sanm-20230701

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


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

For the quarterly period ended July 1, 2023


☐			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)

77-0228183

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification Number)

2700 N. First St.,

San Jose,

95134

(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 class	Trading symbol(s)	Name of each exchange on which registered
Common Stock	SANM	NASDAQ Global Select Market

As of July 26, 2023, there were 57,226,949 shares outstanding of the issuer’s common stock, $0.01 par value per share.

SANMINA CORPORATION

INDEX


		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Interim Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Income	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 5.	Other Information	47
Item 6.	Exhibits	48
Signatures		49

SANMINA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS


	As of
	July 1, 2023		October 1, 2022
			(Restated)
	(Unaudited)
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	656,588	$	529,857
Accounts receivable, net of allowances of approximately $8 million as of July 1, 2023 and October 1, 2022	1,279,966		1,138,894
Contract assets	459,145		475,721
Inventories	1,489,200		1,684,099
Prepaid expenses and other current assets	68,121		62,044
Total current assets	3,953,020		3,890,615
Property, plant and equipment, net	631,744		575,170
Deferred tax assets	187,434		209,554
Other	185,694		160,192
Total assets	$	4,957,892	$	4,835,531
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,724,034	$	2,041,434
Accrued liabilities	277,515		281,599
Accrued payroll and related benefits	138,815		130,892
Short-term debt, including current portion of long-term debt	17,500		17,500
Total current liabilities	2,157,864		2,471,425
Long-term liabilities:
Long-term debt	316,552		329,237
Other	217,748		215,333
Total long-term liabilities	534,300		544,570
Contingencies (Note 8)
Stockholders’ equity	2,265,728		1,819,536
Total liabilities and stockholders’ equity	$	4,957,892	$	4,835,531

See accompanying notes to condensed consolidated financial statements.

SANMINA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
			(Restated)				(Restated)
	(Unaudited)
	(In thousands, except per share data)
Net sales	$	2,207,118	$	2,023,361	$	6,883,029	$	5,694,757
Cost of sales	2,023,910		1,861,176		6,313,246		5,244,780
Gross profit	183,208		162,185		569,783		449,977

Operating expenses:
Selling, general and administrative	68,828		61,506		192,948		184,798
Research and development	6,719		5,071		18,712		15,320
Restructuring and other	296		3,994		1,731		3,730
Total operating expenses	75,843		70,571		213,391		203,848

Operating income	107,365		91,614		356,392		246,129

Interest income	4,213		540		9,685		1,198
Interest expense	(10,066)		(5,615)		(28,033)		(15,362)
Other expense	(2,508)		(7,774)		(11,988)		(7,110)
Interest and other, net	(8,361)		(12,849)		(30,336)		(21,274)

Income before income taxes	99,004		78,765		326,056		224,855
Provision for income taxes	17,267		1,543		63,898		42,835
Net income before noncontrolling interest	81,737		77,222		$	262,158	$	182,020
Less: Net income attributable to noncontrolling interest	5,243		—		14,029		—
Net income attributable to common shareholders	$	76,494	$	77,222	$	248,129	$	182,020

Net income attributable to common shareholders per share:
Basic	$	1.32	$	1.29	$	4.28	$	2.92
Diluted	$	1.28	$	1.25	$	4.14	$	2.83

Weighted average shares used in computing per share amounts:
Basic	57,987		59,970		57,995		62,404
Diluted	59,592		61,702		59,996		64,292

See accompanying notes to condensed consolidated financial statements.

SANMINA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Three Months Ended				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
			(Restated)				(Restated)
	(Unaudited)
	(In thousands)
Net income before noncontrolling interest	$	81,737	$	77,222	$	262,158	$	182,020
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustments	(436)		(3,819)		6,807		(6,935)
Derivative financial instruments:
Change in net unrealized amount	6,856		(2,497)		14,263		7,243
Amount reclassified into net income before noncontrolling interest	(1,832)		5,351		(11,331)		7,751
Defined benefit plans:
Changes in unrecognized net actuarial losses and unrecognized transition costs	(58)		719		(966)		1,380
Amortization of actuarial losses and transition costs	222		228		784		708
Total other comprehensive income (loss), net of tax	4,752		(18)		9,557		10,147
Comprehensive income before noncontrolling interest	$	86,489	$	77,204	$	271,715	$	192,167
Less: Net income attributable to noncontrolling interest	5,243		—		14,029		—
Comprehensive income attributable to common shareholders	$	81,246	$	77,204	$	257,686	$	192,167

See accompanying notes to condensed consolidated financial statements.

SANMINA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


	Three Months Ended				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
			(Restated)				(Restated)
	(Unaudited)
	(In thousands)
Common Stock and Additional Paid-in Capital
Balance, beginning of period	$	6,483,955	$	6,359,270	$	6,381,348	$	6,339,506
Issuances under stock plans	—		72		295		1,474
Stock-based compensation expense	13,317		10,683		37,460		29,045
Repurchases of treasury stock	—		(144)		—		(144)
Sale of noncontrolling interest	—		—		78,169		—
Balance, end of period	6,497,272		6,369,881		6,497,272		6,369,881
Treasury Stock
Balance, beginning of period	(1,399,666)		(1,229,523)		(1,378,159)		(1,047,202)
Repurchases of treasury stock	(52,072)		(124,293)		(73,579)		(306,614)

Balance, end of period	(1,451,738)		(1,353,816)		(1,451,738)		(1,353,816)
Accumulated Other Comprehensive Income
Balance, beginning of period	61,130		50,855		56,325		40,690
Other comprehensive income (loss), net of tax	4,752		(18)		9,557		10,147
Balance, end of period	65,882		50,837		65,882		50,837
Accumulated Deficit
Balance, beginning of period	(3,068,343)		(3,375,564)		(3,239,978)		(3,480,362)
Net income attributable to common shareholders	76,494		77,222		248,129		182,020
Balance, end of period	(2,991,849)		(3,298,342)		(2,991,849)		(3,298,342)
Noncontrolling Interest
Balance, beginning of period	140,918		—		—		—
Sale of noncontrolling interest	—		—		132,132		—
Net income attributable to noncontrolling interest	5,243		—		14,029		—
Balance, end of period	146,161		—		146,161		—
Total stockholders’ equity	$	2,265,728	$	1,768,560	$	2,265,728	$	1,768,560

Common Stock Shares Outstanding
Number of shares, beginning of period	111,285		109,911		110,160		108,734
Issuances under stock plans	43		99		1,168		1,276
Number of shares, end of period	111,328		110,010		111,328		110,010
Treasury Shares
Number of shares, beginning of period	(53,127)		(49,124)		(52,766)		(44,427)
Repurchases of treasury stock	(982)		(3,096)		(1,343)		(7,793)
Number of shares, end of period	(54,109)		(52,220)		(54,109)		(52,220)

See accompanying notes to condensed consolidated financial statements.

SANMINA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended
	July 1, 2023		July 2, 2022
			(Restated)
	(Unaudited)
	(In thousands)
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income before noncontrolling interest	$	262,158	$	182,020
Adjustments to reconcile net income before noncontrolling interest to cash provided by (used in) operating activities:
Depreciation and amortization	87,716		82,097
Stock-based compensation expense	37,460		29,045
Deferred income taxes	21,232		15,993




Other, net	284		(1,298)
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable	(137,712)		(40,276)
Contract assets	16,576		(112,606)
Inventories	199,406		(552,851)
Prepaid expenses and other assets	(27,492)		(13,269)
Accounts payable	(308,579)		507,909
Accrued liabilities	7,262		152,192
Cash provided by operating activities	158,311		248,956

CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(153,239)		(90,398)
Proceeds from sales of property, plant and equipment	1,084		8,339
Purchases of investments	(2,000)		(1,700)

Cash used in investing activities	(154,155)		(83,759)

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Holdback paid in connection with previous business combination	(8,558)		—
Repayments of long-term debt	(13,125)		(14,064)

Proceeds from revolving credit facility borrowings	2,426,300		926,500
Repayments of revolving credit facility borrowings	(2,426,300)		(926,500)

Net proceeds from stock issuances	295		1,474
Repurchases of common stock	(73,579)		(306,758)
Proceeds from collection of notes receivable	—		500
Proceeds from sale of noncontrolling interest	215,799		—
Cash provided by (used in) financing activities	120,832		(318,848)

Effect of exchange rate changes	1,743		(3,070)
Increase (decrease) in cash and cash equivalents	126,731		(156,721)
Cash and cash equivalents at beginning of period	529,857		650,026
Cash and cash equivalents at end of period	$	656,588	$	493,305

Cash paid during the period for:
Interest, net of capitalized interest	$	24,908	$	12,155
Income taxes, net of refunds	$	45,053	$	33,801
Unpaid purchases of property, plant and equipment at the end of period	$	25,938	$	28,831

See accompanying notes to condensed consolidated financial statements.

SANMINA CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Restatement of Condensed Consolidated Financial Statements

Sanmina Corporation (the “Company” or “Sanmina”) identified misstatements in the unaudited condensed consolidated financial statements for the comparative periods of 2022 in conjunction with an independent investigation conducted by the Audit Committee of the Board of Directors, as further disclosed in the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on May 11, 2023. The comparative periods have been amended and restated to correct for such misstatements. More detailed information related to the amendment and restatement is contained in Amendment No. 1 to the Company’s Annual Report on Form 10-K for the fiscal year ended October 1, 2022 and Amendment No. 1 to the Company’s Form 10-Q for the quarter ended December 31, 2022 as filed with the Securities and Exchange Commission on May 22, 2023.

During the preparation of its unaudited consolidated financial statements for the fiscal quarter ended April 1, 2023, the Company determined that certain personnel in one of its divisions had failed to properly substantiate and update cost estimates for materials and other costs over the life of certain contracts. As a result, the Company conducted an independent investigation (the “Investigation”) under the direction of the Audit Committee of the Company’s Board of Directors (the “Audit Committee”). The division, like other Company divisions, has a stand-alone finance organization, which reports directly to the Company’s finance organization and indirectly to the management of the division. References in the findings below refer solely to this division unless otherwise noted. The Investigation found that:

•In connection with the preparation and review of quarterly contract cost and other estimates, an internal control in the Company’s accounting process for the division’s contracts with customers, certain division personnel made inappropriate and unsupported adjustments to reduce certain cost estimates and failed to appropriately evaluate and increase other cost estimates to reflect cost overruns and other costs associated with delays in completing certain contracts.

•The division had a culture that did not recognize or emphasize the importance of rigor in the division’s quarterly contract estimate review process or its significance to the Company’s internal control over financial reporting and accounting and financial reporting determinations with respect to the division’s contracts with customers. Instead, the division’s tone at the top and other control weaknesses enabled participants in the quarterly contract estimate review process to tolerate, place undue reliance on or otherwise fail to challenge unsupported adjustments and assumptions to contract cost estimates that had been made based on unsubstantiated optimism and/or a desire to avoid adverse outcomes.

•The division had an ineffective finance function that did not provide sufficient oversight on financial accounting and reporting matters or effectively challenge adjustments or other improper practices in the quarterly contract estimate review process.

•Certain division personnel lacked sufficient understanding of the division’s policies and procedures for the quarterly contract estimate review process as well as the relevant cost and contract accounting practices and requirements.

•Certain division personnel provided materially inaccurate and incomplete information to, including in response to inquiries from, Company management and the Company’s internal and independent auditors concerning contract cost estimates and related items.

The “Previously Reported” amounts in the following tables are amounts derived from the Form 10-Q for the period ended July 2, 2022. The amounts in columns labeled “Investigation Adjustments” represent the effect of adjustments resulting from an independent investigation conducted by the Audit Committee of the Board of Directors and the amounts in columns labeled “Other Adjustments” represent the effect of uncorrected misstatements in previously filed financial statements that were not material, individually or in the aggregate, to those previously filed financial statements. The effects of the restatement, including the related income tax effects, have been corrected in all impacted tables and footnotes throughout these condensed consolidated financial statements. The only impact to the Unaudited Condensed Consolidated Statements of Comprehensive Income and Unaudited Condensed Consolidated Statements of Stockholders’ Equity was to net income.

Investigation Adjustments correct misstatements that resulted primarily from 1) increases to estimated costs at completion of a contract that previously did not properly reflect estimated costs remaining to be incurred to complete a contract, 2) reductions in the amount of transaction consideration expected to be received under a contract, and 3) segmentation of contracts that had previously been combined. The adjustments primarily affected net sales, cost of sales, contract assets and inventory.

Other Adjustments primarily correct balance sheet misstatements related to inventory cut-off and advance payments from customers.

The following table presents the impact of the financial statement adjustments on the Company’s previously reported Condensed Consolidated Statements of Income for the three and nine months ended July 2, 2022.


	Three Months Ended				Nine Months Ended
	July 2, 2022				July 2, 2022
	(Unaudited)				(Unaudited)
	Previously Reported		Investigation Adjustments		As Restated		Previously Reported		Investigation Adjustments		As Restated
	(In thousands, except per share data)
Net sales	$	2,019,059	$	4,302	$	2,023,361	$	5,687,914	$	6,843	$	5,694,757
Cost of sales	1,853,870		7,306		1,861,176		5,225,789		18,991		5,244,780
Gross profit	165,189		(3,004)		162,185		462,125		(12,148)		449,977

Operating expenses:
Selling, general and administrative	61,506		—		61,506		184,798		—		184,798
Research and development	5,071		—		5,071		15,320		—		15,320
Restructuring and other	3,994		—		3,994		3,730		—		3,730

Total operating expenses	70,571		—		70,571		203,848		—		203,848

Operating income	94,618		(3,004)		91,614		258,277		(12,148)		246,129

Interest income	540		—		540		1,198		—		1,198
Interest expense	(5,615)		—		(5,615)		(15,362)		—		(15,362)
Other income (expense), net	(7,774)		—		(7,774)		(7,110)		—		(7,110)
Interest and other, net	(12,849)		—		(12,849)		(21,274)		—		(21,274)

Income before income taxes	81,769		(3,004)		78,765		237,003		(12,148)		224,855
Provision for income taxes	2,226		(683)		1,543		45,606		(2,771)		42,835
Net Income	$	79,543	$	(2,321)	$	77,222	$	191,397	$	(9,377)	$	182,020

Net income per share:
Basic	$	1.33	$	(0.04)	$	1.29	$	3.07	$	(0.15)	$	2.92
Diluted	$	1.29	$	(0.04)	$	1.25	$	2.98	$	(0.15)	$	2.83

Weighted average shares used in computing per share amounts:
Basic	59,970		—		59,970		62,404		—		62,404
Diluted	61,702		—		61,702		64,292		—		64,292

The following table presents the impact of the financial statement adjustments on the Company’s previously reported Condensed Consolidated Balance Sheet as of October 1, 2022.


	As of
	October 1, 2022

		Previously Reported		Investigation Adjustments		Other Adjustments		As Restated
		(In thousands)
ASSETS
Current assets:
Cash and cash equivalents		$	529,857	$	—	$	—	$	529,857
Accounts receivable, net of allowances		1,138,894		—		—		1,138,894
Contract assets		503,674		(27,953)		—		475,721
Inventories		1,691,081		(21,705)		14,723		1,684,099
Prepaid expenses and other current assets		62,044		—		—		62,044
Total current assets		3,925,550		(49,658)		14,723		3,890,615
Property, plant and equipment, net		575,170		—		—		575,170
Deferred tax assets		198,588		10,966		—		209,554
Other		160,192		—		—		160,192
Total assets		$	4,859,500	$	(38,692)	$	14,723	$	4,835,531
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	2,029,534	$	—	$	11,900	$	2,041,434
Accrued liabilities		275,735		1,441		4,423		281,599
Accrued payroll and related benefits		130,892		—		—		130,892
Short-term debt, including current portion of long-term debt		17,500		—		—		17,500
Total current liabilities		2,453,661		1,441		16,323		2,471,425
Long-term liabilities:
Long-term debt		329,237		—		—		329,237
Other		215,333		—		—		215,333
Total long-term liabilities		544,570		—		—		544,570
Contingencies (Note 8)
Stockholders’ equity		1,861,269		(40,133)		(1,600)		1,819,536
Total liabilities and stockholders’ equity		$	4,859,500	$	(38,692)	$	14,723	$	4,835,531

The following table presents the impact of the financial statement adjustments on the Company’s previously reported Condensed Consolidated Statements of Cash Flows for the nine month period ended July 2, 2022. There were no adjustments to cash flows provided by (used in) investing or financing activities for the nine month period ended July 2, 2022.


	Nine Months Ended
	July 2, 2022
	(Unaudited)
	Previously Reported		Investigation Adjustments		Other Adjustments		As Restated

CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income	$	191,397	$	(9,377)	$	—	$	182,020
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Depreciation and amortization	82,097		—		—		82,097
Stock-based compensation expense	29,045		—		—		29,045
Deferred income taxes	18,522		(2,529)		—		15,993

Other, net	(1,298)		—		—		(1,298)
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable	(39,850)		—		(426)		(40,276)
Contract assets	(110,565)		6,210		(8,251)		(112,606)
Inventories	(559,118)		6,544		(277)		(552,851)
Prepaid expenses and other assets	(13,269)		—		—		(13,269)
Accounts payable	507,632		—		277		507,909
Accrued liabilities	144,363		(848)		8,677		152,192
Cash provided by operating activities	$	248,956	$	—	$	—	$	248,956

Note 2. Basis of Presentation

The accompanying condensed consolidated financial statements of 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 condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended October 1, 2022, included in Amendment No. 1 on Form 10-K/A to the Company’s Annual Report on Form 10-K for such fiscal year filed with the SEC on May 22, 2023.

The condensed consolidated financial statements include all accounts of the Company, its wholly-owned subsidiaries and subsidiaries in which it has control. All intra-company accounts and transactions have been eliminated. Noncontrolling interest represents a noncontrolling investor’s interest in the results of operations of subsidiaries that the Company controls and consolidates.

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from these estimates.

Results of operations for the third quarter of 2023 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 2023 and 2022 are each 52-week years. All references to years relate to fiscal years unless otherwise noted.

Note 3. 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.

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 94% 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 included in the total estimated costs at completion. Additionally, the Company evaluates whether contract modifications for claims have been approved and, if so, estimates the amount, if any, of variable consideration that can be included in the transaction price of the contract. 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. During the nine months ended July 1, 2023, CPS revenue and gross profit were $1 billion and $155 million, respectively.

Estimates of materials, labor and subcontractor costs expected to be incurred to satisfy a performance obligation are updated on a quarterly basis. These estimates consider costs incurred to date and estimated costs to be incurred over the remaining expected period of performance to satisfy a performance obligation. Such 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. Additionally, contract modifications for claims are assessed each quarter to determine whether the claims have been approved. If it is determined that a claim has been approved, the amount of the claim, if any, that can be included in transaction price is estimated considering a number of factors such as the length of time expected to lapse until uncertainty about the claim has been resolved and the extent to which our experience with claims for similar contracts has predictive value.

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 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 not to 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 Ended				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
			(Restated)				(Restated)
	(In thousands)
Segments:
IMS	$	1,811,530	$	1,617,858	$	5,657,800	$	4,584,185
CPS	395,588		405,503		1,225,229		1,110,572
Total	$	2,207,118	$	2,023,361	$	6,883,029	$	5,694,757

End Markets:
Industrial, Defense, Medical and Automotive	$	1,344,068	$	1,221,989	$	4,045,939	$	3,434,221
Communications Networks and Cloud Infrastructure	863,050		801,372		2,837,090		2,260,536
Total	$	2,207,118	$	2,023,361	$	6,883,029	$	5,694,757

Geography:
Americas (1)	$	1,131,925	$	989,172	$	3,380,454	$	2,687,304
APAC	743,372		739,084		2,511,205		2,144,534
EMEA	331,821		295,105		991,370		862,919
Total	$	2,207,118	$	2,023,361	$	6,883,029	$	5,694,757

(1) Mexico represents approximately 70% and 60% of the Americas revenue and the U.S. represents approximately 30% and 40% of the Americas revenue for the nine months ended July 1, 2023 and July 2, 2022, respectively.

Note 4. Financial Instruments

Fair Value Measurements

Fair Value of Financial Instruments

The fair values of cash equivalents (represents 23% of cash and cash equivalents), accounts receivable, accounts payable and short-term debt approximate carrying values due to the short-term duration of these instruments. Additionally, the fair value of variable rate long-term debt approximates carrying value as of July 1, 2023.

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 $40 million and $37 million as of July 1, 2023 and October 1, 2022, respectively. Defined benefit plan assets were $17 million as of October 1, 2022 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 July 1, 2023 or October 1, 2022.

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 condensed consolidated balance sheets. The amount that the Company had the right to offset under these netting arrangements was not material as of July 1, 2023 or October 1, 2022.

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 China, Mexico and India.

The Company had the following outstanding foreign currency forward contracts that were entered into to hedge foreign currency exposures:


	As of
	July 1, 2023		October 1, 2022
Derivatives Designated as Accounting Hedges:
Notional amount (in thousands)	$	127,484	$	123,172
Number of contracts	50		50
Derivatives Not Designated as Accounting Hedges:
Notional amount (in thousands)	$	407,290	$	531,558
Number of contracts	43		43

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 expense, 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 Secured Overnight Financing Rate (“SOFR”), which is the benchmark interest rate associated with anticipated variable rate borrowings. These interest rate swaps have maturity dates of December 1, 2023 and September 27, 2027 and effectively convert a portion of 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 $650 million and $350 million were outstanding as of July 1, 2023 and October 1, 2022, respectively. The aggregate effective interest rate of these swaps as of July 1, 2023 was approximately 4.6%. The interest rate swaps portfolio had a value of $10 million and $6 million as of July 1, 2023 and October 1, 2022, respectively, of which the majority is included in prepaid expenses and other current assets and the remaining amount is included in other long-term liabilities on the condensed consolidated balance sheets.

Note 5. Debt

Long-term debt consisted of the following:


	As of
	July 1, 2023		October 1, 2022
	(In thousands)
Term loan due 2027, net of issuance costs	$	334,052	$	346,737



Less: Current portion of Term Loan	17,500		17,500
Long-term debt	$	316,552	$	329,237

Term Loan maturities by fiscal year are as follows:


	As of
	July 1, 2023
	(In thousands)
Remainder of 2023	$	4,375
2024	13,125
2025	17,500
2026	21,875
2027	280,000
	$	336,875

Revolving Credit Facility

During the fourth quarter of 2022, the Company entered into a Fifth Amended and Restated Credit Agreement (the “Credit Agreement”), that provides for an $800 million revolving credit facility and drew 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.

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 (or 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.

On May 17, 2023, as a result of the Company’s failure to timely file its Form 10-Q for the quarter ended April 1, 2023, the Company was in technical default with respect to certain covenants within its Credit Agreement. The Company filed the Form 10-Q on May 22, 2023 within the stated cure period of 15 calendar days and was no longer in default.

Certain of the Company’s domestic subsidiaries are guarantors under 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 July 1, 2023, there were no borrowings and $13 million of letters of credit outstanding under the Credit Agreement.

Foreign Short-term Borrowing Facilities

As of July 1, 2023, certain foreign subsidiaries of the Company had a total of $73 million of uncommitted short-term borrowing facilities available, under which no borrowings were outstanding.

Debt Covenants

The 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 July 1, 2023.

Note 6. 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 are as follows:


	As of
	July 1, 2023			October 1, 2022
	(In thousands)
Other assets	$	98,288		$	79,495

Accrued liabilities	$	21,366		$	16,695
Other long-term liabilities	64,552			48,566
Total lease liabilities	$	85,918		$	65,261

Weighted average remaining lease term (in years)	10.88			15.74
Weighted average discount rate	3.82		%	2.40		%

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


	Three Months Ended				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
	(In thousands)
Operating lease expense (1)	$	8,976	$	6,009	$	26,541	$	17,779

					Nine Months Ended
					July 1, 2023		July 2, 2022
					(In thousands)
Cash paid for operating lease liabilities					$	18,023	$	14,566

(1) Includes immaterial amounts of short-term leases, variable lease costs and sublease income.

Future lease payments under non-cancelable operating leases as of July 1, 2023, by fiscal year, are as follows:


	Operating Leases
	(In thousands)
Remainder of 2023	$	6,187
2024	23,998
2025	21,258
2026	16,876
2027	13,624
Thereafter	13,113
Total lease payments	95,056
Less: imputed interest	9,138
Total	$	85,918

Note 7. 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. During the nine months ended July 1, 2023 and July 2, 2022, the Company sold approximately $2 billion and $1 billion, respectively, 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 $16 million and $2 million for the nine months ended July 1, 2023 and July 2, 2022, respectively. As of July 1, 2023 and October 1, 2022, $172 million and $194 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 the servicer under the RPA on a weekly basis to the financial institutions that purchased the receivables. As of July 1, 2023 and October 1, 2022, $58 million and $49 million, respectively, had been collected but not yet remitted. This amount is classified in accrued liabilities on the condensed consolidated balance sheets.

Note 8. 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 July 1, 2023 and October 1, 2022, the Company had estimated liabilities of $34 million and $38 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 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 July 1, 2023, the Company had been named in a lawsuit and several administrative orders alleging that certain of its current and former sites sent waste for disposal that contributed to groundwater contamination, which require further management and care. One such order demands that the Company and other alleged defendants, fund continued post-closure care and remediation at four properly permitted former hazardous waste landfills located in Northern California to which the Company may have sent wastewater in the past. The Company is participating with a working group of a number of other alleged defendants in a pending settlement of this matter and has reserved its estimated exposure for this matter as of July 1, 2023, which amount is immaterial.

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 trial against the Company and several other defendants commenced in April 2021 and the submission of evidence concluded in May 2022. On April 3, 2023, the Court published a statement of decision finding the Company and other remaining defendants liable for certain past investigation costs incurred by the plaintiff. The Company believes a loss in this matter is probable and has recorded its estimated loss as of July 1, 2023. There will be subsequent proceedings to assess the Company’s and other defendants’ liability for the plaintiff’s future remediation and other costs, including attorneys’ fees. 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, 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 at the appropriate time.

Other Matters

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 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 the Company believes Dialight’s claimed damages are vastly overstated and are subject to a contractual limitation of liability that limits any Dialight recovery to less than $2 million. In an Opinion and Order dated March 14, 2023, the Court granted in part the Company’s motion for partial summary judgment and dismissed Dialight’s willful misconduct claim. The Company continues to vigorously prosecute its claims against Dialight. Further, the Company strongly disagrees with Dialight’s allegations and is defending against Dialight’s remaining claims vigorously. No trial date has been set in this matter.

In May 2023, the Company and its SCI Technology, Inc. subsidiary (“SCI”) received Civil Investigative Demands (“CIDs”) from the United States Department of Justice (“DOJ") pursuant to the civil False Claims Act (“FCA”). The stated purpose of the CIDs—a form of subpoena requiring responses to written interrogatories and the production of documents relating to certain contracts, projects, proposals and business activities of SCI going back to 2010—is to determine whether there is or has been a violation of the FCA with respect to the provision of products and services to the government. These CIDs supplement several CIDs relating to the same subject matter served upon SCI and certain current and former SCI and Sanmina employees beginning in August 2020, pursuant to which SCI has been producing documents and information and the current and former employees have provided or will provide oral testimony. To date, neither the Company nor SCI has been served with a complaint in this matter. The Company has been, and is, cooperating with the DOJ and continues to produce documents and other information responsive to the CIDs. The Company is unable to predict the ultimate outcome in this matter, although a loss currently is not considered to be probable or estimable.

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

In addition, from time to time, the Company 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. The Company records 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 the Company’s results of operations and financial condition.

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 July 1, 2023 and July 2, 2022 was $17 million (17% of income before taxes) and $2 million (2% of income before taxes), respectively. Income tax expense for the three months ended July 1, 2023 and July 2, 2022 included the recognition of tax benefits of approximately $5 million and $15 million, respectively, that resulted from the release of certain foreign tax reserves due to lapse of time and expiration of statutes of limitations.

The Company’s provision for income taxes for the nine months ended July 1, 2023 and July 2, 2022 was $64 million (20% of income before taxes) and $43 million (19% of income before taxes), respectively. Income tax expense was higher for the nine months ended July 1, 2023 primarily due to an increase in profit before tax.

Note 10. Stockholders’ Equity

Accumulated Other Comprehensive Income

Accumulated other comprehensive income, net of tax as applicable, consisted of the following:


	As of
	July 1, 2023		October 1, 2022
	(In thousands)
Foreign currency translation adjustments	$	70,736	$	63,929
Unrealized holding gains on derivative financial instruments	7,044		4,112
Unrecognized net actuarial losses and transition costs for benefit plans	(11,898)		(11,716)
Total	$	65,882	$	56,325

Stock Repurchase Program

During the nine months ended July 1, 2023 and July 2, 2022, the Company repurchased 1 million and 7 million shares of its common stock for $51 million and $293 million, 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, they also reduce the Company’s liquidity. During the third quarter of 2023, the Company’s Board of Directors authorized the repurchase of up to $200 million of the Company’s common stock in the open market or in negotiated private transactions. As of July 1, 2023, an aggregate of $312 million remained available under these programs.

In addition to the repurchases discussed above, the Company withheld 0.4 million and 0.4 million shares of its common stock during the nine months ended July 1, 2023 and July 2, 2022, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock units. The Company paid $22 million and $13 million for the nine months ended July 1, 2023 and July 2, 2022, 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: Integrated Manufacturing Solutions (“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.

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 Ended				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
			(Restated)				(Restated)
	(In thousands)
Gross sales:
IMS	$	1,821,819	$	1,624,760	$	5,689,432	$	4,607,895
CPS	419,156		432,058		1,308,326		1,191,743
Intersegment revenue	(33,857)		(33,457)		(114,729)		(104,881)
Net sales	$	2,207,118	$	2,023,361	$	6,883,029	$	5,694,757

Gross profit:
IMS	$	152,059	$	118,359	$	429,855	$	333,648
CPS	37,036		47,801		154,564		128,393
Total	189,095		166,160		584,419		462,041
Unallocated items (1)	(5,887)		(3,975)		(14,636)		(12,064)
Total	$	183,208	$	162,185	$	569,783	$	449,977

(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, litigation settlements and investigation costs.

Net sales by geographic segment, determined based on the country in which a product is manufactured, were as follows:


	Three Months Ended				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
			(Restated)				(Restated)
	(In thousands)
Net sales:
Americas (1)	$	1,131,925	$	989,172	$	3,380,454	$	2,687,304
APAC	743,372		739,084		2,511,205		2,144,534
EMEA	331,821		295,105		991,370		862,919
Total	$	2,207,118	$	2,023,361	$	6,883,029	$	5,694,757


Percentage of net sales represented by ten largest customers	47	%	48	%	49	%	49	%
Number of customers representing 10% or more of net sales	1		1		1		2

Note 12. Earnings Per Share

Basic and diluted per share amounts are calculated by dividing net income attributable to common shareholders by the weighted average number of shares of common stock outstanding during the period, as follows:


	Three Months Ended				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
			(Restated)				(Restated)
	(In thousands, except per share data)
Numerator:
Net income attributable to common shareholders	$	76,494	$	77,222	$	248,129	$	182,020

Denominator:

Weighted average common shares outstanding	57,987		59,970		57,995		62,404
Effect of dilutive stock options and restricted stock units	1,605		1,732		2,001		1,888
Denominator for diluted earnings per share	59,592		61,702		59,996		64,292

Net income attributable to common shareholders per share:
Basic	$	1.32	$	1.29	$	4.28	$	2.92
Diluted	$	1.28	$	1.25	$	4.14	$	2.83

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 13. Stock-Based Compensation

Stock-based compensation expense was recognized as follows:


	Three Months Ended				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
	(In thousands)
Cost of sales	$	4,518	$	3,724	$	12,785	$	10,455
Selling, general and administrative	8,588		6,819		24,034		18,230
Research and development	211		140		641		360
Total	$	13,317	$	10,683	$	37,460	$	29,045

During the second quarter of 2023, the Company's stockholders approved the reservation of an additional 1 million

shares of common stock for future issuance under the Company's 2019 Equity Incentive Plan. As of July 1, 2023, an aggregate of 6 million shares of common stock were authorized for future issuance under the Company’s stock plans, of which 3 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 (“RSUs”) 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.

Generally, the Company’s PSUs vest contingent on achievement of cumulative non-GAAP earnings per share measured over three fiscal years. If a minimum threshold is not achieved during the measurement period, the PSUs will be cancelled. If the minimum threshold is achieved or exceeded, the number of shares of common stock that will be issued will range from 70% to 130% 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.

Activity with respect to the Company’s RSUs 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 1, 2022	3,280	37.11	1.35	155,049
Granted	952	59.88
Vested/Forfeited/Cancelled	(1,309)	36.09
Outstanding as of July 1, 2023	2,923	44.98	1.38	172,287
Expected to vest as of July 1, 2023	2,592	44.51	1.33	152,789

As of July 1, 2023, unrecognized compensation expense of $82 million is expected to be recognized over a weighted average period of 1.4 years.

Note 14. Strategic Transaction

India Joint Venture

On October 3, 2022 (“Transaction Date”), the Company completed a joint venture transaction pursuant to a Share Subscription and Purchase Agreement (the “SSPA”) and a Joint Venture and Shareholders’ Agreement (the “Shareholders’ Agreement”) previously entered into 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”), 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. This partnership leverages the Company’s advanced manufacturing experience and RSBVL’s expertise and leadership in the Indian business ecosystem. In addition to supporting the Company’s current customer base, the joint venture will create a state-of-the-art ‘Manufacturing Technology Center of Excellence’ that will serve as an incubation center to support the product development and hardware start-up ecosystem in India, as well as promote research and innovation of leading-edge technologies.

As a result of the transaction, RSBVL acquired shares of SIPL for approximately $216 million of cash such that RSBVL holds 50.1% of the outstanding shares of SIPL and the Company holds the remaining 49.9% of the outstanding shares of SIPL. In connection with RSBVL’s investment, the Company and RSBVL entered into a management services contract pursuant to which the Company has the unilateral ability to make the significant financial and operating decisions made in the ordinary course of SIPL’s business.

In accordance with ASC 810, Consolidation, the Company is required to consolidate entities in which it has a controlling financial interest. The Company determined the voting interest model was applicable under ASC 810 and concluded that, despite not having a majority ownership interest, the Company has a controlling financial interest in SIPL through the management services contract. Therefore, the Company has, by contract, the unilateral ability to control the significant decisions made in the ordinary course of SIPL’s business. Because the Company has a controlling financial interest in SIPL, it consolidates SIPL. However, the Company periodically assesses whether any changes in facts and circumstances have occurred that could require the Company to deconsolidate SIPL.

The Company recognized a noncontrolling interest of $132 million and an increase in additional paid-in-capital of $84 million in the condensed consolidated financial statements in connection with the sale of shares of SIPL to RSBVL as of the Transaction Date. SIPL’s cash and cash equivalents balance of $167 million as of July 1, 2023 is not available for general corporate purposes and must be retained in SIPL to fund SIPL’s operations.

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 our Indian joint venture; 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 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 (the “SEC”). 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 (“Sanmina”, the “Company”, “we” or “us”) operate on a 52 or 53 week year ending on the Saturday nearest September 30. Fiscal 2023 and 2022 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 markets.

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 for the nine months ended July 1, 2023. 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”.

Trends and Uncertainties

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, including 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, although the effects of the COVID-19 pandemic have decreased, our business has been and continues to be impacted by the cascading effects of the pandemic on the global supply chain and macroeconomic challenges such as inflation and market volatility. Over the past few quarters, global supply chain constraints have led to inflation in prices of some components we acquire, as well as labor and operating costs. Although some of the supply chain challenges have eased, we expect the macroeconomic challenges to continue in the near future. Although we have been able to partially mitigate the impacts of inflation through our contractual pricing rights with customers, further pricing increases may result in a decline in our future profitability.

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. One customer represented 10% or more of our net sales for the three months ended July 1, 2023 and July 2, 2022 and nine months ended July 1, 2023. Two customers represented 10% or more of our net sales for the nine months ended July 2, 2022.

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 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.

Over the past several years, the U.S., China, the E.U. and several other countries 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 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.

Overall, we strive to manage the challenges posed by the economy and competition, by focusing on improving our operations, building flexibility and efficiencies in our processes and adjusting our business models to changing circumstances. Given that maintaining low costs is the cornerstone of our success and growth, we are proactively handling cost impacts through a combination of well-calibrated pricing actions and targeted cost-saving measures to enhance overall value.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of our financial condition and results of operations are based upon our 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, as well as estimates related to costs expected to be incurred to satisfy performance

obligations under long-term contracts and variable consideration related to such contracts. 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. Our actual results may differ materially from these estimates.

A complete description of our critical accounting policies and estimates is contained in Amendment No. 1 on Form 10-K/A to our Annual Report on Form 10-K for such fiscal year filed with the SEC on May 22, 2023.

Results of Operations

Key Operating Results


	Three Months Ended				Nine Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
			(Restated)				(Restated)
	(In thousands)
Net sales	$	2,207,118	$	2,023,361	$	6,883,029	$	5,694,757
Gross profit	$	183,208	$	162,185	$	569,783	$	449,977
Operating income	$	107,365	$	91,614	$	356,392	$	246,129
Net income attributable to common shareholders	$	76,494	$	77,222	$	248,129	$	182,020

Net Sales

Sales by end market were as follows (dollars in thousands):


	Three Months Ended								Nine Months Ended
	July 1, 2023		July 2, 2022		Increase/(Decrease)				July 1, 2023		July 2, 2022		Increase/(Decrease)
			(Restated)								(Restated)
Industrial, Medical, Defense and Automotive	$	1,344,068	$	1,221,989	$	122,079	10.0	%	$	4,045,939	$	3,434,221	$	611,718	17.8	%
Communications Networks and Cloud Infrastructure	863,050		801,372		61,678		7.7	%	2,837,090		2,260,536		576,554		25.5	%
Total	$	2,207,118	$	2,023,361	$	183,757	9.1	%	$	6,883,029	$	5,694,757	$	1,188,272	20.9	%

Net sales increased 9.1% in the three months ended July 1, 2023 compared to the three months ended July 2, 2022 and 20.9% in the nine months ended July 1, 2023 compared to the nine months ended July 2, 2022. Sales in both our industrial, medical, defense and automotive end market, as well as our communications networks and cloud infrastructure end market, increased in both periods primarily as a result of improved material availability resulting from easing of supply chain challenges, ramp up of new programs and overall stronger demand.

Gross Margin

Gross margin increased to 8.3% for the three months ended July 1, 2023 from 8.0% for the three months ended July 2, 2022. IMS gross margin increased to 8.3% for the three months ended July 1, 2023, from 7.3% for the three months ended July 2, 2022, primarily due to operating efficiencies from increased volume. CPS gross margin decreased to 8.8% for the three months ended July 1, 2023 from 11.1% for the three months ended July 2, 2022, primarily due to loss recognized on certain fixed-price customer contracts, the effect of which was partially offset by improved operating efficiencies and a favorable product mix.

Gross margin increased to 8.3% for the nine months ended July 1, 2023 from 7.9% for the nine months ended July 2, 2022. IMS gross margin increased to 7.6% for the nine months ended July 1, 2023 from 7.2% for the nine months ended July 2, 2022, primarily due to operating efficiencies from higher volume. CPS gross margin increased to 11.8% for the nine months ended July 1, 2023 from 10.8% for the nine months ended July 2, 2022, primarily due to improved operating efficiencies and a favorable product mix, which was partially offset by losses on certain fixed-price customer contracts.

We have experienced fluctuations in gross margin in the past and may continue to do so in the future. Fluctuations in our gross margins may also be caused by a number of other factors, including:

•the impacts of 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;

•our performance on long-term contracts, including our ability to recover claims for cost overruns; 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 increased $7 million, from $62 million, or 3.0% of net sales, in the three months ended July 2, 2022 to $69 million, or 3.1% of net sales, in the three months ended July 1, 2023. Selling, General and Administrative expenses increased $8 million, from $185 million, or 3.2% of net sales, in the nine months ended July 2, 2022 to $193 million, or 2.8% of net sales, in the nine months ended July 1, 2023. The increase for both periods was primarily due to an increase in our deferred compensation liability resulting from an increase in the market value of participant accounts and higher professional fees.

Research and Development

Research and Development expenses increased $2 million, from $5 million, or 0.3% of net sales, in the three months ended July 2, 2022 to $7 million, or 0.3% of net sales, in the three months ended July 1, 2023. Research and Development expenses increased $4 million, from $15 million, or 0.3% of net sales, in the nine months ended July 2, 2022 to $19 million, or 0.3% of net sales, in the nine months ended July 1, 2023. The increase for both periods was primarily due to higher outside service costs for additional design support on projects and higher material costs.

Restructuring and other

Restructuring and other expenses decreased $4 million, from $4 million in the three months ended July 2, 2022 to $0.3 million in the three months ended July 1, 2023 and decreased $2 million, from $4 million in the nine months ended July 2, 2022 to $2 million in the nine months ended July 1, 2023. The decrease in both periods was primarily due to an increase in our environmental remediation liability for a former site in the third quarter of 2022 and an equipment impairment related to a ceased operation incurred in the second quarter of 2022. The decrease for the nine months ended July 2, 2022 was partially offset by a gain of $5 million during the first quarter of 2022, primarily from the sale of a certain real property.

Interest Income

Interest income for the three months ended July 1, 2023 and July 2, 2022 was $4 million and $1 million, respectively. Interest income for the nine months ended July 1, 2023 and July 2, 2022 was $10 million and $1 million, respectively. The increases for the three and nine months ended July 1, 2023 were primarily due to interest earned on investments purchased with a portion of the cash proceeds received from the sale of an equity interest related to a joint venture transaction that closed on October 3, 2022 as well as higher interest earned on cash deposits.

Interest Expense

Interest expense for the three months ended July 1, 2023 and July 2, 2022 was $10 million and $6 million, respectively. Interest expense for the nine months ended July 1, 2023 and July 2, 2022 was $28 million and $15 million, respectively. The increases for the three and nine months ended July 1, 2023 were primarily due to higher utilization of our

revolving credit facility and higher interest rates during the three and nine months ended July 1, 2023 compared to the same periods in 2022.

Other Expense

Other expense for the three months ended July 1, 2023 and July 2, 2022, was $3 million and $8 million, respectively. The decrease in other expense was primarily due to a gain of $2 million in the market value of participant investment accounts in our deferred compensation plan in the three months ended July 1, 2023 compared to a loss of $5 million in the same period in 2022, partially offset by an increase in fees relating to accounts receivable factoring.

Other expense for the nine months ended July 1, 2023 and July 2, 2022 was $12 million and $7 million, respectively. The increase in other expense for the nine months ended July 1, 2023 was primarily due to a $14 million increase in fees relating to accounts receivable factoring due to increased amounts factored compared to the same period in 2022, the impact of a strengthening of the US dollar against other key currencies in which our expenses are denominated compared to the same period in 2022, and an increase in exposure to the Indian Rupee, which strengthened in 2023 compared to the prior period, as a result of our receipt of consideration in that currency from a joint venture transaction that closed in the first quarter of 2023. These increases were partially offset by a $10 million increase in the market value of participant investment accounts in our deferred compensation plan compared to the same period in 2022.

Provision for Income Taxes

Our provision for income taxes for the three months ended July 1, 2023 and July 2, 2022 was $17 million (17% of income before taxes) and $2 million (2% of income before taxes), respectively. Income tax expense for the three months ended July 1, 2023 and July 2, 2022 included the recognition of tax benefits of approximately $5 million and $15 million, respectively, that resulted from the release of certain foreign tax reserves due to lapse of time and expiration of statutes of limitations.

Our provision for income taxes for the nine months ended July 1, 2023 and July 2, 2022 was $64 million (20% of income before taxes) and $43 million (19% of income before taxes), respectively. Income tax expense was higher for the nine months ended July 1, 2023 primarily due to an increase in profit before tax.

Net Income Attributable to Noncontrolling Interest

On October 3, 2022 (“Transaction Date”), we completed a joint venture transaction pursuant to a Share Subscription and Purchase Agreement (the “SSPA”) and a Joint Venture and Shareholders’ Agreement (the “Shareholders’ Agreement”) previously entered into 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. This partnership leverages our advanced manufacturing experience and RSBVL’s expertise and leadership in the Indian business ecosystem. In addition to supporting our current customer base, the joint venture will create a state-of-the-art ‘Manufacturing Technology Center of Excellence’ that will serve as an incubation center to support the product development and hardware start-up ecosystem in India, as well as promote research and innovation of leading-edge technologies.

As a result of the transaction, RSBVL acquired shares of SIPL for approximately $216 million of cash such that RSBVL holds 50.1% of the outstanding shares of SIPL and we hold the remaining 49.9% of the outstanding shares of SIPL. In connection with RSBVL’s investment, we and RSBVL entered into a management services contract pursuant to which we have the unilateral ability to make the significant financial and operating decisions made in the ordinary course of SIPL’s business.

In accordance with ASC 810, Consolidation, we are required to consolidate entities in which we have a controlling financial interest. We determined the voting interest model was applicable under ASC 810 and concluded that, despite not having a majority ownership interest, we have a controlling financial interest in SIPL through the management services contract. Therefore, we have, by contract, the unilateral ability to control the significant decisions made in the ordinary course of SIPL’s business. Because we have a controlling financial interest in SIPL, we consolidate SIPL. However, we periodically assess whether any changes in facts and circumstances have occurred that could require us to deconsolidate SIPL.

Net income attributable to noncontrolling interest for the three and nine months ended July 1, 2023 was $5 million and $14 million, respectively.

Liquidity and Capital Resources


	Nine Months Ended
	July 1, 2023	July 2, 2022
	(In thousands)
Net cash provided by (used in):
Operating activities	$