UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark one)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 1, 2022
or
For the transition period from to .
Commission File Number 0-21272
Sanmina Corporation
(Exact name of registrant as specified in its charter)
DE
(State or other jurisdiction of incorporation or organization)
77-0228183
(I.R.S. Employer Identification Number)
2700 N. First St., San Jose CA
(Address of principal executive offices)
95134
(Zip Code)
Registrant's telephone number, including area code:
408 964-3500
Title of each class
Common Stock
Trading symbol(s)
Name of each exchange on which registered
SANM
NASDAQ Global Select Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities
Act. Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange
Act 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 ☒ No ☐
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 ☒ No ☐
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 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 has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the
registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant was approximately
$1,453,429,173 as of April 2, 2022 based upon the last reported sale price of the common stock on the NASDAQ Global Select Market on
April 1, 2022.
As of November 3, 2022, the number of shares outstanding of the registrant's common stock was 57,429,717.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information is incorporated into Part III of this report by reference to the Proxy Statement for the registrant's 2023 annual
meeting of stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after
the end of the fiscal year covered by this Form 10-K.
SANMINA CORPORATION
INDEX
PART I
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
[Reserved]
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
PART IV
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Item 1B.
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Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
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Signatures
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Item 1. Business
Overview
Sanmina Corporation (“we” or “Sanmina” or the “Company”) is a leading global provider of integrated manufacturing
solutions, components, products and repair, logistics and after-market services. We provide these comprehensive offerings
primarily to original equipment manufacturers, or OEMs, in the following industries: industrial, medical, defense and
aerospace, automotive, communications networks and cloud infrastructure. The combination of our advanced technologies,
extensive manufacturing expertise and economies of scale enables us to meet the specialized needs of our customers. We were
originally incorporated in Delaware in May 1989.
Our end-to-end solutions, combined with our global expertise in supply chain management, enable us to manage our
customers' products throughout their life cycles. These solutions include:
• product design and engineering, including concept development, detailed design, prototyping, validation,
preproduction services and manufacturing design release and product industrialization;
• manufacturing of components, subassemblies and complete systems;
• high-level assembly and test;
• direct order fulfillment and logistics services;
• after-market product service and support; and
• global supply chain management.
We operate in the Electronics Manufacturing Services (EMS) industry and manage our operations as two businesses:
1) Integrated Manufacturing Solutions (IMS). Our IMS business consists of printed circuit board assembly and test,
high-level assembly and test and direct-order-fulfillment. This segment generated approximately 80% of our total
revenue in 2022.
2) Components, Products and Services (CPS). Components include printed circuit boards, backplanes and backplane
assemblies, cable assemblies, fabricated metal parts, precision machined parts, and plastic injected molded parts.
Products include memory solutions from our Viking Technology division; high-performance storage platforms for
hyperscale and enterprise solutions from our Viking Enterprise Solutions (VES) division; optical, radio frequency
(RF) and microelectronic (microE) design and manufacturing services from Advanced Microsystems
Technologies; defense and aerospace products from SCI Technology; and cloud-based manufacturing execution
software from our 42Q division. Services include design, engineering and logistics and repair. CPS generated
approximately 20% of our total revenue in 2022.
We service our customers from 24 countries on five continents. We locate our facilities near our customers and their
end markets in major centers for the electronics industry or in lower cost locations. Many of our operations located near our
customers and their end markets are focused primarily on new product introduction, lower-volume, higher-complexity
component and subsystem manufacturing and assembly, and high-level assembly and test. Our operations located in lower cost
areas engage primarily in higher-volume component and subsystem manufacturing and assembly for both higher and lower
complexity products.
As one of the largest global manufacturing solutions providers, we are able to capitalize on our competitive strengths
including our:
• customer-focused organization with 34,000 employees;
• mission critical end-to-end solutions;
• product design and engineering resources;
• vertically integrated global/regional manufacturing capabilities;
• comprehensive IT systems and flexible global supplier base;
• expertise in serving diverse end markets; and
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• expertise in industry standards and regulatory requirements.
Industry Overview
EMS companies are the principal beneficiaries of the increased use of outsourced manufacturing services by the
electronics and other industries. Outsourced manufacturing refers to an OEM's use of EMS companies to manufacture their
products, rather than using internal manufacturing resources. As the EMS industry has evolved, OEMs have increased their
reliance on EMS companies for end-to-end services including product design and engineering, manufacturing, high-level
assembly and test, direct-order-fulfillment and logistics services, after-market product service and support, and global supply
chain management.
We believe OEMs will continue to outsource manufacturing because it allows them to:
• focus on core competencies;
• access leading design and engineering capabilities;
• optimize their supply chain while reducing risk and maximizing purchasing power;
• reduce operating costs and capital investment;
• access global manufacturing services; and
• accelerate time to market.
Our Business Strategy
Our vision is to be the trusted leader in providing mission critical products, services and supply chain solutions to
accelerate customer success. Key elements of our business strategy to deliver this vision include:
Capitalizing on Our Comprehensive Solutions. Capitalizing on our end-to-end solutions allows us to sell additional
solutions to our existing customers and attract new customers. Our end-to-end solutions include product design and
engineering, manufacturing, high-level assembly and test, direct order fulfillment and logistics services, after-market product
service and support, and global supply chain management. Our vertically integrated manufacturing solutions enable us to
manufacture additional system components and subassemblies for our customers. When we provide a customer with a number
of services, such as component manufacturing or higher value-added solutions, we can often improve our margins and
profitability. Consequently, our goal is to increase the number of manufacturing programs for which we provide multiple
solutions. To achieve this goal, our sales and marketing organization seeks to cross-sell our solutions to customers.
Extending Our Technology Capabilities. We rely on advanced processes and technologies to provide our products,
components and vertically integrated manufacturing solutions. We continually improve our manufacturing processes and
develop more advanced technologies, providing a competitive advantage to our customers. We work with our customers to
anticipate their future product and manufacturing requirements and align our technology investment activities with their needs.
We use our design expertise to develop product technology platforms that we can customize by incorporating other components
and subassemblies to meet the needs of particular OEMs. These technologies enhance our ability to manufacture complex, high-
value added products, maximizing our potential to continue to win business from existing and new customers.
Attracting and Retaining Long-Term Customer Partnerships. A core component of our strategy is to attract, build
and retain long-term partnerships with companies in growth industries that will benefit from our global/regional footprint and
unique value proposition in advanced electronics manufacturing.
Promoting New Product Introduction (NPI) and Joint Design Manufacturing (JDM) Solutions. As a result of
customer feedback and our customers' desire to manage research and development expenses, we offer product design services
to develop systems and components jointly with our customers. Our NPI services include quick-turn prototyping, supply chain
readiness, functional test development, and release-to-volume production. In a JDM model, our customers bring market
knowledge and product requirements, and we bring complete design engineering and NPI services. Our design engineering
offerings include product architecture development, detailed design, simulation, test and validation, system integration,
regulatory and qualification services.
Continuing to Penetrate Diverse End Markets. We focus our marketing and sales efforts on major end markets within
the electronics technology industry. We target markets we believe offer significant growth opportunities and for which OEMs
sell mission critical products that are subject to strict regulatory requirements and/or rapid technological change because the
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manufacturing of these products requires higher value-added services. We seek to diversify our business across market
segments and customers to reduce our dependence on any particular market or customer.
Pursuing Strategic Transactions. We continually seek to identify and undertake strategic transactions that give us the
opportunity to grow our business by accessing new customers' products, manufacturing solutions, repair service capabilities,
intellectual property, technologies and geographic markets.
Continuing to Seek Cost Savings and Efficiency Improvements. We seek to optimize our facilities to provide cost-
effective services for our customers. We continue to invest in factory automation, process improvements, robotics and AI to
further enhance our efficiency output. We maintain extensive operations in lower cost locations, including Latin America,
Eastern Europe, China, Southeast Asia and India, and we plan to expand our presence in these lower cost locations as
appropriate to meet the needs of our customers. We believe we are well positioned to take advantage of future opportunities on
a global/regional basis.
Our Competitive Strengths
We believe our competitive strengths differentiate us from our competitors and enable us to better serve the needs of
OEMs. Our competitive strengths include:
End-to-End Solutions. We provide solutions throughout the world to support our customers' products during their
entire life cycle, from product design and engineering, through manufacturing, to direct order fulfillment, logistics and after-
market product service and support. Our end-to-end solutions are among the most comprehensive in the industry because we
focus on adding value before and after the actual manufacturing of our customers' products. These solutions also enable us to 1)
provide our customers with a single source of supply for their design, supply chain and manufacturing needs, 2) reduce the time
required to bring products to market and 3) lower product costs, while allowing our customers to focus on those activities they
expect to add the highest value to their business. We believe our end-to-end solutions allow us to develop closer relationships
with our customers and more effectively compete for their future business.
Product Design and Engineering Resources. We provide product design and engineering services for new product
designs, cost reductions and Design-for-Manufacturability/Assembly/Test (DFx). Our engineers work with our customers
during the complete product life cycle. Our design and NPI centers provide turnkey system design services, including:
electrical, mechanical, thermal, software, layout, simulation, test development, design verification, validation, regulatory
compliance and testing services. We design high-speed digital, analog, radio frequency, mixed-signal, wired, wireless, optical
and electro-mechanical modules and systems.
Our engineering engagement models include Joint Design Manufacturing (JDM), Contract Design Manufacturing
(CDM) and consulting engineering for DFx, Value Engineering (cost reduction re-design), and design for global environmental
compliance regulations such as the European Union's Restrictions of Hazardous Substances (RoHS) and Waste Electrical and
Electronic Equipment (WEEE). We focus on industry segments that include industrial, medical, defense and aerospace,
automotive, communications networks and cloud infrastructure. System solutions for these industry segments are supported by
our vertically integrated component technologies, namely printed circuit boards, backplanes, enclosures, cable assemblies,
precision machining, plastics, memory modules, and optical, RF and microelectronics modules.
In these engagement models, our customers bring market knowledge and product requirements and we provide
complete design engineering and new product introductions (NPI) services. For JDM products, the intellectual property is
typically jointly owned by us and the customer, and we perform manufacturing and logistics services. For CDM projects,
customers pay for all services and own the intellectual property.
Vertically Integrated Manufacturing Solutions. We provide a range of vertically integrated manufacturing solutions,
including high-technology components, new product introduction and test development services. These solutions are provided
in every major region worldwide, with design and prototyping close to our customer’s product development centers. Our
customers benefit significantly from our experience in these areas, including product cost reduction, minimization of assets
deployed for manufacturing, accelerated time-to-market and a simplified supply chain. Key system components we
manufacture include high-technology printed circuit boards and printed circuit board assemblies, backplanes and backplane
assemblies, cable assemblies, fabricated metal parts, precision machined parts, plastic injected molded parts, and optical and RF
modules and memory modules. These components and sub-assemblies are integrated into a final product or system, configured
and tested to our customer’s or the end-customer’s specifications and delivered to the final point of use, with us managing the
entire supply chain. By manufacturing system components and subassemblies ourselves, we enhance continuity of supply and
reduce costs for our customers.
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Customers also benefit from our combined design, technology and manufacturing experience with specific products
and markets. For example, in communications networks, we have over 40 years of experience in developing high-speed printed
circuit boards (PCBs) and backplanes. Examples of products for which our experience and vertically integrated model provide
competitive advantage include wireless base stations, network switches, routers and gateways, optical switches, servers and
storage appliances, automotive products, avionics and satellite systems, magnetic resonance imaging (MRI) and computer
tomography (CT) scanners, and equipment used in semiconductor manufacturing processes, including equipment for
photolithography, chemical mechanical polishing, vapor deposition and robotics for wafer transfer. For these and many other
products, customers can gain a competitive advantage with our manufacturing technology, while reducing the capital
requirements associated with manufacturing and global supply chain management.
Advanced Component Technologies. We provide advanced component technologies, which we believe allow us to
differentiate ourselves from our competitors. These advanced technologies include the fabrication of complex printed circuit
boards, backplanes and backplane assemblies, cable assemblies fabricated metal parts, precision machined parts, plastic injected
molded parts, memory modules, and optical, RF and microelectronics modules. For example, we produce some of the most
advanced printed circuit boards and backplanes in the world that are manufactured with a range of low signal loss, high-
performance materials and include features such as buried capacitance and thin-film resistors, high-density interconnects and
micro via technology. We also manufacture high-density rigid-flex printed circuit boards with up to 32 layers and 8 transition
layers for the defense and aerospace markets and high-end medical electronics market.
Our printed circuit board assembly technologies include micro ball grid arrays, chip scale packages, fine-pitch
discretes and small form factor radio frequency and optical components, chip on board, as well as advanced packaging
technologies used in high pin count applications for specific integrated circuits and network processors. We use innovative
design solutions and advanced metal forming techniques to develop and fabricate high-performance indoor and outdoor chassis,
enclosures, racks and frames. Our assembly services use advanced technologies, including precision optical alignment, multi-
axis precision stages and machine vision technologies. We use sophisticated procurement and production management tools to
manage inventories for our customers and ourselves as effectively as possible. We have also developed build-to-order (BTO)
and configure-to-order (CTO) systems and processes that enable us to manufacture and ship finished systems in as little as 8
hours after receipt of an order. We utilize a centralized Technology Council to coordinate the development and introduction of
new technologies to meet our customers' needs in various locations and to increase technical collaboration among our facilities
and divisions.
Global Manufacturing Capabilities. Most of our customers compete and sell their products on a global basis. As such,
they require global solutions that include regional manufacturing for selected end markets, especially when time to market,
local manufacturing or content and low cost solutions are critical objectives. Our global network of manufacturing facilities
provides our customers a combination of sites to maximize both the benefits of regional and low cost manufacturing solutions
and repair services. In addition to our manufacturing and repair locations, we support our customers’ logistics and repair
requirements through a certified partner network.
To manage and coordinate our global operations, we employ an enterprise-wide Enterprise Resource Planning (ERP)
system at substantially all of our manufacturing locations that operates on a single IT platform and provides us with company-
wide inventory planning and purchasing capabilities. This system enables us to standardize planning and purchasing at the
facility level and to optimize inventory visibility and management, improve asset utilization worldwide and reduce risk
throughout the entire product lifecycle. Our systems also enable our customers to receive key information regarding the status
of their programs.
We purchase large quantities of electronic components and other materials from a wide range of suppliers. We are
committed to selecting ethical business partners that adhere to the Responsible Business Alliance (RBA) Code of Conduct. Our
primary supply chain goal is to consolidate our global spend to create the synergy and leverage to drive our supply base for
better cost competitiveness, more favorable terms and leading-edge supply chain solutions. As a result, we often receive
favorable terms and supply chain solutions from suppliers, which generally enables us to provide our customers with greater
total cost reductions than they could obtain themselves. Our strong supplier relationships are beneficial when electronic
components and other materials are in short supply and provide us the necessary support to better optimize the use of our
inventories.
Supply chain management also involves the planning, purchasing, transportation and warehousing of product
components. We use state of the art production management systems to manage our procurement and manufacturing processes
in an efficient and cost-effective manner. We collaborate with our customers to enable us to respond to their changing
component requirements and to reflect any changes in these requirements in our ERP system. This system enables us to forecast
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future supply and demand imbalances and develop strategies to help our customers manage their component requirements,
especially during supply shortages that have affected our industry in the recent past. Our enterprise-wide ERP systems provide
us with company-wide information regarding component inventories and orders to help optimize inventories, planning and
purchasing at the facility level.
Customer-Focused Organization. We believe customer relationships are critical to our success and we are focused on
providing a high level of customer service. Account teams led by global account managers are directly responsible for account
management. Global account managers coordinate the additional resources required to facilitate customer-specific solutions. As
needed, these teams may include subject matter experts in design, specific technology components, services, products, and
supply chain. These teams create the hub for interaction between the customer and our locations, providing local support to
customers worldwide.
Expertise in Serving Diverse End Markets. We have experience in serving customers in the industrial, medical,
defense and aerospace, automotive, communications networks and cloud infrastructure end markets. Our diversification across
end markets reduces our dependence upon any one customer or end market. In order to service to the specialized needs of
customers in particular market segments, we have dedicated personnel, and in some cases facilities, with industry-specific
capabilities and expertise.
Expertise in Industry Standards and Regulatory Requirements. We maintain compliance with industry standards and
regulatory requirements applicable to certain markets, including, among others, medical, automotive and defense and aerospace.
Our Products and Solutions
We offer our OEM customers a diverse set of products and solutions with a focus on wireless, wireline and optical
communications and network infrastructure equipment, such as switches, routers and base stations, computing and storage
systems, defense and commercial avionics and communications, medical imaging, diagnostic and patient monitoring systems,
semiconductor tools for metrology, lithography, dry and wet processing, industrial products, including large format printers and
automated teller machines, energy and clean technology products such as solar and wind energy components, LED lighting,
smart meters and battery systems, electric vehicle power control (and charging) systems, automotive infotainment devices, and
automotive engine-control modules. These products may require us to use some or all of our end-to-end solutions, including
design, component technologies and logistics and repair services.
Integrated Manufacturing Solutions includes:
Printed Circuit Board Assembly and Test. To meet the ever-changing needs across our diverse customer base,
we continue to evolve in support of their current and future requirements. PCBAs are at the core of all electronic systems, and
we continue to work to ensure that our PCBA manufacturing capabilities are aligned with the requirements for such systems.
Printed circuit board assembly involves attaching electronic components, such as integrated circuits, capacitors,
microprocessors, resistors, memory modules, and connectors to printed circuit boards. The most common technologies used to
attach components to printed circuit boards employ surface mount technology (SMT) and pin-through-hole assembly (PTH)
and press-fit technology for connectors. We use SMT, PTH, press-fit and other attachment technologies focused on
miniaturization and increasing the density of component placement on printed circuit boards. These technologies, which
support the needs of our customers to provide greater functionality in smaller products, include chip-scale packaging, ball grid
array, direct chip attach and high density interconnect. We perform in-circuit and functional testing of printed circuit board
assemblies. In-circuit testing verifies that all components are properly inserted and attached and that electrical circuits are
complete. Functional tests are performed to confirm the board or assembly operates in accordance with its final design and
manufacturing specifications. We design and procure test fixtures and develop our own test software or use our customers' test
fixtures and test software. In addition, we provide environmental stress tests of the board or assembly that are designed to
confirm that the board or assembly will meet the environmental stresses, such as heat, to which it will be subjected.
High-Level Assembly and Test. We provide high-level assembly and test in which assemblies and modules are
combined to form complete, finished products. Examples include complex electro-mechanical assemblies, fluid and blood
analysis systems, food dispensing equipment, diagnostic medical devices, high-voltage power management systems, rotating x-
ray equipment for airport security, particle analyzers for homeland security and motorized magnetic resonance imaging units.
Our facilities also support full system level assembly and test and logistic support for a variety of complex electronic systems,
including radio base stations and transmission equipment for 5G wireless networks, optical central offices and wireline
switching and routing hardware, server and storage systems for data centers, carriers central offices and video streaming service
providers, surgical controllers, ultrasound systems, patient monitoring systems, automotive sensor assemblies, and electric
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vehicle power control systems and modules. With decades of experience in automated system assembly and test, we have
focused on glucose meters, disposable sensors, IOT communication modules and disposable drug delivery systems. These
products require highly specialized manufacturing capabilities and processes, as well as integrated IT systems and, in some
cases, industry-specific certifications.
Direct-Order-Fulfillment. We provide direct-order-fulfillment for our OEM customers. Direct-order-fulfillment
involves receiving customer orders, configuring products to quickly fill the orders and delivering the products either to the
OEM, a distribution channel, or directly to the end customer. We manage our direct-order-fulfillment processes using a core set
of common systems and processes that receive order information from the customer and provide comprehensive supply chain
management, including procurement and production planning. These systems and processes enable us to process orders for
multiple system configurations and varying production quantities including single units. Our direct-order-fulfillment services
include BTO and CTO capabilities: in BTO, we build a system with the particular configuration ordered by the OEM customer;
in CTO, we configure systems to an end customer's order, for example by installing software desired by the end customer. The
end customer typically places this order by choosing from a variety of possible system configurations and options. Using
advanced manufacturing processes and a real-time warehouse management and data control system on the manufacturing floor,
we can usually meet a 48 to 72 hour turn-around-time for BTO and CTO requests. We support our direct-order-fulfillment
services with logistics that include delivery of parts and assemblies to the final assembly site, distribution and shipment of
finished systems and processing of customer returns.
Components, Products and Services includes:
Product Design and Engineering. Our design and engineering groups provide customers with comprehensive
services from initial product design and detailed product development to prototyping and validation, production launch and
end-of-life support for a wide range of products covering all our market segments. These groups complement our vertically
integrated manufacturing capabilities by providing component level design services for printed circuit boards, backplanes and a
variety of electro-mechanical systems. Our offerings in design engineering include product architecture, detailed development,
simulation, test and validation, integration and regulatory and qualification services, and our NPI services include quick-turn
prototypes, functional test development and release-to-volume production. We also offer post-manufacturing and end-of-life
support, including repair and sustaining engineering support through our Global Services division. We can also complement our
customer's design team with our unique skills and services which can be used to develop custom, high-performance products
that are manufacturable and cost optimized to meet product and market requirements. Such engineering services can help in
improving a customer’s time-to-market and cost-to-market objectives.
Printed Circuit Boards. We produce a wide range of multilayer printed circuit boards on a global basis with high
layer counts and fine line circuitry. Specialized production equipment along with an in-depth understanding of high
performance laminate materials allow us to fabricate some of the largest form factor and highest speed circuit boards in the
industry.
Our ability to support NPI and quick-turn fabrication followed by manufacturing in both North America and Asia
allows our customers to accelerate their time-to-market as well as their time-to-volume. Standardized processes and procedures
make transitioning of products easier for our customers. Our worldwide engineering teams support designers in Design for
Manufacturability (DFM) analysis and assemblers with field applications support.
Backplanes and Backplane Assemblies. Backplanes are typically very large printed circuit boards that serve as
the backbones of sophisticated electronics products, such as internet routers. Backplanes provide interconnections for printed
circuit board assemblies, power supplies, and other electronic components. We fabricate backplanes in our printed circuit board
factories. Backplane fabrication is significantly more complex than printed circuit board fabrication due to the large size and
thickness of the backplanes. We manufacture backplane assemblies by press-fitting high density connectors into plated through-
holes in the fabricated backplane. In addition, many of the newer, advanced technology backplanes require surface-mounted
attachment of components, including active high-pin count packages that come in a variety of sophisticated package types.
These advanced assembly processes require specialized equipment and a strong focus on quality and process control. We often
perform in-circuit and functional tests on backplane assemblies. We have developed proprietary technologies and process
“know-how” which enable backplanes to run at data rates in excess of 50 gigahertz. We currently have capabilities to
manufacture backplanes at greater than 60 layers in sizes up to 26x40 inches and up to a nominal thickness of 0.425 inches and
in a wide variety of high performance laminate materials. These are among the largest and most complex commercially
manufactured backplanes and the test equipment we have ensures the quality and performance of these backplane systems is
“world class.” We are capable of testing the signal integrity of these backplanes, and often also utilize state of the art x-ray
equipment to verify defect-free installation of the new high density/high speed connectors.
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Cable Assemblies. Cable assemblies are used to connect modules, assemblies and subassemblies, including
backplane assemblies in electronic systems. We provide a broad range of cable assembly products and services, from cable
assemblies and harnesses for automobiles to very complex harnesses for industrial products and semiconductor manufacturing
equipment. We also provide mechanical assembly and integration services where we often assemble, integrate and test cables
with electromechanical systems or sub-systems. We design and manufacture a broad range of high-speed data, radio frequency
and fiber optic cabling products. We build cable assemblies that are used in power systems typically classified as low and
medium voltage. Our manufacturing footprint with facilities in the U.S., the EU, Mexico and China enables us to support our
customers’ NPI and volume production needs on a global basis.
Fabricated Metal Parts. Parts that are fabricated from metal are often used in sub-assemblies and full enclosures,
racks or cabinets that are used to house and protect complex, critical and fragile electronic components, modules and sub-
systems so that the system's functional performance is not compromised due to mechanical, environmental or any other use
conditions. Our mechanical systems manufacturing services are capable of fabricating mechanical components that range from
single parts to complex enclosures, racks or cabinets and we often integrate these with various electronic components and sub-
systems including backplane assemblies and cables with power and thermal management, and other sensor and control systems.
Our services often will include overseeing specialist cleaning or surface treatments with our suppliers as well as painting using
a variety of techniques in our own facilities.
Precision Machined Parts. We offer a suite of world-class precision machining services in the U.S. and Israel.
We use advanced numerically controlled machines enabling the manufacture of components that are machined to very tight
tolerances and we often perform further assembly services with these components in clean-room environments. Our capabilities
include complex medium and large format mill and lathe machining of aluminum, stainless steel, plastics, ferrous and
nonferrous alloys and exotic alloys. We also have helium and hydrostatic leak-test capabilities. By leveraging our established
supply chain, we oversee lapping, anodizing, electrical discharge machining (EDM), heat-treating, cleaning, laser inspection,
painting and packaging. We have specialized facilities supporting machining and complex integration with access to a range of
state-of-the-art, computer-controlled machining equipment that can satisfy rigorous demands for production and quality and
meet very tight tolerance specifications. With some of the largest horizontal milling machines in the U.S., we are a supplier of
vacuum chamber systems for the semiconductor, flat-panel display, LED equipment, industrial, medical and AS9100-certified
aerospace markets.
Plastic Injection Molded Parts. Plastic injection molded parts are used to create a vast array of everyday items,
from very small intricate plastic parts to cosmetic enclosures designed to protect sensitive electronic equipment. Our diverse
capability within the plastic injection molding space spans all major markets and industries. We are equipped with nearly 80
plastic injection molding machines with a wide variety of clamping pressures. Our experienced tooling, process, quality and
resin engineers work concurrently using a scientific molding approach to develop cost-effective, highly reliable manufacturing
solutions for medical, industrial, defense, multimedia, computing and data storage customers. Strategic relationships with U.S.
and Asian toolmakers allow us to deliver cost-effective high-quality plastic manufacturing solutions.
Advanced Microsystems Technologies. Optical and radio frequency (RF) components built off of advanced
micro-electronics are key building blocks of many systems. Our Advanced Microsystems Technologies product technology and
engineering division focuses on optical, RF and microelectronics (microE) design and manufacturing services. Our mission is to
deliver leading-edge technology solutions that enable our customer products while optimizing the value and performance of our
customers’ applications.
Based on our microelectronic design and advanced manufacturing technologies, built off Advanced
Microsystems Technologies foundational IP, we provide RF and optical components, modules and systems for customers
across many industries including the communications, networking, automotive, medical, industrial, military and aerospace
markets. Within the Advanced Microsystems Technologies Division, we produce both passive and active optical components as
well as modules that are built from a combination of industry standard and/or custom components and interconnected using
microelectronic and micro-optic technologies to achieve a unique function. Our experience in RF and optical communication
and networking products spans across long-haul/ultra-long-haul and metro applications for transport/transmission, as well as
broadband access and switching applications, including last-mile solutions. We currently supply optical products ranging from
10G to 800G to the optical communication marketplace. For the medical end market, we develop components and
subassemblies that support Sanmina’s medical manufacturing operations for products such as blood analyzers, food
contamination analyzers, and specialized optical spectrometers and fluorometers utilizing the latest optical technologies. In the
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automotive and industrial end markets, we are working with customers on next generation photonics based Lidar product
offerings.
Our Advanced Microsystems Technologies service offerings are designed to deliver end-to-end solutions with
special focus on product design, test infrastructure development and commercialization, along with optical module and
mmWave RF components and module manufacturing. Customers can couple these components with Sanmina’s broader IMS
services of blade server manufacturing, as well as system integration and test, providing a complete end-to-end solution for
their customers.
Viking Technology. Viking Technology supplies leading-edge Solid State Drives (SSD), DRAM memory
modules and Non-Volatile DIMMs (NVDIMM), along with state-of-the-art ruggedized Microelectronics Multi-Chip Package
(MCP) memory solutions.
Viking Technology provides DRAM memory and flash storage solutions, including high-performance computing
SSDs tailored, high reliable / high performance small form factor flash and DRAM modules, to diverse application for the
networking, industrial, data center, transportation, medical, AI to military markets.
Viking Enterprise Solutions. Viking Enterprise Solutions (VES) is a market leader in high-performance storage
platforms for hyperscale and enterprise data centers worldwide. Leveraging our portfolio of proven product designs, Viking
Enterprise Solutions provides advanced data center products, including NVMe flash memory and disk-based storage server
appliances, JBOD storage systems and related products for a variety of storage and data center applications including rack scale
solutions. With advances in interconnect speeds and architectural changes to disaggregate storage and compute for scale,
Viking Enterprise Solutions is well positioned with a product portfolio to take advantage of these trends.
VES provides end-to-end, design and manufacturing solutions for both platform-based and fully customized data
center products. From our US-based design and development team, we provide a full array of services from early product
conceptualization, through design, product validation and world-wide product certifications. In addition, VES supports all
phases of product manufacturing, including NPI, support for unique product configurations, RMA and product end-of-life
support.
SCI Technology Inc. (SCI). SCI has provided engineering services, products, manufacturing, test, and depot and
repair solutions to the global defense and aerospace industry for nearly 60 years. SCI offers advanced products for aircraft
systems and tactical communications, unmanned aerial systems and components, counter-unmanned aerial systems and
components, and fiber-optics capabilities for use in a variety of defense-related applications.
SCI's customers include U.S. government agencies, U.S. allies and major defense and aerospace prime
contractors. SCI has the infrastructure and facility security clearance to support the stringent certifications, regulations,
processes and procedures required by these customers.
Global Services. Sanmina Global Services complements our end-to-end manufacturing strategy by integrating
engineering, supply chain, manufacturing, logistics, repair and environmentally friendly disposition into a seamless solution for
customers, for both Sanmina manufactured, and non-Sanmina manufactured products around the world. We provide a wide
range of services, including new product introduction, high-level assembly, distribution services and warranty management,
life-extension services and end-of-life management as well as programs that focus on reuse, repair, refurbishment, recycle,
recover and redesign.
42Q. 42Q provides an innovative, world-class cloud-based manufacturing execution solution (MES) that is
scalable, flexible, secure and easy to implement. Our solution provides customers advantages in efficiencies and costs relative
to legacy systems and offers traceability and genealogy, multi-plant visibility, compliance management and on-demand work
instructions.
Our End Markets
We target markets that we believe offer significant growth opportunities and in which OEMs sell complex mission
critical products that are subject to strict regulatory requirements and/or rapid technological change. We believe that markets
involving complex, rapidly changing products offer opportunities to produce products with higher margins because they require
higher value-added manufacturing services and may also include our advanced vertically integrated components. Our
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diversification across the industrial, medical, defense and aerospace, automotive, communications networks and cloud
infrastructure market segments and customers helps mitigate our dependence on any particular market or customer.
Seasonality
Because of the diversity of our customer base, we generally have not experienced significant seasonality in our
business in recent years. However, we cannot predict whether this trend will continue.
Backlog
We generally do not obtain firm, long-term commitments from our customers and our customers usually do not make
firm orders for product delivery more than thirty to ninety days in advance. Additionally, customers may cancel or postpone
scheduled deliveries, in some cases without significant penalty. Therefore, we do not believe the backlog of expected product
sales covered by firm orders is a meaningful measure of future sales.
Customers and Marketing
A key component of our strategy is to attract and retain long-term customer partnerships with leading companies in
growth industries that will benefit from our global/regional footprint and unique value proposition in advanced electronics
manufacturing. We develop relationships with our customers and market our vertically integrated manufacturing solutions
through our sales and marketing staff. Our sales team works closely with our customers' engineering and technical personnel to
understand their strategy and roadmaps to enable their go-to-market strategy. Our sales and marketing staff supports our
business strategy of providing end-to-end solutions by encouraging cross-selling vertically integrated manufacturing solutions
and component manufacturing across a broad range of major OEM products. We utilize our existing technical capabilities in
design, technology components, and complex assembly, integration, and after-sales services to provide tailored solutions to our
customers. With our extensive market knowledge and global/regional footprint, we can align these solutions to our facilities in
each region around the world.
Sales to our ten largest customers typically represent approximately 50% of our net sales. Nokia and Motorola each
represented 10% or more of our net sales in 2022. Nokia represented 10% or more of our net sales in 2021 and 2020.
We typically enter into supply agreements with our major OEM customers with terms ranging from three to five years.
Our supply agreements generally do not obligate the customer to purchase minimum quantities of products. However, the
customer is typically liable for the cost of the materials and components we have ordered to meet their production forecast but
which are not used, provided that the material was ordered in accordance with an agreed-upon procurement plan. In some cases,
the procurement plan contains provisions regarding the types of materials for which our customers will assume responsibility.
Our supply agreements generally contain provisions permitting cancellation and rescheduling of orders upon notice and are
subject to cancellation charges and, in some cases, rescheduling charges. In some circumstances, our supply agreements with
customers include provisions for cost reduction objectives during the term of the agreement, which can have the effect of
reducing revenue and profitability from these arrangements.
Competition
For our integrated manufacturing solutions business, we face competition from other major global EMS companies
such as Benchmark Electronics, Inc., Celestica, Inc., Flex Ltd., Hon Hai Precision Industry Co., Ltd. (Foxconn), Jabil Inc. and
Plexus Corp. Our components, products and services business faces competition from EMS and non-EMS companies that often
have a regional product, service or industry-specific focus. In addition, our potential customers may also compare the benefits
of outsourcing their manufacturing to us with the merits of manufacturing products themselves.
We compete with different companies depending on the type of solution or geographic area. We believe the primary
competitive factors in our industry include manufacturing technology, quality, global/regional footprint, delivery,
responsiveness, provision of value-added solutions and price. We believe our primary competitive strengths include our ability
to provide mission critical end-to-end solutions, product design and engineering resources, vertically integrated manufacturing
solutions, advanced technologies, global manufacturing capabilities, global supplier base, customer focus and responsiveness,
expertise in serving diverse end markets, and expertise in industry standards and regulatory requirements.
Intellectual Property
We hold U.S. and foreign patents and patent applications relating to, among other things, printed circuit board
manufacturing technology, enclosures, cables, memory modules, optical technology, medical devices and computing and
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storage. For other proprietary processes, we rely primarily on trade secret protection. A number of our patents have expired or
will expire in the near term. The expiration and abandonment of patents reduces our ability to assert claims against competitors
or others who use similar technologies and to license such patents to third parties. We have registered a number of trademarks
and have pending trademark applications in both the U.S. and internationally. Sanmina, Viking, Viking Enterprise Solutions,
Viking Technology and 42Q are registered trademarks of Sanmina Corporation.
Compliance with Government Regulations
Environmental Regulations
We are subject to a variety of local, state, federal and foreign environmental laws and regulations relating to the
storage and use of hazardous materials used in our manufacturing processes, as well as the storage, treatment, discharge,
emission and disposal of hazardous waste that are by-products of these processes. We are also subject to occupational safety
and health laws, product labeling and product content requirements, either directly or as required by our customers. Proper
waste disposal is a major consideration for printed circuit board manufacturers due to the metals and chemicals used in the
manufacturing process. Water used in the printed circuit board manufacturing process must be treated to remove metal particles
and other contaminants before it can be discharged into municipal sanitary sewer systems. We operate on-site wastewater
treatment systems at our printed circuit board manufacturing plants in order to treat wastewater generated in the fabrication
process.
Additionally, the electronics assembly process can generate lead dust. Upon vacating a facility, we are responsible for
remediating lead dust from the interior of the manufacturing facility. Although there are no applicable standards for lead dust
remediation in manufacturing facilities, we endeavor to remove the residues. To date, lead dust remediation costs have not been
material to our results of operations. We also monitor for airborne concentrations of lead in our buildings and are unaware of
any significant lead concentrations in excess of the applicable OSHA or other local standards.
We have a range of corporate programs that aim to reduce the use of hazardous materials in manufacturing. We
developed corporate-wide standardized environmental management systems, auditing programs and policies to enable better
management of environmental compliance activities. For example, almost all of our manufacturing facilities are certified under
ISO 14001, a set of standards and procedures relating to environmental compliance management. In addition, the electronics
industry must adhere to the European Union's Restrictions of Hazardous Substances (RoHS) and Waste Electrical and
Electronic Equipment (WEEE). Parallel initiatives have been adopted in other jurisdictions throughout the world, including
several states in the U.S. and the Peoples' Republic of China. RoHS limits the use of lead, mercury and other specified
substances in electronics products. WEEE requires producers to assume responsibility for the collection, recycling and
management of waste electronic products and components. We have implemented procedures intended to ensure our
manufacturing processes are compliant with RoHS and the European Union's Registration, Evaluation and Authorization of
Chemicals (REACH) legislation, when required. WEEE compliance is primarily the responsibility of OEMs.
Asbestos containing materials, or ACM, are present at several of our manufacturing facilities. Although ACM is being
managed and controls have been put in place pursuant to ACM operations and maintenance plans, the presence of ACM could
give rise to remediation obligations and other liabilities.
Our facilities generally operate under environmental permits issued by governmental authorities. For the most part,
these permits must be renewed periodically and are subject to revocation in the event of violations of environmental laws. Any
such revocation may require us to cease or limit production at one or more of our facilities, adversely affecting our results of
operations.
In connection with certain acquisitions, we have incurred liabilities associated with environmental contamination.
These include ongoing investigation and remediation activities at a number of current and former sites, including those located
in Owego, New York; Derry, New Hampshire; and Brockville, Ontario. In addition, we have been named in a lawsuit alleging
operations at our current and former facilities in Orange County, California contributed to groundwater contamination, and also
have ongoing investigation activities at and adjacent to a former facility to determine the extent of any soil, soil vapor, and
groundwater contamination. Finally, there are some sites, including our acquired facility in Gunzenhausen, Germany, which are
known to have groundwater contamination caused by a third-party, and that third-party has provided indemnification to us for
the related liability. However, in certain situations, third-party indemnities may not be effective to reduce our liability for
environmental contamination.
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We use environmental consultants primarily for risk assessments and remediation, including remedial investigation
and feasibility studies, remedial action planning and design and site remediation. Our consultants provide information regarding
the nature and extent of site contamination, acceptable remediation alternatives and estimated costs associated with each
remediation alternative. We consider their recommendations together with other information when determining the appropriate
amount to accrue for environmental liabilities.
Our capital expenditures for environmental control facilities were not material in any of the last three fiscal years and
we do not expect to make material expenditures for this purpose during the current fiscal year.
Other Regulations
We are also subject to a number of domestic and foreign regulations relating to our operations worldwide. In
particular, our sales activities must comply with restrictions relating to the export of controlled technology and sales to denied
or sanctioned parties contained in the U.S. International Traffic in Arms Regulations (ITAR), U.S. Export Administration
Regulations and sanctions administered by the Office of Foreign Asset Controls of the U.S. Treasury Department (OFAC). We
must also comply with regulations relating to the award, administration and performance of U.S. government contracts and
subcontracts with respect to our defense business, including regulations that govern price negotiations, cost accounting
standards, procurement practices, termination at the election of the government and many other aspects of performance under
government contracts and subcontracts. These regulations are complex, require extensive compliance efforts and expenditures
in the form of additional personnel, systems and processes, and, in some cases, require us to ensure that our suppliers adhere to
such regulations. Furthermore, our compliance with these regulations is subject to audit or investigation by governmental
authorities and, from time to time, we receive formal and informal inquiries from government agencies and regulators regarding
our compliance. Finally, the design, manufacture and repair of products that we conduct for the medical industry often requires
compliance with domestic and foreign regulations, including the Food and Drug Administration’s (FDA’s) quality system
regulations and the European Union’s medical device directive. In addition to complying with these standards, our medical
facilities comply with ISO 13485 (formerly EN 46002) and ISO 9001, where required. Should we be found to have violated one
or more of such regulations, we could become subject to civil damages (which in some cases can be trebled) or criminal
penalties and administrative sanctions, including fines, penalties, appointment of government monitors, termination of our
government contracts and, ultimately, debarment from doing further business with the U.S. government. Any of such results
would increase our expenses, reduce our revenue and damage our reputation as both a commercial and government supplier.
Human Capital Resources
General Information About Our Human Capital Resources
As of October 1, 2022, we had approximately 34,000 employees and approximately 4,000 temporary employees, in 24
countries.
Region
Americas
APAC
EMEA
Total
Core Principles
Approximate
Breakdown of
Employees
51 %
37 %
12 %
100 %
At Sanmina, we believe our employees are the key to our success. We cultivate an agile, innovative workplace culture
fueled by collaboration, diversity, equity and inclusion. Having highly engaged employees is essential to our culture and
achieving our mission. We embrace diverse perspectives and empower our employees to improve our organization, help us
innovate, and continuously strengthen our workplace.
As a founding member of the Responsible Business Alliance (“RBA”), the principles of the RBA are fundamental to
our corporate culture and core values and are reflected in our commitments to our customers, stakeholders, employees and
communities in which we do business around the world. We have aligned our work programs, processes and procedures to the
RBA Code of Conduct to help ensure a safe and positive work environment for our employees that emphasizes learning and
professional development, respect for individuals and ethical conduct, and that is facilitated by a direct management-employee
engagement model.
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For over a decade, we have tracked human capital metrics that we consider to be key to our business, including health
and safety, career growth and development, turnover, hiring and diversity, equity and inclusion. Management regularly reviews
these metrics and seeks to improve them.
Health and Safety
The health and safety of our employees is of utmost importance to us. In the U.S., we are subject to the requirements
of the United States Department of Labor’s Occupational Safety & Health Administration (“OSHA”) and we are guided by the
Environmental Health and Safety principles as described in the RBA’s Code of Conduct worldwide. We conduct regular self-
assessments and audits to ensure compliance with our health and safety guidelines and regulatory requirements. Our ultimate
goal is to achieve a level of work-related injuries as close to zero as possible through continuous investment in our safety
programs. We provide protective gear (e.g. eye protection, masks and gloves) as required by applicable standards and as
appropriate given employee job duties. Additionally, during the COVID-19 pandemic, we have invested heavily to help ensure
the health of our employees. Through the use of education and awareness, provision of necessary PPE, and changes to our
manufacturing sites and screening, we strive to make our workplaces a safe place for employees during the workday.
Career Growth and Development
We invest resources in professional development and growth as a means of improving employee performance and
retaining our employees. We leverage both formal and informal programs, including in-person, virtual, social and self-directed
learning, mentoring, coaching, and outside seminars and educational programs, when applicable, to identify, foster, and retain
top talent. Employees have access to courses through our learning and development platforms including Pilgrim, Sanmina
Online Education and Sanmina University.
Our performance review process is intended to promote transparent communication of team member performance,
which we believe is a key factor in our success. The performance reviews enable ongoing assessments, reviews, and mentoring
to identify career development and learning opportunities for our employees. Our emphasis on employee retention, talent
reviews, employee evaluations and succession planning contributed to a promotion rate of approximately 5% in 2022.
Turnover
We continually monitor employee turnover rates, both regionally and as a whole, as our success depends upon
retaining our highly trained manufacturing and operating personnel. We believe the combination of competitive compensation,
career growth and development opportunities have helped increase employee tenure and reduce voluntary turnover. The
average tenure of our employees is approximately seven years and approximately 30% of our employees have been employed
by us for more than ten years.
Hiring Practices
We recruit the best people for the job without regard to gender, ethnicity or other protected traits and it is our policy to
comply fully with all domestic, foreign and local laws relating to discrimination in the workplace.
Diversity, Equity and Inclusion
At Sanmina, we are focused on creating a culture of belonging where employees can be their authentic selves and
cultivate a workplace where everyone has an opportunity to succeed. Recognizing and respecting our global presence, we strive
to maintain a diverse, equitable and inclusive workforce everywhere we operate. Almost 50% of our employees worldwide are
female and, in the U.S., non-Caucasian employees account for almost 55% of the employee base. Our diversity, equity and
inclusion principles are reflected in our employee training, in particular with respect to our policies against harassment and
bullying and the elimination of bias in the workplace.
Management Engagement Practices
We believe in a direct management-employee engagement model by which managers and employees maintain a
regular dialogue about working conditions, compensation, compliance with laws and applicable standards, safety and
advancement opportunities. This model is also reflected in our training and compliance programs, which emphasize the need to
report concerns about violations of policy or law. None of our U.S. employees are represented by a labor union. In some
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international locations, our employees are represented by labor unions on either a national or plant level or are subject to
collective bargaining agreements.
Available Information
Our Internet address is http://www.sanmina.com. We make available through our website, free of charge, our Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably
practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission, or SEC. All
reports we file with the SEC are also available free of charge via EDGAR through the SEC's website at http://www.sec.gov.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following table sets forth the name, position and age of our current executive officers and their ages as of
October 1, 2022.
Name
Jure Sola
Kurt Adzema
Alan Reid
Age
71
53
59
Chairman and Chief Executive Officer
Position
Executive Vice President, Chief Financial Officer
Executive Vice President, Global Human Resources
Jure Sola has served as our Chairman and Chief Executive Officer since August 2020. Prior to that time, from
October 2017 until August 2020, Mr. Sola served as our Executive Chairman. Mr. Sola also served as our Chief Executive
Officer from April 1991 until October 2017, as Chairman of our Board of Directors from April 1991 until December 2001 and
from December 2002 until October 2017, and as Co-Chairman of our Board of Directors from December 2001 until December
2002. In 1980, Mr. Sola co-founded Sanmina and initially held the position of Vice President of Sales. In October 1987, he
became the Vice President and General Manager of Sanmina, responsible for manufacturing operations, sales and marketing.
Mr. Sola served as our President from October 1989 to March 1996.
Kurt Adzema has served as our Executive Vice President and Chief Financial Officer since October 2019. Mr. Adzema
previously served as the Executive Vice President, Finance and Chief Financial Officer of Finisar Corporation, an optical
components company, from March 2010 until September 2019. Prior to March 2010, Mr. Adzema held the positions of Vice
President of Strategy and Corporate Development at Finisar, which he joined in 2005. Prior to joining Finisar, Mr. Adzema held
various positions at SVB Alliant, a subsidiary of Silicon Valley Bank, which advised technology companies on merger and
acquisition transactions, at Montgomery Securities/Banc of America Securities, an investment banking firm, and in the financial
restructuring group of Smith Barney.
Alan Reid has served as our Executive Vice President of Global Human Resources since October 2012. Mr. Reid has
held various roles at Sanmina, including Senior Vice President of Global Human Resources and Human Resources Director of
EMEA, from July 2001 to October 2012. Prior to joining us, he was Group Human Resources Manager at Kymata Ltd., an
optoelectronic technology startup from June 2000 to July 2001. Prior to Kymata, Mr. Reid held various roles in operations and
human resources with The BOC Group PLC. (British Oxygen Company), a global industrial gases and engineering company,
from September 1986 to June 2000.
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Item 1A. Risk Factors
End Market and Operational Risks
Worldwide supply chain shortages caused by supply/demand imbalances, most notably in the semiconductor industry, the
COVID-19 pandemic and geopolitical events are collectively limiting our ability to manufacture and ship all of the products,
for which we have demand; our profitability will be reduced if we are unable to pass on increasing component costs.
Our supply chain is being significantly impacted by a number of factors, including supply/demand imbalances, most
notably in the semiconductor industry, interruptions in supplier and port operations due to the COVID-19 pandemic during a
time when strong worldwide demand for electronic products and components has resumed and geopolitical events, such as the
war in Ukraine. As a result, we are experiencing delays in delivery and shortages of certain components, particularly certain
types of capacitors, resistors and discrete semiconductors needed for many of the products we manufacture. These conditions
have limited our ability to manufacture and ship all of the products for which we have demand and that require these
components and have resulted in an increase in our inventories of other components that cannot be assembled into finished
products without these components. These factors are exacerbated by the fact that we are dependent on a number of limited and
sole source suppliers to provide key components, which we incorporate into our products. We expect these delays and shortages
to persist through at least the remainder of calendar year 2022 and that such shortages could result in delays in shipments to our
customers during the period of such shortages. Any such delays would reduce our revenue, margins and operating cash flow for
the periods affected.
In addition, inflationary pressures resulting from supply chain constraints and generally improved economic conditions
are leading to sustained increases in the prices we pay for components and materials used in production and in our labor and
transportation costs. While we seek to pass on to our customers the increased prices for components and shipping, plus a
margin, our gross margins and profitability could decrease, perhaps significantly, over a sustained period of time if we are
unable to do so.
The COVID-19 pandemic has had, and may continue to have, a significant impact on our results of operations and financial
condition by reducing demand from our customers, interrupting the flow of components needed for our customers’
products, limiting the operations or productivity of our manufacturing facilities and creating health risks to our employees.
Our business, operations and results of operations were significantly and negatively impacted by the COVID-19
pandemic over the past two years. Among other impacts, the pandemic:
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•
Resulted in the temporary closure of certain of our facilities;
Temporarily reduced the amount of staffing at certain of our plants;
Required us in some cases to pay staff who are not able to work due to government orders or illness;
Limited the capacity of logistics providers to deliver the components we use and ship the products we manufacture;
Reduced demand for certain of our customers’ products;
Resulted in interruptions in supply of components, either because our suppliers have themselves been prevented from
operating or because major distribution channels (e.g. sea transport) were disrupted by the pandemic; and
Resulted in certain of our customers and suppliers experiencing financial difficulties, which could impact their ability
or willingness to satisfy their payment or delivery obligations, respectively, to us in the future.
Although conditions have improved in many of the regions in which we operate, we cannot predict when the
COVID-19 pandemic will cease to present risks to our business due to a large number of uncertainties, including the duration of
ongoing supply chain constraints directly and indirectly caused by the pandemic, the extent of the impact of the pandemic on
our customers’ businesses, the number of our employees who may become infected, the continued efficacy and availability of
COVID-19 vaccines and treatments, the geographic locations of any future outbreaks, including outbreaks caused by variants of
COVID-19, such as the Omicron variant of COVID-19 and its subvariants, and actions that government authorities may take in
response. For example, China continues to maintain a “zero tolerance” policy towards COVID-19 infections, which has
disrupted and could continue to disrupt our operations and our suppliers operations there. Thus, we believe that the pandemic
could continue to have a negative impact on our business, results of operations and financial condition for the foreseeable
future.
Adverse changes in the key end markets we target could harm our business by reducing our sales.
We provide products and services to companies that serve the industrial, medical, defense and aerospace, automotive,
communications networks and cloud infrastructure industries. Adverse changes in any of these end markets could reduce
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demand for our customers’ products or make these customers more sensitive to the cost of our products and services, either of
which could reduce our sales, gross margins and net income. A number of factors could affect these industries in general and
our customers in particular, leading to reductions in net sales. These factors include:
•
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•
intense competition among our customers and their competitors, leading to reductions in prices for their products and
increases in pricing pressure placed on us;
failure of our customers’ products to gain widespread commercial acceptance, which could decrease the volume of
orders our customers place with us;
changes in regulatory requirements affecting the products we build for our customers, leading to product redesigns or
obsolescence and potentially causing us to lose business; and
the negative effects of inflation and any potential resultant recession on customer demand.
We realize a substantial portion of our revenues from communications equipment customers. This market is highly
competitive, particularly in the area of price. Should any of our larger customers in this market fail to effectively compete with
their competitors, they could reduce their orders to us or experience liquidity difficulties, either of which could have the effect
of substantially reducing our revenue and net income. There can be no assurance that we will not experience declines in demand
in this or in other end markets in the future.
Our operating results are subject to significant uncertainties, which can cause our future sales, net income and cash
generated from operations to be variable.
Our operating results can vary due to a number of significant uncertainties, including:
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our ability to replace declining sales from end-of-life programs and customer disengagements with new business wins;
conditions in the global economy as a whole and in the industries we serve, which have been significantly impacted by
the COVID-19 pandemic;
fluctuations in component prices, component shortages and extended component lead times caused by high demand
and supply chain constraints, disruptions relating to the COVID-19 pandemic, geopolitical events, such as the war in
Ukraine, natural disasters or otherwise;
timing and success of new product developments and ramps by our customers, which create demand for our services,
but which can also require us to incur start-up costs relating to new tooling and processes;
levels of demand in the end markets served by our customers;
timing of orders from customers and the accuracy of their forecasts;
our inventory levels, which have been driven higher as a result of ongoing supply chain disruptions, with higher levels
of inventory reducing our operating cash flow;
customer payment terms and the extent to which we factor customer receivables during the quarter;
increasing labor costs in the regions in which we operate;
•
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• mix of products ordered by and shipped to major customers, as high volume and low complexity manufacturing
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services typically have lower gross margins than more complex and lower volume services;
our ability to pass tariffs and price increases of components through to our customers;
resolution of quality or other claims made by our customers;
the degree to which we are able to fully utilize our available manufacturing capacity;
customer insolvencies resulting in bad debt or inventory exposures that are in excess of our reserves;
our ability to efficiently move manufacturing operations to lower cost regions when requested by our customers;
changes in our tax provision due to changes in our estimates of pre-tax income in the jurisdictions in which we operate,
uncertain tax positions and our continued ability to utilize our deferred tax assets; and
political and economic developments in countries in which we or our customers or our suppliers have operations,
which could restrict our operations or those of our suppliers and/or customers or increase our costs.
Variability in our operating results may also lead to variability in cash generated by operations, which can adversely
affect our ability to make capital expenditures, engage in strategic transactions and repurchase stock.
We are subject to risks arising from our international operations.
The substantial majority of our net sales are generated through our non-U.S. operations. As a result, we are or can be
negatively impacted by economic, political and other conditions in the foreign countries in which we do business, including:
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changes in trade and tax laws that may result in us or our customers being subject to increased taxes, duties and tariffs
and import and export restrictions, which could increase our costs and/or reduce our customers’ willingness to use our
services in countries in which we are currently manufacturing their products;
compliance with foreign laws, including labor laws that generally provide for increased notice, severance and
consultation requirements compared to U.S. labor laws;
labor unrest, including strikes;
difficulties in staffing due to immigration or travel restrictions imposed by national governments, including the U.S.;
security concerns;
political instability and/or regional military tension or hostilities, such as the war in Ukraine, the possibility of such
conflict broadening to areas outside of Ukraine, and the actions taken by national governments in response to such
hostilities, such as sanctions and export bans;
fluctuations in currency exchange rates, which may either increase or decrease our operating costs and for which we
have significant exposure;
the imposition of currency controls, which would have the effect of preventing us from repatriating profits from our
foreign subsidiaries;
exposure to heightened corruption risks;
aggressive, selective or lax enforcement of laws and regulations by national governmental authorities; and
potentially increased risk of misappropriation of intellectual property.
We operate in countries that have experienced labor unrest, political instability or conflict and strife in the past,
including China, India, Israel, Malaysia, Mexico and Thailand, and we have experienced work stoppages and similar
disruptions at our plants in these countries. To the extent these factors prevent us from adequately staffing our plants and
manufacturing and shipping products in those jurisdictions, our margins and net income could be reduced and our reputation as
a reliable supplier could be negatively impacted.
We rely on a relatively small number of customers for a substantial portion of our sales, and declines in sales to these
customers could significantly reduce our net sales and net income.
Sales to our ten largest customers have historically represented approximately half of our net sales. We expect to
continue to depend upon a relatively small number of customers for a significant percentage of our sales for the foreseeable
future. The loss of, a significant reduction in sales or pricing to, or an inability to recover components liabilities from our largest
customers could therefore substantially reduce our revenue and margins.
Current U.S. trade policy could increase the cost of using both our onshore and offshore manufacturing services for our
U.S. customers, leading them to reduce their orders to us.
Although we maintain significant manufacturing capacity in the U.S., the majority of our manufacturing operations are
located outside the U.S. The U.S., China, the E.U. and several other countries have imposed tariffs on certain imported
products. In particular, the U.S. has imposed tariffs impacting certain components and products imported from China by us into
the U.S. These tariffs apply to both components imported into the U.S. from China for use in the manufacture of products at our
U.S. plants and to certain of our customers’ products that we manufacture for them in China and that are then imported into the
U.S. Any decision by a large number of our customers to cease using our manufacturing services due to the application of
tariffs would materially reduce our revenue and net income. In addition, our gross margins would be reduced in the event we
are for any reason unable to pass on any tariffs that we incurred to our customers. Although our customers are generally liable
for tariffs we pay on their behalf on importation of components used in the manufacture of their products, our gross margins
would be reduced in the event we were for any reason unable to recover tariffs or duties from our customers. Further, although
we are required to pay tariffs upon importation of the components, we may not be able to recover these amounts from
customers until sometime later, if at all, which would adversely impact our operating cash flow in a given period.
Customer order cancellations, push-outs and reduced forecasts could reduce our sales, net income and liquidity.
We generally do not obtain firm, long-term purchase commitments from our customers and our bookings may
generally be canceled prior to the scheduled shipment date. Although customers are generally liable for components we procure
on their behalf, finished goods and work-in-process at the time of cancellation, customers may fail to honor this commitment or
we may be unable or, for other business reasons, choose not to enforce our contractual rights. Cancellations, reductions or push-
outs of orders by customers and reduced customer forecasts customers could cause our inventory levels to increase, consuming
working capital, lead to write-offs of inventory that customers fail to purchase for any reason and reduce our sales, net income
and liquidity.
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Our strategy to pursue higher margin business depends in part on the success of our CPS businesses, which, if not
successful, could cause our future gross margins and operating results to be lower.
A key part of our strategy to capitalize on our ability to provide end-to-end manufacturing solutions is to grow our
Components, Products and Services (“CPS”) businesses, which supplies printed circuit boards, backplane and backplane
assemblies, cable assemblies, fabricated metal parts, precision machined parts, and plastic injected molded parts, memory, RF,
optical and microelectronic solutions, and data storage solutions and design, engineering, logistics and repair services and our
SCI defense and aerospace products. A decrease in orders for these components, products and services can have a
disproportionately adverse impact on our profitability since these components, products and services generally carry higher than
average contribution margins than our core IMS business. In addition, in order to grow this portion of our business profitably,
we must continually make substantial investments in the development of our product development capabilities, research and
development activities, test and tooling equipment and skilled personnel, all of which reduce our operating results in the short
term. The success of our CPS businesses also depends on our ability to increase sales of our proprietary products, convince our
customers to purchase our components rather than those of third parties for use in the manufacture of their products, and expand
the number of our customers who contract for our design, engineering, logistics and repair services. We may face challenges in
achieving commercially viable yields and difficulties in manufacturing components in the quantities and to the specifications
and quality standards required by our customers, as well as in qualifying our components for use in our customers’ designs. Our
proprietary products and design, engineering, logistics and repair services must compete with products and services offered by
established vendors which focus solely on development of similar technologies or the provision of similar services. Any of
these factors could reduce the revenue and margins of our CPS businesses, which in turn would have an adverse and potentially
disproportionate effect on our overall revenues and profitability.
Customer requirements to transfer business may increase our costs.
Our customers sometimes require that we transfer the manufacturing of their products from one of our facilities to
another to achieve cost reductions, tariff reductions and other objectives. These transfers have resulted in increased costs to us
due to facility downtime, less than optimal utilization of our manufacturing capacity and delays and complications related to the
transition of manufacturing programs to new locations. These transfers, and any decision by a significant customer to terminate
manufacturing services in a particular facility, could require us to close or reduce operations at certain facilities and, as a result,
we may incur in the future significant costs for the closure of facilities, employee severance and related matters. We may be
required to relocate additional manufacturing operations in the future and, accordingly, we may incur additional costs that
decrease our net income.
Transfers of our operations to other facilities caused by lease terminations could cause disruptions in our ability to service
our customers
Certain of our foreign manufacturing facilities are leased from third parties. To the extent we are unable to renew the
leases covering such facilities as they expire on reasonable terms, or are forced to move our operations at those facilities to
other locations as a result of a failure to agree upon renewal terms, production for our customers may be interrupted, we may
breach our customer agreements, we could incur significant start-up costs at new facilities and our lease expense may increase,
potentially significantly.
Regulatory, Compliance and Litigation Risks
We are subject to a number of U.S. export control and other regulatory requirements, with which the failure to comply could
result in fines and reduction of future revenue.
We are subject to a number of laws and regulations relating to the export of U.S. technology, anti-corruption and the
award, administration and performance of U.S. government contracts and subcontracts. In particular, our activities must comply
with the restrictions relating to the export of controlled technology and sales to denied or sanctioned parties contained in the
International Traffic in Arms Regulations (“ITAR”), the U.S. Export Administration Regulations and sanctions administered by
the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”). The U.S. Commerce Department recently
released rules that in some cases significantly restrict the export of U.S. technology to or from China. These laws could
negatively impact our operations in China by making it more difficult to import components containing U.S. technology into
China and to export finished products containing such components out of China. Any failure to comply with export control laws
could result in significant fines or penalties. We must also comply with regulations relating to the award, administration and
performance of U.S. government contracts and subcontracts with respect to our defense business, including regulations that
govern price negotiations, cost accounting standards, procurement practices, termination at the election of the government and
many other aspects of performance under government contracts and subcontracts. These laws and regulations are complex,
require extensive compliance efforts and expenditures in the form of additional systems and personnel, and, in some cases,
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require us to ensure that our suppliers adhere to such regulations. Furthermore, our compliance with such regulations is subject
to audit or investigation by governmental authorities. From time to time, we receive formal and informal inquiries from
government agencies and regulators regarding our compliance. Should we be found to have violated one or more of such laws
or regulations, we could become subject to civil damages (which in some cases could be trebled) or criminal penalties and
administrative sanctions, including appointment of government monitors, termination of our government contracts and,
ultimately, debarment from doing further business with the U.S. government. Any of such results would increase our expenses,
reduce our revenue and damage our reputation as both a commercial and government supplier.
If we manufacture or design defective products, if there are manufacturing defects in the components we incorporate into
customer products or if our manufacturing processes do not comply with applicable statutory and regulatory requirements
and standards, we could be subject to claims, damages and fines and lose customers.
We manufacture products to our customers’ specifications, and in some cases our manufacturing processes and
facilities need to comply with various statutory and regulatory requirements and standards. For example, many of the medical
products that we manufacture, as well as the facilities and manufacturing processes that we use to produce them, must comply
with standards established by the U.S. Food and Drug Administration and products we manufacture for the automotive end
market are generally subject to the IATF 16949:2016 standard. In addition, our customers’ products and the manufacturing
processes that we use to produce them often are highly complex. As a result, products that we design or manufacture may at
times contain design or manufacturing defects, and our manufacturing processes may be subject to errors or may not be in
compliance with applicable statutory and regulatory requirements and standards. Finally, customer products can experience
quality problems or failures as a result of defects in the components they specify to be included in the products we manufacture
for them. Defects in the products we design or manufacture, even if caused by components specified by the customer, may
result in product recalls, warranty claims by customers, including liability for repair costs, delayed shipments to customers or
reduced or canceled customer orders. The failure of the products that we design or manufacture or of our manufacturing
processes and facilities to comply with applicable statutory and regulatory requirements and standards may subject us to legal
fines or penalties, cause us to lose business and, in some cases, require us to shut down or incur considerable expense to correct
a manufacturing program or facility. In addition, these defects may result in product liability claims against us by third parties.
The risk and magnitude of such claims may increase as we continue to expand our presence in the medical and automotive end
markets since defects in these types of products can result in death or significant injury to end users of these products. Even
when our customers are contractually responsible for defects in the design of a product and defects in components used in the
manufacture of such products, there is no guarantee that these customers will have the financial resources to indemnify us for
such liabilities and we could nonetheless be required to expend significant resources to defend ourselves if named in a product
liability suit over such defects.
If we are unable to protect our intellectual property or if we infringe, or are alleged to infringe, upon the intellectual
property of others, we could be required to pay significant amounts in costs or damages.
We rely on a combination of copyright, patent, trademark and trade secret laws and contractual restrictions to protect
our intellectual property rights. However, a number of our patents covering certain aspects of our manufacturing processes or
products have expired and will continue to expire in the future. Such expirations reduce our ability to assert claims against
competitors or others who use or sell similar technology. Any inability to protect our intellectual property rights could diminish
or eliminate the competitive advantages that we derive from our proprietary technology. In addition, should a current or former
employee use or disclose any of our or our customers’ proprietary information, we could become subject to legal action by our
customers or others, our key technologies could become compromised and our ability to compete could be adversely impacted.
In addition, we may become involved in administrative proceedings, lawsuits or other proceedings if others allege that
the products we manufacture for our customers or our own manufacturing processes and products infringe on their intellectual
property rights. If successful, such claims could force our customers and us to stop importing or producing products or
components of products that use the challenged intellectual property, to pay up to treble damages and to obtain a license to the
relevant technology or to redesign those products or services so as not to use the infringed technology. The costs of defense and
potential damages and/or impact on production of patent litigation could be significant and have a materially adverse impact on
our financial results. In addition, although our customers typically indemnify us against claims that the products we
manufacture for them infringe others’ intellectual property rights, there is no guaranty that these customers will have the
financial resources to stand behind such indemnities should the need arise, nor is there any guarantee that any such indemnity
could be fully enforced. We sometimes design products on a contract basis or jointly with our customers. In such situations, we
may become subject to claims that products we design infringe third party intellectual property rights and may also be required
to indemnify our customer against liability caused by such claims.
Any of these events could reduce our revenue, increase our costs and damage our reputation with our customers.
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Allegations of failures to comply with domestic or international employment and related laws could result in the payment of
significant damages, which would reduce our net income.
We are subject to a variety of domestic and foreign employment laws, including those related to safety, wages and
overtime, discrimination, harassment, organizing, whistleblowing, classification of employees, privacy and severance
payments. We may be required to defend against allegations that we have violated such laws. Allegations that we have violated
labor laws could lead to damages being awarded to employees or fines from or settlements with plaintiffs or federal, state or
foreign regulatory authorities, the amounts of which could be substantial, and which would reduce our net income. For
example, in the first quarter of 2022, we paid approximately $4 million in a judicially approved settlement in connection with a
lawsuit against the Company alleging violations of California Labor Code provisions governing overtime, meal and rest
periods, wages, wage statements and reimbursements of business expenses.
Cyberattacks and other disruptions of our information technology network and systems could interrupt our operations, lead
to loss of our customer and employee data and subject us to damages.
We rely on internal and cloud-based networks and systems furnished by third parties for worldwide financial
reporting, inventory management, procurement, invoicing, employee payroll and benefits administration and email
communications, among other functions. In addition, our 42Q manufacturing execution solutions software used by us and
certain of our customers operates in the cloud. Despite our business continuity planning, including maintaining redundant data
sites and network availability, both our internal and cloud-based infrastructure may be susceptible to outages due to fire, floods,
power loss, telecommunications failures, terrorist attacks and similar events. In addition, despite the implementation of
numerous network security measures, both our internal and our cloud-based infrastructure may also be vulnerable to hacking,
computer viruses, the installation of malware and similar disruptions either by third parties or employees with access to key IT
infrastructure. Cybersecurity attacks can come in many forms, including distributed denial of service attacks, advanced
persistent threat, phishing, business email compromise efforts and ransomware attacks. Recently, a cyberattack involving
malware delivered through network monitoring software sold by SolarWinds resulted in the penetration of the systems of a
multitude of governmental and commercial entities. While we were not affected by this cyberattack, there can be no assurance
that a future malware attack will not be successful in breaching our systems. Hacking, malware and other cybersecurity attacks,
if not prevented, could lead to the collection and disclosure of sensitive personal or confidential information relating to our
customers, employees or others, exposing us to legal liability and causing us to suffer reputational damage. In addition, our SCI
defense and aerospace business is subject to U.S. government regulations requiring the safeguarding of certain unclassified
government information and to report to the U.S. government certain cyber incidents that affect such information. The
increasing sophistication of cyberattacks requires us to continually evaluate new technologies and processes intended to detect
and prevent these attacks. Our insurance coverage for cyberattacks is limited. There can be no assurance that our cybersecurity
measures will be sufficient to protect the data we manage. If we and our cloud infrastructure vendors are not successful in
preventing such outages and cyberattacks, our operations could be disrupted, we could incur losses, including losses relating to
claims by our customers, employees or privacy regulators relating to loss of personal or confidential business information, the
willingness of customers to do business with us may be damaged and, in the case of our defense business, we could be barred
from future participation in U.S. government programs.
Global, national and corporate initiatives addressing climate change could increase our costs.
Concern over climate change may lead to state, federal and international legislative and regulatory initiatives aimed at
reducing carbon dioxide and other greenhouse gas emissions through incentives, taxes or mandates and there is increased
stockholder interest generally in voluntary corporate commitments to reduce the generation of greenhouse gases. Collectively,
such initiatives and commitments could lead to an increase in both the price of energy and our operating costs. A sustained
increase in energy prices for any reason could increase our raw material, components, operations and transportation costs,
which we may not be able to pass on to our customers and which would therefore reduce our profitability, as would increased
operating costs and investments due to our adoption, whether voluntary or mandatory, of measures to reduce our carbon
footprint. We could also suffer reputational damage if our sustainability practices are perceived to be inadequate.
Any failure to comply with applicable environmental laws could adversely affect our business by causing us to pay
significant amounts for cleanup of hazardous materials or for damages or fines.
We are subject to various federal, state, local and foreign environmental laws and regulations, including those
governing the use, generation, storage, discharge and disposal of hazardous substances and waste in the ordinary course of our
manufacturing operations. If we violate environmental laws or if we own or operate, or owned or operated in the past, a site at
which we or a predecessor company caused contamination, we may be held liable for damages and the costs of remedial
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actions. For example, in June 2022, a court issued a tentative ruling finding us liable for certain investigation costs relating to a
site owned by a predecessor company in Southern California at which a disposal was alleged to have occurred. Although we
estimate and regularly reassess our potential liability with respect to violations or alleged violations and accrue for such
liability, our accruals may not be sufficient. Any increase in existing reserves or establishment of new reserves for
environmental liability would reduce our net income. Our failure or inability to comply with applicable environmental laws and
regulations could also limit our ability to expand facilities or could require us to acquire costly equipment or to incur other
significant expenses to comply with these laws and regulations.
Partly as a result of certain of our acquisitions, we have incurred liabilities associated with environmental
contamination. These liabilities include ongoing investigation and remediation activities at a number of current and former
sites. The time required to perform environmental remediation can be lengthy and there can be no assurance that the scope, and
therefore cost, of these activities will not increase as a result of the discovery of new contamination or contamination on
adjoining landowners’ properties or the adoption of more stringent regulatory standards covering sites at which we are currently
performing remediation activities.
We cannot assure that past disposal activities will not result in liability that will materially affect us in the future, nor
can we provide assurance that we do not have environmental exposures of which we are unaware and which could adversely
affect our future operating results. Changes in or restrictions on discharge limits, emissions levels, permitting requirements and
material storage or handling could require a higher than anticipated level of remediation activities, operating expenses and
capital investment or, depending on the severity of the impact of the foregoing factors, costly plant relocation, any of which
would reduce our net income.
Changes in financial accounting standards or policies have affected, and in the future may affect, our reported financial
condition or results of operations; there are inherent limitations to our system of internal controls; changes in corporate
governance policies and practices may impact our business.
We prepare our consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles
(“GAAP”). The preparation of our financial statements in accordance with GAAP requires that we make estimates and
assumptions that affect the recorded amounts of assets, liabilities and net income during the reporting period. A change in the
facts and circumstances surrounding those estimates could result in a change to our estimates and could impact our future
operating results. GAAP is subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC and
various bodies formed to interpret and create accounting policies. A change in those policies can have a significant effect on our
reported results and may affect our reporting of transactions which are completed before a change is announced. For example,
in fiscal 2019, we implemented the new revenue recognition standard, which is complex and requires significant management
judgment. Although we believe the judgments we applied in implementation of the new revenue recognition standard are
appropriate, there can be no assurance that we will not be required to change our judgments relating to implementation of such
standard in the future, whether as a result of new guidance or otherwise. A significant change in our accounting judgments
could have a significant impact on our reported revenue, gross profit, assets and liabilities. In general, changes to accounting
rules or challenges to our interpretation or application of the rules by regulators may have a material adverse effect on our
reported financial results or on the way we conduct business.
Our system of internal and disclosure controls and procedures were designed to provide reasonable assurance of
achieving their objectives. However, no evaluation of controls can provide absolute assurance that all control issues and
instances of fraud, if any, have been or will be detected. As a result, there can be no assurance that our system of internal and
disclosure controls and procedures will be successful in preventing all errors, theft and fraud, or in informing management of all
material information in a timely manner.
Finally, corporate governance, public disclosure and compliance practices continue to evolve based upon continuing
legislative action, SEC rulemaking and policy positions taken by large institutional stockholders and proxy advisors. As a
result, the number of rules, regulations and standards applicable to us may become more burdensome to comply with, could
increase scrutiny of our practices and policies by these or other groups and increase our legal and financial compliance costs
and the amount of time management must devote to governance and compliance activities. For example, the SEC has recently
proposed rules requiring that issuers provide significantly increased disclosures concerning cybersecurity matters and the
impact of climate changes on their business. Increasing regulatory burdens and corporate governance requirements could also
make it more difficult for us to attract and retain qualified members of our Board of Directors and qualified executive officers.
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Liquidity and Credit Risks
Our customers could experience credit problems, which could reduce our future revenues and net income.
Certain of our customers have experienced significant financial difficulties in the past, with a few filing for
bankruptcy. Financial difficulties experienced by one or more of our customers, could negatively affect our business by
decreasing demand from such customers and through the potential inability of these companies to make full payment on
amounts owed to us. Customer bankruptcies also entail the risk of potential recovery by the bankruptcy estate of amounts
previously paid to us that are deemed a preference under bankruptcy laws. There can be no assurance that additional customers
will not declare bankruptcy or suffer financial distress, in which case our future revenues, net income and cash flow could be
reduced.
We may be unable to generate sufficient liquidity to maintain or expand our operations, which would reduce the amount of
business our customers and vendors are able to do with us and impact our ability to continue operations at current levels
without seeking additional funding; we could experience losses if one or more financial institutions holding our cash or
other financial counterparties were to fail; repatriation of foreign cash could increase our taxes.
Our liquidity is dependent on a number of factors, including profitability, business volume, inventory requirements,
the extension of trade credit by our suppliers, the degree of alignment of payment terms from our suppliers with payment terms
granted to our customers, the amount we invest in our facilities and equipment, the timing of acquisitions and divestitures, the
schedule for repayment of our outstanding indebtedness, the timing of stock repurchases, availability under the Fifth Amended
and Restated Credit Agreement, dated as of September 27, 2022, as amended (the “Amended Cash Flow Revolver”), and the
amount of accounts receivable eligible for sale under our factoring programs. In the event we need or desire additional liquidity
beyond the sources described above to maintain or expand our business levels, make acquisitions or repurchase stock, there can
be no assurance that such additional liquidity will be available on acceptable terms or at all. Any failure to maintain adequate
liquidity would prevent us from maintaining operations at current or desired levels, which in turn would reduce both our
revenue and profitability.
Although we believe our existing cash resources and sources of liquidity, together with cash generated from
operations, will be sufficient to meet our working capital requirements for at least the next 12 months, should demand for our
services increase significantly over the next 12 months or should we experience significant increases in delinquent or
uncollectible accounts receivable for any reason, including in particular worsening economic conditions caused by the
COVID-19 pandemic or otherwise, our cash provided by operations could decrease significantly and we could be required to
seek additional sources of liquidity to continue our operations at their current level. In such a case, there can be no assurance
that such additional sources of financing would be available.
A principal source of our liquidity is our cash and cash equivalents, which are held with various financial institutions.
Although we distribute such funds among a number of financial institutions that we believe to be of high quality, there can be
no assurance that one or more of such institutions will not become insolvent in the future, in which case all or a portion of our
uninsured funds on deposit with such institutions could be lost. Finally, if one or more counterparties to our interest rate or
foreign currency hedging instruments were to fail, we could suffer losses and our hedging of risk could become less effective.
Approximately 50% of our cash is held in foreign jurisdictions. Some of these jurisdictions restrict the amount of cash
that can be transferred to the U.S. or impose taxes and penalties on such transfers of cash. To the extent we have excess cash in
foreign locations that could be used in, or is needed by, our U.S. operations, we may incur significant foreign taxes to repatriate
these funds which would reduce the net amount ultimately available for such purposes.
Our Amended Cash Flow Revolver contains covenants that may adversely impact our business; the failure to comply with
such covenants or the occurrence of an event of default could cause us to be unable to borrow additional funds and cause
our outstanding debt to become immediately payable.
Our Amended Cash Flow Revolver contains a maximum leverage and minimum interest coverage ratio, in both cases
measured on the basis of a trailing 12-month look-back period, and a number of restrictive covenants, including restrictions on
incurring additional debt, making investments and other restricted payments, selling assets and paying dividends, subject to
certain exceptions, with which we must comply. Collectively, these covenants could constrain our ability to grow our business
through acquisition or engage in other strategic transactions. Such facility also contains customary events of default, including
that a material business interruption or cessation has not occurred. Finally, such facility includes covenants requiring, among
other things, that we file quarterly and annual financial statements with the SEC, comply with all laws, pay all taxes and
maintain casualty insurance. If we are not able to comply with these covenants or if an event of default were to occur and not be
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cured, all of our outstanding debt would become immediately due and payable and the incurrence of additional debt under our
Amended Cash Flow Revolver would not be allowed, either of which would have a material adverse effect on our liquidity and
ability to continue to conduct our business.
General Risk Factors
We are subject to intense competition in the EMS industry, which could cause us to lose sales and, therefore, harm our
financial performance.
The EMS industry is highly competitive and the industry has experienced a surplus of manufacturing capacity. Our
competitors include major global EMS providers, including Benchmark Electronics, Inc., Celestica, Inc., Flex Ltd., Hon Hai
Precision Industry Co., Ltd. (Foxconn), Jabil Circuit, Inc. and Plexus Corp., as well as other companies that have a regional,
product, service or industry-specific focus. We also face competition from current and potential OEM customers who may elect
to manufacture their own products internally rather than outsourcing to EMS providers.
Competition is based on a number of factors, including end markets served, price and quality. We may not be able to
offer prices as low as some of our competitors for any number of reasons, including the willingness of competitors to provide
EMS services at prices we are unable or unwilling to offer. There can be no assurance that we will win new business or
maintain existing business due to competitive factors, which could decrease our sales and net income. In addition, due to the
extremely price sensitive nature of our industry, business that we do win or maintain may have lower margins than our
historical or target margins. As a result, competition may cause our gross and operating margins to fall.
Consolidation in the electronics industry may adversely affect our business by increasing customer buying power and
increasing prices we pay for components.
Consolidation in the electronics industry among our customers, our suppliers and/or our competitors may increase,
which could result in a small number of very large electronics companies offering products in multiple sectors of the electronics
industry. If one of our customers is acquired by another company that does not rely on us to provide EMS services, we may lose
that customer’s business. Similarly, consolidation among our suppliers could result in a sole or limited source for certain
components used in our customers’ products. Any such consolidation could cause us to be required to pay increased prices for
such components, which could reduce our gross margin and profitability if we are unable to pass on the corresponding cost to
our customers.
Unanticipated changes in our income tax rates or exposure to additional tax liabilities could increase our taxes and decrease
our net income; our projections of future taxable income that drove the release of our valuation allowance in prior years
could prove to be incorrect, which could cause a charge to earnings.
We are or may become subject to income, sales, value-added, goods and services, withholding and other taxes in the
United States and various foreign jurisdictions. Significant judgment is required in determining our worldwide provision for
taxes and, in the ordinary course of business, there are many transactions and calculations for which the ultimate tax
determination is uncertain. Our effective income tax rates and liability for other taxes could increase as a result of changes in
the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities,
changes in enacted tax laws, the effectiveness of our cash and tax management strategies, our ability to negotiate advance
pricing agreements with foreign tax authorities, compliance with local trade laws and other factors. International initiatives
require multinational enterprises, like ours, to report profitability on a country-by-country basis, which could increase scrutiny
by foreign tax authorities. In addition, our tax determinations are regularly subject to audit by tax authorities. For example, we
are currently undergoing audits of our tax returns for certain recent tax years in a number of jurisdictions, including the United
States. Developments in these or future audits could adversely affect our tax provisions, including through the disallowance or
reduction of deferred tax assets or the assessment of back taxes, interest and penalties, any of which could result in an increase
to income tax expense and therefore a decrease in our net income.
We can experience losses due to foreign exchange rate fluctuations and currency controls, which could reduce our net
income and impact our ability to repatriate funds.
Because we manufacture and sell the majority of our products abroad, our operating results can be negatively impacted
due to fluctuations in foreign currency exchange rates, particularly in volatile currencies to which we are exposed, such as the
Euro, Mexican peso, Malaysian ringgit and Chinese renminbi. We use financial instruments, primarily short-term foreign
currency forward contracts, to hedge our exposure to exchange rate fluctuations. However, the success of our foreign currency
hedging activities in preventing foreign exchange losses depends largely upon the accuracy of our forecasts of future sales,
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expenses, capital expenditures and assets and liabilities. As such, our foreign currency hedging program may not fully cover all
of our exposure to exchange rate fluctuations. If our hedging activities are not successful, our net income may be reduced. In
addition, certain countries in which we operate have adopted currency controls requiring that local transactions be settled only
in local currency rather than in our functional currency, which is generally different than the local currency. Such controls could
require us to hedge larger amounts of local currency than we otherwise would and/or prevent us from repatriating cash
generated by our operations in such countries.
We may not have sufficient insurance coverage for potential claims and losses, which could leave us responsible for certain
costs and damages.
We carry various forms of business and liability insurance in types and amounts we believe are reasonable and
customary for similarly situated companies in our industry. However, our insurance program does not generally cover losses
due to failure to comply with typical customer warranties for workmanship, product and medical device liability, intellectual
property infringement, product recall claims, or environmental contamination. In particular, our insurance coverage with respect
to damages to or closure of our facilities, or damages to our customers’ products caused by cyberattacks and certain natural
disasters, such as earthquakes, epidemics and pandemics (such as the COVID-19 pandemic), is limited and is subject to policy
deductibles, coverage limits, and exclusions, and as a result, may not be sufficient to cover all of our losses. For example, our
policies have very limited coverage for damages due to earthquakes or losses caused by business disruptions. In addition, such
coverage may not continue to be available at commercially reasonable rates and terms. Our policies generally have deductibles
and/or limits or may be limited to certain lines or business or customer engagements that reduce the amount of our potential
recoveries from insurance. As a result, not all of our potential business losses are covered under our insurance policies. Should
we sustain a significant uncovered loss, our net income will be reduced. Additionally, if one or more counterparties to our
insurance coverage were to fail, we would bear the entire amount of an otherwise insured loss.
Recruiting and retaining our key personnel is critical to the continued growth of our business.
Our success depends upon the continued service of our key personnel, particularly our highly skilled sales and
operations executives, managers and engineers with many years of experience in the EMS industry. Such individuals can be
difficult to identify, recruit and retain and are heavily recruited by our competitors. As our key employees choose to retire or
terminate their employment with us, we will be required to replace them with new employees with the required experience. This
has become more difficult in the U.S. recently due to the strong employment market. Should we be unable to recruit new
employees to fill key positions with us, our operations and growth prospects could be negatively impacted.
We may not be successful in implementing and integrating strategic transactions or in divesting assets or businesses, which
could harm our operating results; we could become required to book a charge to earnings should we determine that goodwill
and other acquired assets are impaired.
From time to time, we may undertake strategic transactions that give us the opportunity to access new customers and
new end markets, increase our proprietary product offerings, obtain new manufacturing and service capabilities and
technologies, enter new geographic manufacturing locations, lower our manufacturing costs, increase our margins or further
develop existing customer relationships. Strategic transactions involve a number of risks, uncertainties and costs, including
integrating acquired operations and workforce, businesses and products, resolving quality issues involving acquired products,
incurring severance and other restructuring costs, diverting management attention from their normal operational duties,
maintaining customer, supplier or other favorable business relationships of acquired operations, terminating unfavorable
commercial arrangements, losing key employees, integrating the systems of acquired operations into our management
information systems and satisfying the liabilities of acquired businesses, including liability for past violations of law and
material environmental liabilities. Any of these risks could cause our strategic transactions not to be ultimately profitable. We
may also choose to divest plants, businesses or products lines in the future. Divestitures reduce revenue and, potentially,
margins and can involve the risk of retained liabilities from the operations divested, including environmental liabilities.
In addition, we have in the past recorded, and may be required to record in the future, goodwill and other intangible
assets in connection with our acquisitions. We evaluate, at least on an annual basis, whether events or circumstances have
occurred that indicate all, or a portion, of the carrying amount of our goodwill and other intangible assets may no longer be
recoverable. Should we determine in the future that our goodwill or other intangible assets have become impaired, an
impairment charge to earnings would become necessary, which could be significant. For example, during our fiscal 2018 annual
goodwill impairment analysis, we fully impaired goodwill of $31 million associated with the acquisition of a storage software
business we purchased in 2016.
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We are subject to risks associated with natural disasters and global events.
Our activities, including manufacturing, administration and information technology management, can be adversely
affected by natural disasters such as major earthquakes, hurricanes, floods, tsunamis, tornadoes, fires and epidemics or
pandemics, such as the COVID-19 pandemic. Climate change may cause these events to become more severe and therefore
more damaging. In the event of a major natural disaster affecting one or more of our facilities, our operations and management
information systems, which control our worldwide procurement, inventory management, shipping and billing activities, could
be significantly disrupted. Such events could delay or prevent product manufacturing for an extended period of time. Any
extended inability to continue our operations at affected facilities following such an event could reduce our revenue.
Risks of Investing in Our Stock
The market price of our common stock is volatile and is impacted by factors other than our financial performance.
The stock market in recent years has experienced significant price and volume fluctuations that have affected our stock
price. These fluctuations have often been unrelated to our operating performance. Factors that can cause such fluctuations
include announcements by our customers, suppliers, competitors or other events affecting companies in the electronics industry,
such as component shortages, currency fluctuations, the impact of natural disasters and global events, such as the COVID-19
pandemic, geopolitical tensions, such as the war in Ukraine, general market fluctuations and macroeconomic conditions,
including concerns about inflation and recession, any of which may cause the market price of our common stock to fluctuate
widely.
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Item 1B. Unresolved Staff Comments
None.
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Item 2. Properties
Facilities. Our customers sell their products throughout the world and therefore need access to manufacturing services
globally. For this reason, we maintain facilities both near our major customers and their end markets and also in lower cost
locations, including Latin America, Eastern Europe, China, India and Southeast Asia. Many of our plants located near
customers or their end markets are focused primarily on new product introduction and high-level assembly and test, and plants
located in lower cost areas are engaged primarily in higher volume, less complex component and subsystem manufacturing and
assembly.
We continually evaluate our global manufacturing operations and adjust our facilities and operations to keep our
manufacturing capacity in line with demand and our manufacturing strategy and to provide cost efficient services to our
customers. As a result, we have closed certain facilities not required to satisfy current demand levels in the past and may
continue to do so in the future.
As of October 1, 2022, the approximate square footage of our active manufacturing facilities by region was as follows:
Americas
APAC
EMEA
Total
Approximate
Square Footage
5,717,385
3,938,308
1,640,780
11,296,473
As of October 1, 2022, our active manufacturing facilities consist of nine million square feet in facilities that we own
and two million square feet in leased facilities with lease terms expiring between 2022 and 2042.
We regularly evaluate our expected future facilities requirements and believe our existing facilities are adequate to
meet our requirements for the next 12 months.
Certifications and Registrations. Certifications and registrations under industry standards are important to our business
because many customers rely on them to confirm our adherence to manufacturing process and quality standards. Certain
markets, such as telecommunications, medical, defense, aerospace, automotive and oil and gas, require adherence to industry-
specific standards. Substantially all of our manufacturing facilities are certified to ISO 9001:2015, a standard published by the
International Organization for Standardization. As part of the ISO 9001:2015 certification process, we have a highly developed
quality management system and continually improve its effectiveness in accordance with its requirements. We use this
certification to demonstrate our ability to consistently provide product that meets customer and applicable regulatory
requirements and enhance customer satisfaction through its effective application.
In addition to ISO 9001:2015, many of our facilities are TL 9000 6.3 certified. The TL 9000 quality system
requirements and quality system metrics are designed specifically for the telecommunications industry to promote consistency
and efficiency, reduce redundancy and improve customer satisfaction. Included in the TL 9000 system are performance-based
metrics that quantify reliability and quality performance of the product. The majority of our facilities are also compliant with
the standards set by Underwriters Laboratories (UL). These standards define requirements for quality, manufacturing process
control and manufacturing documentation and are required by many OEMs in the communications sector of the electronics
industry.
Our medical systems division has identified certain manufacturing facilities to be centers of excellence for medical
products manufacturing. These facilities are ISO 13485:2016 certified and, where appropriate, FDA registered and MDSAP
certified. All such facilities are fully compliant with the FDA's quality systems regulations.
Our defense and aerospace operations are headquartered in Huntsville, Alabama in a facility dedicated to meeting the
specialized needs of our defense and aerospace customers. These defense and aerospace operations are AS9100 2016 certified
and maintain other certifications in accordance with various U.S. military specifications, ANSI and other standards as
appropriate for defense and aerospace suppliers. Other selected operations around the world are also AS9100 Rev. D certified.
Our automotive facilities are strategically located worldwide. Substantially all of our automotive facilities are certified
to IATF16949:2016, the automotive industry standard.
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Our oil and gas related manufacturing operations are, as applicable, certified to American Petroleum Institute (API)
requirements.
Item 3. Legal Proceedings
In June 2008, we were named by the Orange County Water District in a suit alleging that a predecessor company’s
actions at a plant we sold in 1998 contributed to polluted groundwater managed by the plaintiff. The complaint seeks recovery
of compensatory and other damages, as well as declaratory relief, for the payment of costs necessary to investigate, monitor,
remediate, abate and contain contamination of groundwater. In April 2013, all claims against us were dismissed. The plaintiff
appealed this dismissal and the Court of Appeal reversed the judgment in August 2017, remanding the case back to the Superior
Court of California for trial. The first phase of a multi-phase trial commenced in April 2021 and the submission of evidence
concluded in May 2022. On June 28, 2022, the Court issued a tentative ruling finding Sanmina and the other defendants liable
for certain past investigation costs incurred by the plaintiff. A final statement of decision in this phase of the trial is expected on
or about the middle of calendar year 2023. Based upon the Court’s tentative ruling, we believe a loss in this matter is probable
and have recorded an estimated loss. Subsequent trial phases to assess Sanmina’s and certain other defendants’ liability for the
plaintiff’s future remediation and other costs, and the allocation of damages among the liable defendants, are anticipated to
occur in 2024 and beyond. It is probable that we will record additional losses in connection with this matter, and it is reasonably
possible that the amount of such additional losses will be material. However, at the current time, we are unable to estimate the
amount of such additional losses or a range of losses. We intend to continue defending the case vigorously and to seek appellate
review of any adverse liability rulings or judgment at the appropriate time.
On December 20, 2019, we sued our former customer, Dialight plc (“Dialight”), in the United States District Court for
the Southern District of New York to collect approximately $10 million in unpaid accounts receivable and net obsolete
inventory obligations. Later the same day, Dialight commenced its own action in the same court. Dialight’s complaint, which
asserts claims for fraudulent inducement, breach of contract and gross negligence/willful misconduct, alleges that we
fraudulently misrepresented our capabilities to induce Dialight to enter into a Manufacturing Services Agreement (“Dialight
MSA”), and then breached our obligations under the Dialight MSA relating to quality, on-time delivery and supply chain
management. Dialight seeks compensatory and punitive damages that it contends exceed $200 million, but which we believe
are vastly overstated and subject to a contractual limitation of liability that limits any Dialight recovery to less than $2 million.
We continue to vigorously prosecute our claims against Dialight. Further, we strongly disagree with Dialight’s allegations and
are defending against them vigorously. No trial date has been set in this matter.
In addition, from time to time, we may become involved in routine legal proceedings, demands, claims, threatened
litigation and regulatory inquiries and investigations that arise in the normal course of our business. We record liabilities for
such matters when a loss becomes probable and the amount of loss can be reasonably estimated. The ultimate outcome of any
litigation is uncertain and unfavorable outcomes could have a negative impact on our results of operations and financial
condition. Regardless of outcome, litigation can have an adverse impact on us as a result of incurrence of litigation costs,
diversion of management resources, and other factors.
See also Note 10 of Notes to Consolidated Financial Statements.
Item 4. Mine Safety Disclosures.
Not applicable.
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PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common stock is traded on the Nasdaq Global Select Market under the symbol SANM. As of November 3, 2022,
we had approximately 789 holders of record of our common stock.
The following graph compares the cumulative 5-year total stockholder return on our common stock relative to the
cumulative total returns of the S&P 500 index and the NASDAQ Electronic Components index. An investment of $100 (with
reinvestment of all dividends, if any) is assumed to have been made in our common stock on September 30, 2017 and in each of
such indices at month end starting on September 30, 2017 and its relative performance is tracked through October 1, 2022.
Comparison of 5 Year Cumulative Total Return *
400
350
300
250
200
150
100
50
e
u
l
a
V
x
e
d
n
I
0
09/30/17
09/29/18
09/28/19
10/03/20
10/02/21
10/01/22
Sanmina Corporation
S&P 500 Index
NASDAQ Electronic Components Index
* $100 invested on 9/30/2017, including reinvestment of dividends, as applicable. Indexes calculated on a month-end basis.
Copyright @ 2022 Standard & Poor's, a division of S&P Global. All rights reserved.
Sanmina Corporation
S&P 500
NASDAQ Electronic Components
9/30/2017
9/29/2018
9/28/2019
10/3/2020
10/2/2021
10/1/2022
100.00
100.00
100.00
74.29
117.91
114.71
86.46
122.93
119.95
71.47
141.55
174.67
105.46
184.02
250.16
124.04
155.55
176.17
Sanmina's stock price performance included in this graph is not necessarily indicative of future stock price performance.
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Dividends
We have never declared or paid cash dividends on our common stock. We currently expect to retain future earnings for
use in our operations, for expansion of our business, and potentially for share repurchases and do not anticipate paying cash
dividends in the foreseeable future. Additionally, our ability to pay dividends is limited pursuant to covenants contained in our
various debt agreements. See also “Item 7-Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources.”
Stock Repurchases
The table below sets forth information regarding repurchases of our common stock during the fourth quarter of 2022.
Period (1)
Month #1
TOTAL
NUMBER OF
SHARES
PURCHASED
AVERAGE
PRICE PAID
PER SHARE
(2)
TOTAL
NUMBER OF
SHARES
PURCHASED
AS PART OF
PUBLICLY
ANNOUNCED
PROGRAMS
(3)
MAXIMUM
DOLLAR VALUE
OF SHARES
THAT MAY YET
BE PURCHASED
UNDER THE
PROGRAMS
(2)
July 3, 2022 through July 30, 2022
131,756
$
39.79
131,756 $ 182,312,678
Month #2
July 31, 2022 through August 27, 2022
—
$
—
— $ 182,312,678
Month #3
August 28, 2022 through October 1, 2022
Total
(1) All months shown are our fiscal months.
402,765
534,521
$
$
46.19
44.61
402,765 $ 163,710,163
534,521
(2) Amounts do not include commissions payable on shares repurchased. The total average price paid per share is a
weighted average based on the total number of shares repurchased during the period.
(3) During the third quarter of 2022, our Board of Directors authorized us to repurchase up to $200 million of our
common stock in the open market or in negotiated transactions off the market. This program has no expiration date.
Item 6. [Reserved]
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These statements relate to our expectations for future events and time
periods. All statements other than statements of historical fact are statements that could be deemed to be forward-looking
statements, including any statements regarding trends in future revenue or results of operations, gross margin, operating
margin, expenses, earnings or losses from operations, or cash flow; any statements of the plans, strategies and objectives of
management for future operations and the anticipated benefits of such plans, strategies and objectives; any statements
regarding future economic conditions or performance; any statements regarding litigation or pending investigations, claims or
disputes; any statements regarding the timing of closing of, future cash outlays for, and benefits of acquisitions and other
strategic transactions, any statements regarding expected restructuring costs and benefits; any statements concerning the
adequacy of our current liquidity and the availability of additional sources of liquidity; any statements regarding the potential
impact of the COVID-19 pandemic on our business, results of operations and financial condition; any statements regarding the
potential impact of supply chain shortages and inflation on our business; any statements regarding the future impact of tariffs
and export controls on our business; any statements relating to the expected impact of accounting pronouncements not yet
adopted; any statements regarding future repurchases of our common stock; any statements of expectation or belief; and any
statements of assumptions underlying any of the foregoing. Generally, the words “anticipate,” “believe,” “plan,” “expect,”
“future,” “intend,” “may,” “will,” “should,” “estimate,” “predict,” “potential,” “continue” and similar expressions identify
forward-looking statements. Our forward-looking statements are based on current expectations, forecasts and assumptions and
are subject to risks and uncertainties, including those contained in Part I, Item 1A of this report. As a result, actual results
could vary materially from those suggested by the forward looking statements. We undertake no obligation to publicly disclose
any revisions to these forward-looking statements to reflect events or circumstances occurring subsequent to filing this report
with the Securities and Exchange Commission. Investors and others should note that Sanmina announces material financial
information to our investors using our investor relations website (http://ir.sanmina.com/investor-relations/overview/
default.aspx), SEC filings, press releases, public conference calls and webcasts. We use these channels to communicate with
our investors and the public about Sanmina, its products and services and other issues. It is possible that the information we
post on our investor relations website could be deemed to be material information. Therefore, we encourage investors, the
media, and others interested in Sanmina to review the information we post on our investor relations website. The contents of
our investor relations website are not incorporated by reference into this annual report on Form 10-K or in any other report or
document we file with the SEC.
Overview
We are a leading global provider of integrated manufacturing solutions, components, products and repair, logistics and
after-market services. Our revenue is generated from sales of our products and services primarily to original equipment
manufacturers (OEMs) that serve the industrial, medical, defense and aerospace, automotive, communications networks and
cloud solutions industries.
Our operations are managed as two businesses:
1) Integrated Manufacturing Solutions (IMS). Our IMS segment consists of printed circuit board assembly and test,
high-level assembly and test and direct-order-fulfillment.
2) Components, Products and Services (CPS). Components include printed circuit boards, backplanes and
backplane assemblies, cable assemblies, fabricated metal parts, precision machined parts, and plastic injected
molded parts. Products include memory solutions from our Viking Technology division; high-performance
storage platforms for hyperscale and enterprise solutions from our Viking Enterprise Solutions (VES) division;
optical, radio frequency (RF) and microelectronic (microE) design and manufacturing services from Advanced
Microsystems Technologies; defense and aerospace products from SCI Technology; and cloud-based
manufacturing execution software from our 42Q division. Services include design, engineering and logistics and
repair.
Our only reportable segment for financial reporting purposes is IMS, which represented approximately 80% of our
total revenue in 2022. Our CPS business consists of multiple operating segments which do not individually meet the
quantitative thresholds for being presented as reportable segments. Therefore, financial information for these operating
segments is combined and presented in a single category entitled “Components, Products and Services”.
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All references in this section to years refer to our fiscal years ending on the Saturday nearest to September 30. Fiscal
2022 and 2021 were each 52-weeks and fiscal 2020 was a 53-week year, with the extra week occurring during the fourth
quarter of fiscal 2020. All references to years relate to fiscal years unless otherwise noted.
Our strategy is to leverage our comprehensive product and service offerings, advanced technologies and global
capabilities to further penetrate diverse end markets that we believe offer significant growth opportunities and have complex
products that require higher value-added services. We believe this strategy differentiates us from our competitors and will help
drive more sustainable revenue growth and provide opportunities for us to ultimately achieve operating margins that exceed
industry standards.
There are many challenges to successfully executing our strategy. For example, we compete with a number of
companies in each of our key end markets. This includes companies that are much larger than we are and smaller companies
that focus on a particular niche. Although we believe we are well-positioned in each of our key end markets and seek to
differentiate ourselves from our competitors, competition remains intense and profitably growing our revenues has been
challenging. Additionally, the COVID-19 pandemic created a unique and challenging environment in which our revenue and
profitability in 2021 and 2020 were significantly and negatively impacted. These impacts arose from rapidly changing market
and economic conditions caused by the pandemic, as well as by numerous measures imposed by government authorities to try
to limit the spread of the virus. These conditions and measures disrupted our operations and those of our customers, interrupted
the supply of components, reduced the capacity of our logistics providers to deliver the components we use and ship the
products we manufacture and resulted in temporary closures of manufacturing sites and reduced staffing of our plants. Although
conditions have improved in many of the regions in which we operate, we cannot predict when the COVID-19 pandemic will
cease to present risks to our business due to a large number of uncertainties, including the duration of ongoing supply chain
constraints directly and indirectly caused by the pandemic, the extent of the impact of the pandemic on our customers’
businesses, the number of employees who may become infected or exposed to infected persons, the need for temporary plant
closures caused by large scale employee infections, the duration of the outbreak, the continued efficacy and availability of
COVID-19 vaccines, the geographic locations of any future outbreaks, including outbreaks caused by variants of COVID-19,
such as the Omicron variant and its subvariants, and actions that government authorities may take in response. For example,
China continues to maintain a “zero tolerance” policy towards COVID-19 infections, which has disrupted and could continue to
disrupt our operations and our suppliers’ operations there. Thus, we believe the pandemic and related supply chain disruptions
could continue to have a negative impact on our business, results of operations and financial condition for the foreseeable
future.
Separately, over the past three years, we incurred restructuring charges of $31 million under our company-wide
restructuring plan adopted in October 2019 (“Q1 FY20 Plan”). These charges consist primarily of severance. Substantially all
cash payments have occurred.
Sales to our ten largest customers typically represent approximately 50% of our net sales in any given year. Sales to
Nokia and Motorola each represented 10% or more of our net sales in 2022. Nokia represented 10% or more of our net sales in
2021 and 2020.
We typically generate about 80% of our net sales from products manufactured in our foreign operations. The
concentration of foreign operations has resulted primarily from a desire on the part of many of our customers to manufacture in
lower cost locations in regions such as Asia, Latin America and Eastern Europe.
Historically, we have had substantial recurring sales to existing customers. We typically enter into supply agreements
with our major OEM customers. These agreements generally have terms ranging from three to five years and cover the
manufacture of a range of products. Under these agreements, a customer typically purchases its requirements for specific
products in particular geographic areas from us. However, these agreements generally do not obligate the customer to purchase
minimum quantities of products, which can have the effect of reducing revenue and profitability. In addition, some customer
contracts contain cost reduction objectives, which can also have the effect of reducing revenue from such customers.
The U.S., China, the E.U. and several other countries have imposed tariffs impacting certain imported products.
Although our customers are generally liable to us for reimbursement of tariffs we pay on components imported for the
manufacture of their products, there can be no assurance that we will be successful in recovering all of the tariffs that are owed
to us. Unrecovered tariffs paid on behalf of our customers reduce our gross margins. Also, although we are required to pay
tariffs upon importation of the components, we may not recover these amounts from customers until sometime later, which
adversely impacts our operating cash flow in a given period. However the net impact of tariffs, after recovery from customers,
has not been, and is not expected to be, material to us.
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On October 3, 2022, subsequent to the end of the fourth quarter of 2022, we completed a joint venture transaction in
which we entered into a Share Subscription and Purchase Agreement (the “SSPA”) and a Joint Venture and Shareholders’
Agreement (the “Shareholders’ Agreement”) with Reliance Strategic Business Ventures Limited (“RSBVL”), a wholly owned
subsidiary of Reliance Industries Limited. Pursuant to the SSPA and the Shareholders’ Agreement, the parties established
Sanmina SCI India Private Limited (“SIPL”), our existing Indian manufacturing entity, as a joint venture to engage in
manufacturing in India of telecommunications equipment, data center and internet equipment, medical equipment, clean
technology equipment and other high-tech equipment. As a result of the transaction, RSBVL acquired shares of SIPL for
approximately $215 million of cash such that immediately after the closing of the transaction, RSBVL holds 50.1% of the
outstanding shares of SIPL and Sanmina holds the remaining 49.9% of the outstanding shares of SIPL. The amount received
from RSBVL was based on preliminary calculations and is subject to adjustment based on final calculations. Given the terms of
the agreements entered into by the parties concerning management of the joint venture, we expect to continue to consolidate
SIPL in future periods.
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Critical Accounting Policies and Estimates
Management's discussion and analysis of our financial condition and results of operations are based upon our
consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the
United States (“GAAP”). We review the accounting policies used in reporting our financial results on a regular basis. The
preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, net sales and expenses and related disclosure of contingent liabilities. On an ongoing basis, we evaluate the process
used to develop estimates related to accounts receivable, inventories, income taxes, environmental matters, litigation and other
contingencies. We base our estimates on historical experience and on various other assumptions that we believe are reasonable
for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Due to
the COVID-19 pandemic, the global economy and financial markets were disrupted and there is a significant amount of
uncertainty about the length and severity of the consequences caused by the pandemic. We have considered information
available to us as of the date of issuance of these financial statements and, other than the impairments described in Note 5, are
not aware of any specific events or circumstances that would require an update to our estimates or judgments, or a revision to
the carrying value of our assets or liabilities. Our estimates may change as new events occur and additional information
becomes available. Our actual results may differ materially from these estimates.
We believe the following critical accounting policies reflect the more significant judgments and estimates used by us
in preparing our consolidated financial statements:
Revenue Recognition. We derive revenue principally from sales of integrated manufacturing solutions, components
and Company-proprietary products. Other sources of revenue include logistic and repair services; design, development and
engineering services; defense and aerospace programs; and sales of raw materials to customers whose requirements change
after we have procured inventory to fulfill the customer’s forecasted demand.
For purposes of determining when to recognize revenue, and in what amount, we apply a 5-step model: (1) identify the
contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4)
allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) we satisfy a
performance obligation. Each of these steps may involve the use of significant judgments.
We recognize revenue for the majority of our contracts on an over time basis. This is due to the fact that 1) we do not
have an alternative use for the end products we manufacture for our customers and have an enforceable right to payment,
including a reasonable profit, for work-in-progress upon a customer’s cancellation of a contract for convenience or 2) our
customer simultaneously receives and consumes the benefits provided by our services. For these contracts, revenue is
recognized on an over time basis using the cost-to-cost method (ratio of costs incurred to date to total estimated costs at
completion) which we believe best depicts the transfer of control to the customer. Revenue streams for which revenue is
recognized on an over time basis include sales of vertically integrated manufacturing solutions (integrated manufacturing
solutions and components); logistics and repair services; design, development and engineering services; and defense and
aerospace programs.
Application of the cost-to-cost method for government contracts in our Defense and Aerospace division requires the
use of significant judgments with respect to estimated materials, labor and subcontractor costs. This division is an operating
segment whose results are combined with eleven other operating segments and reported under CPS. In 2022, CPS revenue and
gross profit were $1.5 billion and $194 million, respectively.
We update our estimates of materials, labor and subcontractor costs on a quarterly basis. These updated estimates are
reviewed each quarter by a group of employees that includes representatives from numerous functions such as engineering,
materials, contracts, manufacturing, program management, finance and senior management. If a change in estimate is deemed
necessary, the impact of the change is recognized in the period of change.
For contracts for which revenue is required to be recognized at a point-in-time, we recognize revenue when we have
transferred control of the related goods, which generally occurs upon shipment or delivery of the goods to the customer.
Revenue streams for which revenue is recognized at a point-in-time include Company-proprietary products and sales of raw
materials.
Inventories— We state inventories at the lower of cost (first-in, first-out method) and net realizable value. Cost
includes raw materials, labor and manufacturing overhead. We regularly evaluate the carrying value of our inventories and
make provisions to reduce excess and obsolete inventories to their estimated net realizable values. The ultimate realization of
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inventory carrying amounts is affected by changes in customer demand for inventory that customers are not contractually
obligated to purchase and inventory held for specific customers who are experiencing financial difficulties. Inventory write-
downs are recorded based on forecasted demand, past experience with specific customers, the ability to redistribute inventory to
other programs or return inventories to our suppliers, and whether customers are contractually obligated and have the ability to
pay for the related inventory. Certain payments received from customers for inventories that have not been shipped to
customers or otherwise disposed of are netted against inventory.
We generally procure inventory based on specific customer orders and forecasts. Customers generally have limited
rights of modification (for example, rescheduling or cancellations) with respect to specific orders. Customer modifications of
orders affecting inventory previously procured by us and our purchases of inventory beyond customer needs may result in
excess and obsolete inventory. Although we may be able to use some excess inventory for other products we manufacture, a
portion of this excess inventory may not be returnable to vendors or recoverable from customers. Write-offs or write-downs of
inventory could be caused by:
• changes in customer demand for inventory, such as cancellation of orders, and our purchases of inventory beyond
customer needs that result in excess quantities on hand that we are not able to return to the vendor, use to fulfill
orders from other customers or charge back to the customer;
• financial difficulties experienced by specific customers for whom we hold inventory; and
• declines in the market value of inventory.
Long-lived Assets—We review property, plant and equipment for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. An asset group is the unit of
accounting that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other
groups of assets. An asset or asset group is considered impaired if its carrying amount exceeds the undiscounted future net cash
flows the asset or asset group is expected to generate. If an asset or asset group is considered impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the asset or asset group exceeds its fair value. For asset
groups for which a building is the primary asset, we estimate fair value primarily based on data provided by commercial real
estate brokers. For other assets, we estimate fair value based on projected discounted future net cash flows, which requires
significant judgment.
Income Taxes— We estimate our income tax provision or benefit in each of the jurisdictions in which we operate,
including estimating exposures related to examinations by taxing authorities. We believe our accruals for tax liabilities are
adequate for all open years based on our assessment of many factors, including past experience and interpretations of tax law
applied to the facts of each matter. Although we believe our accruals for tax liabilities are adequate, tax regulations are subject
to interpretation and the tax controversy process is inherently lengthy and uncertain; therefore, our assessments can involve a
series of complex judgments about future events and rely heavily on estimates and assumptions. To the extent the probable tax
outcome of these matters changes, such changes in estimate will impact our income tax provision in the period in which such
determination is made. We only recognize or continue to recognize tax positions that meet a “more likely than not” threshold of
being upheld. Interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense.
We must also make judgments regarding the realizability of deferred tax assets. The carrying value of our net deferred
tax assets is based on our belief that it is more likely than not that we will generate sufficient future taxable income in certain
jurisdictions to realize these deferred tax assets. We evaluate positive and negative evidence each reporting period when
assessing the need for a valuation allowance. A valuation allowance is established for deferred tax assets if we believe
realization of such assets is not more likely than not. Our judgments regarding future taxable income may change due to
changes in market conditions, new or modified tax laws, tax planning strategies or other factors. If our assumptions, and
consequently our estimates, change in the future, the valuation allowances we have established may be increased or decreased,
resulting in a respective increase or decrease in income tax expense.
Our effective tax rate is highly dependent upon the amount and geographic distribution of our worldwide income or
losses, the tax regulations, rates and holidays in each geographic region, the utilization of net operating losses, the availability
of tax credits and carryforwards, and the effectiveness of our tax planning strategies.
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37
Results of Operations
Years Ended October 1, 2022, October 2, 2021 and October 3, 2020.
The following table presents our key operating results.
Net sales
Gross profit
Gross margin
Operating expenses
Operating income
Operating margin
Net income
Net Sales
October 1,
2022
$ 7,890,475
640,514
$
Year Ended
October 2,
2021
(In thousands)
$ 6,756,643
551,805
$
October 3,
2020
$ 6,960,370
525,707
$
8.1 %
8.2 %
7.6 %
$
$
272,727
367,787
$
$
270,505
281,300
$
$
298,020
227,687
4.7 %
4.2 %
3.3 %
$
256,121
$
268,998
$
139,713
Net sales increased from $6.8 billion for 2021 to $7.9 billion for 2022, an increase of 16.8%. Net sales decreased from
$7.0 billion for 2020 to $6.8 billion for 2021, a decrease of 2.9%. Sales by end market were as follows:
October 1,
2022
Year Ended
October 2,
2021
October 3,
2020
2022 vs. 2021
2021 vs. 2020
Increase/(Decrease)
Increase/(Decrease)
(Dollars in thousands)
Industrial, Defense, Medical and
Automotive
Communications Networks and Cloud
Infrastructure
$
4,714,941
$
3,890,041
$
4,127,720
$
824,900
21.2 % $
(237,679)
(5.8) %
3,175,534
2,866,602
2,832,650
308,932
10.8 %
33,952
1.2 %
Total
$
7,890,475
$
6,756,643
$
6,960,370
$ 1,133,832
16.8 % $
(203,727)
(2.9) %
Comparison of 2022 to 2021 by End Market
The increase in sales was primarily due to three factors. First, there was stronger demand overall in each of our end
markets, driven in part by the continued stabilization of lead times for supply constrained parts. Secondly, we were able to pass
to our customers the vast majority of the increased cost of components caused by supply constraints. Lastly, we added several
new programs that contributed to increased sales in 2022.
Comparison of 2021 to 2020 by End Market
The decrease in sales in our industrial, defense, medical and automotive end market was caused primarily by the
continuing negative impact of the COVID-19 pandemic in 2021, which resulted in supply shortages, restrictions on the types of
products we could manufacture and disruptions to our operations and those of our customers. In particular, there was a shortage
of components in our industrial segment starting in the second half of 2021 that prevented us from shipping all of the product
for which we had demand. The slight increase in sales in our communications networks and cloud infrastructure end market
was primarily due to a more significant impact from the COVID-19 pandemic in 2020 than in 2021.
Gross Margin
Gross margin was 8.1%, 8.2% and 7.6% in 2022, 2021 and 2020, respectively. IMS gross margin increased to 7.2% in
2022 from 7.1% in 2021. Despite an increase in revenue, IMS gross margin increased only slightly because there was little to
no markup on the increased cost of components that we were able to pass on to our customers. Despite higher revenues, CPS
gross margin decreased to 11.9% in 2022 from 12.7% in 2021, primarily due to a less favorable mix of revenue between the
individual businesses in CPS.
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38
IMS gross margin increased to 7.1% in 2021 from 6.7% in 2020, primarily due to increased operational efficiencies
and the benefit of cost reduction and containment efforts implemented in 2020, some of which were in response to the
COVID-19 pandemic. CPS gross margin increased to 12.7% in 2021 from 11.5% in 2020, primarily due to increased volume,
operational efficiencies, favorable product mix and the benefit of cost reduction and containment efforts described above.
We have experienced fluctuations in gross margin in the past and may continue to do so in the future. Fluctuations in
our gross margin may be caused by a number of factors, including:
•
•
•
•
•
•
•
the ongoing impacts of the COVID-19 pandemic and related supply chain constraints on our operations, the
operations of our suppliers and on our customers' businesses;
capacity utilization which, if lower, results in lower margins due to fixed costs being absorbed by lower volumes;
changes in the mix of high and low margin products demanded by our customers;
competition in the EMS industry and pricing pressures from OEMs due to greater focus on cost reduction;
the amount of our provisions for excess and obsolete inventory, including those associated with distressed
customers;
levels of operational efficiency and production yields; and
our ability to transition the location of and ramp manufacturing and assembly operations when requested by a
customer in a timely and cost-effective manner.
Selling, General and Administrative
Selling, general and administrative expenses were $244.6 million, $234.5 million and $240.9 million in 2022, 2021
and 2020, respectively. As a percentage of net sales, selling, general and administrative expenses were 3.1%, 3.5% and 3.5%
for 2022, 2021 and 2020, respectively. The increase in absolute dollars in 2022 was primarily due to higher incentive
compensation, partially offset by a decrease in our deferred compensation liability resulting from a decline in the market value
of participant investment accounts in 2022. The decrease in absolute dollars in 2021 was primarily attributable to reduced
headcount in 2021 resulting from continued actions under our Q1 FY20 Plan and reduced travel and certain other expenses in
2021 in continued response to the COVID-19 pandemic.
Restructuring
Restructuring costs were $11 million, $15 million, and $27 million in 2022, 2021, and 2020, respectively.
The following table is a summary of restructuring costs:
Severance costs
Other exit costs (recognized as incurred)
Total - Q1 FY20 Plan
Costs incurred for other plans
Total - all plans
Q1 FY20 Plan
October 1,
2022
Year Ended
October 2,
2021
(In thousands)
October 3,
2020
$
319
$
1,500
1,819
9,606
9,405
1,834
11,239
3,818
$
17,919
71
17,990
8,793
$
11,425
$
15,057
$
26,783
On October 28, 2019, we adopted a Company-wide restructuring plan (“Q1 FY20 Plan”) under which we have
incurred restructuring costs of approximately $31 million through October 1, 2022. These charges consist primarily of
severance. Substantially all cash payments have occurred and actions under this plan are complete.
Other plans
Other plans include a number of plans for which costs are not expected to be material individually or in the aggregate.
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39
All Plans
Our Integrated Manufacturing Solutions (“IMS”) segment incurred costs of $1 million and $9 million for the year
ended October 1, 2022 and October 2, 2021, respectively. Our CPS segment incurred costs of $10 million and $5 million for the
years ended October 1, 2022 and October 2, 2021, respectively. In addition, we incurred costs of $1 million for the year ended
October 2, 2021 for corporate headcount reductions that were not allocated to our IMS and CPS segments. We had accrued
liabilities of $6 million as of October 1, 2022 and October 2, 2021 for restructuring costs (exclusive of long-term environmental
remediation liabilities).
We expect to incur restructuring costs, which could be material, in future periods primarily relating to vacant facilities
and former sites for which we are or may be responsible for environmental remediation.
Goodwill And Other Impairments
We recorded an impairment charge of $2 million in 2022 and 2020 for certain long-lived assets.
During the second quarter of 2020, commodity prices in the oil and gas market experienced a sharp decline due to a
combination of an oversaturated supply and a decrease in demand caused by the COVID-19 pandemic. This commodity price
decline negatively impacted the projected cash flows of our oil and gas reporting unit, which is part of our CPS operating
segment. Therefore, we performed a goodwill impairment test for this particular reporting unit and concluded that the fair value
of the reporting unit was below its carrying value, resulting in an impairment charge of $7 million. The fair value of the
reporting unit was estimated based on the present value of future discounted cash flows. We had no such charge in 2022 and
2021.
Gain on Sale of Long-lived Assets
During the first quarter of 2022, we recognized a gain of $4.6 million primarily from the sale of a certain real property.
Interest Expense
Interest expense was $22.5 million, $19.6 million and $28.9 million in 2022, 2021 and 2020, respectively. Interest
expense increased $3 million in 2022 primarily due to higher daily average borrowings under our revolving credit facility.
Interest expense decreased $9 million in 2021 compared to 2020 due primarily to lower daily average borrowings under our
revolving credit facility in 2021.
Other Income (Expense), net
Other income (expense), net was $(26.3) million in 2022, $44.3 million in 2021 and a $(0.3) million in 2020.
Other income (expense), net of $(26.3) million in 2022 consists primarily of a $7 million allowance that was provided
for a note receivable from the 2021 sale of certain intellectual property assets based on our expectation that we will incur credit
losses with the counterparty, a $6 million decline in the market value of participant investment accounts in our deferred
compensation plan in 2022, $5 million in fees for sales of accounts receivable, a pension settlement charge of $2 million for the
termination of our frozen U.S. defined benefit plan and a loss on extinguishment of debt of $1 million consisting of a write-off
of unamortized debt issuance costs.
Other income (expense), net of $44.3 million in 2021 consists primarily of receipt of payments of $16 million in
connection with settlements of certain anti-trust class action matters, a $15 million gain from the sale of certain intellectual
property assets and an $8 million gain on liquidation of a foreign entity.
Provision for Income Taxes
We recorded income tax expense of $64.5 million, $38.0 million and $61.0 million in 2022, 2021 and 2020,
respectively. Our effective tax rate was 20.1%, 12.4% and 30.4% for 2022, 2021 and 2020, respectively.
Our effective tax rates for 2022 and 2021 were lower than the expected U.S. statutory rate of 21.0% primarily due to a
$16 million and $43 million tax benefit, respectively, resulting from the release of foreign tax reserves due to lapse of time and
expiration of statutes of limitations.
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40
Liquidity and Capital Resources
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Effect of exchange rate changes
Increase (decrease) in cash and cash equivalents
Key Working Capital Management Measures
Days sales outstanding (1)
Contract asset days (2)
Inventory turns (3)
Days inventory on hand (4)
Accounts payable days (5)
Cash cycle days (6)
October 1,
2022
Year Ended
October 2,
2021
(In thousands)
October 3,
2020
$
$
330,854
(132,214)
(314,299)
(4,510)
(120,169)
$
$
338,342
(91,325)
(77,318)
(199)
169,500
$
$
300,555
(64,409)
(210,280)
(81)
25,785
October 1,
2022
48
20
4.9
74
90
52
As of
October 2,
2021
64
19
6.3
58
83
58
(1) Days sales outstanding (a measure of how quickly we collect our accounts receivable), or “DSO”, is calculated as the ratio
of average accounts receivable, net, to average daily net sales for the quarter.
(2) Contract asset days (a measure of how quickly we transfer contract assets to accounts receivable) are calculated as the ratio
of average contract assets to average daily net sales for the quarter.
(3) Inventory turns (annualized) (a measure of how quickly we sell inventory) are calculated as the ratio of four times our cost
of sales for the quarter to average inventory.
(4) Days inventory on hand (a measure of how quickly we turn inventory into sales) is calculated as the ratio of average
inventory for the quarter to average daily cost of sales for the quarter.
(5) Accounts payable days (a measure of how quickly we pay our suppliers), or “DPO”, is calculated as the ratio of 365 days
to accounts payable turns, in which accounts payable turns is calculated as the ratio of four times our cost of sales for the
quarter to average accounts payable.
(6) Cash cycle days (a measure of how quickly we convert investments in inventory to cash) is calculated as days inventory on
hand plus days sales outstanding minus accounts payable days.
Cash and cash equivalents were $530 million at October 1, 2022 and $650 million at October 2, 2021. Our cash levels
vary during any given period depending on the timing of collections from customers and payments to suppliers, borrowings
under credit facilities, sales of accounts receivable under numerous programs we utilize, repurchases of capital stock and other
factors. Our working capital was approximately $1.5 billion as of October 1, 2022 and October 2, 2021.
Net cash provided by operating activities was $331 million, $338 million and $301 million for 2022, 2021 and 2020,
respectively. Cash flows from operating activities consists of: (1) net income adjusted to exclude non-cash items such as
depreciation and amortization, deferred income taxes and stock-based compensation expense and (2) changes in net operating
assets, which are comprised of accounts receivable, contract assets, inventories, prepaid expenses and other assets, accounts
payable, accrued liabilities and other long-term liabilities. Our working capital metrics tend to fluctuate from quarter-to-quarter
based on factors such as the linearity of our shipments to customers and purchases from suppliers, customer and supplier mix,
and payment terms with customers and suppliers. These fluctuations can significantly affect our cash flows from operating
activities.
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41
During 2022, we generated $446 million of cash from earnings, excluding non-cash items, and used $115 million of
cash because of an increase in our net operating assets and liabilities, resulting primarily from increases in inventories and
contract assets of $663 million and $155 million, respectively, partially offset by increases in accounts payable and accrued
liabilities of $554 million and $134 million, respectively. The increase in inventories is primarily due to shortages of certain
components that prevented us from shipping all products for which we had both demand and the other components necessary to
build such products. The increase in contract assets is primarily due to an increase in overall demand in 2022, which resulted in
a higher level of services performed for which revenue has been recognized, but products had not been delivered to the
customer. The increase in accounts payable is primarily attributable to an increase in inventory. The increase in accrued
liabilities is primarily due to an increase in advance payments from customers and an increase in amounts collected under our
accounts receivable sales program that had not been remitted as of the end of the quarter to the financial institutions that
purchased the receivables. DSO decreased from 64 days as of 2021 to 48 days as of 2022 due primarily to an increase in
accounts receivable factoring.
Net cash used in investing activities was $132 million, $91 million and $64 million for 2022, 2021 and 2020,
respectively. In 2022, we used $139 million of cash for capital expenditures, purchased $2 million of long-term investments and
received $8 million primarily from the sale of a certain property. In 2021, we used $73 million of cash for capital expenditures,
paid $21 million in connection with a business combination, purchased $3 million of long-term investments and received
$5 million from the sale of certain intellectual property assets.
Net cash used in financing activities was $314 million, $77 million and $210 million for 2022, 2021 and 2020,
respectively. In 2022, we repurchased $331 million of common stock (including $14 million in settlement of employee tax
withholding obligations), repaid an aggregate of $333 million of long-term debt using $350 million of proceed from the
issuance of a term loan, incurred $3 million of costs in connection with the amendment of the Fourth Amended and Restated
Loan Agreement, dated as of November 30, 2018 (the “Existing Credit Agreement”) and received $2 million of proceeds from
issuances of common stock pursuant to stock option exercises. In 2021, we repurchased $64 million of common stock
(including $10 million in settlement of employee tax withholding obligations), repaid an aggregate of $19 million of long-term
debt, received $3 million of proceeds from issuances of common stock pursuant to stock option exercises and received
$3 million of installment payments from the sale of certain intellectual property assets.
Revolving Credit Facility. During the fourth quarter of 2022, we entered into a Fifth Amended and Restated Credit
Agreement (“Credit Agreement”) that amended and restated the Existing Credit Agreement. The Credit Agreement provides for
an $800 million revolving credit facility and a $350 million secured term loan (“Term Loan Due 2027”), together with an
accordion feature by which we can obtain, subject to the satisfaction of specified conditions and commitment of the lenders,
additional revolving commitments in an aggregate amount of up to $200 million.
Costs incurred in connection with the Credit Agreement of $3 million are classified as long-term debt and are being
amortized to interest expense over the life of the Term Loan Due 2027 using the effective interest method.
The Term Loan Due 2027 was fully drawn on the Closing Date and proceeds were used to repay the term loan
outstanding under the Existing Credit Agreement. Upon repayment, we recorded a loss on extinguishment of debt of $1 million
consisting of a write-off of unamortized debt issuance costs for the Existing Credit Agreement.
Loans under the Credit Agreement bear interest, at our option, at either the Secured Overnight Financing Rate
benchmark interest rate (“SOFR”) or a base rate, in each case plus a spread determined based on our credit rating. Interest on
the loans is payable quarterly in arrears with respect to base rate loans and at the end of an interest period (and at three-month
intervals if the interest period exceeds three months) in the case of SOFR loans. The outstanding principal amount of all loans
under the Credit Agreement, including the Term Loan Due 2027, together with accrued and unpaid interest, is due on
September 27, 2027. We are required to repay a portion of the principal amount of the Term Loan Due 2027 equal to 1.25% of
the principal in quarterly installments.
Our and our subsidiary guarantors’ obligations under the Credit Agreement are secured by substantially all of the
assets (excluding real property) of Sanmina and its subsidiary guarantors, including cash, accounts receivable, inventory and the
shares of certain of our subsidiaries, subject to certain exceptions.
As of October 1, 2022, no borrowings and $9 million of letters of credit were outstanding under the Credit Agreement,
under which $791 million was available to borrow. There were no borrowings outstanding under the Credit Agreement as of
October 2, 2021.
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42
Short-term Borrowing Facilities. As of October 1, 2022, certain of our foreign subsidiaries had a total of $70 million
of short-term borrowing facilities available, under which no borrowings were outstanding. These facilities expire at various
dates through the second quarter of 2024.
Debt Covenants
The Credit Agreement requires us to comply with a minimum consolidated interest coverage ratio, measured at the end
of each fiscal quarter, and at all times a maximum consolidated leverage ratio. The Credit Agreement contains customary
affirmative covenants, including covenants regarding the payment of taxes and other obligations, maintenance of insurance,
reporting requirements and compliance with applicable laws and regulations. Further, the Credit Agreement contains customary
negative covenants limiting our ability and that of our subsidiaries to, among other things, incur debt, grant liens, make
investments, make acquisitions, make certain restricted payments and sell assets, subject to certain exceptions.
As of October 1, 2022, we were in compliance with these covenants.
Other Liquidity Matters
During 2022 and 2021 we repurchased 8.0 million shares and 1.5 million shares of our common stock for $317 million
and $54 million (including commissions), respectively, under stock repurchase programs authorized by the Board of Directors.
These programs have no expiration dates and the timing of repurchases will depend upon capital needs to support the growth of
our business, market conditions and other factors. Although stock repurchases are intended to increase stockholder value,
purchases of shares reduce our liquidity. As a result, the timing of future repurchases depends upon our future capital needs,
market conditions and other factors. As of October 1, 2022, an aggregate of $164 million remains available under these
programs.
We are party to a Receivables Purchase Agreement (the “RPA”) with certain third-party banking institutions for the
sale of trade receivables generated from sales to certain customers, subject to acceptance by, and a funding commitment from,
the banks that are party to the RPA. As of October 1, 2022, a maximum of $539 million of sold receivables can be outstanding
at any point in time under this program, as amended, subject to limitations under our Existing Credit Agreement. Additionally,
the amount available under the RPA is uncommitted and, as such, is available at the discretion of our third-party banking
institutions. Under the Credit Agreement, the percentage of our total accounts receivable that can be sold and outstanding at any
time is 50%. Trade receivables sold pursuant to the RPA are serviced by us.
In addition to the RPA, we have the option to participate in trade receivables sales programs that have been
implemented by certain of our customers, as in effect from time to time. We do not service trade receivables sold under these
other programs.
The sale of receivables under all of these programs is subject to the approval of the banks or customers involved and
there can be no assurance that we will be able to sell the maximum amount of receivables permitted by these programs when
desired.
Under each of the programs noted above, we sell our entire interest in a trade receivable for 100% of face value, less a
discount. For the years ended October 1, 2022 and October 2, 2021, we sold $1.9 billion and $0.5 billion, respectively, of
accounts receivable under these programs. Upon sale, these receivables are removed from the consolidated balance sheets and
cash received is presented as cash provided by operating activities in the consolidated statements of cash flows. Discounts on
sold receivables were not material for any period presented. As of October 1, 2022 and October 2, 2021, $194 million and $7
million, respectively, of accounts receivable sold under the RPA and subject to servicing by us remained outstanding and had
not yet been collected. Our sole risk with respect to receivables we service is with respect to commercial disputes regarding
such receivables. Commercial disputes include billing errors, returns and similar matters. To date, we have not been required to
repurchase any receivable we have sold due to a commercial dispute. Additionally, we are required to remit amounts collected
by us as servicer on a weekly basis to the financial institutions that purchased the receivables. As of October 1, 2022 and
October 2, 2021, $49 million and $18 million, respectively, had been collected but not yet remitted. This amount is classified in
accrued liabilities on the consolidated balance sheets.
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43
We enter into forward interest rate swap agreements with independent counterparties to partially hedge the variability
in cash flows due to changes in the benchmark interest rate (Term SOFR) associated with anticipated variable rate borrowings.
These interest rate swaps have a maturity date of December 1, 2023, and effectively converts a portion of our variable interest
rate obligations under our Amended Cash Flow Revolver to fixed interest rate obligations. These swaps are accounted for as
cash flow hedges under ASC Topic 815, Derivatives and Hedging. Interest rate swaps with an aggregate notional amount of
$350 million were outstanding as of October 1, 2022 and October 2, 2021. The aggregate effective interest rate of these swaps
as of October 1, 2022 was approximately 4.1%. Given the recent rise in interest rates and the continued likelihood of additional
rate increases, these interest rate swaps had a positive value of $6 million as of October 1, 2022, of which the majority is
included in prepaid expenses and other current assets and the remaining amount is included in other assets on the consolidated
balance sheets.
In the ordinary course of business, we are or may become party to legal proceedings, claims and other contingencies,
including environmental, warranty and employee matters and examinations by government agencies. As of October 1, 2022, we
had accrued liabilities of $38 million related to such matters. We cannot accurately predict the outcome of these matters or the
amount or timing of cash flows that may be required to defend ourselves or to settle such matters or that these reserves will be
sufficient to fully satisfy our contingent liabilities.
As of October 1, 2022, we had a liability of $65 million for uncertain tax positions. Our estimate of liabilities for
uncertain tax positions is based on a number of subjective assessments, including the likelihood of a tax obligation being
assessed, the amount of taxes (including interest and penalties) that would ultimately be payable, and our ability to settle any
such obligations on favorable terms. Therefore, the amount of future cash flows associated with uncertain tax positions may be
significantly higher or lower than our recorded liability and we are unable to reliably estimate when cash settlement may occur.
Our liquidity is largely dependent on changes in our working capital, including sales of accounts receivable under our
receivables sales programs and the extension of trade credit by our suppliers, investments in manufacturing inventory, facilities
and equipment, repayments of obligations under outstanding indebtedness and repurchases of common stock. In 2022, we
generated $331 million of cash from operations. Our primary sources of liquidity as of October 1, 2022 consisted of (1) cash
and cash equivalents of $530 million; (2) our Credit Agreement, under which $791 million, net of outstanding borrowings and
letters of credit, was available; (3) our foreign short-term borrowing facilities of $70 million, all of which was available; (4)
proceeds from the sale of accounts receivable under our receivables sales programs and (5) cash generated from operations.
Subject to satisfaction of certain conditions, including obtaining additional commitments from existing and/or new lenders, we
may increase the revolver commitments under the Credit Agreement by an additional $200 million.
We believe our existing cash resources and other sources of liquidity, together with cash generated from operations,
will be sufficient to meet our working capital requirements through at least the next 12 months. However, should demand for
our services decrease significantly over the next 12 months, should we be unable to recover on inventory obligations owed to us
by our customers or should we experience significant increases in delinquent or uncollectible accounts receivable for any
reason, our cash provided by operations could decrease significantly and we could be required to seek additional sources of
liquidity to continue our operations at their current level.
We distribute our cash among a number of financial institutions that we believe to be of high quality. However, there
can be no assurance that one or more of such institutions will not become insolvent in the future, in which case all or a portion
of our uninsured funds on deposit with such institutions could be lost.
As of October 1, 2022, approximately 50% of our cash balance was held in the United States. Should we choose or
need to remit cash to the United States from our foreign locations, we may incur tax obligations which would reduce the
amount of cash ultimately available to the United States. We believe that cash held in the United States, together with liquidity
available under our Amended Cash Flow Revolver and cash from foreign subsidiaries that could be remitted to the United
States without tax consequences, will be sufficient to meet our United States liquidity needs for at least the next twelve months.
Contractual Obligations
As part of our ongoing operations, we enter into contractual arrangements that obligate us to make future cash
payments. These obligations impact our liquidity and capital resource needs. Our estimated future obligations consist of leases,
the Term Loan, pension plan funding obligations and unrecognized tax benefits as of October 1, 2022.
A summary of our operating lease obligations as of October 1, 2022 can be found in Note 8, “Leases”, to the
Consolidated Financial Statements contained in this report.
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44
A summary of our long-term debt obligations as of October 1, 2022 can be found in Note 7, “Debt”, to the
Consolidated Financial Statements contained in this report.
We have defined benefit pension plans with an underfunded amount of $34 million as of October 1, 2022. We will be
required to provide additional funding to these plans in the future if our returns on plan assets are not sufficient to meet our
funding obligations. Additionally, as of October 1, 2022, we were unable to reliably estimate when cash settlements or closure
of audits with taxing authorities may occur with respect to our long-term liabilities arising from unrecognized tax benefits of
$65 million. The statutes of limitations for these matters range up to 10 years, and unsettled liabilities are released upon
expiration of the statutes.
We also have outstanding firm purchase orders with certain suppliers for the purchase of inventory, which are not
included in the table above. These purchase orders are generally short-term in nature. Orders for standard, or catalog, items can
typically be canceled with little or no financial penalty. Our policy regarding non-standard or customized items dictates that
such items are only ordered specifically for customers who have contractually assumed liability for the inventory, although
exceptions are made to this policy in certain situations. Accordingly, our liability from purchase obligations under these
purchase orders is not expected to be significant. Lastly, pursuant to arrangements under which vendors consign inventory to
us, we may be required to purchase such inventory after a certain period of time. To date, we have not been required to
purchase a significant amount of inventory pursuant to these time limitations.
Off-Balance Sheet Arrangements
As of October 1, 2022, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of
Regulation S-K promulgated by the SEC, that have or are reasonably likely to have a current or future effect on our financial
condition, changes in our financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures, or
capital resources that is material to investors.
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Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
Our primary exposure to market risk for changes in interest rates relates to our Term Loan of $350 million under our
Credit Agreement for which the interest rate we pay is determined at the time of borrowing based on a floating index. As of
October 1, 2022, we had interest rate swaps with an aggregate notional amount of $350 million that effectively convert
$350 million of our outstanding floating rate debt to fixed rate debt. An immediate 10 percent change in interest rates would not
have a significant impact on our results of operations.
Foreign Currency Exchange Risk
We transact business in foreign currencies. Our foreign exchange policy requires that we take certain steps to limit our
foreign exchange exposures resulting from certain assets and liabilities and forecasted cash flows. However, our policy does not
require us to hedge all foreign exchange exposures. Furthermore, our foreign currency hedges are based on forecasted
transactions and estimated balances, the amount of which may differ from that actually incurred. As a result, we can experience
foreign exchange gains and losses in our results of operations.
Our primary foreign currency cash flows are in certain Asian and European countries, Israel, Brazil and Mexico. We
enter into short-term foreign currency forward contracts to hedge currency exposures associated with certain monetary assets
and liabilities denominated in non-functional currencies. These contracts generally have maturities of up to two months.
Accordingly, these forward contracts are not designated as part of a hedging relationship for accounting purposes. All
outstanding foreign currency forward contracts are marked-to-market at the end of the period with unrealized gains and losses
included in other income (expense), net, in the consolidated statements of income. As of October 1, 2022, we had outstanding
foreign currency forward contracts to exchange various foreign currencies for U.S. dollars in an aggregate notional amount of
$532 million.
We also utilize foreign currency forward contracts to hedge certain operational (“cash flow”) exposures resulting from
changes in foreign currency exchange rates. Such exposures result from (1) forecasted non-functional currency sales and (2)
forecasted non-functional currency materials, labor, overhead and other expenses. These contracts may be up to twelve months
in duration and are designated as cash flow hedges for accounting purposes. The effective portion of changes in the fair value of
the contracts is recorded in stockholders' equity as a separate component of accumulated other comprehensive income and
recognized in earnings when the hedged item affects earnings. We had forward contracts related to cash flow hedges in various
foreign currencies in an aggregate notional amount of $123 million as of October 1, 2022.
The net impact of an immediate 10 percent change in exchange rates would not be material to our consolidated
financial statements, provided we accurately forecast and estimate our foreign currency exposure. If such forecasts are
materially inaccurate, we could incur significant gains or losses.
Item 8. Financial Statements and Supplementary Data
The information required by this item is included below and incorporated by reference from the financial statement
schedule included in “Part IV-Item 15(a)(2)”.
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46
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Sanmina Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Sanmina Corporation and its subsidiaries (the “Company”)
as of October 1, 2022 and October 2, 2021, and the related consolidated statements of income, comprehensive income,
stockholders’ equity, and cash flows for each of the three years in the period ended October 1, 2022, including the related notes
and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated
financial statements”). We also have audited the Company's internal control over financial reporting as of October 1, 2022,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of October 1, 2022 and October 2, 2021, and the results of its operations and its cash flows for each
of the three years in the period ended October 1, 2022 in conformity with accounting principles generally accepted in the
United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of October 1, 2022, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to
express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
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47
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition - Cost-to-cost method for government contracts in the Defense and Aerospace division
As described in Notes 2 and 4 to the consolidated financial statements, revenues for the CPS segment were $1.5 billion for the
year ended October 1, 2022, of which the defense and aerospace division represents a portion of the segment. The Company
recognizes revenue for defense and aerospace government contracts on an over time basis using the cost-to-cost method (ratio
of costs incurred to date to total estimated costs at completion), which management believes best depicts the transfer of control
to the customer. Recognition of revenue on government contracts requires the use of significant judgment with respect to
estimated materials, labor, and subcontractor costs.
The principal considerations for our determination that performing procedures relating to revenue recognition - cost-to-cost
method for government contracts in the defense and aerospace division is a critical audit matter are the significant judgment by
management when determining the estimated costs for such contracts, which in turn led to a high degree of auditor judgment,
subjectivity, and effort in performing procedures and in evaluating the audit evidence related to management’s determination of
estimated materials, labor, and subcontractor costs.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the
revenue recognition process, including controls over the cost-to-cost method for government contracts in the defense and
aerospace division. These procedures also included, among others, (i) testing management’s process for determining the
estimation of costs for a sample of defense and aerospace government contracts, (ii) testing the completeness and accuracy of
underlying data used in the estimate, and (iii) evaluating the reasonableness of management’s determination of estimated
materials, labor, and subcontractor costs. Evaluating the reasonableness of the estimated materials, labor and subcontractor
costs used involved assessing management’s ability to reasonably estimate costs for government contracts by assessing the
nature and status of government contracts, performing retrospective reviews of government contract estimates and changes in
estimates over time, and obtaining evidence to support estimated costs.
/s/ PricewaterhouseCoopers LLP
San Jose, California
November 10, 2022
We have served as the Company’s auditor since 2016.
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48
SANMINA CORPORATION
CONSOLIDATED BALANCE SHEETS
Current assets:
Cash and cash equivalents
ASSETS
Accounts receivable, net of allowances of approximately $8 million and $7 million as of
October 1, 2022 and October 2, 2021, respectively
Contract assets
Inventories
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment, net
Deferred income tax assets, net
Other
Total assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
Accrued liabilities
Accrued payroll and related benefits
Short-term debt, including current portion of long-term debt
Total current liabilities
Long-term liabilities:
Long-term debt
Other
Total long-term liabilities
Commitments and Contingencies (Note 10)
Stockholders' equity:
As of
October 1,
2022
October 2,
2021
(In thousands, except par value)
$
529,857
$
650,026
1,138,894
503,674
1,691,081
62,044
3,925,550
575,170
198,588
160,192
$ 4,859,500
1,192,434
348,741
1,036,511
53,952
3,281,664
532,985
235,117
156,953
$ 4,206,719
$ 2,029,534
275,735
130,892
17,500
2,453,661
$ 1,464,693
161,896
117,648
18,750
1,762,987
329,237
215,333
544,570
311,572
253,532
565,104
Preferred stock, $0.01 par value, authorized 5,000 shares, none issued and outstanding
Common stock, $0.01 par value, authorized 166,667 shares; 110,160 and 108,734 shares
issued and 57,394 and 64,307 shares outstanding as of October 1, 2022 and October 2,
2021, respectively
—
574
—
643
Treasury stock, 52,766 and 44,427 shares as of October 1, 2022 and October 2, 2021,
respectively, at cost
Additional paid-in capital
Accumulated other comprehensive income
Accumulated deficit
Total stockholders' equity
Total liabilities and stockholders' equity
(1,378,159)
6,380,774
56,325
(3,198,245)
1,861,269
$ 4,859,500
(1,047,202)
6,338,863
40,690
(3,454,366)
1,878,628
$ 4,206,719
See accompanying notes to the consolidated financial statements.
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49
SANMINA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Net sales
Cost of sales
Gross profit
Operating expenses:
Selling, general and administrative
Research and development
Restructuring and other
Goodwill impairment
Gain on sale of long-lived assets
Total operating expenses
October 1,
2022
Year Ended
October 2,
2021
October 3,
2020
(In thousands, except per share amounts)
$ 7,890,475
7,249,961
640,514
$ 6,756,643
6,204,838
551,805
$ 6,960,370
6,434,663
525,707
244,569
21,343
11,425
—
(4,610)
272,727
234,537
20,911
15,057
—
—
270,505
240,931
22,564
27,916
6,609
—
298,020
Operating income
367,787
281,300
227,687
Interest income
Interest expense
Other income (expense), net
Interest and other, net
Income before income taxes
Provision for income taxes
Net income
Net income per share:
Basic
Diluted
1,628
(22,473)
(26,314)
(47,159)
320,628
64,507
256,121
4.18
4.06
$
$
$
925
(19,551)
44,331
25,705
307,005
38,007
268,998
4.12
4.01
$
$
$
2,322
(28,903)
(348)
(26,929)
200,758
61,045
139,713
2.02
1.97
$
$
$
Weighted-average shares used in computing per share amounts:
Basic
Diluted
61,310
63,117
65,318
67,084
69,041
70,793
See accompanying notes to the consolidated financial statements.
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50
SANMINA CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments
Derivative financial instruments:
Change in net unrealized amount
Amount reclassified into net income
October 1,
2022
Year Ended
October 2,
2021
(In thousands)
October 3,
2020
$
256,121
$
268,998
$
139,713
(12,191)
(9,223)
(925)
8,414
10,003
3,034
4,863
(3,646)
1,332
Defined benefit plans:
Changes in unrecognized net actuarial losses and unrecognized transition
cost
Amortization of actuarial losses and transition cost
Total other comprehensive income (loss)
Comprehensive income
5,884
3,525
15,635
271,756
$
$
4,713
2,417
5,804
274,802
(6,240)
2,106
(7,373)
132,340
$
$
$
$
See accompanying notes to the consolidated financial statements.
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51
SANMINA CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock and
Additional Paid-in
Capital
Treasury Stock
Number
of
Shares
Amount
Number
of
Shares
Amount
Accumulated
Other
Comprehensive
Income
Accumulated
Deficit
Total
(In thousands)
BALANCE AT SEPTEMBER 28, 2019 105,551 $ 6,267,509
(35,831) $
(804,118) $
42,259 $
(3,863,077) $ 1,642,573
Issuances under stock plans
Stock-based compensation
Repurchases of treasury stock
Other comprehensive loss
Net income
2,078
—
—
—
—
7,793
26,235
—
—
—
—
—
—
—
(6,799)
(179,025)
—
—
—
—
—
7,793
26,235
—
(179,025)
—
—
—
—
(7,373)
—
(7,373)
—
139,713
139,713
BALANCE AT OCTOBER 3, 2020
107,629 $ 6,301,537
(42,630) $
(983,143) $
34,886 $
(3,723,364) $ 1,629,916
Issuances under stock plans
Stock-based compensation
Repurchases of treasury stock
Other comprehensive loss
Net income
1,105
—
—
—
—
2,993
34,976
—
—
—
—
—
—
—
(1,797)
(64,059)
—
—
—
—
—
—
—
5,804
—
—
—
—
—
2,993
34,976
(64,059)
5,804
268,998
268,998
BALANCE AT OCTOBER 2, 2021
108,734 $ 6,339,506
(44,427) $
(1,047,202) $
40,690 $
(3,454,366) $ 1,878,628
Issuances under stock plans
Stock-based compensation
Repurchases of treasury stock
Other comprehensive income
Net income
1,426
—
—
—
—
2,378
39,608
—
—
—
—
(144)
(8,339)
(330,957)
—
—
—
—
—
2,378
39,608
—
(331,101)
—
—
—
—
—
—
15,635
—
15,635
—
256,121
256,121
BALANCE AT OCTOBER 1, 2022
110,160 $ 6,381,348
(52,766) $
(1,378,159) $
56,325 $
(3,198,245) $ 1,861,269
See accompanying notes to the consolidated financial statements.
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52
SANMINA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
October 1,
2022
Year Ended
October 2,
2021
(In thousands)
October 3,
2020
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income
$
256,121
$
268,998
$
139,713
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization
Stock-based compensation expense
Deferred income taxes
Impairment of goodwill and other assets
Loss (Gain) on sale of intellectual property
Gain on liquidation of foreign entity
Other, net
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable
Contract assets
Inventories
Prepaid expenses and other assets
Accounts payable
Accrued liabilities
Cash provided by operating activities
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of investments
Sale of investments
Cash paid for business acquisition, net of cash acquired
Proceeds from sale of intellectual property
Cash used in investing activities
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Proceeds from revolving credit facility borrowings
Repayments of revolving credit facility borrowings
Repayments of long-term debt
Proceeds from issuance of long-term debt
Debt issuance costs
Net proceeds from stock issuances
Repurchases of common stock
Proceeds from collection of notes receivable
Cash used in financing activities
Effect of exchange rate changes
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Cash paid during the year:
Interest, net of capitalized interest
Income taxes, net of refunds
Unpaid purchases of property, plant and equipment at end of period
108,783
39,608
31,733
1,848
7,000
—
1,260
46,480
(154,933)
(663,379)
(31,700)
554,492
133,541
330,854
(138,639)
8,425
(2,000)
—
—
—
(132,214)
1,874,000
(1,874,000)
(332,814)
350,000
(3,263)
2,379
(331,101)
500
(314,299)
(4,510)
(120,169)
650,026
109,656
34,976
33,724
—
(15,000)
(8,263)
(1,371)
(146,516)
47,842
(167,186)
(6,486)
236,270
(48,302)
338,342
(73,296)
1,084
(2,705)
—
(21,408)
5,000
(91,325)
399,600
(399,600)
(18,752)
—
—
2,993
(64,059)
2,500
(77,318)
(199)
169,500
480,526
529,857
$
650,026
$
114,218
26,235
13,567
8,409
—
—
(239)
83,623
(283)
39,564
17,798
(106,640)
(35,410)
300,555
(65,982)
1,573
(30,000)
30,000
—
—
(64,409)
1,909,000
(1,909,000)
(39,048)
—
—
7,793
(179,025)
—
(210,280)
(81)
25,785
454,741
480,526
18,243
48,131
38,570
$
$
$
15,264
33,358
20,929
$
$
$
20,477
30,700
12,371
$
$
$
$
See accompanying notes to the consolidated financial statements.
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53
SANMINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Organization of Sanmina
Sanmina Corporation (“Sanmina,” or the “Company”) was incorporated in Delaware in 1989. The Company is a
leading global provider of integrated manufacturing solutions, components, products and repair, logistics and after-market
services. The Company provides these comprehensive solutions primarily to original equipment manufacturers (OEMs) that
serve the industrial, medical, defense and aerospace, automotive, communications networks and cloud infrastructure industries.
The Company's operations are managed as two businesses:
1) Integrated Manufacturing Solutions (IMS). IMS is a single operating segment consisting of printed circuit board
assembly and test, high-level assembly and test and direct-order-fulfillment.
2) Components, Products and Services (CPS). Components include printed circuit boards, backplanes and
backplane assemblies, cable assemblies, fabricated metal parts, precision machined parts, and plastic injected
molded parts. Products include memory solutions from our Viking Technology division; high-performance
storage platforms for hyperscale and enterprise solutions from our Viking Enterprise Solutions (VES) division;
optical, radio frequency (RF) and microelectronic (microE) design and manufacturing services from Advanced
Microsystems Technologies; defense and aerospace products from SCI Technology; and cloud-based
manufacturing execution software from the Company's 42Q division. Services include design, engineering and
logistics and repair.
The Company's only reportable segment is IMS, which represented approximately 80% of total revenue in 2022. CPS
consists of multiple operating segments which do not individually meet the quantitative thresholds for being presented as
reportable segments. Therefore, financial information for these operating segments is combined and presented in a single
category entitled “Components, Products and Services”.
Basis of Presentation
Fiscal Year. The Company operates on a 52 or 53 week year ending on the Saturday nearest September 30. Fiscal
2022 and 2021 were each 52 weeks and fiscal 2020 was a 53-week year, with the extra week occurring during the fourth quarter
of fiscal 2020. All references to years relate to fiscal years unless otherwise noted.
Principles of Consolidation. The consolidated financial statements include the Company's accounts and those of its
subsidiaries. All intercompany balances and transactions have been eliminated.
Note 2. Summary of Significant Accounting Policies
Management Estimates and Uncertainties. The preparation of consolidated financial statements in conformity with
generally accepted accounting principles in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the
consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Due to the
COVID-19 pandemic, the global economy and financial markets were disrupted and there is a significant amount of uncertainty
about the length and severity of the consequences caused by the pandemic. The Company has considered information available
to it as of the date of issuance of these financial statements and is not aware of any specific events or circumstances that would
require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities. Significant
estimates made in preparing the consolidated financial statements relate to allowances for accounts receivable; provisions for
excess and obsolete inventories, environmental matters, and legal exposures; determining liabilities for uncertain tax positions;
determining the realizability of deferred tax assets; and determining fair values of tangible and intangible assets for purposes of
impairment tests. These estimates may change as new events occur and additional information becomes available. Actual
results could differ materially from these estimates.
Financial Instruments and Concentration of Credit Risk. Financial instruments consist primarily of cash and cash
equivalents, accounts receivable, foreign currency forward contracts, interest rate swap agreements, accounts payable and debt
obligations. The fair value of these financial instruments approximates their carrying amount as of October 1, 2022 and
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October 2, 2021 due to the nature or short maturity of these instruments, or because, in some cases, the instruments are recorded
at fair value on the consolidated balance sheets.
Cash and Cash Equivalents. Cash and cash equivalents include cash on hand and on deposit and investments in highly
liquid debt instruments with maturities of three months or less.
Accounts Receivable and Other Related Allowances. The Company had allowances of approximately $8 million and
$7 million as of October 1, 2022 and October 2, 2021, respectively, for uncollectible accounts, product returns and other net
sales adjustments. To establish the allowance for doubtful accounts, the Company estimates credit risk associated with accounts
receivable by considering the creditworthiness of its customers, past experience, specific facts and circumstances, and the
overall economic climate in industries that it serves. To establish the allowance for product returns and other adjustments, the
Company primarily utilizes historical data.
Accounts Receivable Sales. The Company is a party to a Receivables Purchase Agreement (the “RPA”) with certain
third-party banking institutions for the sale of trade receivables generated from sales to certain customers, subject to acceptance
by, and a funding commitment from, the banks that are party to the RPA. Trade receivables sold pursuant to the RPA are
serviced by the Company.
In addition to the RPA, the Company has the option to participate in trade receivables sales programs that have been
implemented by certain of the Company's customers, as in effect from time to time. The Company does not service trade
receivables sold under these other programs. Under each of the programs noted above, the Company sells its entire interest in a
trade receivable for 100% of face value, less a discount. Accounts receivable balances sold are removed from the consolidated
balance sheets and the related proceeds are reported as cash provided by operating activities in the consolidated statements of
cash flows.
Inventories. Inventories are stated at the lower of cost (first-in, first-out method) and net realizable value. Cost includes
labor, materials and manufacturing overhead.
Provisions are made to reduce excess and obsolete inventories to their estimated net realizable values. The ultimate
realization of inventory carrying amounts is primarily affected by changes in customer demand. Inventory provisions are
established based on forecasted demand, past experience with specific customers, the age and nature of the inventory, the ability
to redistribute inventory to other programs or back to suppliers, and whether customers are contractually obligated and have the
ability to pay for the related inventory. Certain payments received from customers for inventory held by the Company are
recorded as a reduction of inventory.
Long-lived Assets. Property, plant and equipment are stated at cost or, in the case of property and equipment acquired
through business combinations, at fair value as of the acquisition date. Depreciation is provided on a straight-line basis over 20
to 40 years for buildings and 3 to 15 years for machinery, equipment, furniture and fixtures. Leasehold improvements are
amortized on a straight-line basis over the shorter of the lease term or useful life of the asset.
The Company reviews property, plant and equipment for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset or asset group may not be recoverable. An asset group is the unit of accounting
which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of
assets. An asset or asset group is considered impaired if its carrying amount exceeds the undiscounted future net cash flows the
asset or asset group is expected to generate. If an asset or asset group is considered to be impaired, the impairment to be
recognized is measured as the amount by which the carrying amount of the asset or asset group exceeds its fair value. For asset
groups for which the primary asset is a building, the Company estimates fair value based on data provided by commercial real
estate brokers. For other asset groups, the Company estimates fair value based on projected discounted future net cash flows.
Foreign Currency Translation. For foreign subsidiaries using the local currency as their functional currency, assets
and liabilities are translated to U.S. dollars at exchange rates in effect at the balance sheet date and income and expenses are
translated at average exchange rates. The effects of these translation adjustments are reported in stockholders' equity as a
component of accumulated other comprehensive income (“AOCI”). For all entities, remeasurement adjustments for non-
functional currency monetary assets and liabilities are included in other income (expense), net in the accompanying
consolidated statements of income. Remeasurement gains and losses arising from long-term intercompany loans denominated
in a currency other than an entity's functional currency are recorded in AOCI if repayment of the loan is not anticipated in the
foreseeable future.
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Derivative Instruments and Hedging Activities. The Company conducts business on a global basis in numerous
currencies and certain of the Company's outstanding debt has a variable interest rate. Therefore, the Company is exposed to
movements in foreign currency exchange rates and interest rates. The Company uses derivatives, such as foreign currency
forward contracts and interest rate swaps, to minimize the volatility of earnings and cash flows associated with changes in
foreign currency exchange rates and interest rates.
The Company accounts for derivative instruments and hedging activities in accordance with ASC Topic 815,
Derivatives and Hedging, which requires each derivative instrument to be recorded on the consolidated balance sheets at its fair
value as either an asset or a liability. If a derivative is designated as a cash flow hedge, the Company excludes time value from
its assessment of hedge effectiveness and recognizes the amount of time value in earnings over the life of the derivative. Gains
or losses on the derivative not caused by changes in time value are recorded in Accumulated Other Comprehensive Income
(“AOCI”), a component of equity, and reclassified into earnings in the same period or periods during which the hedged
transaction affects earnings. If a derivative is designated as a fair value hedge, changes in the fair value of the derivative and of
the item being hedged are recognized in earnings in the current period.
Derivative instruments are entered into for periods of time consistent with the related underlying exposures and are not
entered into for speculative purposes. At the inception of a hedge, the Company documents all relationships between derivative
instruments and related hedged items, as well as its risk-management objectives and strategies for the hedging transaction.
The Company's foreign currency forward contracts and interest rate swaps potentially expose the Company to credit
risk to the extent the counterparties may be unable to meet the terms of the agreement. The Company minimizes such risk by
seeking high quality counterparties.
Leases. The Company's leases consist primarily of operating leases for buildings and land and have initial lease terms
of up to 44 years. Certain of these leases contain an option to extend the lease term for additional periods or to terminate the
lease after an initial non-cancelable term. Renewal options are considered in the measurement of the Company's initial lease
liability and corresponding right-of-use (“ROU”) asset only if it is reasonably certain that the Company will exercise such
options. Leases with lease terms of twelve months or less are not recorded on the Company's balance sheet.
The Company’s lease liability and ROU assets represent the present value of future lease payments which are a
combination of lease components and non-lease components such as maintenance and utilities. Operating lease expense is
recognized on a straight line basis over the term of the lease. Certain of the Company’s lease payments are variable because
such payments adjust periodically based on changes in consumer price and other indexes. Variable payments are expensed as
incurred and not included in the measurement of lease liabilities and ROU assets. Since the Company's leases generally do not
provide an implicit rate, the Company uses an incremental borrowing rate based on information available at the lease
commencement date for purposes of determining the present value of lease payments. The Company's incremental borrowing
rate is based on the term of the lease, the economic environment of the lease and the effect of collateralization, if any.
Revenue Recognition. The Company derives revenue principally from sales of integrated manufacturing solutions,
components and Company-proprietary products. Other sources of revenue include logistics and repair services; design,
development and engineering services; defense and aerospace programs; and sales of raw materials to customers whose
requirements change after the Company has procured inventory to fulfill the customer’s forecasted demand.
For purposes of determining when to recognize revenue, and in what amount, the Company applies a 5-step model: (1)
identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction
price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as)
the Company satisfies a performance obligation. Each of these steps may involve the use of significant judgments.
The Company recognizes revenue for the majority of its contracts on an over time basis. This is due to the fact that 1)
the Company does not have an alternative use for the end products it manufactures for its customers and has an enforceable
right to payment, including a reasonable profit, for work-in-progress upon a customer’s cancellation of a contract for
convenience or 2) the Company’s customer simultaneously receives and consumes the benefits provided by the Company’s
services. For these contracts, revenue is recognized on an over time basis using the cost-to-cost method (ratio of costs incurred
to date to total estimated costs at completion) which the Company believes best depicts the transfer of control to the customer.
Revenue streams for which revenue is recognized on an over time basis include sales of vertically integrated manufacturing
solutions (integrated manufacturing solutions and components); global services (logistics and repair); design, development and
engineering services; and defense and aerospace programs.
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Application of the cost-to-cost method for government contracts in the Company’s Defense and Aerospace division
requires the use of significant judgments with respect to estimated materials, labor and subcontractor costs. This division is an
operating segment whose results are combined with eleven other operating segments and reported under Components, Products
and Services (“CPS”) for segment reporting purposes. In 2022, CPS revenue and gross profit were $1.5 billion and $194
million, respectively.
The Company updates its estimates of materials, labor and subcontractor costs on a quarterly basis. These updated
estimates are reviewed each quarter by a group of employees that includes representatives from numerous functions such as
engineering, materials, contracts, manufacturing, program management, finance and senior management. If a change in estimate
is deemed necessary, the impact of the change is recognized in the period of change.
For contracts for which revenue is required to be recognized at a point-in-time, the Company recognizes revenue when
it has transferred control of the related goods, which generally occurs upon shipment or delivery of the goods to the customer.
Revenue streams for which revenue is recognized at a point-in-time include Company-proprietary products and sales of raw
materials.
Refer to Note 4 for further discussion.
Income taxes. The Company estimates its income tax provision or benefit in each of the jurisdictions in which it
operates, including estimating exposures and making judgments regarding the realizability of deferred tax assets. Deferred tax
assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The carrying value of the Company's net deferred tax
assets is based on the Company's belief that it is more likely than not that the Company will generate sufficient future taxable
income in certain jurisdictions to realize these deferred tax assets. A valuation allowance has been established for deferred tax
assets which do not meet the “more likely than not” criteria discussed above.
The Company's tax rate is dependent upon the geographic distribution of its worldwide income or losses, the tax
regulations and tax holidays in each geographic region, the availability of tax credits and carryforwards, including net operating
losses, and the effectiveness of its tax planning strategies.
The Company makes an assessment of whether each income tax position is “more likely than not” of being sustained
on audit, including resolution of related appeals or litigation, if any. For each income tax position that meets the “more likely
than not” recognition threshold, the Company then assesses the largest amount of tax benefit that is greater than 50% likely of
being realized upon effective settlement with the tax authority. Interest and penalties related to unrecognized tax benefits are
recognized as a component of income tax expense.
Recent Accounting Pronouncement Adopted
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)”, which provides optional
expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by
reference rate reform. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. The
Company adopted this ASU during the fourth quarter of 2022. The impact of adoption was not material.
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Note 3. Balance Sheet and Income Statement Details
Property, Plant and Equipment, net
Property, plant and equipment consisted of the following:
Machinery and equipment
Land and buildings
Leasehold improvements
Furniture and fixtures
Construction in progress
Less: Accumulated depreciation and amortization
Property, plant and equipment, net
As of
October 1,
2022
October 2,
2021
(In thousands)
$ 1,523,598
656,839
42,793
24,805
91,928
2,339,963
(1,764,793)
575,170
$
$ 1,491,156
645,639
44,899
25,394
40,524
2,247,612
(1,714,627)
532,985
$
Depreciation expense was $108 million, $109 million and $113 million for 2022, 2021 and 2020, respectively.
Other Income (Expense), net
The Company terminated its frozen U.S. defined benefit plan (the “Plan”) effective July 3, 2022 and recorded a
pension settlement charge of $2 million during the fourth quarter of 2022 which includes the reclassification of unrecognized
pension losses from accumulated other comprehensive income to other income (expense), net on the consolidated statements of
income. Refer to Note 17 for discussion.
The Company recorded a loss on extinguishment of debt of $1 million during the fourth quarter of 2022, consisting of
a write-off of unamortized debt issuance costs arising from the amendment and restatement of the Fourth Amended and
Restated Loan Agreement, dated as of November 30, 2018. Refer to Note 7 for discussion.
In 2021, the Company sold intellectual property for $15 million, of which $8 million has been received in cash. The
sale of intellectual property was included in other income (expense), net on the consolidated statements of income. During the
fourth quarter of 2022, the Company concluded it expected to incur credit losses with the counterparty for the remaining $7
million due under the arrangement. Accordingly, the Company recorded a charge of $7 million in other income (expense), net
on the consolidated statements of income to establish an allowance for the expected credit loss.
A foreign entity of the Company was substantially liquidated in 2021 and the Company reclassified $8 million of
cumulative translation adjustments associated with this entity from accumulated other comprehensive income to other income
(expense), net on the consolidated statements of income in 2021.
The Company received $16 million of cash in 2021 in connection with settlements of certain anti-trust class action
matters.
Note 4. Revenue Recognition
The Company is a leading global provider of integrated manufacturing solutions, components, products and repair,
logistics and after-market services. For purposes of determining when to recognize revenue, and in what amount, the Company
applies a 5-step model: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3)
determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5)
recognize revenue when (or as) the Company satisfies a performance obligation. Each of these steps may involve the use of
significant judgments, as discussed below.
Step 1 - Identify the contract with a customer
A contract is defined as an agreement between two parties that creates enforceable rights and obligations. The
Company generally enters into a master supply agreement (“MSA”) with its customers that provides the framework under
which business will be conducted, and pursuant to which a customer will issue purchase orders or other binding documents to
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58
specify the quantity, price and delivery requirements for products or services the customer wishes to purchase. The Company
generally considers its contract with a customer to be a firm commitment, consisting of the combination of an MSA and a
purchase order or any other similar binding document.
Step 2 - Identify the performance obligations in the contract
A performance obligation is a promised good or service that is material in the context of the contract and is both
capable of being distinct (customer can benefit from the good or service on its own or together with other readily available
resources) and distinct within the context of the contract (separately identifiable from other promises). The Company reviews
its contracts to identify promised goods or services and then evaluates such items to determine which of those items are
performance obligations. The majority of the Company’s contracts have a single performance obligation since the promise to
transfer an individual good or service is not separately identifiable from other promises in the contract. The Company’s
performance obligations generally have an expected duration of one year or less.
Step 3 - Determine the transaction price
The Company’s contracts with its customers may include certain forms of variable consideration such as early
payment discounts, volume discounts and shared cost savings. The Company includes an estimate of variable consideration
when determining the transaction price and the appropriate amount of revenue to be recognized. This estimate is limited to an
amount which will not result in a significant reversal of revenue in a future period. Factors considered in the Company’s
estimate of variable consideration are the potential amount subject to these contract provisions, historical experience and other
relevant facts and circumstances.
Step 4 - Allocate the transaction price to the performance obligations in the contract
A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or
as, the performance obligation is satisfied. In the event that more than one performance obligation is identified in a contract, the
Company is required to allocate a portion of the transaction price to each performance obligation. This allocation would
generally be based on the relative standalone price of each performance obligation, which most often would represent the price
at which the Company would sell similar goods or services separately.
Step 5 - Recognize revenue when (or as) a performance obligation is satisfied
The Company is required to assess whether control of a product or services promised under a contract is transferred to
the customer at a point-in-time or over time as the product is being manufactured or the services are being provided. If the
criteria in ASC 606 for recognizing revenue on an over time basis are not met, revenue must be recognized at the point-in-time
determined by the Company at which its customer obtains control of a product or service.
The Company has determined that revenue for the majority of its contracts is required to be recognized on an over time
basis. This determination is based on the fact that 1) the Company does not have an alternative use for the end products it
manufactures for its customers and has an enforceable right to payment, including a reasonable profit, for work-in-progress
upon a customer’s cancellation of a contract for convenience or 2) the Company’s customer simultaneously receives and
consumes the benefits provided by the Company’s services. For these contracts, revenue is recognized on an over time basis
using the cost-to-cost method (ratio of costs incurred to date to total estimated costs at completion) which the Company believes
best depicts the transfer of control to the customer. At least 95% of the Company's revenue is recognized on an over time basis,
which is as products are manufactured or services are performed. Because of this, and the fact that there is no work-in-process
or finished goods inventory associated with contracts for which revenue is recognized on an over-time basis, 99% or more of
the Company’s inventory at the end of a given period is in the form of raw materials. For contracts for which revenue is
required to be recognized at a point-in-time, the Company recognizes revenue when it has transferred control of the related
goods, which generally occurs upon shipment or delivery of the goods to the customer.
Application of the cost-to-cost method for government contracts in the Company’s Defense and Aerospace division
requires the use of significant judgments with respect to estimated materials, labor and subcontractor costs. This division is an
operating segment whose results are combined with eleven other operating segments and reported under Components, Products
and Services (“CPS”) for segment reporting purposes. In 2022, CPS revenue and gross profit were $1.5 billion and $194
million, respectively.
The Company updates its estimates of materials, labor and subcontractor costs on a quarterly basis. These updated
estimates are reviewed each quarter by a group of employees that includes representatives from numerous functions such as
engineering, materials, contracts, manufacturing, program management, finance and senior management. If a change in estimate
is deemed necessary, the impact of the change is recognized in the period of change.
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Contract Assets
A contract asset is recognized when the Company has recognized revenue, but has not issued an invoice to its
customer for payment. Contract assets are classified separately on the consolidated balance sheets and transferred to accounts
receivable when rights to payment become unconditional. Because of the Company’s short manufacturing cycle times, the
transfer from contract assets to accounts receivable generally occurs within the next fiscal quarter.
Other
Taxes assessed by governmental authorities that are both imposed on and concurrent with a specific revenue-producing
transaction, and are collected by the Company from a customer, are excluded from revenue.
Shipping and handling costs associated with outbound freight after control of a product has transferred to a customer
are accounted for as fulfillment costs and are included in cost of sales.
The Company applies the following practical expedients or policy elections under ASC 606:
• The promised amount of consideration under a contract is not adjusted for the effects of a significant financing
component because, at inception of a contract, the Company expects the period between when a good or service is
transferred to a customer and when the customer pays for that good or service will generally be one year or less.
• The Company has elected to not disclose information about remaining performance obligations that have original
expected durations of one year or less, which is substantially all of the Company’s remaining performance
obligations.
• Incremental costs of obtaining a contract are not capitalized if the period over which such costs would be
amortized to expense is less than one year.
Disaggregation of revenue
In the following table, revenue is disaggregated by segment, market sector and geography.
Segments:
IMS
CPS
Total
End Markets:
October 1,
2022
Year Ended
October 2,
2021
(In thousands)
October 3,
2020
$ 6,372,442
$ 5,454,269
$ 5,699,751
1,518,033
1,302,374
1,260,619
$ 7,890,475
$ 6,756,643
$ 6,960,370
Communications Networks and Cloud Infrastructure
$ 3,175,534
$ 2,866,602
$ 2,832,650
Industrial, Defense, Medical and Automotive
Total
Geography:
Americas (1)
APAC
EMEA
Total
4,714,941
3,890,041
4,127,720
$ 7,890,475
$ 6,756,643
$ 6,960,370
$ 3,719,496
$ 3,182,849
$ 3,450,527
3,007,904
1,163,075
2,517,963
1,055,831
2,514,005
995,838
$ 7,890,475
$ 6,756,643
$ 6,960,370
(1) Mexico represents approximately 60% of the Americas revenue and the U.S. represents approximately 35%.
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Note 5. Financial Instruments
Fair Value Measurements
Fair Value of Financial Instruments
The fair values of cash equivalents (generally 10% or less of cash and cash equivalents), accounts receivable, accounts
payable and short-term debt approximate carrying value due to the short-term duration of these instruments. Additionally, the
fair value of variable rate long-term debt approximates carrying value as of October 1, 2022.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company's primary financial assets and financial liabilities measured at fair value on a recurring basis are deferred
compensation plan assets and defined benefit plan assets, which are both measured using Level 1 inputs. Deferred
compensation plan assets were $37 million and $46 million as of October 1, 2022 and October 2, 2021, respectively. Defined
benefit plan assets were $17 million and $40 million as of October 1, 2022 and October 2, 2021, respectively. Other financial
assets and financial liabilities measured at fair value on a recurring basis include foreign exchange contracts and interest rate
swaps, which are both measured using Level 2 inputs. Foreign exchange contracts were not material as of October 1, 2022 or
October 2, 2021. Interest rate swaps had a positive value of $6 million and a negative value of $19 million, as of October 1,
2022 and October 2, 2021, respectively.
Offsetting Derivative Assets and Liabilities
The Company has entered into master netting arrangements with each of its derivative counterparties that allows net
settlement of derivative assets and liabilities under certain conditions, such as multiple transactions with the same currency
maturing on the same date. The Company presents its derivative assets and derivative liabilities on a gross basis on the
consolidated balance sheets. The amount that the Company had the right to offset under these netting arrangements was not
material as of October 1, 2022 or October 2, 2021.
Non-Financial Assets Measured at Fair Value on a Nonrecurring Basis
Other non-financial assets, such as intangible assets, goodwill and other long-lived assets, are measured at fair value as
of the date such assets are acquired or in the period an impairment is recorded. During 2020, commodity prices in the oil and
gas market experienced a sharp decline due to a combination of an oversaturated supply and a decrease in demand caused by
the COVID-19 pandemic. This commodity price decline resulted in a negative impact to the projected cash flows of the
Company’s oil and gas reporting unit that is part of the Company's Components, Products and Services (“CPS”) operating
segment and, therefore, the Company performed a goodwill impairment test for this particular reporting unit. The Company
concluded that the fair value of the reporting unit was below its carrying value, resulting in a goodwill impairment charge of $7
million. The fair value of the reporting unit was estimated based on the present value of future discounted cash flows. The
Company also recorded an impairment charge of $2 million in 2022 and 2020 for certain long-lived assets.
Derivative Instruments
Foreign Exchange Rate Risk
The Company is exposed to certain risks related to its ongoing business operations. The primary risk managed by
using derivative instruments is foreign currency exchange risk.
Forward contracts on various foreign currencies are used to manage foreign currency risk associated with forecasted
foreign currency transactions and certain monetary assets and liabilities denominated in non-functional currencies. The
Company's primary foreign currency cash flows are in certain Asian and European countries, Brazil, Israel and Mexico.
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The Company had the following outstanding foreign currency forward contracts that were entered into to hedge
foreign currency exposures:
Derivatives Designated as Accounting Hedges:
Notional amount (in thousands)
Number of contracts
Derivatives Not Designated as Accounting Hedges:
Notional amount (in thousands)
Number of contracts
As of
October 1,
2022
October 2,
2021
$
$
123,172
50
531,558
43
$
$
110,098
48
353,108
46
The Company utilizes foreign currency forward contracts to hedge certain operational (“cash flow”) exposures
resulting from changes in foreign currency exchange rates. Such exposures generally result from (1) forecasted non-functional
currency sales and (2) forecasted non-functional currency materials, labor, overhead and other expenses. These contracts are
designated as cash flow hedges for accounting purposes and are generally one to two months in duration but, by policy, may be
up to twelve months in duration.
For derivative instruments that are designated and qualify as cash flow hedges, the Company excludes time value from
its assessment of hedge effectiveness and recognizes the amount of time value in earnings over the life of the derivative
instrument. Gains or losses on the derivative not caused by changes in time value are recorded in Accumulated Other
Comprehensive Income (“AOCI”), a component of equity, and reclassified into earnings in the same period or periods during
which the hedged transaction affects earnings. The amount of gain or loss recognized in Other Comprehensive Income on
derivative instruments and the amount of gain or loss reclassified from AOCI into income were not material for any period
presented herein.
The Company enters into short-term foreign currency forward contracts to hedge currency exposures associated with
certain monetary assets and liabilities denominated in non-functional currencies. These contracts have maturities of up to two
months and are not designated as accounting hedges. Accordingly, these contracts are marked-to-market at the end of each
period with unrealized gains and losses recorded in other income (expense), net, in the consolidated statements of income. The
amount of gains or losses associated with these forward contracts was not material for any period presented herein. From an
economic perspective, the objective of the Company's hedging program is for gains and losses on forward contracts to
substantially offset gains and losses on the underlying hedged items. In addition to the contracts disclosed in the table above,
the Company has numerous contracts that have been closed from an economic and financial accounting perspective and will
settle early in the first month of the following quarter. Since these offsetting contracts do not expose the Company to risk of
fluctuations in exchange rates, these contracts have been excluded from the above table.
Interest Rate Risk
The Company enters into forward interest rate swap agreements with independent counterparties to partially hedge the
variability in cash flows due to changes in Secured Overnight Financing Rate benchmark interest rate (“SOFR”) associated with
anticipated variable rate borrowings. These interest rate swaps have a maturity date of December 1, 2023, and effectively
convert the Company's variable interest rate obligations to fixed interest rate obligations. These swaps are accounted for as cash
flow hedges under ASC Topic 815, Derivatives and Hedging. Interest rate swaps with an aggregate notional amount of $350
million were outstanding as of October 1, 2022 and October 2, 2021. The aggregate effective interest rate of these swaps as of
October 1, 2022 was approximately 4.1%. Given the recent rise in interest rates and the likelihood of additional rate increases,
these interest rate swaps had a positive value of $6 million as of October 1, 2022, of which the majority is included in prepaid
expenses and other current assets and the remaining amount is included in other assets on the consolidated balance sheets.
Note 6. Financial Instruments and Concentration of Credit Risk
Financial instruments that potentially subject the Company to credit risk consist primarily of cash, cash equivalents,
trade accounts receivable, foreign currency forward contracts and interest rate swap agreements. The carrying value of assets
such as cash, cash equivalents and accounts receivable is expected to approximate fair value due to the short duration of the
assets. The Company maintains its cash and cash equivalents with recognized financial institutions that management believes to
be of high credit quality. One of the Company's most significant credit risks is the ultimate realization of accounts receivable.
This risk is mitigated by ongoing credit evaluations of, and frequent contact with, the Company's customers, especially its most
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significant customers, thus enabling it to monitor changes in business operations and respond accordingly. The Company
generally does not require collateral for sales on credit. The Company considers these concentrations of credit risks when
estimating its allowance for doubtful accounts. Foreign currency forward contracts and interest rate swaps are maintained with
high quality counterparties to reduce the Company's credit risk and are recorded on the Company's balance sheets at fair value.
Nokia and Motorola each represented more than 10% of the Company's net sales in 2022. Nokia represented more than
10% of the Company's net sales in 2021 and 2020. Motorola represented 10% or more of the Company's gross accounts
receivable as of October 1, 2022 and Nokia represented 10% or more of the Company's gross accounts receivable as of
October 2, 2021.
Note 7. Debt
Long-term debt consisted of the following:
Term loan due 2023, net of issuance costs
Term loan due 2027, net of issuance costs
Less: Current portion of long-term debt
Long-term debt
Revolving Credit Facility.
As of
October 1,
2022
October 2,
2021
(In thousands)
$
$
—
346,737
17,500
329,237
$
$
330,322
—
18,750
311,572
On September 27, 2022 (the “Closing Date”), the Company entered into a Fifth Amended and Restated Credit
Agreement (the “Credit Agreement”) that amended and restated the Company’s existing Fourth Amended and Restated Loan
Agreement, dated as of November 30, 2018 (the “Existing Credit Agreement”) by, among other things: (i) increasing the
revolving commitments amount, (ii) providing for a term loan facility and (iii) replacing LIBOR with SOFR for purposes of
determining the interest rate payable for borrowings under the Credit Agreement.
The Credit Agreement provides for an $800 million revolving credit facility and a $350 million secured term loan
(“Term Loan Due 2027”). Subject to the satisfaction of certain conditions, including obtaining additional commitments from
existing and/or new lenders, the Company may increase the revolving commitment up to an additional $200 million. Costs
incurred in connection with the amendment of the Existing Credit Agreement of $3 million are classified as long-term debt and
are being amortized to interest expense over the life of the Term Loan Due 2027 using the effective interest method.
The Term Loan Due 2027 was fully drawn on the Closing Date and the proceeds were used to repay the term loan
outstanding under the Existing Credit Agreement. Upon repayment, the Company recorded a loss on extinguishment of debt of
$1 million consisting of a write-off of unamortized debt issuance costs of the Existing Credit Agreement.
Loans under the Credit Agreement bear interest, at the Company's option, at either the SOFR or a base rate, in each
case plus a spread determined based on the Company's credit rating. Interest on the loans is payable quarterly in arrears with
respect to base rate loans and at the end of an interest period (and at three month intervals if the interest period exceeds three
months) in the case of SOFR loans. The outstanding principal amount of all loans under the Credit Agreement, including, the
Term Loan Due 2027, together with accrued and unpaid interest, is due on September 27, 2027. The Company is required to
repay a portion of the principal amount of the Term Loan Due 2027 equal to 1.25% of the principal in quarterly installments.
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Maturities of the Term Loan Due 2027 as of October 1, 2022 by fiscal year are as follows:
2023
2024
2025
2026
2027
(In Thousands)
17,500
$
13,125
17,500
21,875
280,000
$
350,000
Certain of the Company’s domestic subsidiaries are guarantors in respect of the Credit Agreement. The Company and
the subsidiary guarantors’ obligations under the Credit Agreement are secured by a lien on substantially all of their respective
assets (excluding real property), including cash, accounts receivable and the shares of certain Company subsidiaries, subject to
certain exceptions.
As of October 1, 2022, no borrowings and $9 million of letters of credit were outstanding under the Credit Agreement,
under which $791 million was available to borrow. There were no borrowings outstanding under the Credit Agreement as of
October 2, 2021.
Foreign Short-term Borrowing Facilities. As of October 1, 2022, certain foreign subsidiaries of the Company had a
total of $70 million of short-term borrowing facilities available, under which no borrowings were outstanding. These facilities
expire at various dates through the second quarter of 2024.
Debt Covenants
The Company's Credit Agreement requires the Company to comply with certain financial covenants, namely a
maximum consolidated leverage ratio and a minimum interest coverage ratio, in both cases measured on the basis of a trailing
12 month look-back period. In addition, the Company's debt agreements contain a number of restrictive covenants, including
restrictions on incurring additional debt, making investments and other restricted payments, selling assets and paying dividends,
subject to certain exceptions. The Company was in compliance with these covenants as of October 1, 2022.
Note 8. Leases
ROU assets and lease liabilities recorded in the consolidated balance sheet are as follows:
Other assets
Accrued liabilities
Other long-term liabilities
Total lease liabilities
Weighted average remaining lease term (in years)
Weighted average discount rate
As of
October 1,
2022
October 2,
2021
(In thousands)
$ 79,495
$ 68,012
$ 16,695
48,566
$ 65,261
$ 17,219
38,587
$ 55,806
15.74
2.4 %
14.46
2.72 %
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Lease expense and supplemental cash flow information related to operating leases are as follows:
October 1,
2022
Year Ended
October 2,
2021
October 3,
2020
Operating lease expense (1)
$
23,978
$
21,455
$
20,670
Cash paid for operating lease liabilities
As of
October 1,
2022
October 2,
2021
(In thousands)
$
19,249
$
19,531
(1)
Includes immaterial amounts of short term leases, variable lease costs and sublease income.
Future lease payments under non-cancelable operating leases as of October 1, 2022, by fiscal year, are as follows:
Operating
Leases
2023
2024
2025
2026
2027
Thereafter
Total lease payments
Less: imputed interest
Total
(In thousands)
$
18,109
15,350
12,450
8,907
5,724
10,412
70,952
5,691
65,261
$
Note 9. Accounts Receivable Sale Program
The Company is a party to a Receivable Purchase Agreement (the “RPA”) with certain third-party banking institutions
for the sale of trade receivables generated from sales to certain customers, subject to acceptance by, and a funding commitment
from, the banks that are party to the RPA. Trade receivables sold pursuant to the RPA are serviced by the Company.
In addition to the RPA, the Company has the option to participate in trade receivables sales programs that have been
implemented by certain of the Company's customers, as in effect from time to time. The Company does not service trade
receivables sold under these other programs.
Under each of the programs noted above, the Company sells its entire interest in a trade receivable for 100% of face
value, less a discount. For the years ended October 1, 2022 and October 2, 2021, the Company sold approximately $1.9 billion
and approximately $0.5 billion, respectively, of accounts receivable under these programs. Upon sale, these receivables are
removed from the consolidated balance sheets and cash received is presented as cash provided by operating activities in the
consolidated statements of cash flows. Discounts on sold receivables were not material for any period presented. As of
October 1, 2022 and October 2, 2021, $194 million and $7 million, respectively, of accounts receivable sold under the RPA and
subject to servicing by the Company remained outstanding and had not yet been collected. The Company's sole risk with
respect to receivables it services is with respect to commercial disputes regarding such receivables. Commercial disputes
include billing errors, returns and similar matters. To date, the Company has not been required to repurchase any receivable it
has sold due to a commercial dispute. Additionally, the Company is required to remit amounts collected as servicer under the
RPA on a weekly basis to the financial institutions that purchased the receivables. As of October 1, 2022 and October 2, 2021,
$49 million and $18 million, respectively, had been collected but not yet remitted. This amount is classified in accrued
liabilities on the consolidated balance sheets.
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Note 10. Contingencies
From time to time, the Company is a party to litigation, claims and other contingencies, including environmental,
regulatory and employee matters and examinations and investigations by governmental agencies, which arise in the ordinary
course of business. The Company records a contingent liability when it is probable that a loss has been incurred and the amount
of loss is reasonably estimable in accordance with ASC Topic 450, Contingencies, or other applicable accounting standards. As
of October 1, 2022 and October 2, 2021, the Company had reserves of $38 million and $37 million, respectively for
environmental matters, warranty, litigation and other contingencies (excluding reserves for uncertain tax positions), which the
Company believes are adequate. However, there can be no assurance that the Company's reserves will be sufficient to settle
these contingencies. Such reserves are included in accrued liabilities and other long-term liabilities on the consolidated balance
sheets.
Legal Proceedings
Environmental Matters
The Company is subject to various federal, state, local and foreign laws and regulations and administrative orders
concerning environmental protection, including those addressing the discharge of pollutants into the environment, the
management and disposal of hazardous substances, the cleanup of contaminated sites, the materials used in products, and the
recycling, treatment and disposal of hazardous waste. As of October 1, 2022, the Company had been named in a lawsuit and
several administrative orders alleging certain of its current and former sites contributed to groundwater contamination. One
such order demands that the Company and other alleged defendants remediate groundwater contamination at four landfills
located in Northern California to which the Company may have sent wastewater in the past. The Company is participating in a
working group of other alleged defendants to better understand its potential exposure in this action and has reserved its
estimated exposure for this matter as of October 1, 2022. However, there can be no assurance that the Company's reserve will
ultimately be sufficient.
In June 2008, the Company was named by the Orange County Water District in a suit alleging that a predecessor
company’s actions at a plant the Company sold in 1998 contributed to polluted groundwater managed by the plaintiff. The
complaint seeks recovery of compensatory and other damages, as well as declaratory relief, for the payment of costs necessary
to investigate, monitor, remediate, abate and contain contamination of groundwater. In April 2013, all claims against the
Company were dismissed. The plaintiff appealed this dismissal and the Court of Appeal reversed the judgment in August 2017,
remanding the case back to the Superior Court of California for trial. The first phase of a multi-phase trial against the Company
and several other defendants commenced in April 2021 and the submission of evidence concluded in May 2022. On June 28,
2022, the Court issued a tentative ruling finding Sanmina and the other defendants liable for certain past investigation costs
incurred by the plaintiff. A final statement of decision in this phase of the trial is expected on or about the middle of calendar
year 2023. Based upon the Court’s tentative ruling, the Company believes a loss in this matter is probable and has recorded an
estimated loss. Subsequent trial phases to assess the Company’s and certain other defendants’ liability for the plaintiff’s future
remediation and other costs, and the allocation of damages among the liable defendants, are anticipated to occur in 2024 and
beyond. It is probable that the Company will record additional losses in connection with this matter, and it is reasonably
possible that the amount of such additional losses will be material. However, at the current time, the Company is unable to
estimate the amount of such additional losses or a range of losses. The Company intends to continue defending the case
vigorously and to seek appellate review of any adverse liability rulings or judgment at the appropriate time.
Other Matters
In October 2018, a contractor who had been retained by the Company through a third party temporary staffing agency
filed a lawsuit against the Company in the Santa Clara County Superior Court on behalf of himself and all other similarly
situated Company contractors and employees in California, alleging violations of California Labor Code provisions governing
overtime, meal and rest periods, wages, wage statements and reimbursement of business expenses. The complaint sought
certification of a class of all non-exempt employees. Although the Company continued to deny any wrongdoing, on November
19, 2020, the Company reached an agreement to resolve all claims, including claims under California’s Private Attorneys
General Act of 2004 (the “Settlement”), which also resulted in the dismissal of a suit alleging substantially similar claims filed
in the Santa Clara County Superior Court in June 2021. The final amount of the judicially approved Settlement was
approximately $4 million, and was paid during the first quarter of fiscal 2022.
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In December 2019, the Company sued a former customer, Dialight plc (“Dialight”), in the United States District Court
for the Southern District of New York to collect approximately $10 million in unpaid accounts receivable and net obsolete
inventory obligations. Later the same day, Dialight commenced its own action in the same court. Dialight’s complaint, which
asserts claims for fraudulent inducement, breach of contract, and gross negligence/willful misconduct, alleges that the Company
fraudulently misrepresented its capabilities to induce Dialight to enter into a Manufacturing Services Agreement (the “Dialight
MSA”), and then breached its obligations contained in the Dialight MSA relating to quality, on-time delivery and supply chain
management. Dialight seeks compensatory and punitive damages that it contends exceed $200 million, but which the Company
believes are vastly overstated and are subject to a contractual limitation of liability that limits any Dialight recovery to less than
$2 million. The Company continues to vigorously prosecute its claims against Dialight. Further, the Company strongly
disagrees with Dialight’s allegations and is defending against them vigorously. No trial date has been set in this matter.
For each of the pending matters noted above, the Company is unable to reasonably estimate a range of possible loss at
this time.
Note 11. Restructuring
Restructuring costs were $11 million, $15 million, and $27 million in 2022, 2021, and 2020, respectively.
The following table is a summary of restructuring costs:
Severance costs
Other exit costs (recognized as incurred)
Total - Q1 FY20 Plan
Costs incurred for other plans
Total - all plans
Q1 FY20 Plan
October 1,
2022
Year Ended
October 2,
2021
(In thousands)
$
319
$
1,500
1,819
9,606
9,405
1,834
11,239
3,818
October 3,
2020
$
17,919
71
17,990
8,793
$
11,425
$
15,057
$
26,783
On October 28, 2019, the Company adopted a Company-wide restructuring plan (“Q1 FY20 Plan”) under which the
Company has incurred restructuring costs of approximately $31 million as of October 1, 2022. These charges consist primarily
of severance. Substantially all cash payments have occurred and actions under this plan are complete.
Other plans
Other plans include a number of plans for which costs are not expected to be material individually or in the aggregate.
All Plans
The Company’s Integrated Manufacturing Solutions (“IMS”) segment incurred costs of $1 million and $9 million for
the years ended October 1, 2022 and October 2, 2021, respectively. The Company’s CPS segment incurred costs of $10 million
and $5 million for the years ended October 1, 2022 and October 2, 2021, respectively. In addition, the Company incurred costs
of $1 million for the year ended October 2, 2021 for Corporate headcount reductions that were not allocated to the Company's
IMS and CPS segments. The Company had accrued liabilities of $6 million as of October 1, 2022 and October 2, 2021, for
restructuring costs (exclusive of long-term environmental remediation liabilities).
The Company expects to incur restructuring costs, which could be material, in future periods primarily relating to
vacant facilities and former sites for which the Company is or may be responsible for environmental remediation.
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Note 12. Income Taxes
Domestic and foreign components of income before income taxes were as follows:
Domestic
Foreign
Total
The provision for income taxes consists of the following:
Federal:
Current
Deferred
State:
Current
Deferred
Foreign:
Current
Deferred
October 1,
2022
$ 163,979
156,649
$ 320,628
Year Ended
October 2,
2021
(In thousands)
$ 200,300
106,705
$ 307,005
October 3,
2020
$
96,993
103,765
$ 200,758
October 1,
2022
Year Ended
October 2,
2021
(In thousands)
October 3,
2020
$
1,070
29,222
$
705
34,157
$
(917)
9,460
2,060
3,081
29,640
(566)
4,241
(302)
(906)
112
1,705
2,579
46,376
1,842
Total provision for income taxes
$
64,507
$
38,007
$
61,045
The Company's provision for income taxes for 2022, 2021 and 2020 was $65 million (20% of income before taxes),
$38 million (12% of income before taxes) and $61 million (30% of income before taxes), respectively.
The effective tax rates for 2022 and 2021 were lower than the expected U.S. statutory rate of 21% primarily due to a
$16 million and $43 million tax benefit, respectively, resulting from the release of a foreign tax reserves due to lapse of time
and expiration of statutes of limitations. The effective tax rate for 2020 is higher than the expected U.S. statutory rate of 21%
primarily due to foreign operations that are taxed at rates higher than the U.S. statutory rate.
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The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as
follows:
Deferred tax assets:
U.S. net operating loss carryforwards
Foreign net operating loss carryforwards
Intangibles
Accruals not currently deductible
Property, plant and equipment
Tax credit carryforwards
Reserves not currently deductible
Stock compensation expense
Federal benefit of foreign operations
Derivatives and other impacts of OCI
Lease deferred tax asset
Other
Valuation allowance
Total deferred tax assets
Deferred tax liabilities on undistributed earnings
Deferred tax liabilities on branch operations
Revenue recognition
Lease deferred tax liability
Other
Net deferred tax assets
Recorded as:
Deferred tax assets
Deferred tax liabilities
Net deferred tax assets
As of
October 1,
2022
October 2,
2021
(In thousands)
$
$
$
$
81,917
109,416
25,099
44,963
27,514
18,465
14,939
6,365
21,312
838
15,018
1,915
(118,210)
249,551
(14,775)
(24,182)
(1,572)
(14,808)
—
194,214
$ 127,243
112,516
24,219
43,932
25,494
17,250
11,534
7,677
18,336
7,637
11,563
—
(115,258)
292,143
(14,775)
(30,000)
(1,702)
(11,349)
(2,495)
$ 231,822
198,588
(4,374)
194,214
$ 235,117
(3,295)
$ 231,822
A valuation allowance is established or maintained when, based on currently available information and other factors,
it is more likely than not that all or a portion of the deferred tax assets will not be realized. The Company regularly assesses its
valuation allowance against deferred tax assets on a jurisdiction by jurisdiction basis. The Company considers all available
positive and negative evidence, including future reversals of temporary differences, projected future taxable income, tax
planning strategies and recent financial results. Significant judgment is required in assessing the Company's ability to generate
revenue, gross profit, operating income and jurisdictional taxable income in future periods. The Company's valuation allowance
as of October 1, 2022 relates primarily to foreign net operating losses, with the exception of $14 million related to U.S. state net
operating losses.
The Company provides deferred tax liabilities for the tax consequences associated with the undistributed earnings that
are expected to be repatriated to subsidiaries' parent unless the subsidiaries' earnings are considered indefinitely reinvested. As
of October 1, 2022, income taxes and foreign withholding taxes have not been provided for approximately $439 million of
cumulative undistributed earnings of several non-U.S. subsidiaries. The Company intends to reinvest these earnings indefinitely
in operations outside of the U.S. Determination of the amount of unrecognized deferred tax liabilities on these undistributed
earnings is not practicable.
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69
As of October 1, 2022, the Company has cumulative net operating loss carryforwards for federal, state and foreign tax
purposes of $292 million, $357 million and $465 million, respectively. The federal and state net operating loss carryforwards
begin expiring in fiscal years 2028 and 2023, respectively, and expire at various dates through September 29, 2035. Certain
foreign net operating losses start expiring in 2023. However, the majority of foreign net operating losses carryforward
indefinitely. As of October 1, 2022, the Company has federal tax credits of $21 million that expire between 2031 and 2042.
There are certain restrictions on the utilization of net operating loss and tax credit carryforwards in the event of an “ownership
change” as defined in the Internal Revenue Code. The utilization of certain net operating losses may be restricted due to
changes in ownership and business operations.
Following is a reconciliation of the statutory federal tax rate to the Company's effective tax rate:
Federal tax at statutory tax rate
Effect of foreign operations
Permanent items
Federal credits
Other
State income taxes, net of federal benefit
Release of foreign tax reserves
Effective tax rate
October 1,
2022
21.00 %
2.63
0.07
(0.65)
0.28
1.74
(4.96)
20.11 %
Year Ended
October 2,
2021
21.00 %
7.33
(1.86)
(0.50)
(0.17)
1.01
(14.43)
12.38 %
October 3,
2020
21.00 %
13.02
(0.59)
(1.31)
(0.06)
1.96
(3.61)
30.41 %
A reconciliation of the beginning and ending amount of total liabilities for unrecognized tax benefits, excluding
accrued penalties and interest, is as follows:
Balance, beginning of year
Increase (decrease) related to prior year tax positions
Increase related to current year tax positions
Settlements
Decrease related to lapse of time and expiration of statutes of limitations
Balance, end of year
October 1,
2022
$
$
67,781
(4,456)
7,154
(7,596)
(9,331)
53,552
Year Ended
October 2,
2021
(In thousands)
74,612
$
6,063
7,349
—
(20,243)
67,781
$
October 3,
2020
$
$
66,677
1,327
9,907
—
(3,299)
74,612
The Company had reserves of $11 million and $17 million as of October 1, 2022 and October 2, 2021, respectively,
for the payment of interest and penalties relating to unrecognized tax benefits. During 2022, the Company recognized an
income tax benefit for interest and penalties of $3 million due to lapse of time and expiration of statutes of limitations compared
to an income tax benefit of $23 million in 2021. The Company recognizes interest and penalties related to liabilities for
unrecognized tax benefits as a component of income tax expense. Should the Company be able to ultimately recognize all of
these uncertain tax positions, it would result in a benefit to net income of $44 million in 2022.
The Company conducts business globally and, as a result, files income tax returns in the United States federal
jurisdiction and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination
by taxing authorities throughout the world. The Company is currently being audited by the Internal Revenue Service for tax
years 2008 through 2010. To the extent the final tax liabilities are different from the amounts accrued, this would result in an
increase or decrease in net operating loss carryforwards which could materially impact tax expense. Additionally, the Company
is being audited by various state tax agencies and certain foreign countries. To the extent the final tax liabilities are different
from the amounts accrued, the increases or decreases would be recorded as income tax expense or benefit in the consolidated
statements of income. Although the Company believes that the resolution of these audits will not have a material adverse
impact on the Company’s results of operations, the outcome is subject to uncertainty.
In general, the Company is no longer subject to United States federal or state income tax examinations for years before
2003, and to foreign examinations for years prior to 2006 in its major foreign jurisdictions. It is reasonably possible that the
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70
balance of gross unrecognized tax benefits could decrease in the next 12 months by approximately $9 million related to
payments, the resolution of audits and expiration of statutes of limitations. In addition, there could be a corresponding decrease
in accrued interest and penalties of approximately $4 million.
Note 13. Earnings Per Share
Basic and diluted earnings per share amounts are calculated by dividing net income by the weighted average number
of shares of common stock outstanding during the period, as follows:
Numerator:
Net income
Denominator:
October 1,
2022
Year Ended
October 2,
2021
October 3,
2020
(In thousands, except per share amounts)
$ 256,121
$ 268,998
$ 139,713
Weighted average common shares outstanding
Effect of dilutive stock options and restricted stock units
Denominator for diluted earnings per share
61,310
1,807
63,117
65,318
1,766
67,084
69,041
1,752
70,793
Net income per share:
Basic
Diluted
$
$
4.18
4.06
$
$
4.12
4.01
$
$
2.02
1.97
Weighted-average dilutive securities that were excluded from the above calculation because their inclusion would have
had an anti-dilutive effect under ASC Topic 260, Earnings per Share, due to application of the treasury stock method were not
material for any period presented.
Note 14. Stockholders' Equity
The Company's 2009 Stock Plan (“2009 Plan”) expired as to future grants on January 26, 2019. Although the 2009
Plan expired, it will continue to govern all awards granted under it prior to its expiration date. On March 11, 2019, the
Company's stockholders approved the Company's 2019 Equity Incentive Plan (“2019 Plan”) and the reservation of 4 million
shares of common stock for issuance thereunder, plus any shares subject to stock options or similar awards granted under the
2009 Plan that expire or otherwise terminate without having been exercised in full and shares issued pursuant to awards granted
that are forfeited by the Company.
As of October 1, 2022, an aggregate of 7 million shares were authorized for future issuance under the Company's stock
plans, of which 4 million of such shares were issuable upon exercise of outstanding options and delivery of shares upon vesting
of restricted stock units and 3 million shares of common stock were available for future grant. Awards other than stock options
reduce common stock available for grant by 1.36 shares for every share of common stock subject to such an award. Awards
under the 2019 Plan and 2009 Plan that expire or are cancelled without delivery of shares generally become available for
issuance under the 2019 Plan. The 2019 Plan will expire as to future grants in December 2028.
Stock Repurchase Program
During 2022, 2021 and 2020, the Company repurchased 8.0 million shares, 1.5 million shares and 6.4 million shares of
its common stock for $317 million, $54 million and $166 million (including commissions), respectively, under stock repurchase
programs authorized by the Board of Directors. These programs have no expiration dates and the timing of repurchases will
depend upon capital needs to support the growth of the Company’s business, market conditions and other factors. Although
stock repurchases are intended to increase stockholder value, purchases of shares reduce the Company’s liquidity. As of
October 1, 2022, an aggregate of $164 million remains available under these programs.
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71
In addition to the repurchases discussed above, the Company repurchased 369,000, 286,000 and 398,000 shares of its
common stock during 2022, 2021, and 2020, respectively, in settlement of employee tax withholding obligations due upon the
vesting of restricted stock units. The Company paid $14 million, $10 million and $13 million, respectively, to applicable tax
authorities in connection with these repurchases.
Accumulated Other Comprehensive Income
Accumulated other comprehensive income, net of tax as applicable, consisted of the following:
Foreign currency translation adjustments
Unrealized holding gain (loss) on derivative financial instruments
Unrecognized net actuarial loss and unrecognized transition cost for benefit plans
Total
As of
October 1,
2022
October 2,
2021
(In thousands)
$
$
63,929
4,112
(11,716)
56,325
$
$
76,120
(14,305)
(21,125)
40,690
During the third quarter of 2021, a foreign entity of the Company was substantially liquidated and the Company
reclassified $8 million of cumulative translation adjustments associated with this entity from accumulated other comprehensive
income to other income (expense), net in the consolidated statements of income. During the fourth quarter of 2022, the
Company reclassified $2 million of unrecognized pension losses from accumulated other comprehensive income to other
income (expense), net in the consolidated statements of income. There were no other significant reclassifications from
accumulated other comprehensive income to the consolidated statements of income for any period presented.
Unrealized holding gain (loss) on derivative financial instruments includes losses from interest rate swap agreements
with independent counterparties to partially hedge the variability in cash flows due to changes in the benchmark interest rate
(SOFR) associated with anticipated variable rate borrowings. These swaps are accounted for as cash flow hedges under ASC
Topic 815, Derivatives and Hedging. Interest rate swaps with an aggregate notional amount of $350 million were outstanding as
of October 1, 2022 and October 2, 2021. The aggregate effective interest rate of these swaps as of October 1, 2022 was
approximately 4.1% and was approximately 4.3% as of October 2, 2021. These interest rate swaps had a negative value of $19
million as of October 2, 2021, of which $9 million is included in accrued liabilities and the remaining amount is included in
other long-term liabilities on the consolidated balance sheets. Given the recent rise in interest rates and the likelihood of
additional rate increases, these interest rate swaps had a positive value of $6 million as of October 1, 2022, of which the
majority is included in prepaid expenses and other current assets and the remaining amount is included in other assets on the
consolidated balance sheets.
Note 15. Business Segment, Geographic and Customer Information
ASC Topic 280, Segment Reporting, establishes standards for reporting information about operating segments,
products and services, geographic areas of operations and major customers. Operating segments are defined as components of
an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker
or decision making group in deciding how to allocate resources and in assessing performance.
The Company's operations are managed as two businesses:
1) Integrated Manufacturing Solutions (IMS). IMS is a reportable segment consisting of printed circuit board
assembly and test, high-level assembly and test and direct order fulfillment.
2) Components, Products and Services (CPS). Components include printed circuit boards, backplanes and
backplane assemblies, cable assemblies fabricated metal parts, precision machined parts, and plastic injected
molded parts. Products include memory solutions from our Viking Technology division; high-performance
storage platforms for hyperscale and enterprise solutions from our Viking Enterprise Solutions (VES) division;
optical, radio frequency (RF) and microelectronics (microE) design and manufacturing services from Advanced
Microsystems Technologies; defense and aerospace products from SCI Technology; and cloud-based
manufacturing execution software from the Company's 42Q division. Services include design, engineering and
logistics and repair.
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The Company determined that it has only one reportable segment - IMS, which generated approximately 80% of the
Company's total revenue in 2022. CPS consists of multiple operating segments which do not meet the quantitative threshold for
being presented individually as reportable segments. Therefore, financial information for these operating segments is combined
and presented in a single category entitled “Components, Products and Services”.
The accounting policies for each segment are the same as those disclosed by the Company for its consolidated
financial statements. Intersegment sales consist primarily of sales of components from CPS to IMS.
The Company's chief operating decision making group is the Chief Executive Officer who allocates resources and
assesses performance of operating segments based on a measure of revenue and gross profit that excludes items not directly
related to the Company's ongoing business operations. These items are typically either non-recurring or non-cash in nature.
Segment information is as follows:
Gross sales:
IMS
CPS
Intersegment revenue
Net Sales
Gross Profit:
IMS
CPS
Total
Unallocated items (1)
Total
Depreciation and amortization:
IMS
CPS
Total
Unallocated corporate items (2)
Total
Capital expenditures (receipt basis):
IMS
CPS
Total
Unallocated corporate items (2)
Total
October 1,
2022
Year Ended
October 2,
2021
(In thousands)
October 3,
2020
$ 6,407,724
1,631,918
(149,167)
$ 7,890,475
$ 5,485,612
1,397,742
(126,711)
$ 6,756,643
$ 5,733,180
1,365,712
(138,522)
$ 6,960,370
$ 462,606
193,817
656,423
(15,909)
$ 640,514
$ 391,339
177,248
568,587
(16,782)
$ 551,805
$ 381,638
156,844
538,482
(12,775)
$ 525,707
$
73,914
30,061
103,975
4,808
$ 108,783
$
77,076
27,770
104,846
4,810
$ 109,656
$
81,169
26,718
107,887
6,331
$ 114,218
$
94,636
$
44,672
$
23,933
55,993
150,629
5,650
33,839
78,511
3,343
23,915
47,848
3,227
$ 156,279
$
81,854
$
51,075
(1) For purposes of evaluating segment performance, management excludes certain items from its measures of gross profit.
These items consist of stock-based compensation expense, amortization of intangible assets, charges or credits resulting
from distressed customers and litigation settlements.
(2) Primarily related to selling, general and administration functions.
Segment assets, consisting of accounts receivable, inventories and fixed assets, are substantially proportional to
segment sales.
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Net sales by geographic segment, determined based on the country in which a product is manufactured were as
follows:
Net sales:
Americas (1)
APAC
EMEA
Total
October 1,
2022
Year Ended
October 2,
2021
(In thousands)
October 3,
2020
$ 3,719,496
$ 3,182,849
$ 3,450,527
3,007,904
2,517,963
2,514,005
1,163,075
1,055,831
995,838
$ 7,890,475
$ 6,756,643
$ 6,960,370
(1) Mexico represents approximately 60% of the Americas revenue and the U.S. represents approximately 35%.
Percentage of net sales represented by ten largest customers
Number of customers representing 10% or more of net sales
48.7 %
2
52.7 %
1
55.5 %
1
Property, plant and equipment, net:
Americas
APAC
EMEA
Total
Note 16. Stock-Based Compensation
Stock-based compensation expense was recognized as follows:
Cost of sales
Selling, general and administrative
Research and development
Total
As of
October 1,
2022
October 2,
2021
(In thousands)
$
$
367,172
151,254
56,744
575,170
$
$
322,545
143,111
67,329
532,985
October 1,
2022
$
$
14,065
25,037
506
39,608
Year Ended
October 2,
2021
(In thousands)
14,472
$
20,118
386
34,976
$
October 3,
2020
$
$
10,099
15,897
239
26,235
The Company grants restricted stock units and restricted stock units with performance conditions (“PSUs”) to
executive officers, directors and certain other employees. These units vest over periods ranging from one year to four years and/
or upon achievement of specified performance criteria, with associated compensation expense recognized ratably over the
vesting period.
The Company grants shares for which vesting is contingent on cumulative non-GAAP earnings per share measured
over three fiscal years. If a minimum threshold is not achieved during the measurement period, the shares will be cancelled. If a
minimum threshold is achieved or exceeded, the number of shares of common stock that will be issued will range from 80% to
120% of the number of PSUs granted, depending on the extent of performance. Additionally, the number of shares that vest
may be adjusted up or down by up to 15% based on the Company's total shareholder return relative to that of its peer group over
this same period.
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74
Activity with respect to the Company's restricted stock units and PSUs was as follows:
Outstanding as of September 28, 2019
Granted
Vested/Forfeited/Cancelled
Outstanding as of October 3, 2020
Granted
Vested/Forfeited/Cancelled
Outstanding as of October 2, 2021
Granted
Vested/Forfeited/Cancelled
Outstanding as of October 1, 2022
Expected to vest as of October 1, 2022
Number of
Shares
(In thousands)
3,153
1,340
(1,925)
2,568
1,529
(1,143)
2,954
1,644
(1,318)
3,280
2,909
Weighted
Average Grant-
Date Fair Value
($)
27.82
32.51
28.62
29.67
34.26
29.27
32.21
40.54
30.42
37.11
36.93
Weighted-
Average
Remaining
Contractual
Term
(Years)
1.30
Aggregate
Intrinsic Value
($)
(In thousands)
102,720
1.23
71,571
1.23
113,591
1.35
1.28
155,049
137,524
The fair value of restricted stock units that vested during the year was $44 million for 2022, $32 million for 2021 and
$43 million for 2020. As of October 1, 2022, unrecognized compensation expense of $68 million is expected to be recognized
over a weighted average period of 1.3 years.
Note 17. Employee Benefit Plans
The Company has various defined contribution retirement plans that cover the majority of its domestic employees.
These retirement plans permit participants to elect to have contributions made to the retirement plans in the form of salary
deferrals. Under these retirement plans, the Company may match a portion of employee contributions. Amounts contributed by
the Company were not material for any period presented herein.
The Company sponsors a deferred compensation plan for eligible employees that allows participants to defer payment
of all or part of their compensation. Deferrals under this plan were immaterial. Assets associated with these plans were $37
million and $46 million as of October 1, 2022 and October 2, 2021, respectively. Liabilities associated with these plans were
$37 million and $46 million as of October 1, 2022 and October 2, 2021, respectively. These amounts are recorded in other non-
current assets and other long-term liabilities on the consolidated balance sheets.
Defined benefit plans covering certain employees in the United States and Canada were frozen in 2001. Employees
who had not yet vested will continue to be credited with service until vesting occurs, but no additional benefits will accrue.
During the third quarter of 2022, the Board of Directors approved the termination of the Company's frozen U.S. defined benefit
plan (the “Plan”) effective July 3, 2022. In connection with this termination, the Company purchased a group annuity contract
for $6 million during the fourth quarter of 2022 that provides for the administration of future payments to eligible plan
participants. In addition, the Company recorded a pension settlement charge of $2 million during the fourth quarter of 2022,
which includes the reclassification of unrecognized pension losses from accumulated other comprehensive income to other
income (expense), net on the consolidated statements of income.
The Company also provides defined benefit pension plans in certain other countries. The assumptions used for
calculating the pension benefit obligations for non-U.S. plans depend on the local economic environment and regulations. The
measurement date for the Company's defined benefit plans is October 1, 2022.
75
75
The funded status and plan assets for the defined benefit plans and amount reported on the consolidated balance sheets
were as follows:
As of
October 1, 2022
October 2, 2021
October 3, 2020
Non-U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.
Plan Assets
Projected Benefit Obligation
Underfunded Status
Current Liabilities
Non-current liabilities
Total liabilities
$
$
$
$
(In thousands)
17,290 $ 16,435 $ 23,575 $ 15,430 $ 23,575
22,943
50,871
64,453
63,217
6,508 $ 39,642 $ 10,274 $ 40,878
33,581 $
25,704
3,038 $
30,543
33,581 $
— $
2,054
6,508
38,824
6,508 $ 39,642 $ 10,274 $ 40,878
2,674 $
36,968
10,274
— $
The Company’s investment strategy is designed to help ensure that sufficient pension assets are available to pay
benefits as they become due. Plan assets are invested in mutual funds that are valued using the NAV that is quoted in active
markets (Level 1 input). These plans are managed consistent with regulations or market practices of the country in which the
assets are invested. As of October 1, 2022 there were no significant concentrations of credit risk related to pension plan assets.
All other amounts and assumptions were not material for any period presented herein.
Note 18. Strategic Transactions
India Joint Venture
On October 3, 2022, subsequent to the end of the fourth quarter of 2022, the Company completed a joint venture
transaction in which the Company entered into a Share Subscription and Purchase Agreement (the “SSPA”) and a Joint Venture
and Shareholders’ Agreement (the “Shareholders’ Agreement”) with Reliance Strategic Business Ventures Limited
(“RSBVL”), a wholly owned subsidiary of Reliance Industries Limited. Pursuant to the SSPA and the Shareholder’ Agreement,
the parties established Sanmina SCI India Private Limited (“SIPL”), the Company’s existing Indian manufacturing entity, as a
joint venture to engage in manufacturing in India of telecommunications equipment, data center and internet equipment,
medical equipment, clean technology equipment and other high-tech equipment. As a result of the transaction, RSBVL acquired
shares of SIPL for approximately $215 million of cash such that immediately after the closing of the transaction, RSBVL holds
50.1% of the outstanding shares of SIPL and Sanmina holds the remaining 49.9% of the outstanding shares of SIPL. The
amount received from RSBVL was based on preliminary calculations and is subject to adjustment based on final calculations.
Given the terms of the agreements entered into by the parties concerning management of the joint venture, the Company
expects to continue to consolidate SIPL in future periods.
Acquisition
On April 6, 2021, the Company purchased all of the outstanding stock of a European subsidiary of a multinational
company in the industrial end market. This acquisition increased the Company's IMS capabilities in Europe. The Company also
entered into a master supply agreement with the seller in connection with this acquisition. Total consideration paid in this
acquisition was $38 million of cash, of which $29 million was paid upon closing and $9 million is due in April 2023. The
acquiree had $8 million of cash as of the acquisition date, resulting in a net cash outlay upon closing of $21 million. The pro-
forma effect of the acquisition, as if it had occurred at the beginning of the year, was not material to the consolidated financial
statements. The acquisition is reported in the Company's IMS reportable segment.
The Company's allocation of the purchase price was based on management's estimate of the acquisition-date fair
values of the tangible and identifiable intangible assets acquired and liabilities assumed.
The following represents the allocation of the purchase price to the acquired assets and liabilities assumed.
76
76
Current assets, including cash acquired of $8.1 million
Noncurrent assets, including identifiable intangible assets of $4.4 million and goodwill of
$8.5 million
Current liabilities
Noncurrent liabilities
Total net assets acquired
(In thousands)
18,696
30,711
(10,671)
(152)
38,584
$
$
Goodwill reflects the expectation that the acquisition enables the Company to increase its IMS capabilities in Europe.
Goodwill and identifiable intangible assets are recorded in other non-current assets on the consolidated balance sheets.
Identifiable intangible assets are being amortized over four years.
77
77
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
(a)
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining our disclosure controls and procedures as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Our management,
including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures
will prevent all error and all fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that their objectives are met. Further, the design of disclosure controls and procedures
must reflect the fact that there are resource constraints, and the benefits of disclosure controls and procedures must be
considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of disclosure controls
and procedures can provide absolute assurance that all disclosure control issues and instances of fraud, if any, have been
detected. Nonetheless, our Chief Executive Officer and Chief Financial Officer have concluded that, as of October 1, 2022, (1)
our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives, and (2) our
disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in
the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified by the SEC's rules and forms, and that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
(b)
Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as
defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act). Our management, including our Chief Executive Officer and
Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of
October 1, 2022. In making this assessment, our management used the criteria established in Internal Control-Integrated
Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our
management has concluded that, as of October 1, 2022, our internal control over financial reporting was effective based on the
COSO criteria.
The effectiveness of our internal control over financial reporting as of October 1, 2022 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears under
Item 8.
(c)
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) that occurred during the quarter ended October 1, 2022 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
78
78
PART III
The information called for by Items 10, 11, 12, 13 and 14 of Part III are incorporated by reference from our definitive
Proxy Statement to be filed in connection with our 2023 Annual Meeting of Stockholders pursuant to Regulation 14A, except
that the information regarding our executive officers called for by Item 401(b) of Regulation S-K has been included in Part I of
this report.
79
79
Item 15. Exhibits and Financial Statement Schedules
PART IV
(a)
(1) Financial Statements. The following financial statements are filed under Item 8 hereof as part of this
report:
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Financial Statements:
Consolidated Balance Sheets, As of October 1, 2022 and October 2, 2021
Consolidated Statements of Income, Years Ended October 1, 2022, October 2, 2021 and October 3, 2020
Consolidated Statements of Comprehensive Income, Years Ended October 1, 2022, October 2, 2021 and
October 3, 2020
Consolidated Statements of Stockholders' Equity, Years Ended October 1, 2022, October 2, 2021 and October
3, 2020
Consolidated Statements of Cash Flows, Years Ended October 1, 2022, October 2, 2021 and October 3, 2020
Notes to Consolidated Financial Statements
Page
47
49
50
51
52
53
54
(2) Financial Statement Schedules. The following financial statement schedule of Sanmina Corporation is
filed as part of this report on Form 10-K immediately after the signature pages hereto and should be read in
conjunction with our Financial Statements included in this Item 15:
Schedule II-Valuation and Qualifying Accounts, Years Ended October 1, 2022, October 2, 2021
and October 3, 2020
All other schedules are omitted because they are not applicable or the required information is shown in the
Financial Statements or the notes thereto.
(3) Exhibits. Refer to Item 15(b) immediately below.
80
80
(b)
Exhibits
Exhibit
Number
3.1(1)
3.2(2)
3.3(3)
3.4(4)
3.5(5)
3.6(6)
3.7(7)
3.8(8)
4.1(9)
4.5(10)
10.1(11)*
10.2(12)*
10.3(13)*
10.4(14)*
10.5(15)*
10.6(16)*
10.7(17)*
10.8(18)*
10.9(19)*
10.10(20)
10.11(21)*
10.12(22)
10.13(23)
10.14(24)
10.15(25)*
10.16(26)*
10.17(27)*
10.18(28)*
10.19(29)*
10.20(30)‡
10.21(31) ‡
10.22(14)*
10.23(14)*
Description
Restated Certificate of Incorporation of the Registrant, dated January 31, 1996.
Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant, dated March 9,
2001.
Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock
of the Registrant, dated May 31, 2001.
Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant, dated
December 7, 2001.
Amended and Restated Bylaws of the Registrant dated December 1, 2008.
Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant, as amended,
dated July 27, 2009.
Certificate of Ownership and Merger as filed with the Secretary of State of the State of Delaware and
effective November 15, 2012.
Certificate of Amendment of Amended and Restated Bylaws dated December 7, 2015
Indenture, dated as of June 4, 2014, among Sanmina Corporation, certain subsidiaries of Sanmina
Corporation as guarantors and U.S. Bank National Association as trustee.
Description of the Registrant's Securities
Intentionally omitted
Amended and Restated Sanmina-SCI Corporation Deferred Compensation Plan dated June 9, 2008.
Revised form of Officer and Director Indemnification Agreement.
2009 Incentive Plan, as amended on March 5, 2018.
Intentionally omitted
Form of Stock Option Agreement for use under the 2009 Incentive Plan.
Form of Restricted Stock Unit Agreement for use under the 2009 Incentive Plan.
Form of Restricted Stock Agreement for use under the 2009 Incentive Plan.
Form of Change of Control Severance Benefit Agreement.
Amendment to employment offer letter between Sanmina Corporation and Alan Reid dated March 12,
2010.
Form of Restricted Stock Unit Agreement under 2009 Incentive Plan for director grants.
Purchase Agreement, dated as of May 20, 2014, by and among Sanmina Corporation, certain subsidiaries
of Sanmina Corporation, as guarantors, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
representative of the initial purchasers.
Second Amendment to the Sanmina Corporation Deferred Compensation Plan adopted as of May 12,
2015.
Intentionally omitted
First Amendment to the Sanmina-SCI Corporation Deferred Compensation Plan.
Amendment No. 3 to Sanmina-SCI Corporation Deferred Compensation Plan.
Intentionally omitted
Intentionally omitted
Fourth Amendment to the Sanmina Corporation Deferred Compensation Plan.
Receivables Purchase Agreement, dated March 26, 2018, among Sanmina Corporation, the sellers and
buyers from time to time party thereto and the Bank of Tokyo-Mitsubishi UFG, Ltd., as administrative
agent.
Joinder and Amendment No. 1 to the Receivables Purchase Agreement dated June 25, 2018 among
Sanmina Corporation, MUFG Bank Ltd. (formerly known as The Bank of Tokyo-Mitsubishi UFG, Ltd.),
Wells Fargo Bank N.A., Bank of the West and MUFG Bank Ltd., as administrative agent.
Fifth Amendment to Sanmina Corporation Deferred Compensation Plan.
Sixth Amendment to Sanmina Corporation Deferred Compensation Plan.
81
81
10.24
10.25
10.26(14)±
10.27(24)‡
10.28
10.29(33)*
10.30(32)*
10.31(32)*
10.32
10.33(34) ±
10.34
10.35(35)
10.36(36)
10.37(37) ±
10.38(38) ±
10.39(33)±
10.39.1(33)±
10.39.2(33)±
10.39.3(33)±
10.39.4(33)±
10.40
10.41
10.42±
14.1(39)
21.1
23.1
31.1
31.2
32.1(40)
Intentionally omitted
Intentionally omitted
Joinder Agreement and Amendment No. 2 to the Receivables Purchase Agreement, dated September 17,
2018, among Sanmina Corporation, Sanmina-SCI Systems Pte. Ltd., MUFG Bank Ltd., Wells Fargo
Bank N.A., Bank of the West and MUFG Bank Ltd., as administrative agent.
Amendment No. 3 to the Receivables Purchase Agreement, dated December 21, 2018, among Sanmina
Corporation, Sanmina-SCI Systems Pte. Ltd., MUFG Bank Ltd., Wells Fargo Bank N.A., Bank of the
West and MUFG Bank Ltd., as administrative agent.
Intentionally omitted
2019 Equity Incentive Plan, as amended
Form of Restricted Stock Unit Award Agreement for use under 2019 Equity Incentive Plan
Form of Stock Option Award Agreement for use under 2019 Equity Incentive Plan
Intentionally omitted
Amendment No. 4 to the Receivables Purchase Agreement, dated April 3, 2019, among Sanmina
Corporation, Sanmina-SCI Systems Pte. Ltd., MUFG Bank Ltd., Wells Fargo Bank N.A., Bank of the
West and MUFG Bank Ltd., as administrative agent.
Intentionally omitted
Separation and Release Agreement dated January 10, 2020 between Sanmina Corporation and Michael
Clarke
Separation and Release Agreement dated August 14, 2020 between Sanmina Corporation and Hartmut
Liebel
Amendment No. 5 to the Receivables Purchase Agreement, dated December 17, 2020, among Sanmina
Corporation, Sanmina-SCI Systems Pte. Ltd., MUFG Bank Ltd., Wells Fargo Bank N.A., Bank of the
West
Amendment No. 6 to the Receivables Purchase Agreement, dated November 24, 2021, among Sanmina
Corporation, Sanmina-SCI Systems Pte. Ltd., MUFG Bank Ltd., Wells Fargo Bank N.A. and Bank of the
West.
Share Subscription and Purchase Agreement dated as of March 3, 2022 by and among Reliance Strategic
Business Ventures Limited, Sanmina Corporation, Sanmina-SCI Systems Singapore Pte Ltd, AET
Holdings Limited and Sanmina-SCI India Private Limited.
Joint Venture and Shareholders’ Agreement dated as of March 3, 2022 by and among Reliance Strategic
Business Ventures Limited, Sanmina Corporation, Sanmina-SCI Systems Singapore Pte Ltd and
Sanmina-SCI India Private Limited.
Form of Management Services Agreement by and among Reliance Strategic Business Ventures Limited,
Sanmina Corporation, Sanmina-SCI Systems Singapore Pte Ltd and Sanmina-SCI India Private Limited.
Form of Business Transfer Agreement by and between Sanmina-SCI Technology India Private Limited
and a wholly-owned subsidiary of Sanmina Corporation to be incorporated under the laws of India.
Form of Services Agreement by and between Sanmina Corporation and Sanmina-SCI India Private
Limited.
Fifth Amended and Restated Credit Agreement dated as of September 27, 2022 by and among Sanmina
Corporation, the lenders from time to time party thereto and Bank of America, N.A., as Administrative
Agent (filed herewith).
Second Amended and Restated Security Agreement dated as of September 27, 2022 by and among
Sanmina Corporation, certain subsidiaries of Sanmina Corporation parties thereto and Bank of America,
N.A., as Administrative Agent (filed herewith).
Joinder Agreement and Amendment No. 7 to the Receivables Purchase Agreement, dated as of July 28,
2022, among Sanmina Corporation, Sanmina-SCI Systems Singapore Ptd. Ltd., Sanmina-SCI Systems
Malaysia Sdn. Bhd., MUFG Bank Ltd., Wells Fargo Bank, N.A. and Bank of the West (filed herewith).
Code of Business Conduct and Ethics of the Registrant
Subsidiaries of the Registrant (filed herewith).
Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm (filed herewith).
Certification of the Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
Certification of the Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
82
82
32.2(40)
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
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
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase Document
XBRL Taxonomy Extension Definition Linkbase Document
XBRL Taxonomy Extension Label Linkbase Document
XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Compensatory plan in which an executive officer or director participates.
‡ Portions of this exhibit have been omitted pursuant to an order granting confidential treatment and this exhibit has been filed
separately with the SEC.
± Portions of this exhibit have been omitted in accordance with Item 601(b)(10)(iv) of Regulation S-K under the Securities Act
of 1933.
(1) Incorporated by reference to Exhibit 3.2 to the Registrant's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996, SEC File No. 000-21272, filed with the Securities and Exchange Commission (“SEC”) on
December 24, 1996.
(2) Incorporated by reference to Exhibit 3.1(a) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2001, filed with the SEC on May 11, 2001.
(3) Incorporated by reference to Exhibit 3.1.2 to the Registrant's Registration Statement on Form S-4, filed with the SEC
on August 10, 2001.
(4) Incorporated by reference to Exhibit 3.1.3 to the Registrant's Annual Report on Form 10-K for the fiscal year ended
September 29, 2001, filed with the SEC on December 21, 2001.
(5) Incorporated by reference to Exhibit 3.2 to Registrant's Current Report on Form 8-K, filed with the SEC on
December 5, 2008.
(6) Incorporated by reference to Exhibit 3.6 to Registrant's Current Report on Form 8-K, filed with the SEC on August
19, 2009.
(7) Incorporated by reference to Exhibit 3.7 to the Registrant's Annual Report on Form 10-K for the fiscal year ended
September 29, 2012, filed with the SEC on November 21, 2012
(8) Incorporated by reference to Exhibit 3.8 to the Registrant’s Current Report on Form 8-K filed with the SEC on
December 11, 2015.
(9) Incorporated by reference to Exhibit 4.1 to Registrant's Current Report on Form 8-K filed with the SEC on June 5,
2014.
(10) Incorporated by reference to same numbered exhibit to the Registrant's Annual Report on Form 10-K for the fiscal
year ended September 28, 2019, filed with the SEC on November 8, 2019.
(11) Intentionally omitted
(12) Incorporated by reference to Exhibit 10.74 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 28, 2008, filed with the SEC on August 4, 2008.
(13) Incorporated by reference to Exhibit 10.42 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 28, 2008, filed with the SEC on August 4, 2008.
(14) Incorporated by reference to the same numbered exhibit to the Registrant’s Annual Report on Form 10-K for the
fiscal year ended September 29, 2018 filed with the SEC on November 15, 2018.
(15) Intentionally omitted
(16) Incorporated by reference to Exhibit 10.43 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 28, 2009, filed with the SEC on May 5, 2009
(17) Incorporated by reference to Exhibit 10.44 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 28, 2009, filed with the SEC on May 5, 2009
(18) Incorporated by reference to Exhibit 10.45 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 28, 2009, filed with the SEC on May 5, 2009
(19) Incorporated by reference to Exhibit 10.48 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended January 2, 2010, filed with the SEC on February 5, 2010.
83
83
(20) Incorporated by reference to Exhibit 10.48 to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter
ended December 28, 2013, filed with the SEC on January 31, 2014.
(21) Incorporated by reference to Exhibit 10.49 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter
ended March 29, 2014 filed with the SEC on April 28, 2014.
(22) Incorporated by reference to Current Report on Form 8-K filed by the Registrant with the SEC on May 21, 2014.
(23) Incorporated by reference to Exhibit 10.30 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter
ended June 27, 2015 filed with the SEC on July 24, 2015.
(24) Incorporated by reference to same numbered exhibit to the Registrant’s Quarterly Report on Form 10-Q for the first
fiscal quarter ended December 29, 2018 filed with the SEC on February 7, 2019.
(25) Incorporated by reference to Exhibit 10.28 to Registrant’s Annual Report on Form 10-K for the fiscal year ended
October 3, 2015, filed with the SEC on November 19, 2015.
(26) Incorporated by reference to Exhibit 10.29 to Registrant’s Annual Report on Form 10-K for the fiscal year ended
October 3, 2015, filed with the SEC on November 19, 2015.
(27) Intentionally omitted
(28) Intentionally omitted
(29) Incorporated by reference to Exhibit 10.32 to Registrant’s Annual Report on Form 10-K for the fiscal year ended
September 30, 2017, filed with the SEC on November 13, 2017.
(30) Incorporated by reference to Exhibit 10.33 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2018 filed with the SEC on May 2, 2018.
(31) Incorporated by reference to Exhibit 10.34 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 2018 filed with the SEC on August 3, 2018.
(32) Incorporated by reference to same number exhibit to the Registrant’s Quarterly Report on Form 10-Q for the fiscal
quarter ended March 30, 2019 filed with the SEC on May 2, 2019.
(33) Incorporated by reference to same number exhibit to the Registrant’s Quarterly Report on Form 10-Q for the fiscal
quarter ended April 2, 2022 filed with the SEC on May 4, 2022.
(34) Incorporated by reference to same number exhibit to the Registrant’s Quarterly Report on Form 10-Q for the fiscal
quarter ended June 29, 2019 filed with the SEC on August 1, 2019.
(35) Incorporated by reference from Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended December
28, 2019 filed with the SEC on January 30, 2020.
(36) Incorporated by reference to same numbered exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year
ended October 3, 2020, filed with the SEC on November 13, 2020.
(37) Incorporated by reference to same number exhibit to Registrant’s Quarterly Report on Form 10-Q for the fiscal
quarter ended January 2, 2021 filed with the SEC on February 4, 2021.
(38) Incorporated by reference to same number exhibit to Registrant’s Quarterly Report on Form 10-Q for the fiscal
quarter ended January 1, 2022 filed with the SEC on February 2, 2022.
(39) Incorporated by reference to same numbered exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year
ended October 2, 2021, filed with the SEC on November 12, 2021.
(40) This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or
otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filings
under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date
hereof and irrespective of any general incorporation language in any filings.
(c)
Financial Statement Schedules. See Item 15(a)(2) above.
84
84
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.
SIGNATURES
Date: November 10, 2022
Sanmina Corporation
(Registrant)
By:
/s/ JURE SOLA
Jure Sola
Chief Executive Officer
85
85
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Jure Sola and Kurt Adzema and each of them, his
or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to
file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Signature
Title
Date
/s/ JURE SOLA
Jure Sola
/s/ KURT ADZEMA
Kurt Adzema
/s/ BRENT BILLINGER
Brent Billinger
/s/ EUGENE A. DELANEY
Eugene A. Delaney
/s/ JOHN P. GOLDSBERRY
John P. Goldsberry
/s/ SUSAN JOHNSON
Susan Johnson
/s/ RITA S. LANE
Rita S. Lane
/s/ JOSEPH LICATA
Joseph Licata
/s/ KRISH PRABHU
Krish Prabhu
/s/ MARIO M. ROSATI
Mario M. Rosati
Chairman and Chief Executive Officer and Director
(Principal Executive Officer)
November 10, 2022
Chief Financial Officer
(Principal Financial Officer)
November 10, 2022
November 10, 2022
November 10, 2022
November 10, 2022
November 10, 2022
November 10, 2022
November 10, 2022
November 10, 2022
November 10, 2022
Controller
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
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The financial statement Schedule II-VALUATION AND QUALIFYING ACCOUNTS is filed as part of this Form 10-K.
FINANCIAL STATEMENT SCHEDULE
SANMINA CORPORATION
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
Allowances for Doubtful Accounts, Product Returns and Other Net
Sales Adjustments
Fiscal year ended October 3, 2020
Fiscal year ended October 2, 2021
Fiscal year ended October 1, 2022
Balance at
Beginning of
Period
Charged to
Operations
Charges
Utilized
(In thousands)
Balance at
End of
Period
$ 12,481 $
8,570 $
$
6,935 $
$
(3,911) $
(1,635) $
7,978 $
8,570
— $
— $
6,935
— $ 14,913
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