UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~July 4, 2020~~April 3, 2021


☐						TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number 001-14423

PLEXUS CORP.

(Exact name of registrant as specified in charter)


Wisconsin						39-1344447
(State or other jurisdiction of incorporation)						(I.R.S. Employer Identification No.)

One Plexus Way

Neenah, Wisconsin 54957

(Address of principal executive offices) (Zip Code)

Telephone Number (920) 969-6000

(Registrant’s telephone number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	PLXS	The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~August~~May 4, ~~2020,~~2021, there were ~~29,245,563~~28,593,983 shares of common stock outstanding.

Table of Contents

PLEXUS CORP.

TABLE OF CONTENTS

~~July 4, 2020~~April 3, 2021



PART I. FINANCIAL INFORMATION			3
ITEM 1. FINANCIAL STATEMENTS			3
Condensed Consolidated Statements of Comprehensive I ~~ncome~~Income (Loss)			3
Condensed Consolidated Balance Sheets			4
Condensed Consolidated Statements of Shareholders' Equity			5
Condensed Consolidated Statements of Cash Flows			6
Notes to Condensed Consolidated Financial Statements			7
ITEM 2. ~~MANAGEMENT'S DICUSSION~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			2420
"Safe Harbor" Cautionary Statement Under the Private Securities Litigation Reform Act of 1995			2420
Overview			2420
Results of Operations			2621
Liquidity of Capital Resources			31
~~Contractual Obligations, Commitments and Off-Balance Sheet Obligations~~			3627
Disclosure About Critical Accounting Policies			3731
New Accounting Pronouncements			3731
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			3831
ITEM 4. CONTROLS AND PROCEDURES			3831
PART II. OTHER INFORMATION			3932
ITEM 1A. Risk Factors			3932
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			4032
ITEM 6. Exhibits			4133
SIGNATURES			4234

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PLEXUS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share data)

Unaudited


		Three Months Ended						Nine Months Ended							Three Months Ended				Six Months Ended
		July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019			April 3, 2021		April 4, 2020		April 3, 2021		April 4, 2020
Net sales	Net sales	$	857,394	$	799,644	$	2,477,167	$	2,354,239	Net sales	$	880,885	$	767,364	$	1,711,240	$	1,619,773
Cost of sales	Cost of sales	774,513		728,614		2,253,651		2,140,190		Cost of sales	789,883		705,919		1,540,961		1,479,138
Gross profit	Gross profit	82,881		71,030		223,516		214,049		Gross profit	91,002		61,445		170,279		140,635
Selling and administrative expenses	Selling and administrative expenses	37,028		36,627		114,517		109,521		Selling and administrative expenses	38,286		38,233		70,697		77,489
Restructuring and impairment charges	Restructuring and impairment charges	—		—		6,003		—		Restructuring and impairment charges	2,029		6,003		2,029		6,003
Operating income	Operating income	45,853		34,403		102,996		104,528		Operating income	50,687		17,209		97,553��		57,143
Other income (expense):	Other income (expense):									Other income (expense):
Interest expense	Interest expense	(3,988)		(3,711)		(11,934)		(9,105)		Interest expense	(3,818)		(3,814)		(7,904)		(7,946)
Interest income	Interest income	368		445		1,546		1,410		Interest income	390		533		764		1,178
Miscellaneous, net	Miscellaneous, net	(600)		(1,419)		(2,619)		(4,304)		Miscellaneous, net	(825)		154		(2,343)		(2,019)
Income before income taxes	Income before income taxes	41,633		29,718		89,989		92,529		Income before income taxes	46,434		14,082		88,070		48,356
Income tax expense	Income tax expense	5,791		4,917		10,215		20,744		Income tax expense	4,671		1,156		10,108		4,424
Net income	Net income	$	35,842	$	24,801	$	79,774	$	71,785	Net income	$	41,763	$	12,926	$	77,962	$	43,932
Earnings per share:	Earnings per share:									Earnings per share:
Basic	Basic	$	1.23	$	0.83	$	2.73	$	2.34	Basic	$	1.45	$	0.44	$	2.71	$	1.50
Diluted	Diluted	$	1.20	$	0.81	$	2.66	$	2.28	Diluted	$	1.42	$	0.43	$	2.65	$	1.46
Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	29,199		29,912		29,210		30,637		Basic	28,736		29,291		28,799		29,216
Diluted	Diluted	29,793		30,635		29,936		31,420		Diluted	29,310		29,925		29,409		29,999
Comprehensive income:
Comprehensive income (loss):										Comprehensive income (loss):
Net income	Net income	$	35,842	$	24,801	$	79,774	$	71,785	Net income	$	41,763	$	12,926	$	77,962	$	43,932
Other comprehensive income (loss):
Other comprehensive (loss) income:										Other comprehensive (loss) income:
Derivative instrument fair value adjustment	Derivative instrument fair value adjustment	3,178		(406)		(1,138)		1,956		Derivative instrument fair value adjustment	(4,556)		(6,539)		(501)		(4,316)
Foreign currency translation adjustments	Foreign currency translation adjustments	5,586		(679)		3,463		(2,035)		Foreign currency translation adjustments	(3,404)		(7,327)		5,296		(2,123)
Other comprehensive income (loss):		8,764		(1,085)		2,325		(79)
Total comprehensive income		$	44,606	$	23,716	$	82,099	$	71,706
Other comprehensive (loss) income										Other comprehensive (loss) income	(7,960)		(13,866)		4,795		(6,439)
Total comprehensive income (loss)										Total comprehensive income (loss)	$	33,803	$	(940)	$	82,757	$	37,493

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

PLEXUS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

Unaudited


		July 4, 2020		September 28, 2019			April 3, 2021		October 3, 2020
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	296,545	$	223,761	Cash and cash equivalents	$	294,370	$	385,807
Restricted cash	Restricted cash	3,098		2,493		Restricted cash	142		2,087
Accounts receivable, net of allowances of $4,387 and $1,537, respectively		519,323		488,284
Accounts receivable, net of allowances of $1,675 and $3,597, respectively						Accounts receivable, net of allowances of $1,675 and $3,597, respectively	508,576		482,086
Contract assets	Contract assets	116,442		90,841		Contract assets	116,440		113,946
Inventories, net	Inventories, net	819,543		700,938		Inventories, net	771,605		763,461
Prepaid expenses and other	Prepaid expenses and other	32,836		31,974		Prepaid expenses and other	36,202		31,772
Total current assets	Total current assets	1,787,787		1,538,291		Total current assets	1,727,335		1,779,159
Property, plant and equipment, net	Property, plant and equipment, net	380,056		384,224		Property, plant and equipment, net	379,014		383,661
Operating lease right-of-use assets	Operating lease right-of-use assets	71,885		—		Operating lease right-of-use assets	68,877		69,879
Deferred income taxes	Deferred income taxes	14,089		13,654		Deferred income taxes	22,351		21,422
Other assets	Other assets	34,707		64,714		Other assets	39,226		35,727
Total non-current assets	Total non-current assets	500,737		462,592		Total non-current assets	509,468		510,689
Total assets	Total assets	$	2,288,524	$	2,000,883	Total assets	$	2,236,803	$	2,289,848

LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Current portion of long-term debt and finance lease obligations	Current portion of long-term debt and finance lease obligations	$	145,993	$	100,702	Current portion of long-term debt and finance lease obligations	$	50,229	$	146,829
Accounts payable	Accounts payable	553,254		444,944		Accounts payable	528,363		516,297
Customer deposits	Customer deposits	173,027		139,841		Customer deposits	175,099		159,972
Accrued salaries and wages	Accrued salaries and wages	60,056		73,555		Accrued salaries and wages	64,860		76,927
Other accrued liabilities	Other accrued liabilities	105,290		106,461		Other accrued liabilities	100,722		103,492
Total current liabilities	Total current liabilities	1,037,620		865,503		Total current liabilities	919,273		1,003,517
Long-term debt and finance lease obligations, net of current portion	Long-term debt and finance lease obligations, net of current portion	188,626		187,278		Long-term debt and finance lease obligations, net of current portion	188,730		187,975
Long-term accrued income taxes payable	Long-term accrued income taxes payable	53,899		59,572		Long-term accrued income taxes payable	47,974		53,899
Long-term operating lease liabilities	Long-term operating lease liabilities	38,077		—		Long-term operating lease liabilities	34,751		36,779
Deferred income taxes payable	Deferred income taxes payable	6,394		5,305		Deferred income taxes payable	7,042		6,433
Other liabilities	Other liabilities	19,087		17,649		Other liabilities	25,081		23,765
Total non-current liabilities	Total non-current liabilities	306,083		269,804		Total non-current liabilities	303,578		308,851
Total liabilities	Total liabilities	1,343,703		1,135,307		Total liabilities	1,222,851		1,312,368
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies	0		0
Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:
Preferred stock, $0.01 par value, 5,000 shares authorized, NaN issued or outstanding	Preferred stock, $0.01 par value, 5,000 shares authorized, NaN issued or outstanding	—		—		Preferred stock, $0.01 par value, 5,000 shares authorized, NaN issued or outstanding	0		0
Common stock, $0.01 par value, 200,000 shares authorized, 53,442 and 52,917 shares issued, respectively, and 29,214 and 29,004 shares outstanding, respectively		534		529
Common stock, $0.01 par value, 200,000 shares authorized, 53,838 and 53,525 shares issued, respectively, and 28,659 and 29,002 shares outstanding, respectively						Common stock, $0.01 par value, 200,000 shares authorized, 53,838 and 53,525 shares issued, respectively, and 28,659 and 29,002 shares outstanding, respectively	538		535
Additional paid-in capital	Additional paid-in capital	615,103		597,401		Additional paid-in capital	627,176		621,564
Common stock held in treasury, at cost, 24,228 and 23,913 shares, respectively		(912,731)		(893,247)
Common stock held in treasury, at cost, 25,179 and 24,523 shares, respectively						Common stock held in treasury, at cost, 25,179 and 24,523 shares, respectively	(986,539)		(934,639)
Retained earnings	Retained earnings	1,257,374		1,178,677		Retained earnings	1,373,041		1,295,079
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(15,459)		(17,784)		Accumulated other comprehensive loss	(264)		(5,059)
Total shareholders’ equity	Total shareholders’ equity	944,821		865,576		Total shareholders’ equity	1,013,952		977,480
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	2,288,524	$	2,000,883	Total liabilities and shareholders’ equity	$	2,236,803	$	2,289,848

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

PLEXUS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

Unaudited


	Three Months Ended				Six Months Ended
	April 3, 2021		April 4, 2020		April 3, 2021		April 4, 2020
Common stock - shares outstanding
Beginning of period	28,766		29,222		29,002		29,004
Exercise of stock options and vesting of other share-based awards	242		189		313		498
Treasury shares purchased	(349)		(225)		(656)		(316)
End of period	28,659		29,186		28,659		29,186

Total stockholders' equity, beginning of period	$	1,006,959	$	908,372	$	977,480	$	865,576
Common stock - par value
Beginning of period	536		532		535		529
Exercise of stock options and vesting of other share-based awards	2		2		3		5
End of period	538		534		538		534
Additional paid-in capital
Beginning of period	624,859		609,168		621,564		597,401
Share-based compensation expense	6,473		5,779		11,822		10,825
Exercise of stock options and vesting of other share-based awards, including tax withholding	(4,156)		(7,501)		(6,210)		(780)
End of period	627,176		607,446		627,176		607,446
Treasury stock
Beginning of period	(957,410)		(899,577)		(934,639)		(893,247)
Treasury shares purchased	(29,129)		(13,154)		(51,900)		(19,484)
End of period	(986,539)		(912,731)		(986,539)		(912,731)
Retained earnings
Beginning of period	1,331,278		1,208,606		1,295,079		1,178,677
Net income	41,763		12,926		77,962		43,932
Cumulative effect adjustment for adoption of new accounting pronouncement (1)	—		—		—		(1,077)
End of period	1,373,041		1,221,532		1,373,041		1,221,532
Accumulated other comprehensive loss
Beginning of period	7,696		(10,357)		(5,059)		(17,784)
Other comprehensive (loss) income	(7,960)		(13,866)		4,795		(6,439)
End of period	(264)		(24,223)		(264)		(24,223)
Total stockholders' equity, end of period	$	1,013,952	$	892,558	$	1,013,952	$	892,558

Three Months Ended Nine Months Ended
July 4,
2020 June 29,
2019 July 4,
2020 June 29,
2019
Common stock - shares outstanding
Beginning of period 29,186 30,241 29,004 31,838
Exercise of stock options and vesting of other stock awards 28 30 526 295
Treasury shares purchased — (784) (316) (2,646)
End of period 29,214 29,487 29,214 29,487
Total stockholders' equity, beginning of period $ 892,558 $ 875,444 $ 865,576 $ 921,143
Common stock - par value
Beginning of period 534 528 529 526
Exercise of stock options and vesting of other stock awards — 1 5 3
End of period 534 529 534 529
Additional paid-in capital
Beginning of period 607,446 586,279 597,401 581,488
Stock-based compensation expense 6,542 5,426 17,367 15,355
Exercise of stock options and vesting of other stock awards, including tax benefits 1,115 611 335 (4,527)
End of period 615,103 592,316 615,103 592,316
Treasury stock
Beginning of period (912,731) (817,435) (893,247) (711,138)
Treasury shares purchased — (44,407) (19,484) (150,704)
End of period (912,731) (861,842) (912,731) (861,842)
Retained earnings
Beginning of period 1,221,532 1,117,045 1,178,677 1,062,246
Net income 35,842 24,801 79,774 71,785
Cumulative effect adjustment for adoption of new accounting pronouncements (1) — — (1,077) 7,815
End of period 1,257,374 1,141,846 1,257,374 1,141,846
Accumulated other comprehensive loss
Beginning of period (24,223) (10,973) (17,784) (11,979)
Other comprehensive (loss) income 8,764 (1,085) 2,325 (79)
End of period (15,459) (12,058) (15,459) (12,058)
Total stockholders' equity, end of period $ 944,821 $ 860,791 $ 944,821 $ 860,791

(1) See Note 1, "Basis of Presentation," for a discussion of recently adopted accounting pronouncements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

PLEXUS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Unaudited


		Nine Months Ended							Six Months Ended
		July 4, 2020		June 29, 2019			April 3, 2021		April 4, 2020
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net income	Net income	$	79,774	$	71,785	Net income	$	77,962	$	43,932
Adjustments to reconcile net income to net cash flows from operating activities:	Adjustments to reconcile net income to net cash flows from operating activities:					Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	Depreciation and amortization	42,216		38,795		Depreciation and amortization	30,671		27,938
Deferred income taxes	Deferred income taxes	2,560		2,448		Deferred income taxes	1,454		2,226
Share-based compensation expense	Share-based compensation expense	17,367		15,355		Share-based compensation expense	11,822		10,825
Provision for allowance for doubtful accounts	Provision for allowance for doubtful accounts	3,155		—		Provision for allowance for doubtful accounts	(2,405)		3,402
Asset impairment charges	Asset impairment charges	3,054		—		Asset impairment charges	0		3,054
Other, net	Other, net	491		148		Other, net	1,060		(13)
Changes in operating assets and liabilities, excluding impacts of acquisition:
Changes in operating assets and liabilities:						Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(32,299)		(65,324)		Accounts receivable	(21,955)		21,671
Contract assets	Contract assets	(25,224)		(28,692)		Contract assets	(2,439)		(20,300)
Inventories	Inventories	(116,810)		(33,756)		Inventories	(4,689)		(65,662)
Other current and noncurrent assets		1,758		(3,537)
Other current and non-current assets						Other current and non-current assets	(10,860)		7,619
Accrued income taxes payable	Accrued income taxes payable	(15,202)		(1,648)		Accrued income taxes payable	(15,720)		(17,050)
Accounts payable	Accounts payable	111,634		(72,014)		Accounts payable	16,317		41,595
Customer deposits	Customer deposits	32,962		39,979		Customer deposits	14,284		(3,049)
Other current and noncurrent liabilities		(12,917)		43,493
Other current and non-current liabilities						Other current and non-current liabilities	(6,643)		(10,780)
Cash flows provided by operating activities	Cash flows provided by operating activities	92,519		7,032		Cash flows provided by operating activities	88,859		45,408
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Payments for property, plant and equipment	Payments for property, plant and equipment	(41,223)		(74,602)		Payments for property, plant and equipment	(23,149)		(30,679)
Proceeds from sales of property, plant and equipment	Proceeds from sales of property, plant and equipment	886		160		Proceeds from sales of property, plant and equipment	201		694
Business acquisition		—		1,180
Other, net	Other, net	(200)		—		Other, net	(200)		0
Cash flows used in investing activities	Cash flows used in investing activities	(40,537)		(73,262)		Cash flows used in investing activities	(23,148)		(29,985)
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Borrowings under debt agreements	Borrowings under debt agreements	595,240		884,500		Borrowings under debt agreements	151,967		335,694
Payments on debt and finance lease obligations	Payments on debt and finance lease obligations	(554,077)		(754,743)		Payments on debt and finance lease obligations	(254,396)		(329,756)
Debt issuance costs		(699)		(688)
Repurchases of common stock	Repurchases of common stock	(19,484)		(150,704)		Repurchases of common stock	(51,900)		(19,484)
Proceeds from exercise of stock options	Proceeds from exercise of stock options	10,965		2,023		Proceeds from exercise of stock options	3,303		9,850
Payments related to tax withholding for share-based compensation	Payments related to tax withholding for share-based compensation	(10,625)		(6,547)		Payments related to tax withholding for share-based compensation	(9,510)		(10,625)
Cash flows provided by (used in) financing activities		21,320		(26,159)
Cash flows used in financing activities						Cash flows used in financing activities	(160,536)		(14,321)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	87		102		Effect of exchange rate changes on cash and cash equivalents	1,443		(68)
Net increase (decrease) in cash and cash equivalents and restricted cash		73,389		(92,287)
Net (decrease) increase in cash and cash equivalents and restricted cash						Net (decrease) increase in cash and cash equivalents and restricted cash	(93,382)		1,034
Cash and cash equivalents and restricted cash:	Cash and cash equivalents and restricted cash:					Cash and cash equivalents and restricted cash:
Beginning of period	Beginning of period	226,254		297,686		Beginning of period	387,894		226,254
End of period	End of period	$	299,643	$	205,399	End of period	$	294,512	$	227,288

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

PLEXUS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND ~~NINE~~SIX MONTHS ENDED ~~JULY~~APRIL 3, 2021 AND APRIL 4, 2020 ~~AND JUNE 29, 2019~~

Unaudited

1. Basis of Presentation

Basis of Presentation:

The accompanying Condensed Consolidated Financial Statements included herein have been prepared by Plexus Corp. and its subsidiaries (together “Plexus” or the “Company”) without audit and pursuant to the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (“SEC”). The accompanying Condensed Consolidated Financial Statements reflect all adjustments, which include normal recurring adjustments necessary for the fair statement of the consolidated financial position of the Company as of ~~July 4,~~April 3, 2021 and October 3, 2020, ~~and September 28, 2019,~~ the results of operations and shareholders' equity for the three and ~~nine~~six months ended ~~July~~April 3, 2021 and April 4, 2020, ~~and June 29, 2019,~~ and the cash flows for the same ~~nine~~six month periods.

The Company’s fiscal year ends on the Saturday closest to September 30. The Company uses a “4-4-5” weekly accounting system for the interim periods in each quarter. Each quarter, therefore, ends on a Saturday at the end of the 4-4-5 period. Periodically, an additional week must be added to the fiscal year to re-align with the Saturday closest to September 30. ~~Fiscal 2020 includes 53 weeks; therefore, the~~The first quarter of fiscal 2020 included 14 weeks while all other fiscal quarters presented herein included 13 weeks.

Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"), have been condensed or omitted pursuant to the SEC’s rules and regulations dealing with interim financial statements. However, the Company believes that the disclosures made in the Condensed Consolidated Financial Statements included herein are adequate to make the information presented not misleading. It is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s ~~2019~~2020 Annual Report on Form 10-K.

Certain prior period amounts have been reclassified to conform to the current period presentation.

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and notes thereto. The full extent to which the COVID-19 outbreak will impact the Company's business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted. The Company has considered information available as of the date of issuance of these financial statements and is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or a revision of the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information becomes available. Actual results could differ materially from these estimates.

Recently Adopted Accounting Pronouncements:

In ~~May 2014,~~June 2016, the FASB issued ASU ~~2014-09,~~2016-13, which ~~requires an entity~~replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and required consideration of a broader range of reasonable and supportable information to recognize revenue relating to contracts with customers that depicts the transfer of promised goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled in exchange for such goods or services ("Topic 606"). On September 30, 2018, theinform credit loss estimates. The Company adopted ~~and applied Topic 606~~this guidance during the first quarter of fiscal 2021 with no material impact to ~~all contracts using~~ the ~~modified retrospective method of adoption. Upon adoption, the Company recognized an increase to its fiscal 2019 beginning Retained earnings balance of $7.8 million.~~Company's Consolidated Financial Statements.

In February 2016, the FASB issued ASU 2016-02 (“("Topic ~~842”~~842"), which is intended to improve financial reporting of lease transactions by requiring lessees to recognize most leases as a right-of-use (“ROU”) asset and lease liability on their balance sheets for the rights and obligations created by leases, but record expenses on their income statements in a similar manner. ~~For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. ASU 2016-02~~Topic 842 also requires disclosures regarding the amount, timing and judgments related to accounting for an entity’s leases and related cash flows.

On September 29, 2019, the Company adopted Topic 842 using the modified retrospective method of adoption, which allows financial information for comparative periods prior to adoption not to be updated. ~~The~~Upon adoption, the Company recognized ~~right-of-use assets and operating lease liabilities on its Consolidated Balance Sheets, but~~a $1.1 million reduction in retained earnings as a result of two existing build-to-suit arrangements for the ~~standard did not have a material impact on its Consolidated Statements of Comprehensive Income or Consolidated Statements of Cash Flows.~~

~~ASC 842 provides optional practical expedients~~facilities in Guadalajara, Mexico that were reassessed to assist with transition to the new standard. Management elected the package of practical expedients offered, which allows entities to not reassess: (i) whether any contracts prior to the adoption date are or containbe finance leases ~~(ii) lease classification, and (iii) whether capitalized initial direct costs continue to meet the definition of initial direct costs~~ under the new ~~guidance. For all new and modified leases after adoption, management elected the short-term lease~~

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recognition exemption for all of the Company’s leases that qualify, in addition to the practical expedient to not separate lease and nonlease components. Refer to Note 7, "Leases," for further information.standard.

In August 2017, the FASB issued ASU 2017-12 related to the accounting for hedging activities. The pronouncement expands and refines hedge accounting, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The Company adopted this guidance during the first quarter of fiscal 2020 with no material impact to the Company's Consolidated Financial Statements; however, the impact of the new standard on future periods will depend on the facts and circumstances of future transactions.

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Recently Issued Accounting Pronouncements Not Yet Adopted:

In June 2016, the FASB issued ASU 2016-13, which replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and required consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This guidance is effective for the Company beginning in the first quarter of fiscal year 2021. Early adoption is permitted. The Company plans to adopt this methodology the first quarter of fiscal 2021 and does not expect a material impact on its Consolidated Financial Statements.

In March 2020, the FASB issued ASU 2020-04, which provides guidance in accounting for contracts, hedging relationships, and other transactions that are affected by reference rate reform. The amendments in this update are elective and were effective immediately upon issuance. The Company is currently in the process of assessing the impacts of reference rate reform but does not expect this standard to have a material impact on its Consolidated Financial Statements.

The Company believes that no other recently issued accounting standards will have a material impact on its Consolidated Financial Statements, or apply to its operations.

2. Inventories

Inventories as of ~~July 4,~~April 3, 2021 and October 3, 2020 ~~and September 28, 2019~~ consisted of the following (in thousands):


		July 4, 2020		September 28, 2019			April 3, 2021		October 3, 2020
Raw materials	Raw materials	$	686,130	$	577,545	Raw materials	$	657,404	$	630,833
Work-in-process	Work-in-process	61,161		49,315		Work-in-process	46,693		53,602
Finished goods	Finished goods	72,252		74,078		Finished goods	67,508		79,026
Total inventories, net	Total inventories, net	$	819,543	$	700,938	Total inventories, net	$	771,605	$	763,461

In certain circumstances, per contractual terms, customer deposits are received by the Company to offset ~~obsolete and excess~~ inventory risks. The total amount of customer deposits related to inventory and included within current liabilities on the accompanying Condensed Consolidated Balance Sheets as of ~~July 4,~~April 3, 2021 and October 3, 2020 ~~and September 28, 2019 w~~were~~as $166.9~~ $170.7 million a~~and $136.5~~nd $154.6 million, respectively.

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3. Debt, Finance Lease ~~Obligations~~ and Other Financing Obligations

Debt, finance lease ~~obligations~~ and other financing obligations as of ~~July 4,~~April 3, 2021 and October 3, 2020, ~~and September 28, 2019~~ consisted of the following (in thousands):


		July 4, 2020		September 28, 2019			April 3, 2021		October 3, 2020
4.05% Senior Notes, due June 15, 2025	4.05% Senior Notes, due June 15, 2025	$	100,000	$	100,000	4.05% Senior Notes, due June 15, 2025	$	100,000	$	100,000
4.22% Senior Notes, due June 15, 2028	4.22% Senior Notes, due June 15, 2028	50,000		50,000		4.22% Senior Notes, due June 15, 2028	50,000		50,000
Borrowings under the revolving commitment	Borrowings under the revolving commitment	—		95,000		Borrowings under the revolving commitment	38,000		0
Term Loans, due April 28, 2021	Term Loans, due April 28, 2021	138,000		—		Term Loans, due April 28, 2021	0		138,000
Finance lease and other financing obligations	Finance lease and other financing obligations	48,497		44,492		Finance lease and other financing obligations	52,037		48,435
Unamortized deferred financing fees	Unamortized deferred financing fees	(1,878)		(1,512)		Unamortized deferred financing fees	(1,078)		(1,631)
Total obligations	Total obligations	334,619		287,980		Total obligations	238,959		334,804
Less: current portion	Less: current portion	(145,993)		(100,702)		Less: current portion	(50,229)		(146,829)
Long-term debt and finance lease obligations, net of current portion		$	188,626	$	187,278
Long-term debt, finance lease and other financing obligations, net of current portion						Long-term debt, finance lease and other financing obligations, net of current portion	$	188,730	$	187,975

On June 15, 2018, the Company entered into a Note Purchase Agreement (the “2018 NPA”) pursuant to which it issued an aggregate of $150.0 million in principal amount of unsecured senior notes, consisting of $100.0 million in principal amount of 4.05% Series A Senior Notes, due on June 15, 2025, and $50.0 million in principal amount of 4.22% Series B Senior Notes, due on June 15, 2028 (collectively, the “2018 Notes”), in a private placement. The 2018 NPA includes customary operational and financial covenants with which the Company is required to comply, including, among others, maintenance of certain financial ratios such as a total leverage ratio and a minimum interest coverage ratio. The 2018 Notes may be prepaid in whole or in part at any time, subject to payment of a make-whole amount; interest on the 2018 Notes is payable semiannually. As of ~~July 4, 2020,~~April 3, 2021, the Company was in compliance with the covenants under the 2018 NPA.

On May 15, 2019, the Company refinanced its then-existing senior unsecured revolving credit facility by entering into a new 5-year senior unsecured revolving credit facility (referred to as the "Credit Facility"), which expanded the maximum commitment from $300.0 million to $350.0 million and extended the maturity from July 5, 2021 to May 15, 2024. The maximum commitment under the Credit Facility may be further increased to $600.0 million, generally by mutual agreement of the Company and the lenders, subject to certain customary conditions. The increase of the maximum facility is not able to be exercised until after the effective date of the 364 day delayed draw term loans ("Term Loans") on April 28, 2021, as outlined in Amendment No. 1 to the Credit Agreement (the "Amendment") subsequently discussed. During the ~~nine~~six months ended ~~July 4, 2020,~~April 3, 2021, the highest daily borrowing was ~~$164.5 million;~~$148.0 million and the average daily borrowings were ~~$97.1~~$48.2 million. The Company borrowed ~~$455.7~~$151.0 million and repaid ~~$550.7~~$113.0 million of revolving borrowings ("~~Revolving Commitment"~~revolving commitment") under the Credit Facility during the ~~nine~~six months

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ended ~~July 4, 2020.~~April 3, 2021. As of ~~July 4, 2020,~~April 3, 2021, the Company was in compliance with all financial covenants relating to the Credit ~~Facility,~~Agreement, which are generally consistent with those in the 2018 NPA ~~previously discussed.~~discussed above. The Company is required to pay a commitment fee on the daily unused ~~revolver credit~~revolving commitment based on the Company's leverage ratio; the fee was 0.125% as of ~~July 4, 2020.~~April 3, 2021.

To further ensure ~~our~~the Company's ability to meet ~~our~~it working capital and fixed capital requirements, on April 29, 2020, the Company entered into Amendment No. 1 to the ~~Amendment~~Credit Agreement (the "Amendment") in response to the COVID-19 outbreak, which ~~amends~~amended the Credit Agreement, dated as of May 15, 2019. The Amendment ~~amends~~modified certain provisions of the Credit Facility to, among other things, provide for a ~~$138.0 million~~364 day unsecured delayed draw term loans ~~facility.~~ ("Term ~~loans~~Loans") for $138.0 million. Term Loans borrowed under the new facility were funded in a single draw on May 4, 2020 and ~~will~~were scheduled to mature on April 28, 2021. On January 29, 2021, the Company terminated the Term Loans through repayment of the $138.0 million outstanding using borrowings from the revolving commitment under the Credit Facility. Outstanding ~~term loans will bear~~Term Loans bore interest, at the Company’s option, at a eurocurrency rate (subject to a floor of 1.0%) plus a margin of 1.75% per annum or at a base rate (subject to a floor of 2.0%) plus a margin of 0.75% per annum. In addition, the Company is required to pay, on a quarterly basis, a ticking fee at a rate equal to 0.75% per annum on the average daily aggregate unused term loan commitments from the effective date of the Amendment to and including the date all of the term loan commitments are terminated in accordance with the terms of the Credit Facility. The proceeds of the term loans were used to prepay outstanding revolving and swing line loans under the Credit Facility and for the general corporate purposes of the Company and its subsidiaries. The $138.0 million of outstanding term loans as of July 4, 2020 was subject to a 2.75% per annum interest rate.

The fair value of the Company’s debt, excluding finance ~~leases,~~lease and other financing obligations, was ~~$298.3~~$199.6 million and ~~$252.3~~$299.3 million as of ~~July 4,~~April 3, 2021 and October 3, 2020, ~~and September 28, 2019,~~ respectively. The carrying value of the Company's debt, excluding finance ~~leases~~lease and other financing obligations, was ~~$288.0~~$188.0 million and ~~$245.0~~$288.0 million as of ~~July 4,~~April 3, 2021 and October 3, 2020, ~~and September 28, 2019,~~ respectively. If measured at fair value in the financial ~~statements,~~statements, the Company's debt would be classified as Level 2 in the fair value hierarchy. Refer to Note 4, "Derivatives and Fair Value Measurements," for further information regarding the Company's fair value calculations and classifications.

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4. Derivatives and Fair Value Measurements

All derivatives are recognized in the accompanying Condensed Consolidated Balance Sheets at their estimated fair value. The Company uses derivatives to manage the variability of foreign currency obligations. The Company has cash flow hedges related to forecasted foreign currency obligations, in addition to non-designated hedges to manage foreign currency exposures associated with certain foreign currency denominated assets and liabilities. The Company does not enter into derivatives for speculative purposes.

The Company designates some foreign currency exchange contracts as cash flow hedges of forecasted foreign currency expenses. Changes in the fair value of the derivatives that qualify as cash flow hedges are recorded in "Accumulated other comprehensive loss" in the accompanying Condensed Consolidated ~~Balance~~Balance Sheets until earnings are affected by the variability of the cash flows. In the next twelve months, the Company estimates th~~at $1.8~~that $0.7 million of ~~unrealized~~unrealized gains, net of tax, related to cash flow hedges will be reclassified from other comprehensive ~~loss~~(loss) income into earnings. Changes in the fair value of the non-designated derivatives related to recognized foreign currency denominated assets and liabilities are recorded in "Miscellaneous, net" in the accompanying Condensed Consolidated Statements of Comprehensive ~~Income.~~Income (Loss).

The Company enters into forward currency exchange contracts for its operations in Malaysia and Mexico on a rolling basis. The Company had cash flow hedges outstanding with a notional ~~value o~~valu~~f $79.2~~e of $106.7 million as as of ~~July 4, 2020,~~April 3, 2021, and ~~$80.0~~a notional value of $96.8 million as of ~~September 28, 2019.~~October 3, 2020. These forward currency contracts fix the exchange rates for the settlement of fu~~ture~~future foreign currency obligations that have yet to be realized. The total fair value of the forward currency exchange contracts was a ~~$1.8~~$0.7 million assetas of ~~July 4, 2020,~~April 3, 2021, and a ~~$0.6~~$1.2 million ~~liability~~asset as of ~~September 28, 2019.~~October 3, 2020.

The Company had additional forward currency exchange contracts outstanding as of ~~July 4, 2020,~~April 3, 2021, with a notional value of ~~$18.8~~$27.2 million; t~~there~~here were ~~$34.4~~$15.8 million of such contracts outstanding as of ~~September 28, 2019.~~October 3, 2020. The Company did not designate these derivative instruments as hedging instruments. The net settlement amount (fair value) related to these contracts is recorded on the Condensed Consolidated Balance Sheets as either a current or long-term asset or liability, depending on the term, and as an element of "Miscellaneous, ~~net."~~net" in the accompanying Condensed Consolidated Statements of Comprehensive Income (Loss). The total fair value of these derivatives waswas a ~~$0.2~~$0.3 million ~~asset a~~sliability as of ~~July 4, 2020,~~April 3, 2021, and a ~~$0.9~~less than $0.1 million asset as of ~~September 28, 2019.~~October 3, 2020.

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The tables below present information regarding the fair values of derivative instruments and the effects of derivative instruments on the Company’s Condensed Consolidated Financial Statements:

Fair Values of Derivative Instruments (in thousands)

Derivative Assets

Derivative Liabilities

Derivative Assets

Derivative Liabilities

July 4,
2020

September 28,
2019

July 4,
2020

September 28,
2019

April 3,
2021

October 3,
2020

April 3,
2021

October 3,
2020

Derivatives designated as hedging instruments

Balance sheet
classification

Fair Value

Balance sheet
classification

Fair Value

Derivatives designated as hedging instruments

Balance sheet
classification

Fair Value

Balance sheet
classification

Fair Value

Foreign currency forward contracts

Prepaid expenses and other

1,955

156

Other accrued liabilities

175

798

Foreign currency forward contracts

Prepaid expenses and other

843

1,830

Other accrued liabilities

155

641

Fair Values of Derivative Instruments (in thousands)

Derivative Assets

Derivative Liabilities

Derivative Assets

Derivative Liabilities

July 4,
2020

September 28,
2019

July 4,
2020

September 28,
2019

April 3,
2021

October 3,
2020

April 3,
2021

October 3,
2020

Derivatives not designated as hedging instruments

Balance sheet
classification

Fair Value

Balance sheet
classification

Fair Value

Derivatives not designated as hedging instruments

Balance sheet
classification

Fair Value

Balance sheet
classification

Fair Value

Foreign currency forward contracts

Prepaid expenses and other

297

912

Other accrued liabilities

141

Foreign currency forward contracts

Prepaid expenses and other

Other accrued liabilities

423

The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Loss ("OCL") (in thousands)

for the Three Months Ended

Derivatives in cash flow hedging relationships

Amount of Gain (Loss) Recognized in OCL on Derivatives

Derivatives in cash flow hedging relationships

Amount of Loss Recognized in OCL on Derivatives

July 4, 2020

June 29, 2019

Derivatives in cash flow hedging relationships

April 3, 2021

April 4, 2020

Foreign currency forward contracts

1,990

(578)

Foreign currency forward contracts

(2,748)

(6,325)


Derivative Impact on Gain (Loss) Recognized in Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands)
for the Three Months Ended
Derivatives in cash flow hedging relationships	Classification of Gain Reclassified from Accumulated OCL into Income	Amount of Gain Reclassified from Accumulated OCL into Income
		April 3, 2021		April 4, 2020
Foreign currency forward contracts	Cost of sales	$	1,643	$	204
Foreign currency forward contracts	Selling and administrative expenses	$	165	$	10

Derivatives not designated as hedging instruments

Location of Loss Recognized on Derivatives in Income

Amount of Loss on Derivatives Recognized in Income

April 3, 2021

April 4, 2020

Foreign currency forward contracts

Miscellaneous, net

(233)

(223)

The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Loss ("OCL") (in thousands)

for the Six Months Ended

Derivatives in cash flow hedging relationships

Amount of Gain (Loss) Recognized in OCL on Derivatives

April 3, 2021

April 4, 2020

Foreign currency forward contracts

1,411

(4,140)


Derivative Impact on Gain (Loss) Recognized in Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands)
for the Six Months Ended
Derivatives in cash flow hedging relationships	Classification of Gain (Loss) Reclassified from Accumulated OCL into Income	Amount of Gain (Loss) Reclassified from Accumulated OCL into Income
		April 3, 2021		April 4, 2020
Foreign currency forward contracts	Cost of sales	$	1,741	$	177
Foreign currency forward contracts	Selling and administrative expenses	$	171	$	(1)

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Derivative Impact on (Loss) Gain Recognized in Condensed Consolidated Statements of Comprehensive Income (in thousands)
for the Three Months Ended
Derivatives in cash flow hedging relationships Classification of Loss Reclassified from Accumulated OCL into Income Amount of Loss Reclassified from Accumulated OCL into Income
July 4, 2020 June 29, 2019
Foreign currency forward contracts Cost of sales $ (1,102) $ (153)
Foreign currency forward contracts Selling and administrative expenses (86) (19)

Derivatives not designated as hedging instruments Location of Gain Recognized on Derivatives in Income Amount of Gain on Derivatives Recognized in Income
July 4, 2020 June 29, 2019
Foreign currency forward contracts Miscellaneous, net $ 166 $ 235

The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Loss (in thousands)
for the Nine Months Ended
Derivatives in cash flow hedging relationships Amount of (Loss) Gain Recognized in OCL on Derivatives
July 4, 2020 June 29, 2019
Foreign currency forward contracts $ (2,150) $ 275

Derivative Impact on (Loss) Gain Recognized in Condensed Consolidated Statements of Comprehensive Income (in thousands)
for the Nine Months Ended
Derivatives in cash flow hedging relationships Classification of Loss Reclassified from Accumulated OCL into Income Amount of Loss Reclassified from Accumulated OCL into Income
July 4, 2020 June 29, 2019
Foreign currency forward contracts Cost of sales $ (925) $ (1,507)
Foreign currency forward contracts Selling and administrative expenses (87) (174)

Derivatives not designated as hedging instruments

Location of (Loss) Gain Recognized on Derivatives in Income

Amount of (Loss) Gain on Derivatives Recognized in Income

Derivatives not designated as hedging instruments

Location of Gain (Loss) Recognized on Derivatives in Income

Amount of Gain (Loss) on Derivatives Recognized in Income

July 4, 2020

June 29, 2019

April 3, 2021

April 4, 2020

Foreign currency forward contracts

Miscellaneous, net

(467)

1,865

Foreign currency forward contracts

Miscellaneous, net

297

(633)

Fair Value Measurements:

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (or exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses quoted market prices when available or discounted cash flows to calculate fair value. The accounting guidance establishes a fair value hierarchy based on three levels of inputs that may be used to measure fair value. The input levels are:

Level 1: Quoted (observable) market prices in active markets for identical assets or liabilities.

Level 2: Inputs other than Level 1 that are observable, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability.

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The following table lists the fair values of ~~liabilities~~assets of the Company’s derivatives as of ~~July 4,~~April 3, 2021 and October 3, 2020, ~~and September 28, 2019,~~ by input level:


Fair Value Measurements Using Input Levels Asset (in thousands)	Fair Value Measurements Using Input Levels Asset (in thousands)																	Fair Value Measurements Using Input Levels Asset (in thousands)
July 4, 2020		Level 1		Level 2		Level 3		Total
April 3, 2021										April 3, 2021	Level 1		Level 2		Level 3		Total
Derivatives	Derivatives									Derivatives
Foreign currency forward contracts	Foreign currency forward contracts	$	—	$	1,936	$	—	$	1,936	Foreign currency forward contracts	$	0	$	355	$	0	$	355

September 28, 2019
October 3, 2020										October 3, 2020
Derivatives	Derivatives									Derivatives
Foreign currency forward contracts	Foreign currency forward contracts	$	—	$	216	$	—	$	216	Foreign currency forward contracts	$	0	$	1,201	$	0	$	1,201

The fair value of foreign currency forward contracts is determined using a market approach, which includes obtaining directly or indirectly observable values from third parties active in the relevant markets. Inputs in the fair value of the foreign currency forward contracts include prevailing forward and spot prices for ~~currency and interest rate forward curves.~~currency.

5. Income Taxes

The effective tax ~~rate~~rates for the three and ~~nine~~six months ended ~~July 4, 2020~~April 3, 2021 was ~~13.9%~~10.1% and ~~11.4%~~11.5%, respectively, compared to the effective tax rates of ~~16.5%~~8.2% and ~~22.4%~~9.1% for the three and ~~nine~~six months ended ~~June 29, 2019, respectively.~~

April 4, 2020. The effective tax rate for the three and six months ended ~~July 4, 2020 decreased~~April 3, 2021 increased from the effective tax rate for the three and six months ended ~~June 29, 2019,~~April 4, 2020, primarily due to a net $0.8 million benefit for special tax items during the three months ended January 4, 2020, as well as a change in the geographic distribution of pre-tax book income ~~as well as~~for the three and six months ended April 3, 2021. The increase in the effective tax rate was partially offset by a ~~$0.8 million~~ tax benefit ~~related to the lapse~~ of ~~a statute of limitations~~$0.9 million recognized for ~~uncertain tax positions recorded during~~ the three months ended ~~July 4, 2020.~~

The effective tax rate for the nine months ended July 4, 2020 decreased from the effective tax rate for the nine months ended June 29, 2019, primarily due to the additional impact of the U.S. Tax Cuts & Jobs Act of $7.0 million recorded during the nine months ended June 29, 2019. The decrease was also due to the geographic distribution of pre-tax book income, an $0.8 million tax benefitApril 3, 2021 related to the ~~lapse~~release of a ~~statute of limitations~~full valuation allowance for ~~uncertain tax positions, an $0.8 million benefit for special tax items and~~ a ~~$0.6 million tax benefit~~jurisdiction within the EMEA segment related to ~~restructuring during the nine months ended July 4, 2020. The $0.8 million benefit for special~~a settlement of an income tax items for the nine months ended July 4, 2020 was comprised of a $1.9 million benefit related to guidance issued by the U.S. Department of the Treasury regarding foreign tax credits partially offset by $1.1 million of special tax items.

~~The Coronavirus Aid, Relief, and Economic Security Act was signed into law on March 27, 2020. The Company does not expect a material impact from the law.~~audit.

There were no material additions to the amount of unrecognized tax benefits recorded for uncertain tax positions as of ~~July 4, 2020.~~April 3, 2021. The Company recognizes accrued interest and penalties on uncertain tax positions as a component of income tax expense. The amount of interest and penalties recorded for the three and ~~nine~~six months ended ~~July 4, 2020~~April 3, 2021 was not material.

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One or more uncertain tax positions may be settled within the next 12 months. Settlement of these matters is not expected to have a material effect on the Company's consolidated results of operations, financial position and cash flows. The Company is not currently under examination by taxing authorities in the U.S. The Company is under audit in various foreign jurisdictions but settlement is not expected to have a material impact.

The Company maintains valuation allowances when it is more likely than not that all or a portion of a net deferred tax asset will not be realized. During the three months ended ~~July 4, 2020,~~April 3, 2021, the Company ~~continued~~released a full valuation allowance for a jurisdiction within the EMEA segment related to the settlement of an income tax audit. The Company continues to record a full valuation allowance against its net deferred tax assets in certain jurisdictions within the EMEA segment and a partial valuation ~~allowance~~ against ~~certain U.S. state~~its net deferred tax assets in certain jurisdictions within the AMER segment, as it was more likely than not that these assets would not be fully realized based primarily on historical performance. The Company will continue to provide a valuation allowance against its net deferred tax assets in each of the applicable jurisdictions going forward until it determines it is more likely than not that the deferred tax assets will be realized.

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6. Earnings Per Share

The following is a reconciliation of the amounts utilized in the computation of basic and diluted earnings per share for the three and ~~nine~~six months ended ~~July~~April 3, 2021 and April 4, 2020 ~~and June 29, 2019~~ (in thousands, except per share amounts):


		Three Months Ended						Nine Months Ended							Three Months Ended				Six Months Ended
		July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019			April 3, 2021		April 4, 2020		April 3, 2021		April 4, 2020
Net income	Net income	$	35,842	$	24,801	$	79,774	$	71,785	Net income	$	41,763	$	12,926	$	77,962	$	43,932
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	29,199		29,912		29,210		30,637		Basic weighted average common shares outstanding	28,736		29,291		28,799		29,216
Dilutive effect of share-based awards and options outstanding	Dilutive effect of share-based awards and options outstanding	594		723		726		783		Dilutive effect of share-based awards and options outstanding	574		634		610		783
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	29,793		30,635		29,936		31,420		Diluted weighted average shares outstanding	29,310		29,925		29,409		29,999
Earnings per share:	Earnings per share:									Earnings per share:
Basic	Basic	$	1.23	$	0.83	$	2.73	$	2.34	Basic	$	1.45	$	0.44	$	2.71	$	1.50
Diluted	Diluted	$	1.20	$	0.81	$	2.66	$	2.28	Diluted	$	1.42	$	0.43	$	2.65	$	1.46

For the three and ~~nine~~six months ended ~~July 4, 2020,~~April 3, 2021, share-based awards for ~~approximately 0.3 million and~~less than 0.1 million shares were not included in the computation of diluted earnings per share as they were antidilutive.

For ~~both~~ the three and ~~nine~~six months ended ~~June 29, 2019,~~April 4, 2020, share-based awards for approximately 0.3 million and 0.1 million shares were not included in the computation of diluted earnings per share as they were antidilutive.

See also Note 12, "Shareholders' Equity," for information regarding the Company's share repurchase plans.

7. Leases

The Company’s lease portfolio includes both real estate and non-real estate type leases which are accounted for as either finance or operating leases. Real estate leases generally include office, warehouse and manufacturing facilities and non-real estate leases generally include office equipment and vehicles. The Company determines if a contract is or contains a lease at inception. The Company’s leases have remaining lease termscomponents of less than 1 year to 40 years. Renewal options that are deemed reasonably certain are included as part of the lease term for purposes of calculating the right-of-use (“ROU”) assets and lease liability. Variable lease payments are generally expensed as incurred and include certain index-based changes in rent, certain nonlease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. The Company elected the practical expedient to not separate lease and nonlease components, as such nonlease components are included in the calculation of the ROU asset and lease liability and included in the lease expense over the term of the lease. The Company uses a discount rate to calculate the ROU asset and lease liability. When the implicit rate is known or provided in the lease documents, the Company is required to use this rate. In cases in which the implicit rate is not known, the Company uses an estimated incremental borrowing rate.

Operating lease ROU assets and lease liabilities are recorded on the date the Company takes possession of the leased assets with expense recognized on a straight-line basis over the lease term. Leases with an estimated total term of 12 months or less are not recorded on the balance sheet and the lease expense is recognized on a straight-line basis over the lease term. Generally, the Company's lease agreements do not contain material residual value guarantees or material restrictive covenants.

Upon adoption of ASU 2016-02, the Company recorded $45.5 million of right-of-use assets and lease liabilities, related to its existing operating lease portfolio. The Company also reclassified amounts previously held on the balance sheet to operating right-of-use assets and operating lease liabilities upon adoption due to existing arrangements subject to the new standard, including $30.2 million of prepaid leases in other non-current assets. The accounting for the ~~Company’s finance leases remained substantially unchanged. In addition, the company recognized a $1.1 million reduction to retained earnings~~three and six months and ended April 3, 2021 and April 4, 2020 were as a result of two existing build-to-suit arrangements for the facilities in Guadalajara, Mexico that were reassessed to be finance leases under the new standard. The adoption of this new standard did not have a material impact on the Condensed Consolidated Statements of Cash Flows or Condensed Consolidated Statements of Comprehensive Income.follows (in thousands):


	Three Months Ended				Six Months Ended
	April 3, 2021		April 4, 2020		April 3, 2021		April 4, 2020
Finance lease expense:
Amortization of right-of-use assets	$	2,135	$	1,075	$	3,151	$	2,269
Interest on lease liabilities	1,237		1,211		2,440		2,502
Operating lease expense	2,697		2,898		5,449		6,079
Other lease expense	1,266		1,139		2,519		1,259
Total	$	7,335	$	6,323	$	13,559	$	12,109

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~~As a result of the adoption, the following adjustments were made to the opening balances of the Company's Condensed Consolidated Balance Sheets (in thousands):~~

September 28, 2019 Impacts due to adoption of Topic 842 September 29, 2019
ASSETS
   Prepaid expenses and other $ 31,974 $ (170) $ 31,804
   Operating right-of-use assets — 75,790 75,790
   Property, plant and equipment, net 384,224 (1,833) 382,391
   Deferred income taxes 13,654 432 14,086
   Other non-current assets 64,714 (30,193) 34,521
LIABILITIES AND SHAREHOLDERS' EQUITY
   Other accrued liabilities $ 106,461 $ 7,939 $ 114,400
   Long-term debt and finance lease obligations, net of current portion 187,278 (207) 187,071
   Long-term operating lease liabilities — 37,371 37,371
   Retained earnings 1,178,677 (1,077) 1,177,600

~~The components of lease expense for three and nine months ended July 4, 2020 were as follows (in thousands):~~

Three Months Ended Nine Months Ended
July 4, 2020 July 4, 2020
Finance lease expense:
Amortization of right-of-use assets $ 951 $ 3,220
Interest on lease liabilities 1,236 3,738
Operating lease expense 2,898 8,977
Other lease expense 957 2,216
Total $ 6,042 $ 18,151

Based on the nature of the ROU asset, amortization of finance ~~right-of-use~~ROU assets, operating lease expense and other lease expense are recorded within either cost of goods sold or selling and administrative expenses, and interest on finance lease liabilities is recorded within interest expense on the Condensed Consolidated Statements of Comprehensive ~~Income.~~Income (Loss). Other lease expense includes lease expense for leases with an estimated total term of twelve months or less and variable lease expense related to variations in lease payments as a result of a change in factors or circumstances occurring after the lease possession date.

~~Table of Contents~~

The following tables sets forth the amount of lease assets and lease liabilities included in the Company’s Condensed Consolidated Balance Sheets (in thousands):


	~~Financial Statement Line Item~~	~~July 4, 2020~~
~~ASSETS~~
~~Finance lease assets~~	~~Property, plant and equipment, net~~	$	~~37,484~~
~~Operating lease assets~~	~~Right-of-use operating lease assets~~	~~71,885~~
~~Total lease assets~~		$	~~109,369~~

~~LIABILITIES AND SHAREHOLDERS' EQUITY~~
~~Current~~
~~Finance lease liabilities~~	~~Current portion of long-term debt and finance lease obligations~~	$	~~2,765~~
~~Operating lease liabilities~~	~~Other accrued liabilities~~	~~8,061~~
~~Non-current~~
~~Finance lease liabilities~~	~~Long-term debt and finance lease obligations, net of current portion~~	~~37,387~~
~~Operating lease liabilities~~	~~Long-term operating lease liabilities~~	~~38,077~~
~~Total lease liabilities~~		$	~~86,290~~


	Financial Statement Line Item	April 3, 2021		October 3, 2020
ASSETS
Finance lease assets	Property, plant and equipment, net	$	41,157	$	36,408
Operating lease assets	Operating lease right-of-use assets	68,877		69,879
Total lease assets		$	110,034	$	106,287

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Finance lease liabilities	Current portion of long-term debt and finance lease obligations	$	5,270	$	2,700
Operating lease liabilities	Other accrued liabilities	9,314		7,724
Non-current
Finance lease liabilities	Long-term debt and finance lease obligations, net of current portion	38,265		37,033
Operating lease liabilities	Long-term operating lease liabilities	34,751		36,779
Total lease liabilities		$	87,600	$	84,236

~~Other information related to the Company’s leases was as follows:~~


	~~July 4, 2020~~
~~Weighted-average remaining lease term (in years)~~
~~Finance leases~~	~~12.8~~
~~Operating leases~~	~~18.5~~
~~Weighted-average discount rate~~
~~Finance leases~~	~~17.6~~	%
~~Operating leases~~	~~3.0~~	%

Three Months Ended Nine Months Ended
July 4, 2020 July 4, 2020
Cash paid for amounts included in the measurement of lease liabilities (in thousands)
   Operating cash flows used in finance leases $ 1,152 $ 3,401
   Operating cash flows used in operating leases 2,445 8,283
   Finance cash flows used in finance leases 989 2,553
ROU assets obtained in exchange for lease liabilities (in thousands)
   Operating leases $ 83 $ 7,592
   Finance leases 2,133 2,490

~~Table of Contents~~

~~Future minimum lease payments required under finance and operating leases as of July 4, 2020, were as follows (in thousands):~~

Operating leases Finance leases
Remaining 2020 $ 2,581 $ 1,782
2021 8,787 7,285
2022 8,013 6,811
2023 7,570 5,785
2024 5,963 4,993
2025 and thereafter 20,457 98,762
Total minimum lease payments 53,371 125,418
Less: imputed interest (7,233) (85,266)
Present value of lease liabilities $ 46,138 $ 40,152

~~As of July 4, 2020, the Company’s future operating leases that have not yet commenced are immaterial.~~

~~Future minimum lease payments required under long-term operating and capital leases as of September 28, 2019, were as follows (in thousands):~~

Operating leases Capital leases
2020 $ 10,395 $ 6,734
2021 6,554 3,490
2022 5,584 2,884
2023 5,153 1,652
2024 3,713 958
Thereafter 9,426 34,143
Total $ 40,825 $ 49,861

8. Share-Based Compensation

The Company recognized ~~$6.6~~$6.5 million and ~~$17.4~~$11.8 million of compensation expense associated with share-based awards for the three and ~~nine~~six months ended ~~July 4, 2020,~~April 3, 2021, respectively, and ~~$5.4~~$5.8 million and ~~$15.4~~$10.8 million for the three and ~~nine~~six months ended ~~June 29, 2019,~~April 4, 2020, respectively.

The Company uses the Black-Scholes valuation model to determine the fair value of stock options and stock-settled appreciation rights ("SARs"). The Company uses its stock price on grant date as the fair value assigned to restricted stock units ("RSUs").

Performance stock units ("PSUs") are payable in shares of the Company's common stock. For PSUs issued in fiscal year 2020 and earlier, the PSUs vest based on the relative total shareholder return ("TSR") of the Company's common stock as compared to the companies in the Russell 3000 index, a market condition, and the Company's economic return performance during the three year performance period, a performance condition. In the first quarter of fiscal 2021, the Company updated the market condition for PSUs based on TSR to the S&P 400 index for all future PSU grants, including those granted in 2021. The Company uses the Monte Carlo valuation model to determine the fair value of PSUs at the date of grant for PSUs that vest based on the relative TSR of the Company's common stock. The Company uses its stock price on grant date as the fair value assigned to PSUs that vest based on the Company's economic return performance. The number of shares that may be issued pursuant to ~~PSUs~~PSU grants that have not fully vested ranges from 0 to ~~0.5~~0.4 million and is dependent upon the Company's TSR and economic return performance over the applicable performance periods.

The Company recognizes share-based compensation expense over the share-based awards' vesting period.

~~Table of Contents~~

9. Litigation

The Company is party to lawsuits in the ordinary course of business. Management does not believe that these proceedings, individually or in the aggregate, will have a material positive or adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

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10. Reportable Segments

Reportable segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or group, in assessing performance and allocating resources. The Company uses an internal management reporting system, which provides important financial data to evaluate performance and allocate the Company’s resources on a regional basis. Net sales for the segments are attributed to the region in which the product is manufactured or the service is performed. ~~We operate~~The Company operates in the Americas ("AMER"), Asia-Pacific ("APAC") and Europe, Middle East, and Africa ("EMEA"). The services provided, manufacturing processes used, class of customers serviced and order fulfillment processes used are similar and generally interchangeable across the segments. A segment’s performance is evaluated based upon its operating income (loss). A segment’s operating income (loss) includes its net sales less cost of sales and selling and administrative expenses, but excludes corporate and other expenses. Corporate and other expenses primarily represent corporate selling and administrative expenses, restructuring and ~~restructuring costs~~impairment charges and other charges, if any. These costs are not allocated to the segments, as management excludes such costs when assessing the performance of the segments. Inter-segment transactions are generally recorded at amounts that approximate arm’s length transactions. The accounting policies for the segments are the same as for the Company taken as a whole.

Information about the Company’s 3 reportable segments for the three and ~~nine~~six months ended ~~July~~April 3, 2021 and April 4, 2020, ~~and June 29, 2019,~~ respectively, is as follows (in thousands):


		Three Months Ended						Nine Months Ended							Three Months Ended				Six Months Ended
		July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019			April 3, 2021		April 4, 2020		April 3, 2021		April 4, 2020
Net sales:	Net sales:									Net sales:
AMER	AMER	$	305,941	$	366,466	$	993,871	$	1,084,823	AMER	$	364,697	$	334,454	$	692,264	$	687,930
APAC	APAC	482,267		384,841		1,321,254		1,141,394		APAC	458,872		387,845		910,174		838,987
EMEA	EMEA	91,846		81,318		250,326		229,438		EMEA	83,322		74,003		162,045		158,480
Elimination of inter-segment sales	Elimination of inter-segment sales	(22,660)		(32,981)		(88,284)		(101,416)		Elimination of inter-segment sales	(26,006)		(28,938)		(53,243)		(65,624)
		$	857,394	$	799,644	$	2,477,167	$	2,354,239		$	880,885	$	767,364	$	1,711,240	$	1,619,773

Operating income (loss):	Operating income (loss):									Operating income (loss):
AMER	AMER	$	8,516	$	14,221	$	21,102	$	42,901	AMER	$	26,203	$	289	$	42,685	$	12,586
APAC	APAC	66,297		51,264		178,549		151,779		APAC	58,112		49,874		119,654		112,252
EMEA	EMEA	1,115		1,522		257		2,385		EMEA	(1,618)		(544)		(2,606)		(858)
Corporate and other costs		(30,075)		(32,604)		(96,912)		(92,537)
Corporate and other expenses										Corporate and other expenses	(32,010)		(32,410)		(62,180)		(66,837)
		$	45,853	$	34,403	$	102,996	$	104,528		$	50,687	$	17,209	$	97,553	$	57,143
Other income (expense):	Other income (expense):									Other income (expense):
Interest expense	Interest expense	$	(3,988)	$	(3,711)	$	(11,934)	$	(9,105)	Interest expense	$	(3,818)	$	(3,814)	$	(7,904)	$	(7,946)
Interest income	Interest income	368		445		1,546		1,410		Interest income	390		533		764		1,178
Miscellaneous, net	Miscellaneous, net	(600)		(1,419)		(2,619)		(4,304)		Miscellaneous, net	(825)		154		(2,343)		(2,019)
Income before income taxes	Income before income taxes	$	41,633	$	29,718	$	89,989	$	92,529	Income before income taxes	$	46,434	$	14,082	$	88,070	$	48,356


	April 3, 2021		October 3, 2020
Total assets:
AMER	$	773,337	$	759,030
APAC	1,085,492		1,073,951
EMEA	271,193		279,757
Corporate and eliminations	106,781		177,110
	$	2,236,803	$	2,289,848

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July 4,
2020 September 28,
2019
Total assets:
AMER $ 787,879 $ 751,990
APAC 1,116,558 958,744
EMEA 275,134 209,541
Corporate and eliminations 108,953 80,608
$ 2,288,524 $ 2,000,883

11. Guarantees

The Company offers certain indemnifications under its customer manufacturing agreements. In the normal course of business, the Company may from time to time be obligated to indemnify its customers or its customers’ customers against damages or liabilities arising out of the Company’s negligence, misconduct, breach of contract, or infringement of third-party intellectual property rights. Certain agreements have extended broader indemnification, and while most agreements have contractual limits, some do not. However, the Company generally does not provide for such indemnities and seeks indemnification from its customers for damages or liabilities arising out of the Company’s adherence to customers’ specifications or designs or use of materials furnished, or directed to be used, by its customers. The Company does not believe its obligations under such indemnities are material.

In the normal course of business, the Company also provides its customers a limited warranty covering workmanship, and in some cases materials, on products manufactured by the Company. Such warranty generally provides that products will be free from defects in the Company’s workmanship and meet mutually agreed-upon specifications for periods generally ranging from 12 months to 24 months. The Company’s obligation is generally limited to correcting, at its expense, any defect by repairing or replacing such defective product. The Company’s warranty generally excludes defects resulting from faulty customer-supplied components, design defects or damage caused by any party or ~~caused~~cause other than by the Company.

The Company provides for an estimate of costs that may be incurred under its limited warranty at the time product revenue is recognized and establishes additional reserves for specifically identified product issues. These costs primarily include labor and materials, as necessary, associated with repair or replacement and are included in the Company's accompanying Condensed Consolidated Balance Sheets in "other accrued liabilities." The primary factors that affect the Company’s warranty liability include the value and the number of shipped units and historical and anticipated rates of warranty claims. As these factors are impacted by actual experience and future expectations, the Company assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Below is a table summarizing the activity related to the Company’s limited warranty liability for the ~~nine~~six months ended ~~July~~April 3, 2021 and April 4, 2020 ~~and June 29, 2019~~ (in thousands):


		Nine Months Ended							Six Months Ended
		July 4, 2020		June 29, 2019			April 3, 2021		April 4, 2020
Reserve balance, beginning of period	Reserve balance, beginning of period	$	6,276	$	6,646	Reserve balance, beginning of period	$	6,386	$	6,276
Accruals for warranties issued during the period	Accruals for warranties issued during the period	2,323		2,930		Accruals for warranties issued during the period	967		1,554
Settlements (in cash or in kind) during the period	Settlements (in cash or in kind) during the period	(1,712)		(2,420)		Settlements (in cash or in kind) during the period	(1,747)		(1,466)
Reserve balance, end of period	Reserve balance, end of period	$	6,887	$	7,156	Reserve balance, end of period	$	5,606	$	6,364

12. Shareholders' Equity

On August 20, 2019, the Board of Directors approved a ~~new stock~~share repurchase plan under which the Company is authorized to repurchase $50.0 million of its common stock (the "2019 Program"). ~~The~~During the six months ended April 3, 2021, the Company completed the 2019 Program ~~commenced upon completion~~by repurchasing 73,560 shares under this program for $5.3 million and at an average price of ~~the 2018 Program, as defined below.~~$72.44. During the three months ended ~~July~~April 4, 2020, the Company ~~had 0 share repurchases~~repurchased 224,564 shares under ~~the 2019 Program.~~this program for $13.2 million at an average price of $58.57 per share. During the ~~nine~~six months ended ~~July~~April 4, 2020, the Company repurchased 315,231 shares under ~~the 2019 Program~~this program for $19.5 million at an average price of ~~$61.81 per share. As of July 4, 2020, $27.2 million of repurchase authority remained~~

~~Table of Contents~~$61.81.

~~under the 2019 Program. The Company temporarily suspended any share repurchases under the 2019 Program in March~~On August 13, 2020, ~~due to the uncertainties created by the COVID-19 outbreak, but expects to resume share repurchase activity in the fourth quarter of fiscal 2020.~~

~~On February 14, 2018,~~ the Board of Directors approved a ~~stock~~new share repurchase ~~plan under which~~program that authorizes the Company ~~was authorized~~ to repurchase ~~$200.0~~up to $50.0 million of its common stock (the ~~"2018~~"2021 Program"). beginning upon expiration of the Company’s 2019 Program. On November 18, 2020, the Board of Directors approved an additional $50.0 million in share repurchase authority under the existing 2021 Program such that there now exists a total of $100.0 million in share repurchase authority under the program. During the three months ended ~~June 29, 2019,~~ April 3, 2021, the Company repurchased ~~784,493~~349,297 shares under ~~the 2018 Program~~this program for ~~$44.4~~$29.1 million at an average price of ~~$56.61~~$83.39 per share. During the ~~nine~~six months ended ~~June 29, 2019,~~April 3, 2021, the Company repurchased ~~2,646,125~~582,808 shares under ~~the 2018 Program~~this program for ~~$150.7~~$46.6 million at an average price of ~~$56.95 per share.~~$79.91. As of April 3, 2021, $53.4 million of authority remained under the 2021 Program. The ~~2018~~2021 Program ~~was completed during the fourth quarter of fiscal 2019, when all share repurchase authority under it was exhausted.~~has no expiration.

All shares repurchased under the aforementioned programs were recorded as treasury stock.

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13. Trade Accounts Receivable Sale Programs

The Company has Master Accounts Receivable Purchase Agreements with MUFG Bank, New York Branch (formerly known as The Bank of Tokyo-Mitsubishi UFJ, Ltd.) (the "MUFG RPA"), and HSBC Bank (China) Company Limited, Xiamen branch (the "HSBC RPA"), under which the Company may elect to sell ~~receivables~~receivables; at a discount. These facilities are uncommitted facilities. The maximum facility amount under the MUFG ~~RPA~~RPA as of ~~July 4, 2020~~April 3, 2021 is $340.0 million.The maximum facility amount under the HSBC RPA as of ~~July 4, 2020~~April 3, 2021 is $60.0 million. The MUFG RPA will be automatically extended each year unless any party gives no less than 10 days prior notice that the agreement should not be extended. The contract length terms of the HSBC RPA are generally consistent with the terms of the MUFG RPA previously discussed.

Transfers of receivables under the programs are accounted for as sales and, accordingly, receivables sold under the programs are excluded from accounts receivable on the Condensed Consolidated Balance Sheets and are reflected as cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows. Proceeds from the transfer reflect the face value of the receivables less a discount. The sale discount is recorded within "Miscellaneous, net" in the Condensed Consolidated Statements of Comprehensive Income (Loss) in the period of the sale.

The ~~Company~~Company sold ~~$189.9~~ $195.6 million and ~~$223.6~~$188.3 million of trade accounts receivable under these programs, or their predecessors, during the three months ended ~~July~~April 3, 2021 and April 4, 2020, ~~and June 29, 2019,~~ respectively, in exchange for cash proceeds of ~~$189.4~~$195.1 million and ~~$222.1~~$187.4 million, respectively.

The Company sold ~~$606.0~~$394.0 million and ~~$698.0~~$416.1 millionof trade accounts receivable under these programs, or their predecessors, during the ~~nine~~six months ended ~~July~~April 3, 2021 and April 4, 2020, ~~and June 29, 2019,~~ respectively, in exchange for cash proceeds of ~~$603.4~~$392.9 million a~~nd $693.7~~and $414.0 million, respectively.

14. Revenue from Contracts with Customers

Significant Judgments

Revenue is recognized over time for arrangements with customers for which: (i) the Company's performance does not create an asset with an alternative use to the Company, and (ii) the Company has an enforceable right to payment, including reasonable profit margin, for performance completed to date. Revenue recognized over time is estimated based on costs incurred to date plus a reasonable profit margin. If either of the two conditions noted above are not met to recognize revenue over time, revenue is recognized following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying arrangement.

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

The Company generally enters into a master services arrangement that establishes the framework under which business will be conducted. These arrangements represent the master terms and conditions of the Company's services that apply to individual orders, but they do not commit the customer to work with, or to continue to work with, the Company nor do they obligate the customer to any specific volume or pricing of purchases. Moreover, these terms can be amended in appropriate situations.

~~Table of Contents~~

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

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

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

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

Contract Costs

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

There were no other costs to obtain or fulfill customer contracts.

Disaggregated Revenue

The table below includes the Company’s revenue for the three and ~~nine~~six months ended ~~July~~April 3, 2021 and April 4, 2020, ~~and June 29, 2019, respectively,~~ disaggregated by geographic reportable segment and market sector (in thousands):


		Three Months Ended July 4, 2020															Three Months Ended April 3, 2021
		Reportable Segment:															Reportable Segment:
		AMER		APAC		EMEA		Total			AMER		APAC		EMEA		Total
Market Sector:	Market Sector:									Market Sector:
Industrial										Industrial	$	131,341	$	255,537	$	20,040	$	406,918
Healthcare/Life Sciences	Healthcare/Life Sciences	$	106,130	$	172,441	$	51,503	$	330,074	Healthcare/Life Sciences	155,027		149,863		44,877		349,767
Industrial/Commercial		70,349		226,887		19,809		317,045
Aerospace/Defense	Aerospace/Defense	85,277		36,979		18,805		141,061		Aerospace/Defense	75,188		31,320		17,692		124,200
Communications		42,392		26,240		582		69,214
External revenue	External revenue	304,148		462,547		90,699		857,394		External revenue	361,556		436,720		82,609		880,885
Inter-segment sales	Inter-segment sales	1,793		19,720		1,147		22,660		Inter-segment sales	3,141		22,152		713		26,006
Segment revenue	Segment revenue	$	305,941	$	482,267	$	91,846	$	880,054	Segment revenue	$	364,697	$	458,872	$	83,322	$	906,891


	Three Months Ended April 4, 2020
	Reportable Segment:
	AMER		APAC		EMEA		Total
Market Sector (1):
Industrial	$	118,088	$	202,576	$	18,234	$	338,898
Healthcare/Life Sciences	117,143		118,033		35,804		270,980
Aerospace/Defense	96,197		42,933		18,356		157,486
External revenue	331,428		363,542		72,394		767,364
Inter-segment sales	3,026		24,303		1,609		28,938
Segment revenue	$	334,454	$	387,845	$	74,003	$	796,302
(1) During the three months ended January 2, 2021, the Company consolidated the previously reported Industrial/Commercial and Communications market sectors to form the Industrial market sector. Prior period amounts have been reclassified to conform to the current period presentation.

2017

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


		Nine Months Ended July 4, 2020															Six Months Ended April 3, 2021
		Reportable Segment:															Reportable Segment:
		AMER		APAC		EMEA		Total			AMER		APAC		EMEA		Total
Market Sector:	Market Sector:									Market Sector:
Industrial										Industrial	$	253,367	$	493,785	$	37,808	$	784,960
Healthcare/Life Sciences	Healthcare/Life Sciences	$	347,469	$	440,199	$	125,673	$	913,341	Healthcare/Life Sciences	281,466		303,909		83,705		669,080
Industrial/Commercial		249,530		608,815		55,503		913,848
Aerospace/Defense	Aerospace/Defense	286,963		123,161		60,545		470,669		Aerospace/Defense	152,168		65,579		39,453		257,200
Communications		101,186		74,925		3,198		179,309
External revenue	External revenue	985,148		1,247,100		244,919		2,477,167		External revenue	687,001		863,273		160,966		1,711,240
Inter-segment sales	Inter-segment sales	8,723		74,154		5,407		88,284		Inter-segment sales	5,263		46,901		1,079		53,243
Segment revenue	Segment revenue	$	993,871	$	1,321,254	$	250,326	$	2,565,451	Segment revenue	$	692,264	$	910,174	$	162,045	$	1,764,483

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


	Six Months Ended April 4, 2020
	Reportable Segment:
	AMER		APAC		EMEA		Total
Market Sector (1):
Industrial	$	237,975	$	430,613	$	38,310	$	706,898
Healthcare/Life Sciences	241,339		267,758		74,170		583,267
Aerospace/Defense	201,686		86,182		41,740		329,608
External revenue	681,000		784,553		154,220		1,619,773
Inter-segment sales	6,930		54,434		4,260		65,624
Segment revenue	$	687,930	$	838,987	$	158,480	$	1,685,397
(1) During the three months ended January 2, 2021, the Company consolidated the previously reported Industrial/Commercial and Communications market sectors to form the Industrial market sector. Prior period amounts have been reclassified to conform to the current period presentation.

For the three and ~~nine~~six months ended ~~July~~April 3, 2021, approximately 92% and 91%, respectively, of the Company's revenue was recognized as control for products and services were transferred over time to customers. For the three and six months ended April 4, 2020, approximately 90% of the Company's revenue was recognized as ~~products and services were transferred over time. For the three and nine months ended June 29, 2019, approximately 92% and 90% of the Company's revenue was recognized as~~control for products and services were transferred over time ~~respectively.~~to customers.

Contract Balances

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

Contract Assets: For performance obligations satisfied at a point in time, billing occurs subsequent to revenue recognition, at which point the customer has been billed and the resulting asset is recorded within accounts receivable. For performance obligations satisfied over time as work progresses, the Company has an unconditional right to payment, which results in the

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recognition of contract assets. The following table summarizes the activity in the Company's contract assets ~~for~~during the ~~nine~~six months ended ~~July~~April 3, 2021 and April 4, 2020 ~~and June 29, 2019~~ (in thousands):


		Nine Months Ended							Six Months Ended
		July 4, 2020		June 29, 2019			April 3, 2021		April 4, 2020
Contract assets, beginning of period	Contract assets, beginning of period	$	90,841	$	—	Contract assets, beginning of period	$	113,946	$	90,841
Cumulative effect adjustment at September 29, 2018		—		76,417
Revenue recognized during the period	Revenue recognized during the period	2,233,243		2,126,379		Revenue recognized during the period	1,559,878		1,460,580
Amounts collected or invoiced during the period	Amounts collected or invoiced during the period	(2,207,642)		(2,097,595)		Amounts collected or invoiced during the period	(1,557,384)		(1,440,144)
Contract assets, end of period	Contract assets, end of period	$	116,442	$	105,201	Contract assets, end of period	$	116,440	$	111,277

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Deferred Revenue: Deferred revenue is recorded when consideration is received from a customer prior to transferring goods or services to the customer under the terms of the contract, which is included in other accrued ~~liabilities.~~liabilities on the Condensed Consolidated Balance Sheets. As of ~~July 4,~~April 3, 2021 and October 3, 2020 ~~and September 28, 2019~~ the balance of ~~prepayments~~advance payments from customers that remained in other accrued liabilities was ~~$61.7~~$60.5 million and ~~$67.9~~$55.6 million, respectively. The advance payment is not considered a significant financing component because it is used to meet working capital demands that can be higher in the early stages of a contract, offset obsolete and excess inventory risks and to protect the ~~company~~Company from the other party failing to adequately complete some or all of its obligations under the contract. Deferred revenue is recognized into revenue when all revenue recognition criteria are met. For performance obligations satisfied over time, recognition will occur as work progresses; otherwise deferred revenue will be recognized based upon shipping terms.

15. Restructuring and Impairment Charges

Restructuring and impairment ~~costs~~charges incurred in the Company's EMEA and AMER ~~segment~~segments, in the periods presented, primarily relate to the reductions-in-force and the previously announced closure of our Boulder Design Center. These charges are recorded within restructuring and impairment charges on the Condensed Consolidated Statements of Comprehensive ~~Income.~~Income (Loss). Restructuring liabilities are recorded within other accrued liabilities on the Condensed Consolidated Balance Sheets.

~~There were 0~~For the three and six months ended April 3, 2021, the Company incurred restructuring and impairment ~~costs incurred during~~charges of $2.0 million, which consisted of severance from the reduction of the Company's workforce primarily in the EMEA region.

For the three and six months ended ~~July 4, 2020. For the nine months ended July~~April 4, 2020, the Company incurred restructuring and impairment ~~costs~~charges of $6.0 million, which consisted of the following:

•$3.1 million of fixed asset and operating right-of-use asset impairment at the Company's Boulder Design Center; and

•$2.9 million of severance from the reduction of the Company's workforce primarily at the Boulder Design Center.

The Company recognized a tax benefit of $0.2 million related to restructuring charges in the three and six months ended April 3, 2021 and $0.6 million related to restructuring charges in the ~~nine~~three and six months ended ~~July~~April 4, 2020.

The Company's restructuring accrual activity for the three ~~and nine~~ months ended ~~July~~April 3, 2021 and April 4, 2020 is included in the table below (in thousands):

Fixed Asset and Operating Right-of-Use Asset Impairment Employee Termination and Severance Costs Total
Accrual balance, January 4, 2020 $ — $ 447 $ 447
Restructuring and impairment costs 3,054 2,949 6,003
Amounts utilized (3,054) (2,049) (5,103)
Accrual balance, April 4, 2020 $ — $ 1,347 $ 1,347
Restructuring and impairment costs — — —
Amounts utilized — (1,089) (1,089)
Accrual balance, July 4, 2020 $ — $ 258 $ 258


	Fixed Asset and Operating Right-of-Use Asset Impairment		Employee Termination and Severance Costs		Total
Accrual balance, January 2, 2021	$	0	$	22	$	22
Restructuring and Impairment Charges	0		2,029		2,029
Amounts utilized	0		(440)		(440)
Accrual balance, April 3, 2021	$	0	$	1,611	$	1,611


	Fixed Asset and Operating Right-of-Use Asset Impairment		Employee Termination and Severance Costs		Total
Accrual balance, January 4, 2020	$	0	$	447	$	447
Restructuring and Impairment Charges	3,054		2,949		6,003
Amounts utilized	(3,054)		(2,049)		(5,103)
Accrual balance, April 4, 2020	$	0	$	1,347	$	1,347

There was 0 material restructuring activity for the three months ended January 2, 2021 or January 4, 2020.

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~~All impairment costs were expensed in~~The restructuring accrual balance for the three months ended April ~~4, 2020. The restructuring accrual balance~~3, 2021 is expected to be utilized by the end of the fourth quarter of fiscal ~~2020.~~

~~16. Acquisition~~

On July 27, 2018, the Company purchased the assets of one of the business lines of Cascade Controls, Inc., a new product introduction company in Portland, Oregon, for $12.4 million in cash, subject to certain customary post-closing adjustments. In the three months ended December 29, 2018, the Company received a $1.2 million purchase price adjustment as a result of a post-closing adjustment.

2021.

2319

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

"SAFE HARBOR" CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:

The statements contained in this Form 10-Q that are guidance or which are not historical facts (such as statements in the future tense and statements including believe, expect, intend, plan, anticipate, goal, target and similar terms and concepts), including all discussions of periods which are not yet completed, are forward-looking statements that involve risks and uncertainties. These risks and uncertainties include the evolving effect, which may intensify, of COVID-19 on our employees, customers, suppliers, and logistics providers, including the impact of governmental actions being taken to curtail the spread of the virus. Other risks and uncertainties include, but are not limited to: the risk of customer delays, changes, cancellations or forecast inaccuracies in both ongoing and new programs; the lack of visibility of future orders, particularly in view of changing economic conditions; the economic performance of the industries, sectors and customers we serve; the effects of shortages and delays in obtaining components as a result of economic cycles, natural disasters or otherwise; the effects of tariffs, trade disputes, trade agreements and other trade protection measures; the effects of the volume of revenue from certain sectors or programs on our margins in particular periods; our ability to secure new customers, maintain our current customer base and deliver product on a timely basis; the risks of concentration of work for certain customers; the particular risks relative to new or recent customers, programs or services, which risks include customer and other delays, start-up costs, potential inability to execute, the establishment of appropriate terms of agreements, and the lack of a track record of order volume and timing; the effects of start-up costs of new programs and facilities or the costs associated with the closure or consolidation of facilities; possible unexpected costs and operating disruption in transitioning programs, including transitions between Company facilities; the risk that new program wins and/or customer demand may not result in the expected revenue or profitability; the fact that customer orders may not lead to long-term relationships; our ability to manage successfully and execute a complex business model characterized by high product mix and demanding quality, regulatory, and other requirements; the risks associated with excess and obsolete inventory, including the risk that inventory purchased on behalf of our customers may not be consumed or otherwise paid for by the customer, resulting in an inventory write-off; risks related to information technology systems and data security; the ability to realize anticipated savings from restructuring or similar actions, as well as the adequacy of related charges as compared to actual expenses; increasing regulatory and compliance requirements; the effects of U.S. Tax Reform, any tax law changes as a result of change in U.S. presidential administration, and of related foreign jurisdiction tax developments; current or potential future barriers to the repatriation of funds that are currently held outside of the United States as a result of actions taken by other countries or otherwise; the potential effects of jurisdictional results on our taxes, tax rates, and our ability to use deferred tax assets and net operating losses; the weakness of areas of the global economy; the effect of changes in the pricing and margins of products; raw materials and component cost fluctuations; the potential effect of fluctuations in the value of the currencies in which we transact business; the effects of changes in economic conditions, political conditions and tax matters in the United States and in the other countries in which we do business (including as a result of the United Kingdom’s ~~pending~~ exit from the European Union); the potential effect of other world or local events or other events outside our control (such as changes in energy prices, terrorism, global health epidemics and weather events); the impact of increased competition; an inability to successfully manage human capital; changes in financial accounting standards; and other risks detailed herein and in our other Securities and Exchange Commission filings, ~~(particularly~~particularly in ~~"Risk Factors"~~Risk Factors in our fiscal ~~2019~~2020 Form 10-K and ~~our Quarterly Reports on~~any subsequently filed Form ~~10-Q for the three months ended January 4, 2020, April 4, 2020 and July 4, 2020).~~10-Q.

* * *

OVERVIEW

Plexus Corp. and its subsidiaries (together "Plexus," the "Company," or "we") participate in the Electronic Manufacturing Services ("EMS") industry. We partner with our customers to create the products that build a better world. Since 1979, Plexus has been ~~partnering with~~a dedicated partner to companies ~~to transform concepts into branded products and deliver them to the market. From idea to aftermarket and everything in between, Plexus is a~~by providing global ~~leader in providing support for all the facets of the product realization process -~~ Design and Development, Supply Chain Solutions, New Product Introduction, Manufacturing and Aftermarket Services. We offer advanced design and production capabilities, allowing our customers to concentrate on their core competencies. Plexus helps accelerate our customers' time to market, reduce their investment in engineering and manufacturing capacity, and optimize total product cost. Plexus is a global leader that specializes in serving customers in industries with highly complex products and demanding regulatory environments. Plexus delivers comprehensive end-to-end solutions in the Americas ("AMER"), ~~Asia-Pacific ("APAC") and~~ Europe, Middle East, and Africa ("EMEA") and Asia-Pacific ("APAC") regions for our customers. Our strategy remains consistent and can be summarized in four words: focus, execution, passion and discipline. We engineer innovative solutions for customers in growth markets and focus on partnering with leading global companies in the Industrial, Healthcare/Life Sciences, and Aerospace/Defense sectors. Superior execution is

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foundational to our differentiation. We are dedicated partners to our customers, committed to achieving zero defects and perfect delivery through Operational Excellence. We accomplish Operational Excellence by being united as a team and guided by our values and leadership behaviors. We do the right thing to support our team members, communities and customers. Through our collective passion, we drive purpose to our actions and decisions. Finally, we are committed to delivering shareholder value through a consistent and disciplined financial model.

The following information should be read in conjunction with our Condensed Consolidated Financial Statements included herein, the "Risk Factors" section in Part II, Item 1A included herein as well as Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended ~~September 28, 2019,~~October 3, 2020, and our "Safe Harbor" Cautionary Statement included above.

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COVID-19 Update

We continue to monitor the global outbreak and spread of COVID-19 and take steps to mitigate the potential risks to us posed by its spread and related circumstances and impacts.

~~Workplace Safety~~

The health and safety of our employees is a top priority for us.We have progressively implemented measures to safeguard our employees from the COVID-19 infection and exposure ~~in alignment with guidelines established by the Centers for Disease Control, the World Health Organization, governmental requirements,~~ and ~~our own safety standards.~~They consist of policies, procedures, protocols, and guidance related to, among other things, COVID-19 symptom awareness, effective hygiene practices, travel restrictions, visitor restrictions, social distancing, face covering expectations, temperature and health screening, work-from-home requirements, employee infection assessments, close contact tracing, enhanced workplace cleaning, and large-scale decontamination.~~In addition, in all geographies in which we operate, regulatory authorities at some point have imposed restrictions regarding the conduct of business and people movement to safeguard its citizens.~~

We have made significant efforts to mitigate the effects of ~~these measures and impacts~~regulatory authority restrictions on our operations through a combination of adjustments in our shift patterns, flexible work arrangements, productivity improvements, facility enhancements to support social distancing and optimizing employee capability to work from home.These efforts will continue as requirements change, new risks are identified, and infections impact us. We have recently experienced an increase in labor shortages due to COVID-19 quarantines, particularly in Malaysia, as the virus continues to spread. While we have been successful in largely mitigating the effects of the pandemic on our productivity, ~~and are currently operating at pre-COVID-19 production capacity globally,~~ the continued spread and resurgence of the COVID-19 virus may make our ability to mitigate the impacts more challenging.

~~Supply Chain~~

We remain in close contact with our suppliers and our customers to understand the impacts of COVID-19 on their businesses and operations. Our suppliers may face challenges in maintaining an adequate workforce or securing materials from their own suppliers as a result of COVID-19. ~~As such, we~~We have experienced, and may continue to experience, an inability to procure certain components and materials on a timely basis as a result of the COVID-19 outbreak. We continue to take steps to validate our suppliers’ ability to deliver to us on ~~time, which may also be affected by the impact of COVID-19 on their own financial condition.~~

~~Customers~~

~~Likewise, we remain in close contact with our~~time. Our customers ~~to understand the impact of COVID-19 on their businesses and the resulting potential impact on our business. COVID-19 has introduced~~have experienced volatility and uncertainty, ~~to all of our customers,~~ which has resulted in the need for us to react and respond. While COVID-19 has negatively impacted some of our customers and, therefore, our business with them, we have experienced opportunities with new and existing customers, particularly in our Healthcare/Life Sciences Sector, to manufacture products in high demand to combat the effects of COVID-19.

~~Liquidity~~

We believe we are positioned with a strong balance sheet as we face the future challenges presented by COVID-19. As of the ~~third~~second quarter of fiscal ~~2020,~~2021, cash and cash equivalents and restricted cash ~~was $300~~were $295 million, while debt, finance lease obligations and other financing ~~was $335~~were $239 million. ~~This included a $138~~Borrowings under our Credit Facility as of April 3, 2021 were $38 million, ~~unsecured delayed draw term loans facility secured on April 29, 2020 in response to the uncertainties created by the COVID-19 outbreak that we subsequently drew the full amount. The full amount~~leaving $312 million of our revolving commitment of $350 million ~~remained~~ available for use as of ~~July 4, 2020. Refer to Note~~April 3, "Debt, Finance Lease Obligations and Other Financing," in Notes to Condensed Consolidated Financial Statements and “Management’s Discussion and Analysis Liquidity and Capital Resources” in Part I, Item 2 for further information.2021.

See "Risk Factors" contained in our Annual Report on Form 10-K for the fiscal year ended October 3, 2020, "Our financial condition and results of operations may be materially adversely affected by the ongoing coronavirus (COVID-19) outbreak."

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RESULTS OF OPERATIONS

Consolidated Performance Summary. The following table presents selected consolidated financial data (dollars in millions, except per share data):


		Three Months Ended									Nine Months Ended										Three Months Ended						Six Months Ended
		July 4, 2020			June 29, 2019			July 4, 2020			June 29, 2019				April 3, 2021			April 4, 2020			April 3, 2021			April 4, 2020
Net sales	Net sales	$	857.4		$	799.6		$	2,477.2		$	2,354.2		Net sales	$	880.9		$	767.4		$	1,711.2		$	1,619.8
Cost of sales	Cost of sales	774.5			728.6			2,253.7			2,140.2			Cost of sales	789.9			705.9			1,541.0			1,479.1
Gross profit	Gross profit	82.9			71.0			223.5			214.0			Gross profit	91.0			61.4			170.3			140.6
Gross margin	Gross margin	9.7		%	8.9		%	9.0		%	9.1		%	Gross margin	10.3		%	8.0		%	10.0		%	8.7		%
Operating income	Operating income	45.9			34.4			103.0			104.5			Operating income	50.7			17.2			97.6			57.1
Operating margin	Operating margin	5.3		%	4.3		%	4.2		%	4.4		%	Operating margin	5.8		%	2.2		%	5.7		%	3.5		%
Net income	Net income	35.8			24.8			79.8			71.8			Net income	41.8			12.9			78.0			43.9
Diluted earnings per share	Diluted earnings per share	$	1.20		$	0.81		$	2.66		$	2.28		Diluted earnings per share	$	1.42		$	0.43		$	2.65		$	1.46
Return on invested capital*	Return on invested capital*							12.9		%	12.9		%	Return on invested capital*							17.3		%	11.4		%
Economic return*	Economic return*							4.1		%	3.9		%	Economic return*							9.2		%	2.6		%
*Non-GAAP metric; refer to "Return on Invested Capital ("ROIC") and Economic Return" below for more information and Exhibit 99.1 for a reconciliation.
*Non-GAAP metric; refer to "Return on Invested Capital ("ROIC") and economic return" below for more information and Exhibit 99.1 for a reconciliation.														*Non-GAAP metric; refer to "Return on Invested Capital ("ROIC") and economic return" below for more information and Exhibit 99.1 for a reconciliation.

Net sales. For the three months ended ~~July 4, 2020,~~April 3, 2021, net sales increased ~~$57.8~~$113.5 million, or ~~7.2%~~14.8%, as compared to the three months ended ~~June 29, 2019.~~April 4, 2020. For the ~~nine~~six months ended ~~July 4, 2020,~~April 3, 2021, net sales increased ~~$123.0~~$91.4 million, or ~~5.2%~~5.6%, as compared to the ~~nine~~six months ended ~~June 29, 2019.~~April 4, 2020.

Net sales are analyzed by management by geographic segment, which reflects ~~the Company's~~our reportable segments, and by market sector. Management measures operational performance and allocates resources on a geographic segment basis. ~~The Company’s~~Our global business development strategy is based on our targeted market sectors. Beginning in fiscal year 2021, we consolidated the previously reported Industrial/Commercial and Communications market sectors to form the Industrial market sector. Prior period amounts have been reclassified to conform to the current period presentation.

A discussion of net sales by reportable segment is presented below (in millions):


		Three Months Ended						Nine Months Ended							Three Months Ended				Six Months Ended
		July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019			April 3, 2021		April 4, 2020		April 3, 2021		April 4, 2020
Net sales:	Net sales:									Net sales:
AMER	AMER	$	306.0	$	366.5	$	993.9	$	1,084.8	AMER	$	364.7	$	334.4	$	692.3	$	687.9
APAC	APAC	482.3		384.8		1,321.3		1,141.4		APAC	458.9		387.9		910.2		839.0
EMEA	EMEA	91.8		81.3		250.3		229.4		EMEA	83.3		74.0		162.0		158.5
Elimination of inter-segment sales	Elimination of inter-segment sales	(22.7)		(33.0)		(88.3)		(101.4)		Elimination of inter-segment sales	(26.0)		(28.9)		(53.3)		(65.6)
Total net sales	Total net sales	$	857.4	$	799.6	$	2,477.2	$	2,354.2	Total net sales	$	880.9	$	767.4	$	1,711.2	$	1,619.8

AMER. Net sales for the three months ended ~~July 4, 2020~~April 3, 2021 in the AMER segment ~~decreased $60.5~~increased $30.3 million, or ~~16.5%~~9.1%, as compared to the three months ended ~~June 29, 2019.~~April 4, 2020. The ~~decrease~~increase in net sales was driven by ~~overall~~a $28.0 million increase in production ramps for new customers, partially inclusive of increased demand as a result of COVID-19, and a $15.7 million increase in production ramps of new products for existing customers. These increases were partially offset by net decreased customer end-market demand, primarily with commercial aerospace customers in the Aerospace/Defense sector.

During the six months ended April 3, 2021, net sales in the AMER segment increased $4.4 million, or 0.6%, as compared to the six months ended April 4, 2020. The increase in net sales was driven by a $48.1 million increase in production ramps for new customers, partially inclusive of increased demand as a result of COVID-19, and a $28.8 million increase in production ramps of new products for existing customers. These increases were mostly offset by net decreased customer end-market demand, ~~driven by COVID-19,~~primarily with commercial aerospace customers in the Aerospace/Defense sector, and a reduction in net sales of ~~$6.1~~$13.8 million due to ~~manufacturing transfers to our~~disengagements with customers.

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APAC. Net sales for the three months ended April 3, 2021 in the APAC segment ~~and $5.4~~increased $71.0 million, ~~due~~or 18.3%, as compared to the three months ended April 4, 2020. The increase in net sales was driven by an increase in customer end-market demand as well as a ~~disengagement with~~$5.1 million increase in production ramps of new products for an existing customer.

During the six months ended April 3, 2021, net sales in the APAC segment increased $71.2 million, or 8.5%, as compared to the six months ended April 4, 2020. The increase in net sales was driven by an increase in customer end-market demand as well as a ~~customer.~~$12.9 million increase in production ramps of new products for existing customers. The ~~decrease~~increase was partially offset by a ~~$30.2~~$6.0 million decrease in the partial loss of a program with an existing customer and a $5.0 million decrease in an end-of-life product.

EMEA. Net sales for the three months ended April 3, 2021 in the EMEA segment increased $9.3 million, or 12.6%, as compared to the three months ended April 4, 2020. The increase in net sales was driven by net increased customer end-market demand.

During the six months ended April 3, 2021, net sales in the EMEA segment increased $3.5 million, or 2.2%, as compared to the six months ended April 4, 2020. The increase in net sales was driven by net increased customer end-market demand.

Our net sales by market sector were as follows (in millions):


	Three Months Ended				Six Months Ended
	April 3, 2021		April 4, 2020		April 3, 2021		April 4, 2020
Net sales:
Industrial	$	406.9	$	338.9	$	785.0	$	706.9
Healthcare/Life Sciences	349.8		271.0		669.0		583.3
Aerospace/Defense	124.2		157.5		257.2		329.6
Total net sales	$	880.9	$	767.4	$	1,711.2	$	1,619.8

Industrial. Net sales for the three months ended April 3, 2021 in the Industrial sector increased $68.0 million, or 20.1%, as compared to the three months ended April 4, 2020. The increase was driven by net increased customer end-market demand and an $8.3 million increase in production ramps of new products for existing customers.

During the ~~nine~~six months ended ~~July 4, 2020,~~April 3, 2021, net sales in the ~~AMER segment decreased $90.9~~Industrial sector increased $78.1 million, or ~~8.4%~~11.0%, as compared to the ~~nine~~six months ended ~~June 29, 2019.~~April 4, 2020. The ~~decrease in net sales~~increase was driven by ~~overall~~ net ~~decreased~~increased customer end-market demand and a $9.9 million increase in production ramps of new products for existing customers. These increases were partially offset by a decrease of $11.4 million due to disengagements with customers.

Healthcare/Life Sciences. Net sales for the three months ended April 3, 2021 in the Healthcare/Life Sciences sector increased $78.8 million, or 29.1%, as compared to the three months ended April 4, 2020. The increase was driven by net increased customer end-market demand, inclusive of ~~decreased~~increased demand ~~driven by~~as a result of COVID-19, ~~a reduction in net sales of $42.3 million due to manufacturing transfers to our APAC segment and $14.8 million due to a disengagement with a customer. The decrease was partially offset by a $115.3~~an $18.0 million increase in production ramps of new products for existing customers and a ~~$21.5 million increase in production ramps for new customers.~~

~~APAC.~~ Net sales for the three months ended July 4, 2020 in the APAC segment increased $97.5 million, or 25.3%, as compared to the three months ended June 29, 2019. The increase in net sales was driven by a $21.3 million increase in production ramps of new products for existing customers, a $6.4$15.9 million increase in production ramps for a new customer, inclusive of increased demand as a ~~$6.1 million increase~~result of COVID-19.

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~~due~~During the six months ended April 3, 2021, net sales in the Healthcare/Life Sciences sector increased $85.7 million, or 14.7%, as compared to ~~manufacturing transfers from our AMER segment and overall~~the six months ended April 4, 2020. The increase was driven by net increased customer end-market demand, inclusive of increased demand ~~driven by COVID-19. The increase was partially offset by a $6.8 million decrease for end-of-life products.~~

During the nine months ended July 4, 2020, net sales in the APAC segment increased $179.9 million, or 15.8%, as compared to the nine months ended June 29, 2019. The increase in net sales was driven by a $69.6 million increase in production ramps of new products for existing customers, a $42.3 million increase due to manufacturing transfers from our AMER segment, a $13.6 million increase in production ramps for a new customer and overall net increased customer end-market demand inclusive of increased demand driven by COVID-19. The increase was partially offset by a $27.9 million decrease for end-of-life products.

~~EMEA.~~ Net sales for the three months ended July 4, 2020 in the EMEA segment increased $10.5 million, or 12.9%, as compared to the three months ended June 29, 2019. The increase in net sales was driven by an increase in production ramps for a new program as a result of COVID-19, ~~partially offset by overall net decreased end-market demand.~~

During the nine months ended July 4, 2020, net sales in the EMEA segment increased $20.9 million, or 9.1%, as compared to the nine months ended June 29, 2019. The increase in net sales was the result of a $14.3 million increase in production ramps of new products for existing customers inclusive of increased demand driven by COVID-19 and an increase in production ramps for a new program as a result of COVID-19, partially offset by overall net decreased customer end-market demand.

~~Our net sales by market sector is presented below (in millions):~~

Three Months Ended Nine Months Ended
July 4,
2020 June 29,
2019 July 4,
2020 June 29,
2019
Market Sector:
Healthcare/Life Sciences $ 330.1 $ 308.8 $ 913.4 $ 909.0
Industrial/Commercial 317.0 247.9 913.8 717.3
Aerospace/Defense 141.1 151.4 470.7 414.4
Communications 69.2 91.5 179.3 313.5
Total net sales $ 857.4 $ 799.6 $ 2,477.2 $ 2,354.2

~~Healthcare/Life Sciences~~. Net sales for the three months ended July 4, 2020 in the Healthcare/Life Sciences sector increased $21.3 million, or 6.9%, as compared to the three months ended June 29, 2019. The increase in net sales was driven by a $13.3 million increase in production ramps for a new customer and a $12.4 million increase in production ramps of new products for existing customers, both inclusive of customer ramps for critical care products as a result of COVID-19. The increase was partially offset by overall net decreased customer end-market demand inclusive of decreased demand for products associated with elective procedures as a result of COVID-19.

During the nine months ended July 4, 2020, net sales in the Healthcare/Life Sciences sector increased $4.4 million, or 0.5%, as compared to the nine months ended June 29, 2019. The increase in net sales was driven by a $43.0$32.5 million increase in production ramps of new products for existing customers and a ~~$13.5~~$26.2 million increase in production ramps for a new customer, ~~both~~ inclusive of ~~customer ramps for critical care products~~increased demand as a result of COVID-19. ~~The increase was~~These increases are partially offset by ~~overall net decreased customer end-market demand inclusive of decreased demand for products associated with elective procedures as a result of COVID-19.~~

~~Industrial/Commercial~~. Net sales for the three months ended July 4, 2020 in the Industrial/Commercial sector increased $69.1 million, or 27.9%, as compared to the three months ended June 29, 2019. The increase was driven by a $27.6 million increase in production ramps of new products for existing customers and overall net increased customer end-market demand. The increase was partially offset by a decrease of $5.4$6.0 million due to the partial loss of a ~~disengagement~~program with ~~a customer.~~

During the nine months ended July 4, 2020, net sales in the Industrial/Commercial sector increased $196.5 million, or 27.4%, as compared to the nine months ended June 29, 2019. The increase was driven by a $85.1 million increase in production ramps of new products foran existing customers, a $6.2 million increase in production ramps for a new customer and overall net increased customer end-market demand. The increase was partially offset by a decrease of $14.8 million due to a disengagement with a customer.

Aerospace/Defense. Net sales for the three months ended ~~July 4, 2020~~April 3, 2021 in the Aerospace/Defense sector decreased ~~$10.3~~$33.3 million, or ~~6.8%~~21.1%, as compared to the three months ended ~~June 29, 2019.~~April 4, 2020. The decrease was driven by ~~overall~~ net decreased customer end-market demand ~~inclusive of decreased demand driven by~~primarily with commercial aerospace customers due to COVID-19.

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During the nine months ended July 4, 2020, net sales in the Aerospace/Defense sector increased $56.3 million, or 13.6%, as compared to the nine months ended June 29, 2019. The increase was driven by a $40.0 million increase in production ramps of new products for existing customers and a $15.3 million increase in production ramps for new customers. The increase was partially offset by overall net decreased customer end-market demand inclusive of decreased demand driven by COVID-19.

~~Communications~~. Net sales for the three months ended July 4, 2020 in the Communications sector decreased $22.3 million, or 24.4%, as compared to the three months ended June 29, 2019. The decrease was driven by overall net decreased customer end-market demand. The decrease was partially offset by an $8.2 million increase ~~of $6.4 million due to~~in production ramps for a new customer.

During the ~~nine~~six months ended ~~July 4, 2020,~~April 3, 2021, net sales in the ~~Communications~~Aerospace/Defense sector decreased ~~$134.2~~$72.4 million, or ~~42.8%~~22.0%, as compared to the ~~nine~~six months ended ~~June 29, 2019.~~April 4, 2020. The decrease was driven by ~~overall~~ net decreased customer end-market ~~demand.~~demand primarily with commercial aerospace customers due to COVID-19. The decrease was partially offset by an $18.0 million increase ~~of $13.6 million due to~~in production ramps for a new customer.

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Cost of sales. Cost of sales for the three months ended ~~July 4, 2020~~April 3, 2021 increased ~~$45.9~~$84.0 million, or ~~6.3%~~11.9%, as compared to the three months ended ~~June 29, 2019,~~April 4, 2020, while cost of sales for the ~~nine~~six months ended ~~July 4, 2020~~April 3, 2021 increased ~~$113.5~~$61.9 million, or ~~5.3%~~4.2%, as compared to the ~~nine~~six months ended ~~June 29, 2019.~~April 4, 2020. Cost of sales is comprised primarily of material and component costs, labor costs and overhead. For the three and six months ended ~~July~~April 3, 2021 and April 4, 2020, ~~approximately 90% of the total cost of sales was variable in nature and fluctuated with sales volumes; for the nine months ended July 4, 2020 and the three and nine months ended June 29, 2019,~~ approximately 89% of the total cost of sales was variable in nature and fluctuated with sales volumes. Of these amounts, approximately ~~91%~~88% of these costs for the three and six months ended April 3, 2021, 86% for the three months ended ~~July~~April 4, 2020 ~~90%~~and 87% for the ~~nine~~six months ended ~~July~~April 4, 2020, ~~88% for the three months ended June 29, 2019 and 89% for the nine months ended June 29, 2019 of these costs in each period~~ were related to material and component costs.

The increase in cost of sales for the three and six months ended ~~July 4, 2020~~April 3, 2021 compared to the three and six months ended ~~June 29, 2019~~April 4, 2020 was primarily ~~due to~~driven by the increase in net sales and ~~$3.6 million related to~~an increase in fixed costs. These increases were partially offset by an improvement in labor productivity, a decrease in employee compensation and supplies costs associated with ~~COVID-19. The increase was partially offset by~~COVID-19, and a ~~positive shift~~decrease in ~~customer mix~~travel and ~~decreased fixed~~healthcare costs. The increase in cost of sales for the nine months ended July 4, 2020 compared to the nine months ended June 29, 2019 was primarily due to the increase in net sales, fixed costs to support new program ramps and $8.2 million related to employee compensation and supplies costs associated with COVID-19. The increase was partially offset by a positive shift in customer mix.

Gross profit. Gross profit for the three months ended ~~July 4, 2020~~April 3, 2021 increased ~~$11.9~~$29.6 million, or ~~16.8%~~48.2%, as compared to the three months ended ~~June 29, 2019.~~April 4, 2020. Gross profit for the ~~nine~~six months ended ~~July 4, 2020~~April 3, 2021 increased ~~$9.5~~$29.7 million, or ~~4.4%~~21.1%, as compared to the ~~nine~~six months ended ~~June 29, 2019.~~April 4, 2020. Gross margin of 10.3% for the three months ended ~~July 4, 2020~~April 3, 2021 increased 80230 basis points while gross margin of 10.0% for the ~~nine~~six months ended ~~July 4, 2020 deceased 10~~April 3, 2021 increased 130 basis points as compared to the three and ~~nine~~six months ended ~~June 29, 2019,~~April 4, 2020, respectively. The primary ~~driver of~~reasons for the increase in ~~gross profit and~~ gross margin for the three and six months ended ~~July 4, 2020 was~~April 3, 2021 were the ~~increase~~improvements in net sales, positive shift in customer mix and fixed cost leverage. The increase was partially offset by increased employee compensation and supplies costs related to COVID-19. The primary driver of the increase in gross profit for the nine months ended July 4, 2020 was the increase in net sales, partially offset by fixed costs due to the ramp of new programs and increased employee compensation and supplies costs related to COVID-19, which drove thelabor productivity, as well as a decrease in ~~gross margin in that period.~~travel and healthcare costs.

Operating income. Operating income for the three months ended ~~July 4, 2020~~April 3, 2021 increased ~~$11.5~~$33.5 million, or ~~33.4%~~194.8%, as compared to the three months ended ~~June 29, 2019~~April 4, 2020 as a result of the increase in gross ~~profit.~~profit and a decrease in selling and administrative expenses ("S&A"). The decrease in S&A was primarily due to the decrease in restructuring and impairment charges, a decrease in bad debt expense, and a decrease in travel and healthcare costs. This was partially offset by an increase in incentive compensation expenses. Operating margin of ~~5.3%~~5.8% increased ~~100~~360 basis points compared to the three months ended ~~June 29, 2019~~April 4, 2020 primarily due to the increase in gross margin as a result of ~~the~~ factors previously ~~discussed.~~discussed and reduction of S&A.

Operating income for the ~~nine~~six months ended ~~July 4, 2020 decreased $1.5~~April 3, 2021 increased $40.5 million, or ~~1.4%~~70.9%, as compared to the ~~nine~~six months ended ~~June 29, 2019~~April 4, 2020 as a result of the ~~$11.0 million~~ increase in ~~selling~~gross profit and ~~administrative expenses ("~~a decrease in S~~&A") that~~&A. The decrease in S&A was primarily due to a ~~$6.0 million increase~~decrease in bad debt expense, a decrease in restructuring and impairment charges, ~~due to the previously announced closure of our Boulder Design Center, $2.5 million~~and a decrease in travel and healthcare costs. This was partially offset by an increase in ~~bad debt expense and increased~~incentive compensation expenses. Operating margin of ~~4.2% decreased 20~~5.7% increased 220 basis points compared to the ~~nine~~six months ended ~~June 29, 2019~~April 4, 2020 primarily due to the ~~decrease~~increase in gross margin as a result of ~~the~~ factors previously ~~discussed.~~

~~Table~~discussed and reduction of ~~Contents~~

S&A.

A discussion of operating income by reportable segment is presented below (in millions):


		Three Months Ended						Nine Months Ended							Three Months Ended				Six Months Ended
		July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019			April 3, 2021		April 4, 2020		April 3, 2021		April 4, 2020
Operating income (loss):	Operating income (loss):									Operating income (loss):
AMER	AMER	$	8.5	$	14.2	$	21.1	$	42.9	AMER	$	26.2	$	0.3	$	42.7	$	12.6
APAC	APAC	66.2		51.3		178.5		151.8		APAC	58.2		49.9		119.7		112.3
EMEA	EMEA	1.2		1.5		0.3		2.4		EMEA	(1.6)		(0.6)		(2.6)		(0.9)
Corporate and other costs	Corporate and other costs	(30.0)		(32.6)		(96.9)		(92.6)		Corporate and other costs	(32.1)		(32.4)		(62.2)		(66.9)
Total operating income	Total operating income	$	45.9	$	34.4	$	103.0	$	104.5	Total operating income	$	50.7	$	17.2	$	97.6	$	57.1

AMER. Operating income increased $25.9 million for the three months ended ~~July 4, 2020 decreased $5.7 million~~April 3, 2021 as compared to the three months ended ~~June 29, 2019,~~April 4, 2020, primarily as a result of ~~the decrease in~~increased net sales, ~~partially offset by~~ a positive shift in customer mix and ~~decreased fixed costs.~~improvements in labor productivity. In addition, there was a decrease in costs associated with COVID-19, including employee compensation and supplies costs, as well as a decrease in S&A primarily due to a decrease in bad debt expense.

During the ~~nine~~six months ended ~~July 4, 2020,~~April 3, 2021, operating income in the AMER segment ~~decreased $21.8~~increased $30.1 million as compared to the ~~nine~~six months ended ~~June 29, 2019,~~April 4, 2020, primarily as a result of ~~the decrease~~a positive shift in customer mix, improvements in labor productivity, increased net sales, ~~and increased~~reduced fixed costs ~~to support new program ramps, as well as employee compensation~~ and ~~supplies costs associated with COVID-19. In addition, there was an increase~~a decrease in S&A primarily due to ~~an increase~~a decrease in bad debt ~~expense, which was partially offset by a positive shift in customer mix.~~expense.

APAC. Operating income increased $8.3 million for the three months ended ~~July 4, 2020 increased $14.9 million~~April 3, 2021 as compared to the three months ended ~~June 29, 2019,~~April 4, 2020, primarily as a result of ~~the increase~~increased net sales, improvements in ~~net sales.~~labor productivity and a decrease in costs

~~During the nine months ended July 4, 2020, operating income in the APAC segment increased $26.7 million as compared to the nine months ended June 29, 2019, primarily as a result~~

Table of ~~the increase in net sales,~~Contents

associated with COVID-19, including employee compensation and supplies costs. This was partially offset by a negative shift in customer mix and an increase in fixed costs to support new program ramps.

During the six months ended April 3, 2021, operating income in the APAC segment increased $7.4 million as compared to the six months ended April 4, 2020, primarily as a result of increased net sales, improvements in labor productivity, a decrease in costs associated with COVID-19, including employee compensation and supplies costs. This was partially offset by a negative shift in customer mix and an increase in fixed costs ~~associated with COVID-19.~~to support new program ramps.

EMEA. Operating income decreased $1.0 million for the three months ended ~~July 4, 2020 decreased $0.3 million~~April 3, 2021 as compared to the three months ended ~~June 29, 2019,~~April 4, 2020, primarily as a result of ~~the increased~~an increase in fixed costs to support new program ~~ramps and increased S&A primarily due to compensation expense.~~ramps.

During the ~~nine~~six months ended ~~July 4, 2020,~~April 3, 2021, operating income in the EMEA segment decreased ~~$2.1~~$1.7 million as compared to the ~~nine~~six months ended ~~June 29, 2019,~~April 4, 2020, primarily as a result of ~~the~~a decrease in labor productivity and an increase in fixed costs to support new program ramps.

Other expense. Other expense for the three months ended ~~July 4, 2020 decreased $0.5~~April 3, 2021 increased $1.1 million as compared to the three months ended ~~June 29, 2019,~~April 4, 2020. The increase in other expense for the three months ended April 3, 2021 was primarily due to the impact of foreign exchange volatility, which resulted in a foreign exchange loss of $0.2 million during the three months ended April 3, 2021 as compared to a ~~result of decreased factoring fees.~~$1.0 million foreign exchange gain during the three months ended April 4, 2020.

Other expense for the ~~nine~~six months ended ~~July 4, 2020~~April 3, 2021 increased ~~$1.0~~$0.7 million as compared to the ~~nine~~six months ended ~~June 29, 2019,~~April 4, 2020. The increase in other expense for the six months ended April 3, 2021 was primarily due to ~~an increase~~the impact of ~~$2.8~~foreign exchange volatility, which resulted in a foreign exchange loss of $1.2 million ~~in interest expense,~~during the six months ended April 3, 2021 as compared to a $0.1 million foreign exchange gain during the six months ended April 4, 2020, partially offset by a decrease of ~~$1.7~~$1.0 million in factoring fees.

Income taxes. Income tax expense and effective income tax rates ~~are presented below~~were as follows (dollars in millions):


		Three Months Ended						Nine Months Ended							Three Months Ended				Six Months Ended
		July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019			April 3, 2021		April 4, 2020		April 3, 2021		April 4, 2020
Income tax expense, as reported (GAAP)	Income tax expense, as reported (GAAP)	$	5.8	$	4.9	$	10.2	$	20.7	Income tax expense, as reported (GAAP)	$	4.7	$	1.2	$	10.1	$	4.4
Special tax items		—		—		0.8		(7.0)
Restructuring charges		—		—		0.6		—
Restructuring and impairment charges										Restructuring and impairment charges	0.2		0.6		0.2		0.6
Impact of other special tax items										Impact of other special tax items	—		—		—		0.8
Income tax expense, as adjusted (non-GAAP) (1)	Income tax expense, as adjusted (non-GAAP) (1)	$	5.8	$	4.9	$	11.6	$	13.7	Income tax expense, as adjusted (non-GAAP) (1)	$	4.9	$	1.8	$	10.3	$	5.8

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		Three Months Ended						Nine Months Ended							Three Months Ended				Six Months Ended
		July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019			April 3, 2021		April 4, 2020		April 3, 2021		April 4, 2020
Effective tax rate, as reported (GAAP)	Effective tax rate, as reported (GAAP)	13.9	%	16.5	%	11.4	%	22.4	%	Effective tax rate, as reported (GAAP)	10.1	%	8.2	%	11.5	%	9.1	%
Special tax items		—		—		0.4		(7.6)
Restructuring charges		—		—		0.3		—
Restructuring and impairment charges										Restructuring and impairment charges	—		0.7		—		0.8
Impact of other special tax items										Impact of other special tax items	—		—		—		0.9
Effective tax rate, as adjusted (non-GAAP) (1)	Effective tax rate, as adjusted (non-GAAP) (1)	13.9	%	16.5	%	12.1	%	14.8	%	Effective tax rate, as adjusted (non-GAAP) (1)	10.1	%	8.9	%	11.5	%	10.8	%

(1) We believe the non-GAAP presentation of income tax expense and the effective tax rate excluding special tax items, guidance issued by the U.S. Department of the Treasury and restructuring charges provides additional insight ~~into~~over the change ~~between~~from the comparative reporting periods by isolating the impact of these significant, special items. In addition, we believe that our income tax expense, as adjusted, and effective tax rate, as adjusted, enhance the ability of investors to analyze our operating performance and supplement, but do not replace, our income tax expense and effective tax rate calculated in accordance with U.S. GAAP.

For the nine months ended July 4, 2020, we recorded a tax benefit of $1.9 million related to guidance issued by the U.S. Department of the Treasury regarding foreign tax credits and a tax benefit of $0.6 million related to restructuring charges, partially offset by $1.1 million of other special tax items. For the nine months ended June 29, 2019, we recorded a $7.0 million adjustment to income tax expense, inclusive of unrecognized tax benefits, as a result of proposed additional guidance issued by the U.S. Department of the Treasury, related to the U.S. Tax Cuts and Jobs Act ("Tax Reform").

Income tax expense for the three and ~~nine~~six months ended ~~July 4, 2020~~April 3, 2021 was ~~$5.8~~$4.7 million and ~~$10.2~~$10.1 million, respectively, compared to ~~$4.9~~$1.2 million and ~~$20.7~~$4.4 million for the three and ~~nine~~six months ended ~~June 29, 2019,~~April 4, 2020, respectively. The increase is primarily due to an increase in pre-tax book income for the three and six months ended April 3, 2021. The increase is partially offset by a tax ~~expense~~benefit of $0.9 million recognized for the three months ended July 4, 2020 was primarily due to the increase in pre-tax book income and the geographic distribution of pre-tax book income, partially offset by an $0.8 million tax benefit for a lapse of a statute of limitation for an uncertain tax position. The decrease in income tax expense for the nine months ended July 4, 2020 was primarily due to the $7.0 million impact of Tax Reform recorded in the nine months ended June 29, 2019. The decrease was also due to the geographic distribution of pre-tax book income, an $0.8 million tax benefitApril 3, 2021 related to the ~~lapse~~release of a ~~statute~~full valuation allowance for a jurisdiction within the EMEA segment related to a settlement of ~~limitations for uncertain~~an income tax ~~positions, an~~audit. In addition, there was a net $0.8 million benefit for special tax items ~~and a $0.6 million tax benefit related to restructuring~~ during the ~~nine~~six months ended ~~July~~April 4, 2020. The $0.8 million benefit for special tax items for the nine months ended July 4, 2020 was comprised of a $1.9 million benefit related to guidance issued by the U.S. Department of the Treasury regarding foreign tax credits partially offset by $1.1 million of special tax items

~~The Coronavirus Aid, Relief, and Economic Security Act was signed into law on March 27, 2020. The Company does not expect a material impact from the law.~~

Our ~~U.S. statutory tax rate for fiscal 2020 is 21%. Our~~annual effective tax rate varies from ~~our blended~~the U.S. statutory rate of 21.0% primarily due to the geographic distribution of worldwide earnings as well as a tax holiday granted to a subsidiary ~~within our~~located in the APAC segment where we derive a significant

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portion of our earnings. ~~In addition, our~~Our effective tax rate ~~has been impacted by changes due to Tax Reform previously discussed. Our effective tax rate~~also may be impacted by disputes with taxing authorities, tax planning activities, adjustments to uncertain tax positions and changes in valuation allowances.

The estimated effective income tax rate for fiscal ~~2020~~2021 is expected to be ~~between 12% and 14%~~approximately 12.0% to 14.0%.

Net ~~income.~~ Income.Net income for the three months ended ~~July 4, 2020~~April 3, 2021 increased ~~$11.0~~$28.9 million, or ~~44.4%~~224.0%, ~~as compared to~~from the three months ended ~~June 29, 2019~~April 4, 2020 to ~~$35.8~~$41.8 million. Net income increased primarily as a result of the increase in operating income, partially offset by the increase in income tax expense as previously discussed.

Net income for the ~~nine~~six months ended ~~July~~April 3, 2021 increased $34.1 million, or 77.7%, from the six months ended April 4, 2020 ~~increased $8.0 million, or 11.1%, as compared~~ to ~~the nine months ended June 29, 2019 to $79.8~~$78.0 million. Net income increased primarily as a result of the increase in operating income, ~~and decrease~~partially offset by the increase in income tax expense as previously discussed.

Diluted earnings per share. Diluted earnings per share for the three months ended ~~July 4, 2020~~April 3, 2021 increased to ~~$1.20 as compared to $0.81~~$1.42 from $0.43 for the three months ended ~~June 29, 2019,~~April 4, 2020, primarily as a result of increased net income due to the factors ~~previously~~ discussed above and a reduction in diluted shares outstanding due to repurchase activity under the Company's stock repurchase plans.

Diluted earnings per share for the ~~nine~~six months ended ~~July~~April 3, 2021 increased to $2.65 from $1.46 for the six months ended April 4, 2020, ~~increased to $2.66 as compared to $2.28 for the nine months ended June 29, 2019,~~ primarily as a result of increased net income due to the factors ~~previously~~ discussed above and a reduction in diluted shares outstanding due to repurchase activity under the Company's stock repurchase plans.

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Return on Invested Capital ("ROIC") and economic return. We use a financial model that is aligned with our business strategy and includes a ROIC goal of 500 basis points over our weighted average cost of capital ("WACC"), which we refer to as "economic return."

Non-GAAP financial measures, including ROIC and economic return, are used for internal management goals and decision making because such measures provide management and investors additional insight into financial performance. In particular, we provide ROIC and economic return because we believe they offer insight into the metrics that are driving management decisions because we view ROIC and economic return as important measures in evaluating the efficiency and effectiveness of our long-term capital requirements. We also use a derivative measure of ROIC as a performance criteria in determining certain elements of compensation, and certain compensation incentives are based on economic return performance.

We define ROIC as tax-effected operating income before restructuring and other special items divided by average invested capital over a rolling ~~four-quarter~~three-quarter period for the ~~third~~second quarter. Invested capital is defined as equity plus debt and operating lease liabilities, less cash and cash equivalents. Other companies may not define or calculate ROIC in the same way. ROIC and other non-GAAP financial measures should be considered in addition to, not as a substitute for, measures of our financial performance prepared in accordance with U.S. generally accepted accounting principles ("GAAP").

We review our internal calculation of WACC ~~annually,~~annually. Our WACC was 8.1% for fiscal year 2021 and ~~our estimated WACC is~~ 8.8% for fiscal year 2020. By exercising discipline to generate ROIC in excess of our WACC, our goal is to create value for our shareholders. ~~ROIC was 12.9% for both~~For the ~~nine~~six months ended ~~July~~April 3, 2021, ROIC of 17.3% reflects an economic return of 9.2%, based on our weighted average cost of capital of 8.1%. For the six months ended April 4, 2020, ~~and June 29, 2019.~~ROIC of 11.4% reflects an economic return of 2.6%, based on our weighted average cost of capital of 8.8% for that fiscal year.

For a reconciliation of ROIC, ~~and~~ economic return and adjusted operating income (tax effected) to our financial statements that were prepared using GAAP, see Exhibit 99.1 to this ~~Quarterly Report~~quarterly report on Form 10-Q, which exhibit is incorporated herein by reference.

Refer to the table below, which includes the calculation of ROIC and economic return (dollars in millions) for the indicated periods:


		Nine Months Ended										Six Months Ended
		July 4, 2020			June 29, 2019				April 3, 2021			April 4, 2020
Adjusted operating income (tax-effected)		$	126.4		$	118.5
Adjusted operating income (tax effected)								Adjusted operating income (tax effected)	$	173.3		$	109.9
Average invested capital	Average invested capital	980.9			921.4			Average invested capital	1,002.3			964.9
ROIC	ROIC	12.9		%	12.9		%	ROIC	17.3		%	11.4		%
WACC	WACC	8.8		%	9.0		%	WACC	8.1		%	8.8		%
Economic return	Economic return	4.1		%	3.9		%	Economic return	9.2		%	2.6		%

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LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents and restricted cash were ~~$299.6~~$294.5 million as of ~~July 4, 2020,~~April 3, 2021, as compared to ~~$226.3~~$387.9 million as of ~~September 28, 2019.~~October 3, 2020.

As of ~~July 4, 2020, 86%~~April 3, 2021, 88% of our cash and cash equivalents balance was held outside of the U.S. by our foreign subsidiaries. ~~With the enactment of Tax Reform, we believe that our offshore cash can be accessed in a more tax efficient manner than before Tax Reform.~~ Currently, we believe that our cash balance, together with cash available under our Credit Facility, will be sufficient to meet our liquidity needs and potential share repurchases, if any, for the next twelve months and for the foreseeable future.

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Our future cash flows from operating activities will be reduced by ~~$59.6~~$53.6 million due to cash payments for U.S. federal taxes on the deemed repatriation of undistributed foreign earnings that are payable over an eight year period that began in fiscal 2019 with the first payment. The table below provides the expected timing of these future cash outflows, in accordance with the following installment schedule for the remaining ~~seven~~six years (in millions):


Remaining 2020		$	—
2021		5.7
Remaining 2021				Remaining 2021	$	—
2022	2022	5.7		2022	5.6
2023	2023	5.7		2023	5.6
2024	2024	10.6		2024	10.6
2025	2025	14.2		2025	14.2
2026	2026	17.7		2026	17.6
Total	Total	$	59.6	Total	$	53.6

Cash Flows. The following table provides a summary of cash flows ~~for the periods presented, excluding the effect of exchange rates on cash and cash equivalents and restricted cash~~ (in millions):


		Nine Months Ended							Six Months Ended
		July 4, 2020		June 29, 2019			April 3, 2021		April 4, 2020
Cash provided by operating activities	Cash provided by operating activities	$	92.5	$	7.0	Cash provided by operating activities	$	88.9	$	45.4
Cash used in investing activities	Cash used in investing activities	$	(40.5)	$	(73.3)	Cash used in investing activities	(23.1)		(30.0)
Cash provided by (used in) financing activities		$	21.3	$	(26.2)
Cash used in financing activities						Cash used in financing activities	(160.5)		(14.3)

Operating Activities. Cash flows provided by operating activities were ~~$92.5~~$88.9 million for the ~~nine~~six months ended ~~July 4, 2020,~~April 3, 2021, as compared to ~~cash flows provided by operating activities of $7.0~~$45.4 million for the ~~nine~~six months ended ~~June 29, 2019.~~April 4, 2020. The increase was primarily due to the increase in net income, as well as cash flow improvements (reductions) of:

•$183.6 million in accounts payable cash flows driven by increased purchasing activity to support ramp of customer programs and longer lead times for certain components heightened by the COVID-19 outbreak.

•$~~33.0 million in accounts receivable cash flows, which resulted from the timing of payments.~~

•~~$(83.1)~~61.0 million in inventory cash flows driven by ~~increased~~inventory management efforts, as well as stabilizing inventory levels for the six months ended April 3, 2021 compared to the six months ended April 4, 2020. For the six months ended April 4, 2020, we had increasing inventory levels to support the ramp of customer programs and longer lead times for certain components ~~heightened by~~due to the COVID-19 outbreak.

•$~~(56.4)~~17.9 million in contract asset cash flows driven by consistent demand from over time customers compared to growing demand in the six months ended April 4, 2020.

•$17.3 million in customer deposit cash flows driven by significant deposits received from three customers offset by a significant deposit reduction from one customer in the current year.

•$(43.6) million in accounts receivable cash flows, which resulted from the increase in net sales.

•$(25.3) million in accounts payables cash flows driven by decreased purchasing activity as prior purchasing activity provided sufficient inventory to meet current demand.

•$(18.5) million in other current and noncurrent ~~liabilities~~asset cash flows driven by ~~decreases~~an increase in ~~advance payments from customers~~prepaid expenses and ~~accrued salaries and wages due to timing~~miscellaneous receivables.

Table of ~~the quarter-end.~~Contents

The following table provides a summary of cash cycle days for the periods indicated (in days):


		Three Months Ended				Three Months Ended
		July 4, 2020	June 29, 2019		April 3, 2021	April 4, 2020
Days in accounts receivable	Days in accounts receivable	55	52	Days in accounts receivable	52	55
Days in contract assets	Days in contract assets	12	12	Days in contract assets	12	13
Days in inventory	Days in inventory	97	95	Days in inventory	89	99
Days in accounts payable	Days in accounts payable	(65)	(54)	Days in accounts payable	(61)	(62)
Days in cash deposits	Days in cash deposits	(20)	(16)	Days in cash deposits	(20)	(18)
Annualized cash cycle	Annualized cash cycle	79	89	Annualized cash cycle	72	87

We calculate days in accounts receivable and contract assets as each balance sheet item for the respective quarter divided by annualized sales for the respective quarter by day. We calculate days in inventory, accounts payable, and cash deposits as each balance sheet line item for the respective quarter divided by annualized cost of sales for the respective quarter by day. We calculate annualized cash cycle as the sum of days in accounts receivable, days in contract assets and days in inventory, less days in accounts payable and days in cash deposits.

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As of ~~July 4, 2020,~~April 3, 2021, annualized cash cycle days decreased ~~ten~~fifteen days compared to ~~June 29, 2019~~the three months ended April 4, 2020 due to the following factors:

•Days in accounts receivable for the three months ended ~~July 4, 2020 increased~~April 3, 2021 decreased three days compared to the three months ended ~~June 29, 2019.~~April 4, 2020. The ~~increase~~decrease is primarily attributable to the timing of customer shipments and ~~reduction in factored receivables.~~payments and mix of customer payment terms.

•Days in contract assets for the three months ended ~~July 4, 2020 remained flat~~April 3, 2021 decreased one day compared to the three months ended ~~June 29, 2019.~~April 4, 2020. The decrease is primarily attributable to increased net sales.

•Days in inventory for the three months ended ~~July~~April 3, 2021 decreased ten days compared to the three months ended April 4, ~~2020~~2020. The decrease is primarily attributable to increased net sales and continued inventory management.

Days in accounts payable for the three months ended April 3, 2021 decreased one day compared to the three months ended April 4, 2020. The decrease is primarily attributable to decreased purchasing activity as prior purchasing activity provided sufficient inventory to meet current demand.

Days in cash deposits for the three months ended April 3, 2021 increased two days compared to the three months ended June 29, 2019. The increase is primarily attributable to increasing inventory levels to support the ramp of customer programs and longer lead times for certain components heightened by the COVID-19 outbreak.

•~~Days in accounts payable for the three months ended July~~April 4, 2020 increased eleven days compared to the three months ended June 29, 2019. The increase is primarily attributable to increased purchasing activity to support the ramp of customer programs and longer lead times for certain components heightened by the COVID-19 outbreak.

•~~Days in cash deposits for the three months ended July 4, 2020 increased four days compared to the three months ended June 29, 2019.~~2020. The increase was primarily attributable to significant deposits received from 3three customers to cover higher inventory balances.

Free Cash Flow. We define free cash flow ("FCF"), a non-GAAP financial measure, as cash flow provided by operations less capital expenditures. FCF was ~~$51.3~~$65.7 million for the ~~nine~~six months ended ~~July 4, 2020~~April 3, 2021 compared to ~~$(67.6)~~$14.7 million for the ~~nine~~six months ended ~~June 29, 2019,~~April 4, 2020, an increase of ~~$118.9~~$51.0 million.

Non-GAAP financial measures, including FCF, are used for internal management assessments because such measures provide additional insight to investors into ongoing financial performance. In particular, we provide FCF because we believe it offers insight into the metrics that are driving management decisions. We view FCF as an important financial metric as it demonstrates our ability to generate cash and can allow us to pursue opportunities that enhance shareholder value. FCF is a non-GAAP financial measure that should be considered in addition to, not as a substitute for, measures of our financial performance prepared in accordance with GAAP.

A reconciliation of FCF to our financial statements that were prepared using GAAP follows (in millions):


		Nine Months Ended							Six Months Ended
		July 4, 2020		June 29, 2019			April 3, 2021		April 4, 2020
Cash flows provided by operating activities	Cash flows provided by operating activities	$	92.5	$	7.0	Cash flows provided by operating activities	$	88.9	$	45.4
Payments for property, plant and equipment	Payments for property, plant and equipment	(41.2)		(74.6)		Payments for property, plant and equipment	(23.2)		(30.7)
Free cash flow	Free cash flow	$	51.3	$	(67.6)	Free cash flow	$	65.7	$	14.7

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Investing Activities. Cash flows used in investing activities were ~~$40.5~~$23.1 million for the ~~nine~~six months ended ~~July 4, 2020~~April 3, 2021 compared to ~~$73.3~~$30.0 million for the ~~nine~~six months ended ~~June 29, 2019.~~April 4, 2020. The decrease in cash used in investing activities was due to a ~~$33.4~~$7.5 million decrease in capital expenditures, primarily due to the construction of a second manufacturing facility in Guadalajara ~~Mexico which was completed in~~during the ~~first quarter of fiscal~~six months ended April 4, 2020.

We estimate funded capital expenditures for fiscal ~~2020 to~~2021 will be approximately ~~$50~~$70.0 million to ~~$60~~$85.0 million, of which ~~$41.2~~$23.2 million was utilized through the first ~~nine~~six months of fiscal ~~2020.~~2021. The remaining fiscal ~~2020~~2021 capital expenditures are anticipated to be used primarily for our manufacturing footprint expansion in Thailand and to support new program ramps as well as to replace older equipment. We believe our estimated capital expenditures will continue to be funded from cash flows provided by operations and may be supplemented by available cash or borrowings, if required.

Financing Activities. Cash flows ~~provided by financing activities were $21.3 million for the nine months ended July 4, 2020 compared to cash flows~~ used in financing activities ~~of $26.2~~were $160.5 million for the ~~nine~~six months ended ~~June 29, 2019.~~April 3, 2021 compared to $14.3 million for the six months ended April 4, 2020. The increase was primarily attributable to ~~drawing $138.0~~the repayment of the $138 million ~~on the unsecured~~ term ~~loans, a $131.2~~loan, an increase of $32.4 million ~~decrease~~ in cash used to repurchase our common stock and ~~an $8.9~~a $6.5 million ~~increase~~decrease in proceeds from the exercise of stock options. This ~~change~~ was partially offset by ~~a $228.0~~an increase of $32.0 million ~~decrease~~ in ~~borrowing and increase in repayments~~net borrowings on our revolving ~~commitment.~~commitment from the six months ended April 4, 2020.

On August 20, 2019, the Board of Directors approved a ~~new stock~~share repurchase plan ~~pursuant to~~under which ~~the Company is~~we are authorized to repurchase $50.0 million of ~~its~~our common stock (the "2019 Program"). ~~The~~During the three months ended January 2, 2021, we completed the 2019 Program ~~commenced upon completion~~by repurchasing 73,560 shares under this program for $5.3 million at an average price of ~~the 2018 Program, as defined below.~~$72.44 per share. During the ~~nine~~three months ended ~~July~~April 4, 2020, we repurchased 224,564 shares under this program for $13.2 million at an average price of $58.57 per share. During the ~~Company~~six months ended April 4, 2020, we repurchased

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315,231 shares under ~~the 2019 Program~~this program for $19.5 million at an average price of $61.81.

On August 13, 2020, the Board of Directors approved a new share repurchase program that authorizes us to repurchase up to $50.0 million of our common stock (the "2021 Program") beginning on expiration of the 2019 program. On November 18, 2020, the Board of Directors approved an additional $50.0 million in share repurchase authority under the existing 2021 Program such that there now exists a total of $100.0 million in share repurchase authority under the program. During the three months ended April 3, 2021, we repurchased 349,297 shares under this program for $29.1 million at an average price of $83.39 per share. During the six months ended April 3, 2021, we repurchased 582,808 shares under this program for $46.6 million at an average price of $79.91. As of ~~July 4, 2020, $27.2~~April 3, 2021, $53.4 million of authority remained under the ~~2019 Program.~~2021 program. The ~~Company temporarily suspended any share repurchases under the 2019~~2021 Program ~~in March 2020 due to the uncertainties created by the COVID-19 outbreak, but expects to resume share repurchase activity in the fourth quarter of fiscal 2020.~~

On February 14, 2018, the Board of Directors approved a stock repurchase plan under which the Company was authorized to repurchase $200.0 million of its common stock (the "2018 Program"). During the nine months ended June 29, 2019, the Company repurchased 2,646,125 shares under this program for $150.7 million, at an average price of $56.95 per share. The 2018 Program was completed during the fourth quarter of fiscal 2019, when all share repurchase authority under it was exhausted.has no expiration.

All shares repurchased under the aforementioned programs were recorded as treasury stock.

On June 15, 2018, ~~the Company~~we entered into a Note Purchase Agreement (the “2018 NPA”) pursuant to which it issued an aggregate of $150.0 million in principal amount of unsecured senior notes, consisting of $100.0 million in principal amount of 4.05% Series A Senior Notes, due on June 15, 2025, and $50.0 million in principal amount of 4.22% Series B Senior Notes, due on June 15, 2028 (collectively, the “2018 Notes”), in a private placement. The 2018 NPA includes customary operational and financial covenants with which ~~the Company is~~we are required to comply, including, among others, maintenance of certain financial ratios such as a total leverage ratio and a minimum interest coverage ratio. The 2018 Notes may be prepaid in whole or in part at any time, subject to payment of a make-whole amount; interest on the 2018 Notes is payable semiannually. As of ~~July 4, 2020, the Company was~~April 3, 2021, we were in compliance with the covenants under the 2018 NPA.

On May 15, 2019, ~~the Company~~we refinanced ~~its~~our then-existing senior unsecured revolving credit facility by entering into a new ~~5-year~~five-year senior unsecured revolving credit facility (referred to as the "Credit Facility"), which expanded the maximum commitment from $300.0 million to $350.0 million and extended the maturity from July 5, 2021 to May 15, 2024. The maximum commitment under the Credit Facility may be further increased to $600.0 million, generally by mutual agreement of the ~~Company~~lenders and ~~the lenders,~~us, subject to certain customary conditions. The increase of the maximum facility is not able to be exercised until after the effective date of the 364 day delayed draw term loans ("Term Loans") on April 28, 2021, as outlined in Amendment No. 1 to the Credit Agreement (the "Amendment") subsequently discussed. During the ~~nine~~six months ended ~~July 4, 2020,~~April 3, 2021, the highest daily borrowing was ~~$164.5~~$148.0 million; the average daily borrowings were ~~$97.1~~$48.2 million. ~~The Company~~We borrowed ~~$455.7~~$151.0 million and repaid ~~$550.7~~$113.0 million of revolving borrowings ~~("Revolving Commitment")~~ under the Credit Facility during the ~~nine~~six months ended ~~July 4, 2020.~~April 3, 2021. As of ~~July 4, 2020, the Company was~~April 3, 2021, we were in compliance with all financial covenants relating to the Credit ~~Facility,~~Agreement, which are generally consistent with those in the 2018 NPA ~~previously discussed. The Company is~~discussed above. We are required to pay a commitment fee on the daily unused revolver credit commitment based on ~~the Company's~~our leverage ratio; the fee was 0.125% as of ~~July 4, 2020.~~April 3, 2021.

To further ensure our ability to meet our working capital and fixed capital requirements, on April 29, 2020, ~~the Company~~we entered into Amendment No. 1 to the ~~Amendment~~Credit Agreement (the "Amendment") in response to the COVID-19 outbreak, which ~~amends~~amended the Credit Agreement, dated as of May 15, 2019. The Amendment ~~amends~~modified certain provisions of the ~~Existing~~ Credit ~~Agreement~~Facility to, among other things, provide for a ~~$138 million~~364 day unsecured delayed draw term loans ~~facility.~~ ("Term ~~loans~~Loans") for $138.0 million. Term Loans borrowed under the new facility were funded in a single draw on May 4, 2020 and ~~will~~were scheduled to mature on April 28, 2021. On January 29, 2021, we terminated the Term Loans through repayment of the $138.0 million outstanding using borrowings

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from our revolving commitment under the Credit Facility. Outstanding ~~term loans will bear~~Term Loans bore interest, at ~~the Company’s~~our option, at a eurocurrency rate (subject to a floor of 1.0%) plus a margin of 1.75% per annum or at a base rate (subject to a floor of 2.0%) plus a margin of 0.75% per annum. In addition, the Company is required to pay, on a quarterly basis, a ticking fee at a rate equal to 0.75% per annum on the average daily aggregate unused term loan commitments from the effective date of the Amendment to and including the date all of the term loan commitments are terminated in accordance with the terms of the Credit Facility. The proceeds of the term loans were used to prepay outstanding revolving and swing line loans under the Credit Facility and for the general corporate purposes of the Company and its subsidiaries. The $138.0 million of outstanding term loans as of July 4, 2020 was subject to a 2.75% per annum interest rate.

The Credit Agreement and the 2018 NPA allow for the future payment of cash dividends or the repurchase of shares provided that no event of default (including any failure to comply with a financial covenant) exists at the time of, or would be caused by, the dividend payment or the share repurchases. We have not paid cash dividends in the past. However, ~~the Board of Directors of the Company evaluates~~we evaluate from time to time potential uses of excess cash, which in the future may include share repurchases above those already authorized, a special cash dividend or recurring cash dividends.

~~The Company has~~We have Master Accounts Receivable Purchase Agreements with MUFG Bank, New York Branch (formerly known as The Bank of Tokyo-Mitsubishi UFJ, Ltd.) (the "MUFG RPA"), and HSBC Bank (China) Company Limited, Xiamen branch (the "HSBC RPA"), under which ~~the Company~~we may elect to sell receivables, at a ~~discount.~~discount, on an ongoing basis. These facilities are uncommitted facilities. The maximum facility amount under the MUFG RPA as of ~~July 4, 2020~~April 3, 2021 is $340.0 million. The maximum facility amount under the HSBC RPA as of ~~July 4, 2020~~April 3, 2021 is $60.0 million. The MUFG RPA will be automatically extended each year

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unless any party gives no less than 10 days prior notice that the agreement should not be extended. The contract length terms of the HSBC RPA are generally consistent with the terms of the MUFG RPA ~~previously discussed.~~discussed above.

~~The Company~~We sold ~~$189.9~~$195.6 million and ~~$223.6~~$188.3 million of trade accounts receivable under these programs during the three months ended ~~July~~April 3, 2021 and April 4, 2020, ~~and June 29, 2019,~~ respectively, in exchange for cash proceeds of ~~$189.4~~$195.1 million and ~~$222.1~~$187.4 million, respectively.

In all cases, the sale discount was recorded within "Miscellaneous, net" in the Condensed Consolidated Statements of Comprehensive Income (Loss) ~~Income~~ in the period of the sale. For further information regarding the receivable sale programs, see Note 13, "Trade Accounts Receivable Sale Programs," in Notes to Condensed Consolidated Financial Statements.

Based on current expectations, we believe that our projected cash flows provided by operations, available cash and cash equivalents, potential borrowings under the Credit Facility and our leasing capabilities should be sufficient to meet our working capital and fixed capital requirements for the next twelve months. We believe we are positioned with a strong balance sheet as we face the future challenges that may be presented by COVID-19. As of the ~~third~~end of the second quarter of fiscal ~~2020,~~2021, cash and cash equivalents and restricted cash ~~was $300~~were $295 million, while debt, finance lease obligations and other financing were ~~$335~~$239 million. In addition to our strong balance sheet, we have significant funding availability through our Credit Facility, should future needs arise. In addition, to further ensure our ability to meet our working capital and fixed capital requirements, we drew the full amount of the unsecured delayed draw term loans facility previously discussed in response to the COVID-19 outbreak. If our future financing needs increase, then we may need to arrange additional debt or equity financing. Accordingly, we evaluate and consider from time to time various financing alternatives to supplement our financial resources. However, we cannot be assured that we will be able to make any such arrangements on acceptable terms.

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~~CONTRACTUAL OBLIGATIONS, COMMITMENTS AND OFF-BALANCE SHEET OBLIGATIONS~~

Our disclosures regarding contractual obligations and commercial commitments are located in our SEC filings. Information in the following table provides a summary of our contractual obligations and commercial commitments as of July 4, 2020 (dollars in millions):

Payments Due by Fiscal Year
Contractual Obligations Total Remaining 2020 2021-2022 2023-2024 2025 and thereafter
Debt Obligations (1) $ 328.8 $ 1.0 $ 153.1 $ 12.2 $ 162.5
Finance Lease Obligations 125.4 1.8 14.1 10.8 98.7
Operating Lease Obligations 53.4 2.6 16.8 13.6 20.4
Purchase Obligations (2) 685.3 446.5 238.1 0.7 —
Repatriation Tax on Undistributed Foreign Earnings (3) 59.6 — 11.4 16.3 31.9
Other Liabilities on the Balance Sheet (4) 19.3 0.7 8.2 1.6 8.8
Other Liabilities not on the Balance Sheet (5) 8.7 0.5 4.2 0.7 3.3
Total Contractual Cash Obligations $ 1,280.5 $ 453.1 $ 445.9 $ 55.9 $ 325.6

1)~~As of July 4, 2020, debt obligations includes $150.0 million in principal amount of 2018 Notes and $138.0 million in term loans borrowed under the credit facility, as well as interest.~~

2)~~As of July 4, 2020, purchase obligations consist primarily of purchases of inventory and equipment in the ordinary course of business.~~

3)As of July 4, 2020, repatriation tax on undistributed foreign earnings consists of U.S. federal income taxes on the deemed repatriation of undistributed foreign earnings due to Tax Reform. Refer to "Liquidity and Capital Resources" above for further detail.

4)As of July 4, 2020, other obligations on the balance sheet included deferred compensation obligations to certain of our former and current executive officers, as well as other key employees, other financing obligations arising from information technology maintenance agreements, and asset retirement obligations related to our buildings. We have excluded from the above table the impact of approximately $1.4 million, as of July 4, 2020, related to unrecognized income tax benefits. We cannot make reliable estimates of the future cash flows by period related to these obligations.

5)As of July 4, 2020, other obligations not on the balance sheet consist of guarantees and a commitment for salary continuation and certain benefits in the event employment of one executive officer of the Company is terminated without cause. Excluded from the amounts disclosed are certain bonus and incentive compensation amounts, which would be paid on a prorated basis in the year of termination.

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DISCLOSURE ABOUT CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are disclosed in our ~~2019~~2020 Annual Report on Form 10-K. During the ~~third~~second quarter of fiscal ~~2020,~~2021, there were no material changes.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 1, "Basis of Presentation," in Notes to Condensed Consolidated Financial Statements ~~for further information~~ regarding recent accounting new accounting pronouncements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from changes in foreign exchange and interest rates. We selectively use financial instruments to reduce such risks. We do not use derivative financial instruments for speculative purposes.

Foreign Currency Risk

Our international operations create potential foreign exchange risk. Our policy is to selectively hedge our foreign currency denominated transactions in a manner that partially offsets the effects of changes in foreign currency exchange rates. We typically use foreign currency contracts to hedge only those currency exposures associated with certain assets and liabilities denominated in non-functional currencies. Corresponding gains and losses on the underlying transaction generally offset the gains and losses on these foreign currency hedges. We cannot predict changes in currency rates, nor the degree to which we will be able to manage the impacts of currency exchange rate changes, including the impacts on currency exchange rates related to the COVID-19 outbreak. ~~Such changes could have a material effect on our business, results of operations and financial condition.~~

Our percentages of transactions denominated in currencies other than the U.S. dollar for the indicated periods were as follows:


		Three Months Ended				Three Months Ended
		July 4, 2020	June 29, 2019		April 3, 2021	April 4, 2020
Net Sales	Net Sales	13.1%	9.9%	Net Sales	10.4%	11.0%
Total Costs	Total Costs	16.6%	15.6%	Total Costs	15.2%	15.7%

~~The Company has~~We have evaluated the potential foreign currency exchange rate risk on transactions denominated in currencies other than the U.S. dollar for the periods presented above. Based on ~~the Company’s~~our overall currency exposure, as of ~~July 4, 2020,~~April 3, 2021, a ~~10%~~10.0% change in the value of the U.S. dollar relative to our other transactional currencies would not have a material effect on ~~the Company’s~~our financial position, results of operations, or cash flows.

Interest Rate Risk

We have financial instruments, including ~~cash equivalents and~~ debt, which are sensitive to changes in interest rates. The primary objective of our investment activities is to preserve principal, while maximizing yields without significantly increasing market risk. To achieve this, we ~~maintain our portfolio of cash equivalents in a variety of highly rated securities, money market funds and certificates of deposit, and~~ limit the amount of principal exposure to any one issuer. We cannot predict changes in interest rates, including the impacts on interest rates related to the COVID-19 outbreak. ~~Such changes could have a material effect on our business, results of operations and financial condition.~~

As of ~~July 4, 2020,~~April 3, 2021, our only material interest rate risk is associated with our Credit Facility. Revolving commitments under the Credit Facility bear interest, at ~~the Company's~~our option, at a eurocurrency or base rate plus, in each case, an applicable interest rate margin based on ~~the Company's~~our then-current leverage ratio (as defined in the Credit Agreement). As of ~~July 4, 2020,~~April 3, 2021, the borrowing rate under the ~~revolving commitment~~Credit Agreement was LIBOR plus 1.10%. In addition, the outstanding term loans will bear interest, at the Company’s option, at a eurocurrency rate plus a margin of 1.75% per annum or at a base rate plus a margin of 0.75% per annum. In addition, the Company is required to pay, on a quarterly basis, a ticking fee at a rate equal to 0.75% per annum on the average daily aggregate unused term loan commitments from the effective date of the Amendment to and including the date all of the term loan commitments are terminated in accordance with the terms of the Credit Facility. As of July 4, 2020 the term loans was subject to a 2.75% per annum interest rate. The Company is monitoring developments related to LIBOR; see also Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended September 28, 2019 for more information. Borrowings under the 2018 NPA are based on a fixed interest rate, thus mitigating much of our interest rate risk. Based on ~~the Company's~~our overall interest rate exposure, as of ~~July 4, 2020,~~April 3, 2021, a 10.0% change in interest rates would not have a material effect on ~~the Company's~~our financial position, results of operations, or cash flows.

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures designed to ensure that the information the Company must disclose in its filings with the Securities and Exchange Commission ("SEC") is recorded, processed, summarized and reported on a timely basis. The Company’s Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") have reviewed and evaluated, with the participation of the Company’s management, the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of

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the period covered by this report (the "Evaluation Date"). Based on such evaluation, the CEO and CFO have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective, at the reasonable assurance level, (a) in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act, and (b) in assuring that information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the ~~third~~second quarter of fiscal ~~2020~~2021, there have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1A. Risk Factors

In addition to the risks and uncertainties discussed herein, particularly those discussed in the “Safe Harbor” Cautionary Statement and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part I, Item 2, see the risk factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended ~~September 28, 2019~~October 3, 2020 that have had no material ~~changes, except as disclosed below, which new risk factor was previously outlined in our Form 10-Q for the three months ended April 4, 2020.~~

~~Our financial condition and results of operations for fiscal year 2020 and beyond may be materially adversely affected by the ongoing coronavirus (COVID-19) outbreak.~~

The full extent to which the COVID-19 outbreak will impact our business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted, including new medical and other information that may emerge concerning COVID-19 and the actions by governmental entities or others to contain it or treat its impact.

The COVID-19 outbreak poses the risk that we or our employees, suppliers, customers and others may be restricted or prevented from conducting business activities for indefinite or intermittent periods of time, including as a result of employee health and safety concerns, shutdowns, shelter in place orders, travel restrictions and other actions and restrictions that may be prudent or required by governmental authorities. For example, in China, at the onset of the COVID-19 outbreak in that country during our second fiscal quarter, our operations were significantly impacted for several weeks due to quarantines, travel restrictions, and other factors affecting us and our suppliers. In addition, we experienced a temporary reduction of our operating capacity in Malaysia during our second quarter of fiscal 2020 as a result of government-mandated actions to control the spread of COVID-19. Finally, while our facilities have been classified as essential or otherwise permitted to operate in jurisdictions in which facility closures have been mandated, we can give no assurance that this will not change in the future or that we will continue to be permitted to conduct business in each of the jurisdictions in which we operate.

Additionally, we have modified our business practices for the continued health and safety of our employees. We may take further actions, or be required to take further actions, that are in the best interests of our employees. Our suppliers and customers have also implemented such measures, which has resulted in, and we expect it will continue to result in, disruptions or delays and higher costs. The implementation of health and safety practices by us, our suppliers, or our customers could impact customer demand, supplier deliveries, our productivity, and costs, which could have a material adverse impact on our business, financial condition, or results of operations.

While we currently believe we have ample liquidity to manage the financial impact of COVID-19, we can give no assurance that this will continue to be the case if the impact of COVID-19 is prolonged or if there is an extended impact on us or the economy generally. Further, the impacts of COVID-19 have caused significant uncertainty and volatility in the credit markets. If our liquidity or access to capital becomes significantly constrained, or if costs of capital increase significantly due to the impact of COVID-19 as result of volatility in the capital markets, a reduction in our creditworthiness or other factors, then our financial condition, results of operations and cash flows could be materially adversely affected.

Our management of the impact of COVID-19 has and will continue to require significant investment of time from our management and employees, as well as resources across our enterprise. The focus on managing and mitigating the impacts of

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COVID-19 on our business may cause us to divert or delay the application of our resources toward existing or new initiatives or investments, which could have a material adverse impact on our results of operations.

The foregoing and other continued disruptions to our business as a result of COVID-19 has had and could continue to have a material adverse effect on our business, results of operations, financial condition during 2020 and beyond.changes.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides the specified information about the repurchases of shares by the Company during the three months ended April 3, 2021.


Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum approximate dollar value of shares that may yet be purchased under the plans or programs(1)
January 3, 2021 - January 30, 2021	81,673	$	81.20	81,673	$	75,295,631
January 31, 2021 - February 27, 2021	157,754	81.09		157,754	63,133,461
February 28, 2021 - April 3, 2021	109,870	88.33		109,870	53,428,468
Total	349,297	$	83.39	349,297

(1) On August ~~20, 2019,~~13, 2020, the Board of Directors approved a new stock repurchase plan under which ~~the Company is~~we are authorized to repurchase up to $50.0 million of ~~its~~our common stock (the ~~"2019~~"2021 Program"). On November 18, 2020, the Board of Directors approved an additional $50.0 million in share repurchase authority under the existing 2021 Program such that there now exists a total of $100.0 million in share repurchase authority under the program. The ~~2019~~2021 Program commenced upon completion of the stock repurchase plan approved by the Board of Directors on ~~February 14, 2018,~~August 20, 2019, pursuant to which the Company was authorized to repurchase ~~$200.0~~$50.0 million of its common stock. The ~~2019~~2021 Program has no expiration. ~~There were no repurchases of shares by~~The table above reflects the ~~Company during the three months ended July 4, 2020 due to a temporary suspension of share repurchases~~maximum dollar amount remaining available for purchase under the ~~2019~~2021 Program ~~due to the uncertainties created by the COVID-19 outbreak. However, the Company expects to resume share repurchase activity in the fourth quarter~~as of ~~fiscal 2020. As of July 4, 2020, $27.2 million of authority remained under the 2019 Program.~~April 3, 2021.

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ITEM 6. EXHIBITS

The list of exhibits is included below:


Exhibit No.						Exhibit
~~10.1~~						Amendment No. 1 to Credit Agreement, dated as of April 29, 2020, among Plexus Corp., the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on April 30, 2020 by Plexus Corp.).
31.1						Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
31.2						Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
32.1						Certification of the CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2						Certification of the CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1						Reconciliation of ROIC to GAAP and ~~economic return financial statements~~Economic Return Financial Statements
101						The following materials from Plexus Corp.’s Quarterly Report on Form 10-Q for the quarter ended ~~July 4, 2020,~~April 3, 2021, formatted in ~~iXBRL (Inline~~Inline Extensible Business Reporting ~~Language)~~Language ("XBRL"): (i) the Condensed Consolidated Statements of Comprehensive Income (Loss) ~~Income,~~, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Shareholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.
101.INS						Inline XBRL Instance Document (the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document)
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document
104						~~Cover Page Interactive Data File (formatted as~~The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended April 3, 2021, formatted in Inline XBRL and contained in Exhibit ~~101)~~101.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Plexus Corp.

Registrant

Date:

~~August~~May 7, ~~2020~~2021

/s/ Todd P. Kelsey

Todd P. Kelsey

President and Chief Executive Officer

Date:

~~August~~May 7, ~~2020~~2021

/s/ Patrick J. Jermain

Patrick J. Jermain

Executive Vice President and Chief Financial Officer

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	September 28, 2019		Impacts due to adoption of Topic 842		September 29, 2019
ASSETS
Prepaid expenses and other	$	31,974	$	(170)	$	31,804
Operating right-of-use assets	—		75,790		75,790
Property, plant and equipment, net	384,224		(1,833)		382,391
Deferred income taxes	13,654		432		14,086
Other non-current assets	64,714		(30,193)		34,521
LIABILITIES AND SHAREHOLDERS' EQUITY
Other accrued liabilities	$	106,461	$	7,939	$	114,400
Long-term debt and finance lease obligations, net of current portion	187,278		(207)		187,071
Long-term operating lease liabilities	—		37,371		37,371
Retained earnings	1,178,677		(1,077)		1,177,600


	Operating leases		Finance leases
Remaining 2020	$	2,581	$	1,782
2021	8,787		7,285
2022	8,013		6,811
2023	7,570		5,785
2024	5,963		4,993
2025 and thereafter	20,457		98,762
Total minimum lease payments	53,371		125,418
Less: imputed interest	(7,233)		(85,266)
Present value of lease liabilities	$	46,138	$	40,152


	Operating leases		Capital leases
2020	$	10,395	$	6,734
2021	6,554		3,490
2022	5,584		2,884
2023	5,153		1,652
2024	3,713		958
Thereafter	9,426		34,143
Total	$	40,825	$	49,861


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


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


	Payments Due by Fiscal Year
Contractual Obligations	Total		Remaining 2020		2021-2022		2023-2024		2025 and thereafter
Debt Obligations (1)	$	328.8	$	1.0	$	153.1	$	12.2	$	162.5
Finance Lease Obligations	125.4		1.8		14.1		10.8		98.7
Operating Lease Obligations	53.4		2.6		16.8		13.6		20.4
Purchase Obligations (2)	685.3		446.5		238.1		0.7		—
Repatriation Tax on Undistributed Foreign Earnings (3)	59.6		—		11.4		16.3		31.9
Other Liabilities on the Balance Sheet (4)	19.3		0.7		8.2		1.6		8.8
Other Liabilities not on the Balance Sheet (5)	8.7		0.5		4.2		0.7		3.3
Total Contractual Cash Obligations	$	1,280.5	$	453.1	$	445.9	$	55.9	$	325.6