10-Q 1 sanm-20220402.htm 10-Q sanm-20220402
0000897723false2022Q210-01http://fasb.org/us-gaap/2021-01-31#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2021-01-31#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2021-01-31#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2021-01-31#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2021-01-31#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2021-01-31#OtherLiabilitiesNoncurrent00008977232021-10-032022-04-0200008977232022-04-27xbrli:sharesiso4217:USDxbrli:shares00008977232022-04-02iso4217:USD00008977232021-10-0200008977232022-01-022022-04-0200008977232021-01-032021-04-0300008977232020-10-042021-04-030000897723us-gaap:RetainedEarningsMember2022-01-022022-04-020000897723us-gaap:RetainedEarningsMember2021-01-032021-04-030000897723us-gaap:RetainedEarningsMember2021-10-032022-04-020000897723us-gaap:RetainedEarningsMember2020-10-042021-04-030000897723us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-01-010000897723us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-01-020000897723us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-10-020000897723us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2020-10-030000897723us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-01-022022-04-020000897723us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-01-032021-04-030000897723us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-10-032022-04-020000897723us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2020-10-042021-04-030000897723us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-04-020000897723us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-04-030000897723us-gaap:TreasuryStockMember2022-01-010000897723us-gaap:TreasuryStockMember2021-01-020000897723us-gaap:TreasuryStockMember2021-10-020000897723us-gaap:TreasuryStockMember2020-10-030000897723us-gaap:TreasuryStockMember2022-01-022022-04-020000897723us-gaap:TreasuryStockMember2021-01-032021-04-030000897723us-gaap:TreasuryStockMember2021-10-032022-04-020000897723us-gaap:TreasuryStockMember2020-10-042021-04-030000897723us-gaap:TreasuryStockMember2022-04-020000897723us-gaap:TreasuryStockMember2021-04-030000897723us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-010000897723us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-020000897723us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-10-020000897723us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-10-030000897723us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-022022-04-020000897723us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-032021-04-030000897723us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-10-032022-04-020000897723us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-10-042021-04-030000897723us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-020000897723us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-030000897723us-gaap:RetainedEarningsMember2022-01-010000897723us-gaap:RetainedEarningsMember2021-01-020000897723us-gaap:RetainedEarningsMember2021-10-020000897723us-gaap:RetainedEarningsMember2020-10-030000897723us-gaap:RetainedEarningsMember2022-04-020000897723us-gaap:RetainedEarningsMember2021-04-0300008977232021-04-030000897723sanm:NumberofCommonSharesMember2022-01-010000897723sanm:NumberofCommonSharesMember2021-01-020000897723sanm:NumberofCommonSharesMember2021-10-020000897723sanm:NumberofCommonSharesMember2020-10-030000897723sanm:NumberofCommonSharesMember2022-01-022022-04-020000897723sanm:NumberofCommonSharesMember2021-01-032021-04-030000897723sanm:NumberofCommonSharesMember2021-10-032022-04-020000897723sanm:NumberofCommonSharesMember2020-10-042021-04-030000897723sanm:NumberofCommonSharesMember2022-04-020000897723sanm:NumberofCommonSharesMember2021-04-0300008977232020-10-03xbrli:pure0000897723sanm:CPSThirdPartyRevenueMember2021-10-032022-04-020000897723sanm:CPSMemberus-gaap:OperatingSegmentsMember2021-10-032022-04-020000897723sanm:IMSThirdPartyRevenueMember2022-01-022022-04-020000897723sanm:IMSThirdPartyRevenueMember2021-01-032021-04-030000897723sanm:IMSThirdPartyRevenueMember2021-10-032022-04-020000897723sanm:IMSThirdPartyRevenueMember2020-10-042021-04-030000897723sanm:CPSThirdPartyRevenueMember2022-01-022022-04-020000897723sanm:CPSThirdPartyRevenueMember2021-01-032021-04-030000897723sanm:CPSThirdPartyRevenueMember2020-10-042021-04-030000897723sanm:IndustrialMedicalAutomotiveandDefenseMember2022-01-022022-04-020000897723sanm:IndustrialMedicalAutomotiveandDefenseMember2021-01-032021-04-030000897723sanm:IndustrialMedicalAutomotiveandDefenseMember2021-10-032022-04-020000897723sanm:IndustrialMedicalAutomotiveandDefenseMember2020-10-042021-04-030000897723sanm:CommunicationsNetworksAndCloudInfrastructureMember2022-01-022022-04-020000897723sanm:CommunicationsNetworksAndCloudInfrastructureMember2021-01-032021-04-030000897723sanm:CommunicationsNetworksAndCloudInfrastructureMember2021-10-032022-04-020000897723sanm:CommunicationsNetworksAndCloudInfrastructureMember2020-10-042021-04-030000897723srt:AmericasMember2022-01-022022-04-020000897723srt:AmericasMember2021-01-032021-04-030000897723srt:AmericasMember2021-10-032022-04-020000897723srt:AmericasMember2020-10-042021-04-030000897723us-gaap:EMEAMember2022-01-022022-04-020000897723us-gaap:EMEAMember2021-01-032021-04-030000897723us-gaap:EMEAMember2021-10-032022-04-020000897723us-gaap:EMEAMember2020-10-042021-04-030000897723srt:AsiaPacificMember2022-01-022022-04-020000897723srt:AsiaPacificMember2021-01-032021-04-030000897723srt:AsiaPacificMember2021-10-032022-04-020000897723srt:AsiaPacificMember2020-10-042021-04-030000897723country:MX2022-04-020000897723country:US2022-04-020000897723us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-04-020000897723us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-10-020000897723us-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-04-020000897723us-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-10-020000897723us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-04-020000897723us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-10-020000897723us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2022-04-020000897723us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2021-10-020000897723us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-10-032022-04-020000897723us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2021-10-032022-04-020000897723us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-10-032022-04-020000897723us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-10-020000897723us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-04-020000897723sanm:DelayedDrawTermLoanMember2022-04-020000897723sanm:DelayedDrawTermLoanMember2021-10-020000897723us-gaap:ForeignLineOfCreditMember2022-04-020000897723srt:MaximumMember2022-04-020000897723us-gaap:OtherAssetsMember2022-04-020000897723us-gaap:OtherAssetsMember2021-10-020000897723us-gaap:LiabilitiesTotalMember2022-04-020000897723us-gaap:LiabilitiesTotalMember2021-10-020000897723sanm:RPAMember2022-04-020000897723sanm:RPAMember2021-10-020000897723sanm:ViolationOfLaborCodeMember2021-10-032022-01-010000897723sanm:CollectibilityofReceivableandExcessandObsoleteInventoryMember2021-10-032022-04-020000897723sanm:PerformanceOfManufacturingServiceAgreementMember2021-10-032022-04-020000897723sanm:PerformanceOfManufacturingServiceAgreementMembersrt:MaximumMember2022-04-020000897723us-gaap:EmployeeSeveranceMembersanm:Q1FY20PlanMember2022-01-022022-04-020000897723us-gaap:EmployeeSeveranceMembersanm:Q1FY20PlanMember2021-01-032021-04-030000897723us-gaap:EmployeeSeveranceMembersanm:Q1FY20PlanMember2021-10-032022-04-020000897723us-gaap:EmployeeSeveranceMembersanm:Q1FY20PlanMember2020-10-042021-04-030000897723us-gaap:OtherRestructuringMembersanm:Q1FY20PlanMember2022-01-022022-04-020000897723us-gaap:OtherRestructuringMembersanm:Q1FY20PlanMember2021-01-032021-04-030000897723us-gaap:OtherRestructuringMembersanm:Q1FY20PlanMember2021-10-032022-04-020000897723us-gaap:OtherRestructuringMembersanm:Q1FY20PlanMember2020-10-042021-04-030000897723sanm:Q1FY20PlanMember2022-01-022022-04-020000897723sanm:Q1FY20PlanMember2021-01-032021-04-030000897723sanm:Q1FY20PlanMember2021-10-032022-04-020000897723sanm:Q1FY20PlanMember2020-10-042021-04-030000897723sanm:OtherplansMember2022-01-022022-04-020000897723sanm:OtherplansMember2021-01-032021-04-030000897723sanm:OtherplansMember2021-10-032022-04-020000897723sanm:OtherplansMember2020-10-042021-04-030000897723sanm:Q1FY20PlanMember2022-04-020000897723sanm:IMSMember2020-10-042021-04-030000897723sanm:IMSMember2021-10-032022-04-020000897723sanm:CPSMember2021-10-032022-04-020000897723sanm:CPSMember2020-10-042021-04-030000897723us-gaap:SubsequentEventMember2022-04-032022-05-040000897723sanm:IMSMemberus-gaap:OperatingSegmentsMember2022-01-022022-04-020000897723sanm:IMSMemberus-gaap:OperatingSegmentsMember2021-01-032021-04-030000897723sanm:IMSMemberus-gaap:OperatingSegmentsMember2021-10-032022-04-020000897723sanm:IMSMemberus-gaap:OperatingSegmentsMember2020-10-042021-04-030000897723sanm:CPSMemberus-gaap:OperatingSegmentsMember2022-01-022022-04-020000897723sanm:CPSMemberus-gaap:OperatingSegmentsMember2021-01-032021-04-030000897723sanm:CPSMemberus-gaap:OperatingSegmentsMember2020-10-042021-04-030000897723us-gaap:IntersegmentEliminationMember2022-01-022022-04-020000897723us-gaap:IntersegmentEliminationMember2021-01-032021-04-030000897723us-gaap:IntersegmentEliminationMember2021-10-032022-04-020000897723us-gaap:IntersegmentEliminationMember2020-10-042021-04-030000897723us-gaap:OperatingSegmentsMember2022-01-022022-04-020000897723us-gaap:OperatingSegmentsMember2021-01-032021-04-030000897723us-gaap:OperatingSegmentsMember2021-10-032022-04-020000897723us-gaap:OperatingSegmentsMember2020-10-042021-04-030000897723us-gaap:MaterialReconcilingItemsMember2022-01-022022-04-020000897723us-gaap:MaterialReconcilingItemsMember2021-01-032021-04-030000897723us-gaap:MaterialReconcilingItemsMember2021-10-032022-04-020000897723us-gaap:MaterialReconcilingItemsMember2020-10-042021-04-030000897723us-gaap:CostOfSalesMember2022-01-022022-04-020000897723us-gaap:CostOfSalesMember2021-01-032021-04-030000897723us-gaap:CostOfSalesMember2021-10-032022-04-020000897723us-gaap:CostOfSalesMember2020-10-042021-04-030000897723us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-01-022022-04-020000897723us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-032021-04-030000897723us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-10-032022-04-020000897723us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-10-042021-04-030000897723us-gaap:ResearchAndDevelopmentExpenseMember2022-01-022022-04-020000897723us-gaap:ResearchAndDevelopmentExpenseMember2021-01-032021-04-030000897723us-gaap:ResearchAndDevelopmentExpenseMember2021-10-032022-04-020000897723us-gaap:ResearchAndDevelopmentExpenseMember2020-10-042021-04-030000897723srt:MinimumMember2021-10-032022-04-020000897723srt:MaximumMember2021-10-032022-04-020000897723us-gaap:PerformanceSharesMembersrt:MinimumMember2021-10-032022-04-020000897723us-gaap:PerformanceSharesMembersrt:MaximumMember2021-10-032022-04-020000897723us-gaap:PerformanceSharesMember2021-10-032022-04-0200008977232020-10-042021-10-020000897723us-gaap:RestrictedStockUnitsRSUMember2022-04-020000897723us-gaap:RestrictedStockUnitsRSUMember2021-10-032022-04-020000897723sanm:RSVLMembersanm:JointVentureWithRelianceMember2022-04-020000897723sanm:SanminaMembersanm:JointVentureWithRelianceMember2022-04-02

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 2, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 .

Commission File Number 0-21272
Sanmina Corporation
(Exact name of registrant as specified in its charter)
DE77-0228183
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification Number)
  
2700 N. First St.,San Jose,CA95134
(Address of principal executive offices)(Zip Code)
(408)964-3500
(Registrant's telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x]    No [ ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [x]    No [ ]
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
[X]
Accelerated filer [ ]
Non-accelerated filer [  ]
Smaller reporting company
  Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  No
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common StockSANMNASDAQ Global Select Market

As of April 27, 2022, there were 60,844,138 shares outstanding of the issuer's common stock, $0.01 par value per share.



SANMINA CORPORATION

INDEX



2




SANMINA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
 As of
 April 2,
2022
 October 2,
2021
(Unaudited)
 (In thousands)
ASSETS 
Current assets: 
Cash and cash equivalents$559,893 $650,026 
Accounts receivable, net of allowances of approximately $7 million as of April 2, 2022 and October 2, 2021
1,270,494 1,192,434 
Contract assets417,286 348,741 
Inventories1,437,955 1,036,511 
Prepaid expenses and other current assets61,525 53,952 
Total current assets3,747,153 3,281,664 
Property, plant and equipment, net525,362 532,985 
Deferred tax assets220,532 235,117 
Other156,867 156,953 
Total assets$4,649,914 $4,206,719 
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities:  
Accounts payable$1,817,465 $1,464,693 
Accrued liabilities314,648 161,896 
Accrued payroll and related benefits116,794 117,648 
Short-term debt, including current portion of long-term debt18,750 18,750 
Total current liabilities2,267,657 1,762,987 
Long-term liabilities:  
Long-term debt302,751 311,572 
Other241,416 253,532 
Total long-term liabilities544,167 565,104 
Contingencies (Note 7)
Stockholders' equity1,838,090 1,878,628 
Total liabilities and stockholders' equity$4,649,914 $4,206,719 

See accompanying notes to condensed consolidated financial statements.

3


SANMINA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months EndedSix Months Ended
April 2,
2022
April 3,
2021
April 2,
2022
April 3,
2021
(Unaudited)
(In thousands, except per share data)
Net sales$1,911,530 $1,699,677 $3,668,855 $3,454,926 
Cost of sales1,759,083 1,556,579 3,371,919 3,170,593 
Gross profit152,447 143,098 296,936 284,333 
Operating expenses:
Selling, general and administrative61,817 61,142 123,292 120,109 
Research and development5,472 5,353 10,249 10,158 
Restructuring and other2,932 11,880 4,346 13,784 
Gain on sale of long-lived assets  (4,610) 
Total operating expenses70,221 78,375 133,277 144,051 
Operating income82,226 64,723 163,659 140,282 
Interest income349 244 658 474 
Interest expense(4,870)(4,880)(9,747)(9,834)
Other income (expense), net(1,408)6,143 664 8,010 
Interest and other, net(5,929)1,507 (8,425)(1,350)
Income before income taxes76,297 66,230 155,234 138,932 
Provision for income taxes23,077 19,193 43,380 43,874 
Net income$53,220 $47,037 $111,854 $95,058 
Net income per share:
Basic$0.85 $0.72 $1.76 $1.46 
Diluted$0.83 $0.70 $1.71 $1.42 
Weighted average shares used in computing per share amounts:
Basic62,845 65,249 63,622 65,244 
Diluted64,271 66,957 65,365 66,887 



See accompanying notes to condensed consolidated financial statements.


4


SANMINA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months EndedSix Months Ended
April 2,
2022
April 3,
2021
April 2,
2022
April 3,
2021
(Unaudited)
(In thousands)
Net income$53,220 $47,037 $111,854 $95,058 
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustments(1,069)(1,561)(3,116)78 
Derivative financial instruments:
Change in net unrealized amount7,776 291 9,740 3,647 
Amount reclassified into net income337 2,530 2,400 1,029 
Defined benefit plans:
Changes in unrecognized net actuarial losses and unrecognized transition costs183 680 661 (45)
Amortization of actuarial losses and transition costs242 460 480 966 
Total other comprehensive income7,469 2,400 10,165 5,675 
Comprehensive income$60,689 $49,437 $122,019 $100,733 

See accompanying notes to condensed consolidated financial statements.
5


SANMINA CORPORATION
 
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 
Three Months EndedSix Months Ended
April 2,
2022
April 3,
2021
April 2,
2022
April 3,
2021
(Unaudited)
(In thousands)
Common Stock and Additional Paid-in Capital
Balance, beginning of period$6,349,588 $6,310,795 $6,339,506 $6,301,537 
Issuances under stock plans352 1,023 1,402 2,073 
Stock-based compensation expense9,330 9,224 18,362 17,432 
Balance, end of period6,359,270 6,321,042 6,359,270 6,321,042 
Treasury Stock
Balance, beginning of period(1,116,025)(995,665)(1,047,202)(983,143)
Repurchases of treasury stock(113,498)(2,525)(182,321)(15,047)
Balance, end of period(1,229,523)(998,190)(1,229,523)(998,190)
Accumulated Other Comprehensive Income
Balance, beginning of period43,386 38,161 40,690 34,886 
Other comprehensive income7,469 2,400 10,165 5,675 
Balance, end of period50,855 40,561 50,855 40,561 
Accumulated Deficit
Balance, beginning of period(3,395,732)(3,675,343)(3,454,366)(3,723,364)
Net income53,220 47,037 111,854 95,058 
Balance, end of period(3,342,512)(3,628,306)(3,342,512)(3,628,306)
Total stockholders' equity$1,838,090 $1,735,107 $1,838,090 $1,735,107 
Common Stock Shares Outstanding
Number of shares, beginning of period109,518 107,998 108,734 107,629 
Issuances under stock plans393 283 1,177 652 
Number of shares, end of period109,911 108,281 109,911 108,281 
Treasury Shares
Number of shares, beginning of period(46,198)(43,112)(44,427)(42,630)
Repurchases of treasury stock(2,926)(80)(4,697)(562)
Number of shares, end of period(49,124)(43,192)(49,124)(43,192)









See accompanying notes to condensed consolidated financial statements.
6


SANMINA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
April 2,
2022
 April 3,
2021
(Unaudited)
(In thousands)
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income$111,854 $95,058 
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Depreciation and amortization55,032 54,831 
Stock-based compensation expense18,362 17,432 
Deferred income taxes11,071 13,641 
Other, net(1,903)(19)
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable(79,705)(79,166)
Contract assets(68,545)61,626 
Inventories(403,396)75,303 
Prepaid expenses and other assets(11,334)1,359 
Accounts payable357,176 (99,525)
Accrued liabilities158,661 2,360 
Cash provided by operating activities147,273 142,900 
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of property, plant and equipment(52,650)(25,718)
Proceeds from sales of property, plant and equipment8,025 178 
Purchases of investments(1,000) 
Cash used in investing activities(45,625)(25,540)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Repayments of long-term debt(9,376)(9,376)
Proceeds from revolving credit facility borrowings202,800 399,600 
Repayments of revolving credit facility borrowings(202,800)(399,600)
Net proceeds from stock issuances1,402 2,073 
Repurchases of common stock(182,321)(15,047)
Cash used in financing activities(190,295)(22,350)
Effect of exchange rate changes(1,486)(360)
Increase (decrease) in cash and cash equivalents(90,133)94,650 
Cash and cash equivalents at beginning of period650,026 480,526 
Cash and cash equivalents at end of period$559,893 $575,176 
Cash paid during the period for:
Interest, net of capitalized interest$7,533 $3,082 
Income taxes, net of refunds$17,052 $18,675 
Unpaid purchases of property, plant and equipment at the end of period$18,264 $10,693 


See accompanying notes to condensed consolidated financial statements.
7


SANMINA CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Sanmina Corporation (the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been omitted pursuant to those rules or regulations. The interim condensed consolidated financial statements are unaudited, but reflect all adjustments, consisting primarily of normal recurring adjustments, that are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended October 2, 2021, included in the Company's 2021 Annual Report on Form 10-K.

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Due to the COVID-19 pandemic, the global economy and financial markets have been 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. These estimates may change as new events occur and additional information becomes available. Actual results could differ materially from these estimates.

Results of operations for the second quarter of 2022 are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year.

The Company operates on a 52 or 53 week year ending on the Saturday nearest September 30. Fiscal 2022 and 2021 are each 52-week years. All references to years relate to fiscal years unless otherwise noted.

Recent Accounting Pronouncement Not Yet 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. These expedients and exceptions are effective for the Company as of March 12, 2020 through December 31, 2022. The Company has not yet applied any of the expedients and exceptions and is currently evaluating the impact of the provisions of this ASU.

Note 2. 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 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.
8


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 aggregated with eleven other operating segments and reported under Components, Products and Services ("CPS") for segment reporting purposes. During the first half of 2022, CPS revenue and gross profit was $703 million and $90 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.

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 condensed consolidated balance sheets and transferred to
9


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.
Three Months EndedSix Months Ended
April 2,
2022
April 3,
2021
April 2,
2022
April 3,
2021
(In thousands)
Segments:
IMS$1,549,416 $1,356,380 $2,966,327 $2,808,500 
CPS362,114 343,297 702,528 646,426 
Total$1,911,530 $1,699,677 $3,668,855 $3,454,926 
End Markets:
Industrial, Medical, Automotive and Defense$1,154,720 $980,794 $2,209,691 $2,013,312 
Communications Networks and Cloud Infrastructure756,810 718,883 1,459,164 1,441,614 
Total$1,911,530 $1,699,677 $3,668,855 $3,454,926 
Geography:
Americas (1)$898,571 $803,642 $1,695,591 $1,635,464 
EMEA298,580 272,167 567,814 531,459 
APAC714,379 623,868 1,405,450 1,288,003 
Total$1,911,530 $1,699,677 $3,668,855 $3,454,926 
(1) Mexico represents approximately 60% of the Americas revenue and the U.S. represents approximately 40%.

10


Note 3. 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 April 2, 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 $45 million and $46 million as of April 2, 2022 and October 2, 2021, respectively. Defined benefit plan assets were $40 million as of October 2, 2021 and are measured at fair value only in the fourth quarter of each year. Other financial assets and financial liabilities measured at fair value on a recurring basis include foreign exchange contracts and interest rate swaps, which are both measured using Level 2 inputs. Foreign exchange contracts were not material as of April 2, 2022 or October 2, 2021. Interest rate swaps had a negative value of $3 million and $19 million as of April 2, 2022 and October 2, 2021, respectively.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Other non-financial assets, such as 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.

Offsetting Derivative Assets and Liabilities

The Company has entered into master netting arrangements with each of its derivative counterparties that allows net settlement of derivative assets and liabilities under certain conditions, such as multiple transactions with the same currency maturing on the same date. The Company presents its derivative assets and derivative liabilities on a gross basis on the unaudited condensed consolidated balance sheets. The amount that the Company had the right to offset under these netting arrangements was not material as of April 2, 2022 or October 2, 2021.

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, Israel and Mexico.

The Company had the following outstanding foreign currency forward contracts that were entered into to hedge foreign currency exposures:
 As of
April 2,
2022
 October 2,
2021
Derivatives Designated as Accounting Hedges:
   Notional amount (in thousands)$113,690 $110,098 
   Number of contracts50 48 
Derivatives Not Designated as Accounting Hedges:
   Notional amount (in thousands)$363,563 $353,108 
   Number of contracts42 46 
11



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 condensed 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 the benchmark interest rate (LIBOR) 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 April 2, 2022 and October 2, 2021. The aggregate effective interest rate of these swaps as of April 2, 2022 was approximately 4.3%. Due to a decline in interest rates since the time the swaps were put in place, these interest rate swaps had a negative value of $3 million as of April 2, 2022, of which the majority is included in accrued liabilities and the remaining amount is included in other long-term liabilities on the condensed consolidated balance sheets.

Note 4. Debt

Long-term debt consisted of the following:
 As of
 April 2,
2022
October 2,
2021
 (In thousands)
Term loan due 2023 ("Term Loan"), net of issuance costs$321,501 $330,322 
Less: Current portion of Term Loan18,750 18,750 
Long-term debt$302,751 $311,572 

Term Loan maturities as of April 2, 2022 by fiscal year are as follows:

12


(In Thousands)
Remainder of 2022$9,375 
202314,062 
2024300,000 
$323,437 

As of April 2, 2022, there were no borrowings and $8 million of letters of credit outstanding under the Fourth Amended and Restated Credit Agreement (the "Amended Cash Flow Revolver").

As of April 2, 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.

Debt Covenants

The Company's Amended Cash Flow Revolver requires the Company to comply with certain financial covenants, namely a maximum 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 April 2, 2022.

Note 5. 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") assets 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.

ROU assets and lease liabilities recorded in the condensed consolidated balance sheet are as follows:
 As of
 April 2,
2022
October 2,
2021
 (In thousands)
Other assets$67,729 $68,012 
 
Accrued liabilities$16,869 $17,219 
Other long-term liabilities38,989 38,587 
Total lease liabilities
$55,858 $55,806 
Weighted average remaining lease term (in years)14.2514.46
Weighted average discount rate2.61 %2.72 %

Lease expense and supplemental cash flow information related to operating leases are as follows:
13


Three Months EndedSix Months Ended
April 2,
2022
April 3,
2021
April 2,
2022
April 3,
2021
(In thousands)
Operating lease expense (1)$5,860 $5,218 $11,770 $10,562 
Six Months Ended
April 2,
2022
April 3,
2021
(In thousands)
Cash paid for operating lease liabilities$9,752 $9,891 
(1)    Includes immaterial amounts of short term leases, variable lease costs and sublease income.

Future lease payments under non-cancelable operating leases as of April 2, 2022, by fiscal year, are as follows:
Operating Leases
 (In thousands)
Remainder of 2022$9,612 
202314,888 
202410,785 
20258,589 
20265,352 
20272,181 
Thereafter9,767 
Total lease payments
61,174 
Less: imputed interest5,316 
Total
$55,858 

Note 6. Accounts Receivable Sale Program

The Company has entered into 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. During each of the six months ended April 2, 2022 and April 3, 2021, the Company sold approximately $371 million of accounts receivable under these programs. Upon sale, these receivables are removed from the condensed consolidated balance sheets and cash received is presented as cash provided by operating activities in the condensed consolidated statements of cash flows. Discounts on sold receivables were not material for any period presented. As of April 2, 2022 and October 2, 2021, $92 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 April 2, 2022 and October 2, 2021, $78 million and $18 million, respectively, had been collected but not yet remitted. The unremitted amount was included in accrued liabilities on the condensed consolidated balance sheets.

14


Note 7. 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 April 2, 2022 and October 2, 2021, the Company had reserves of $31 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 unaudited condensed 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 April 2, 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 April 2, 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 its actions contributed to polluted groundwater managed by the plaintiff. The complaint seeks recovery of compensatory and other damages, as well as declaratory relief, for the payment of costs necessary to investigate, monitor, remediate, abate and contain contamination of groundwater within the plaintiff’s control. In April 2013, all claims against the Company were dismissed. The plaintiff appealed this dismissal and the appellate court reversed the judgment in August 2017, remanding the case back to the Superior Court for trial. The first phase of a multi-phase trial against the Company and several other defendants commenced in April 2021 and is expected to conclude in the third quarter of fiscal 2022. Subsequent trial phases, if necessary, likely would occur later in 2022 and 2023. The Company is contesting the plaintiff’s claims vigorously.

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.

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.

15


For each of the pending matters noted above, the Company is unable to reasonably estimate a range of possible loss at this time.

Other Contingencies

During the three months ended April, 3, 2021, the Company received settlement payments of $5 million in connection with certain anti-trust class action matters. These payments are included in other income (expense), net in the condensed consolidated statements of income.

Note 8. Restructuring

The following table is a summary of restructuring costs:
Restructuring Expense
Three Months EndedSix Months Ended
April 2,
2022
April 3,
2021
April 2,
2022
April 3,
2021
(In thousands)
Severance costs$80 $10,656 $(163)$11,492 
Other exit costs (recognized as incurred)228 9 639 9 
Total - Q1 FY20 Plan308 10,665 476 11,501 
Costs incurred for other plans2,623 1,215 3,870 2,283 
Total - all plans$2,931 $11,880 $4,346 $13,784 
Q1 FY20 Plan
On October 28, 2019, the Company adopted a Company-wide restructuring plan ("Q1 FY20 Plan"), under which the Company has incurred costs of approximately $30 million as of April 2, 2022. These costs consist primarily of severance, the majority of which had been paid as of the end of the second quarter of 2022. Remaining cash payments are expected to occur through the end of 2023. Actions under this plan are substantially complete.

Other Restructuring 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 $9 million for the six months ended April 3, 2021 and none for the six months ended April 2, 2022. The Company’s CPS segment incurred costs of $4 million for each of the six months ended April 2, 2022 and April 3, 2021. The Company had accrued liabilities of $4 million and $6 million as of April 2, 2022 and October 2, 2021 for restructuring costs (exclusive of long-term environmental remediation liabilities).

The Company expects to incur restructuring costs in future periods primarily for vacant facilities and former sites for which the Company is or may be responsible for environmental remediation.

Note 9. Income Tax

The Company estimates its annual effective income tax rate at the end of each quarterly period. The estimate takes into account the geographic mix of expected pre-tax income (loss), expected total annual pre-tax income (loss), enacted changes in tax laws, implementation of tax planning strategies and possible outcomes of audits and other uncertain tax positions. To the extent there are fluctuations in any of these variables during a period, the provision for income taxes may vary.

The Company's provision for income taxes for the three months ended April 2, 2022 and April 3, 2021 was $23 million (30% of income before taxes) and $19 million (29% of income before taxes), respectively, and the Company’s provision for income taxes for the six months ended April 2, 2022 and April 3, 2021 was $43 million (28% of
income before taxes) and $44 million (32% of income before taxes), respectively. The tax rate was lower for the six months ended April 2, 2022 compared to the six months ended April 3, 2021 due to a $3 million decrease in unfavorable discrete items.
16



It is reasonably possible that the Company's liability for uncertain tax positions could decrease materially during the quarter ending July 2, 2022 based upon the resolution of audits and expiration of statutes of limitations, which would result in a decrease in income tax expense at that time.

Note 10. Stockholders' Equity

Accumulated Other Comprehensive Income
Accumulated other comprehensive income, net of tax as applicable, consisted of the following:
As of
April 2,
2022
October 2,
2021
(In thousands)
Foreign currency translation adjustments$73,004 $76,120 
Unrealized holding losses on derivative financial instruments(2,165)(14,305)
Unrecognized net actuarial losses and transition costs for benefit plans(19,984)(21,125)
    Total$50,855 $40,690 

Unrealized holding losses 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 (LIBOR) 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 April 2, 2022 and October 2, 2021. The aggregate effective interest rate of these swaps as of April 2, 2022 was approximately 4.3%. These interest rate swaps had a negative value of $19 million as of October 2, 2021. Due to an increase in interest rates since October 2, 2021, the negative value of these interest rate swaps has decreased to $3 million as of April 2, 2022, of which the majority is included in accrued liabilities and the remaining amount is included in other long-term liabilities in the condensed consolidated balance sheets.

Stock Repurchase Program

During the six months ended April 2, 2022 and April 3, 2021, the Company repurchased 4.4 million and 0.4 million shares of its common stock for $169 million and $9 million, respectively, under stock repurchase programs authorized by the Board of Directors in October 2019 and during the first quarter of 2022. 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 April 2, 2022, an aggregate of $111 million remains available under these programs. Subsequent to the end of the second quarter of fiscal 2022, the Board of Directors approved a new $200 million stock repurchase program containing the same terms as the previously approved plans.

In addition to the repurchases discussed above, the Company withheld 0.3 million and 0.2 million shares of its common stock during the six months ended April 2, 2022 and April 3, 2021, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock units. The Company paid $13 million and $6 million for the six months ended April 2, 2022 and April 3, 2021, respectively, to applicable tax authorities in connection with these repurchases.

Note 11. 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: IMS and CPS. The Company's CPS business 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 presented in a single category entitled "CPS" and the Company has only one reportable segment - IMS.

17


During the first quarter of 2021, the Company's Viking Technology operating segment was aggregated and reported in the Company's IMS reportable segment. The Company began reporting Viking Technology under its CPS segment during the fourth quarter of 2021. Accordingly, the data presented in the table below reflects this change in segment reporting for all periods presented. The change in segment reporting does not affect the Company’s previously reported consolidated financial statements.

The following table presents revenue and a measure of segment gross profit used by management to allocate resources and assess performance of operating segments:
Three Months EndedSix Months Ended
April 2,
2022
April 3,
2021
April 2,
2022
April 3,
2021
(In thousands)
Gross sales:
IMS$1,558,125 $1,365,207 $2,983,135 $2,823,121 
CPS389,867 365,973 757,144 689,911 
Intersegment revenue (36,462)(31,503)(71,424)(58,106)
Net sales$1,911,530 $1,699,677 $3,668,855 $3,454,926 
Gross profit:
IMS$108,660 $94,326 $215,289 $200,246 
CPS46,998 52,105 89,736 92,389 
Total155,658 146,431 305,025 292,635 
Unallocated items (1)(3,211)(3,333)(8,089)(8,302)
Total$152,447 $143,098 $296,936 $284,333 

(1)    For purposes of evaluating segment performance, management excludes certain items from its measure of gross profit. These items consist of stock-based compensation expense, amortization of intangible assets, charges or credits resulting from distressed customers and litigation settlements.

Net sales by geographic segment, determined based on the country in which a product is manufactured, were as
follows:
Three Months EndedSix Months Ended
April 2,
2022
April 3,
2021
April 2,
2022
April 3,
2021
(In thousands)
Net sales:
Americas (1)$898,571 $803,642 $1,695,591 $1,635,464 
EMEA298,580 272,167 567,814 531,459 
APAC714,379 623,868 1,405,450 1,288,003 
Total
$1,911,530 $1,699,677 $3,668,855 $3,454,926 

(1)    Mexico represents approximately 60% of the Americas revenue and the U.S. represents approximately 40%.
Percentage of net sales represented by ten largest customers50 %54 %49 %56 %
Number of customers representing 10% or more of net sales2 1 2 1 

18


Note 12. Earnings Per Share
 
Basic and diluted per share amounts are calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period, as follows:
Three Months EndedSix Months Ended
April 2,
2022
April 3,
2021
April 2,
2022
April 3,
2021
(In thousands, except per share data)
Numerator:
Net income$53,220 $47,037 $111,854 $95,058 
Denominator:
Weighted average common shares outstanding62,845 65,249 63,622 65,244 
Effect of dilutive stock options and restricted stock units1,426 1,708 1,743 1,643 
Denominator for diluted earnings per share64,271 66,957 65,365 66,887 
Net income per share:
Basic$0.85 $0.72 $1.76 $1.46 
Diluted$0.83 $0.70 $1.71 $1.42 

Note 13. Stock-Based Compensation

Stock-based compensation expense was recognized as follows:
Three Months EndedSix Months Ended
April 2,
2022
April 3,
2021
April 2,
2022
April 3,
2021
(In thousands)
Cost of sales$2,948 $3,629 $6,731 $7,050 
Selling, general and administrative6,276 5,479 11,411 10,196 
Research and development106 116 220 186 
  Total$9,330 $9,224 $18,362 $17,432 

During the second quarter of 2022, the Company's stockholders approved the reservation of an additional 1.3 million shares of common stock for future issuance under the Company's 2019 Equity Incentive Plan. As of April 2, 2022, an aggregate of 7 million shares of common stock 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.

Restricted and Performance Stock Units

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 also 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.
19


    
Activity with respect to the Company's restricted stock units and PSUs was as follows:
Number of
Shares
Weighted-
Average Grant Date
Fair Value
($)
Weighted-
Average
Remaining
Contractual
Term
(Years)
Aggregate
Intrinsic
Value
($)
(In thousands)(In thousands)
Outstanding as of October 2, 20212,954 32.21 1.23113,591 
Granted1,374 39.42 
Vested/Forfeited/Cancelled(1,141)29.68 
Outstanding as of April 2, 20223,187 36.23 1.66133,629 
Expected to vest as of April 2, 20222,703 36.13 1.59113,359 

As of April 2, 2022, unrecognized compensation expense of $78 million is expected to be recognized over a weighted average period of 1.6 years.

Note 14. Strategic Transaction

On March 2, 2022, 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 (“RSVL”), a wholly-owned subsidiary of Reliance Industries Limited. Pursuant to the SSPA and the Shareholders' Agreement, the parties will establish 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.

Pursuant to the terms of the SSPA, RSVL will acquire shares of SIPL such that immediately after the closing of this transaction, RSVL will hold 50.1% of the outstanding shares of SIPL and the Company will hold 49.9% of the outstanding shares of SIPL. The Company expects the transaction to close during the fourth quarter of 2022.


20



Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report on Form 10-Q 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, including the joint venture with Reliance Strategic Business Ventures Limited, 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 or expected 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 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 II, 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 quarterly report on Form 10-Q or in any other report or document we file with the SEC.

Sanmina Corporation and its subsidiaries (the “Company”, “we” or “us”) operate on a 52 or 53 week year ending on the Saturday nearest September 30. Fiscal 2022 and 2021 are each 52-week years. All references to years relate to fiscal years unless otherwise noted.

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 infrastructure 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 interconnect systems (printed circuit board fabrication, backplane, cable assemblies and plastic injection molding) and mechanical systems (enclosures and precision machining). 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, optical and microelectronic (microE) design and manufacturing services from our Advanced Micro Systems Technologies division; 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 the first half of 2022. Our CPS business consists of multiple operating segments which do not individually meet the quantitative thresholds for being presented as reportable segments under the accounting rules for segment reporting.
21


Therefore, financial information for these operating segments is aggregated and presented in a single category entitled “Components, Products and Services”.

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 results of operations 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 components and products and resulted in temporary closures of manufacturing sites and reduced staffing of our plants. We are unable to accurately predict the full impact that the COVID-19 pandemic will have on us due to a 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 the BA.2 subvariant, and actions that government authorities may take in response. For example, although acute pandemic conditions have abated in many regions in which we operate, recent increases in infections in China, and the measures being taken by the government in response, have disrupted the operations of certain of our plants. We believe it is likely that the pandemic and related supply chain disruptions will continue to have a negative impact on our business, results of operations and financial condition for the foreseeable future.

A small number of customers have historically generated a significant portion of our net sales. Sales to our ten largest customers have typically represented approximately 50% of our net sales. Two customers represented 10% or more of our net sales for the three and six months ended April 2, 2022. One customer represented 10% or more of our net sales for the three and six months ended April 3, 2021.

We typically generate about 80% of our net sales from products manufactured in our non-U.S. 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 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 can 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.

On March 2, 2022, 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 (“RSVL”), a wholly-owned subsidiary of Reliance Industries Limited. Pursuant to the SSPA and the Shareholders' Agreement, the parties will establish 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.

Pursuant to the terms of the SSPA, RSVL will acquire shares of SIPL such that immediately after the closing of this transaction, RSVL will hold 50.1% of the outstanding shares of SIPL and we will hold 49.9% of the outstanding shares of SIPL. We expect the transaction to close during the fourth quarter of 2022.

22


Critical Accounting Policies and Estimates

Management's discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed 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 have been 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 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.

A complete description of our critical accounting policies and estimates is contained in our Annual Report on Form 10-K for the fiscal year ended October 2, 2021 filed with the Securities and Exchange Commission.

Results of Operations

Key Operating Results
Three Months EndedSix Months Ended
April 2,
2022
April 3,
2021
April 2,
2022
April 3,
2021
(In thousands)
Net sales$1,911,530 $1,699,677 $3,668,855 $3,454,926 
Gross profit$152,447 $143,098 $296,936 $284,333 
Operating income$82,226 $64,723 $163,659 $140,282 
Net income $53,220 $47,037 $111,854 $95,058 

Net Sales

Sales by end market were as follows (dollars in thousands):
Three Months EndedSix Months Ended
April 2,
2022
April 3,
2021
Increase/(Decrease)April 2,
2022
April 3,
2021
Increase/(Decrease)
Industrial, Medical, Defense and Automotive$1,154,720 $980,794 $173,926 17.7 %$2,209,691 $2,013,312 $196,379 9.8 %
Communications Networks and Cloud Infrastructure756,810 718,883 37,927 5.3 %1,459,164 1,441,614 17,550 1.2 %
Total$1,911,530 $1,699,677 $211,853 12.5