<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(mark one)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
-------- EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
-------- SECURITIES EXCHANGE ACT OF 1934
Commission file number 000-14824
PLEXUS CORP.
(Exact Name of Registrant as Specified in its Charter)
WISCONSIN 39-1344447
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
55 JEWELERS PARK DRIVE
NEENAH, WISCONSIN 54957-0156
(920) 722-3451
(Address, including zip code, of principal executive offices and
Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01
par value Preferred
Stock Purchase
Rights
(Title of Class)
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(s)) and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of December 12, 2000, 40,600,189 shares of Common Stock were
outstanding, and the aggregate market value of the shares of Common Stock (based
upon the $48.6875 closing sale price on that date, as reported on the NASDAQ
National Market) held by non-affiliates (excludes shares reported as
beneficially owned by directors and officers -- does not constitute an admission
as to affiliate status) was approximately $1.9 billion.
DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K Into Which
Document Portions of Document are Incorporated
Proxy Statement for 2000 Annual
Meeting of Shareholders Part III
<PAGE> 2
"SAFE HARBOR" CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995:
The statements contained in the Form 10-K which are not historical
facts (such as statements in the future tense and statements including
"believe," "expect," "intend," "plan," "look forward to," "anticipate" and
similar terms) are forward-looking statements that involve risks and
uncertainties, including, but not limited to, the level of overall growth in the
electronics industry, the Company's ability to integrate acquired operations,
the Company's ability to secure new customers and maintain its current customer
base, the result of cost reduction efforts, material cost fluctuations and the
adequate availability of components and related parts for production, the risk
of customer delays or cancellations in both ongoing and new programs, the timing
and mix of production, the effect of start-up costs of new programs and
facilities, capacity utilization, the effect of economic conditions, the impact
of technological changes and increased competition, design and manufacturing
deficiencies and other risks detailed herein and in the Company's other
Securities and Exchange Commission filings. In addition, see the Management's
Discussion and Analysis of Financial Condition and Results of Operations in Item
7, particularly "General" and "Risk Factors" for a further discussion of factors
which could affect future results.
* * *
Unless otherwise indicated, all share and per share information
reported throughout this report has been restated to give effect to Plexus'
two-for-one stock splits effective August 31, 2000, and August 25, 1997.
PART 1
ITEM 1. BUSINESS
OVERVIEW
Plexus Corp. and its subsidiaries (together "Plexus," the "Company," or
"we") provide product realization services to original equipment manufacturers,
or OEMs, in the networking/datacommunications/telecommunications, medical,
industrial, computer and transportation industries. We provide advanced
electronics design, manufacturing and testing services to our customers and
focus on complex, high-end products. We offer our customers the ability to
outsource all stages of product realization, including: development and design,
materials procurement and management, prototyping and new product introduction,
testing, manufacturing and after-market support.
We believe that our broad service offerings with respect to the design
and realization of complex, high-end products within the electronics
manufacturing services, or EMS, industry provide us with a significant
competitive advantage. Through a staff of over 350 product development
engineers, we offer a complete menu of engineering services, including digital
and analog design, mechanical and industrial design, embedded software design,
printed circuit board design, test equipment and software development, product
verification and new product introduction services. Our manufacturing services
include printed circuit board assembly, product configuration, testing, final
product and system box build and after-market support. Throughout the production
process, we offer logistics services, such as materials procurement, inventory
management, packaging and distribution.
Our customers include both industry leading OEMs and emerging
technology companies. Due to our focus on serving OEMs in high-growth technology
and medical sectors, our business is influenced by major technological trends
such as the level and rate of development of fiber optics infrastructure, the
expansion of network computing and Internet use, and the expansion of
outsourcing by OEMs generally.
Established in 1979, we have approximately 5,600 full-time employees
and 18 facilities in 13 locations, totaling approximately 1.4 million square
feet. Over the past few years, we have expanded our capacity and geographic
reach through a series of strategic acquisitions. Through these transactions, we
have enhanced our access to and ability to provide services within important
technology corridors in Boston, Chicago and Seattle; established a base in
Europe; significantly increased the size and capabilities of our medical
services offerings; significantly expanded our capacity with respect to the
assembly of configured-to-order wireless products; and acquired proven low-cost
manufacturing operations in Mexico.
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SERVICES
Plexus offers a broad range of integrated services that provide
customers with a total design, new product introduction and manufacturing
solution to take a product from initial design through production to
after-market support. Our customers may utilize any or all of the following
services and tend to use more of these services as their outsourcing strategies
mature:
Product development and design. We provide comprehensive product
development and design and test engineering services. These services include
project management, initial feasibility studies, product concept definition,
specifications for product features and functions, product engineering
specifications, microprocessor selection, circuit design, software design,
application-specific integrated circuit design, printed circuit board layout,
product housing design, development of test specifications and product
validation testing. Through our product development and design services, we
provide customers with a complete product design that can be manufactured
efficiently.
Prototyping and new product introduction services. We provide rapid
assembly of prototype products within our dedicated, streamlined New Product
Introduction Plus centers. We supplement our prototype assembly services with
value-added services, including printed circuit board design, materials
management, manufacturing defects analysis, analysis of the manufacturability
and testability of a design, test implementation and pilot production runs
leading to volume production. These services link our engineering organization,
our customers' engineering organizations and our volume manufacturing
organization. This link facilitates an efficient transition to manufacturing. We
believe that these services provide significant value to our customers by
accelerating their products' time-to-market schedule.
Test development and product testing. Because product functionality has
driven components and assembly techniques to become increasingly complex, there
is a need to design and assemble increasingly complex in-circuit and functional
test equipment for electronic products and assemblies. Our internal development
of this test equipment allows us to rapidly implement test solutions and
efficiently test printed circuit assemblies, subassemblies and product and
system assemblies. We also develop and utilize specialized equipment that allows
us to environmentally stress test products during functional testing to assure
reliability. We believe that the design and production of test equipment is an
important factor in our ability to provide technology-driven products of
consistent and high quality.
Manufacturing and assembly. We provide turnkey manufacturing services
for a variety of electronic products to diverse industries. These services
include developing and implementing a materials strategy that meets customers'
demand and flexibility requirements, assembling printed circuit assemblies
utilizing a wide range of assembly technologies, building and configuring final
product and system boxes and testing assemblies to meet customers' requirements.
We have the expertise to assemble very complex electronic products that utilize
multiple printed circuit boards and subassemblies. These complex products are
typically configured to fulfill unique customer requirements and many are
shipped directly to our customers' end users. In addition, we have developed
special processes and tools to meet industry-specific requirements. Among these
are the tools and processes to assemble finished medical devices that meet U.S.
Food and Drug Administration Quality Systems Regulation requirements and similar
regulatory requirements of other countries.
After-market support. We provide service support for manufactured
products. In this context, supported products, which may or may not be under the
customer's warranty, may be returned for repairs or upgrades at the customer's
discretion.
RECENT COMBINATIONS AND ACQUISITIONS
Since fiscal 1998, we have completed six acquisitions that have added
facilities totaling approximately 539,000 square feet and over 2,400 new
employees. We have actively pursued combinations and acquisitions to expand our
geographic reach, increase our design, engineering and manufacturing capability
and breadth of service offerings and strengthen and broaden our customer
relationships. Since fiscal 1998, we have completed the following acquisitions:
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<TABLE>
<CAPTION>
ACQUIRED COMPANY/ FACILITIES
DATE OPERATIONS SQUARE FOOTAGE EMPLOYEES LOCATION(S)
---- ----------------- --------------- --------- -----------
<S> <C> <C> <C> <C>
July 2000 Keltek (Holdings) Limited 77,000 461 Kelso, Scotland
Maldon, England
May 2000 Turnkey electronics 250,000 1,394 Juarez, Mexico
manufacturing operations of
Elamex, S.A. de C.V.
April 2000 Agility, Incorporated 25,000 98 Ayer, Massachusetts
December 1999 Printed circuit board operations -- 45 Everett, Washington (1)
of Intermec Technologies
Corporation
September 1999 Printed circuit board operations 25,000 125 Wheeling, Illinois
of Shure, Incorporated
July 1999 SeaMED Corporation 162,000 301 Bothell, Washington
</TABLE>
--------------
(1) Combined with our existing Bothell, Washington, operations.
In addition, Plexus has recently announced its pending acquisition of
e2E Corporation ("e2E"), a privately held printed circuit board design and
engineering service provider for electronic OEMs. This acquisition will expand
Plexus' industry leading product realization services by adding more than 100
engineers/designers in seven domestic design centers, including: Hillsboro,
Oregon; Nashua, New Hampshire; San Diego, California; and Dallas, Texas; as well
as international design centers in Melrose, Scotland, and Tel Aviv, Israel.
Plexus will exchange approximately $20.6 million of its common stock for all the
outstanding capital stock of e2E. This merger will be accounted for as a pooling
of interest. The transaction is expected to be completed in December 2000, but
is subject to customary closing conditions. The debt of e2E is estimated to be
approximately $3.1 million at the time of the closing.
CUSTOMERS AND INDUSTRIES SERVED
We provide services to a wide variety of customers, ranging from large
multi-national companies to smaller emerging technology companies, including
start-ups. During fiscal 2000, we provided services to approximately 140
customers. Because of the variety of services we offer, our flexibility in
design and manufacturing and our ability to respond to customer needs in a
timely fashion, we believe that we are well positioned to offer our services to
customers in most market segments. For many customers, we serve both a design
and production function, thereby permitting customers to concentrate on concept
development, distribution and marketing, while accelerating their time to
market, reducing their investment in manufacturing capacity and optimizing total
product cost.
Lucent Technologies Inc. ("Lucent") and General Electric Company ("GE")
represented over 10 percent of our net sales for the periods set forth below:
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
FISCAL YEAR
CUSTOMER 2000 1999 1998
-------- ---- ---- ----
<S> <C> <C> <C>
Lucent Technology 23% 16% *
General Electric * 12% *
</TABLE>
--------------
*represents sales less than 10 percent
Many of our large customers, including Lucent and GE, contract
independently through multiple divisions, subsidiaries, production facilities or
locations. We believe that in most cases our sales to one such subsidiary,
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division, facility or location are not dependent on sales to others. Although
the complete loss of any major customer could have a significant negative impact
on us, we do not believe the loss of all divisions, subsidiaries, facilities or
locations of a major customer to be likely.
We provided services within the following industries in the following
proportions:
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
FISCAL YEAR
-----------------------------------------
INDUSTRY 2000 1999 1998
-------- ---- ---- ----
<S> <C> <C> <C>
Networking/Datacommunications 36% 24% 15%
Medical 27% 31% 29%
Industrial 19% 23% 20%
Computer 10% 14% 23%
Transportation/Other 8% 8% 13%
</TABLE>
MATERIALS AND SUPPLIERS
We purchase raw materials and electronic components from manufacturers
and distribution companies. The key electronic components we purchase include
printed circuit boards, specialized components such as application-specific
integrated circuits, semi-conductors, interconnect products, electronic
subassemblies (including memory modules, power supply modules and cable and wire
harnesses), resistors and capacitors. Along with these electronic components, we
also purchase components for use in higher-level assembly and manufacturing.
These components include sheet metal fabrications, aluminum extrusions, die
castings and various other hardware and fastener components. These components
range from standard to highly customized and they vary widely in terms of market
volatility and price.
From time to time, allocation of components becomes an integral part of
the electronics industry, and component shortages can occur with respect to
particular components. In response, we actively manage our business in a way
that minimizes our exposure to materials and component shortages. We have
developed a corporate procurement organization whose primary purpose is to
create strong supplier alliances to ensure, as much as possible, a steady flow
of components at competitive prices. Because we design products and can
influence what components are used in some new products, components
manufacturers often provide us with a greater amount of materials and
components, even during shortages. We have also established and continue to
expand strategic relationships with international purchasing offices, and we
attempt to leverage our design position with suppliers. Beyond this, we have
undertaken a series of flexibility initiatives, including the utilization of
in-plant stores, point-of-use programs, assured supply programs and similar
efforts. All of these undertakings seek to improve our overall supply chain
flexibility and to accommodate our growth plans.
SALES AND MARKETING
We market our services primarily through our sales and marketing
organization of approximately 65 people, which includes salespeople, strategic
customer managers, technology specialists and advertising and other corporate
communications personnel. Our sales and marketing efforts focus on generating
new customers and pursuing profitable opportunities. We use our ability to
provide a full range of product realization services as a marketing tool, and
our technology specialists participate in marketing through direct customer
contact and participation in industry symposia and seminars. Our sales force is
integrated with the rest of our business and is aligned geographically within
important technology corridors. We support our sales and marketing efforts with
in-depth industry research.
COMPETITION
The market for the products and services we provide is highly
competitive. We compete primarily on the basis of engineering, testing and
production capabilities, technological capabilities and the capacity for
responsiveness, quality and price. There are many competitors in the electronics
design and assembly industry. Larger and more geographically diverse competitors
have substantially more resources than we do. Other, smaller competitors compete
only in narrow, specific areas of our business. We also compete against
companies that design
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or manufacture items in-house rather than by outsourcing. In addition, we
compete against foreign, low-labor-cost manufacturers. This foreign,
low-labor-cost competition tends to focus on commodity and consumer-related
products, which is not our primary focus.
PATENTS AND TRADEMARKS
The Company does not own any material patents or copyrights. The
Company owns the servicemarks "Plexus," "Plexus, The Product Realization
Company," and "SeaMED." The Company has applied for (and is using) the
servicemarks "ProtoCenter" and "NPI Plus."
Plexus has arranged with another company to offer product development
services relating to a 5GHz radio which Plexus developed for this company. The
radio has potential use in a variety of products, particularly RF/wireless video
products. Plexus made these arrangements in connection with the design services
provided to the other company. While Plexus does not have exclusive rights to
the 5GHz radio, Plexus could generate revenue through the design and
manufacturing of products utilizing the radio. Production and sale of any such
products utilizing this technology has not yet commenced. In addition, there can
be no assurance that Plexus' customers will be able to successfully
commercialize products utilizing this technology.
Plexus (along with hundreds of other companies) has been sued by the
Lemelson Medical, Education & Research Foundation Limited Partnership
("Lemelson") related to the alleged possible infringement of certain Lemelson
patents relating to machine vision and bar-code technology. Plexus and many
other defendants have requested a stay of the action pending developments in
other Lemelson litigation. If a judgment is rendered and/or a license fee is
required in the future, that could affect the results for the period or periods
in which payment is made or accrued. Additionally, Plexus believes that it may
be contractually indemnified by the companies from which Plexus purchased the
machine vision and bar-code technology equipment.
To augment its management information systems, in the first quarter of
fiscal 2001, Plexus entered into a license agreement with JD Edwards for
enterprise resource planning ("ERP") software and systems to enhance and
standardize Plexus' ability to translate information from production facilities
into financial and managerial reporting. Because of the very recent execution of
the license, the conversion timetable has not yet been finalized (and will be
subject to change); however, Plexus has begun developing its global model as
well as a pilot conversion. The conversion process is expected to continue for
approximately two to three years to convert all current sites and business
units.
ENVIRONMENTAL COMPLIANCE
The Company is subject to a variety of environmental regulations
relating to the use, storage, discharge and disposal of hazardous chemicals used
during its manufacturing process. Although the Company believes that it is in
compliance with all federal, state and local environmental laws, and does not
anticipate any significant expenditures in maintaining its compliance, there can
be no assurances that violations will not occur which could have a material
adverse effect on the results of the Company.
EMPLOYEES
Our employees are one of our primary strengths, and we make
considerable efforts to maintain a well-qualified staff. As we have grown, we
have been able to offer enhanced career opportunities to many of our employees.
Our human resources department identifies career objectives and monitors
specific skill development for employees with management and technical potential
for advancement. We invest heavily in training at all levels to ensure that
employees are well trained. We operate a policy of involvement and consultation
with employees in every facility and strive for continuous improvement at all
levels.
As of December 1, 2000, we employed approximately 5,600 full-time
employees. Given the growth of our business and the quick response time required
by our customers, we seek to maintain flexibility to scale our operations as
necessary to maximize efficiency. To do so, we use skilled temporary labor. In
Europe, approximately 60 of our employees are covered by union agreements. These
union agreements are typically renewed at the beginning of each year, although
in a few cases they may last two or more years. None of our
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employees in the United States and Mexico is covered by union agreements. We
have no history of labor disputes at any of our facilities. We believe that our
employee relationships are good.
ITEM 2. PROPERTIES
Our facilities comprise an integrated network of technology and
manufacturing centers, with corporate headquarters located in our engineering
facility in Neenah, Wisconsin. We own or lease facilities with approximately 1.4
million square feet of capacity. This includes approximately 1.0 million square
feet in the United States, approximately 250,000 square feet in Mexico and
approximately 102,000 square feet in Europe. We are also undertaking expansion
projects to expand significantly several of our existing facilities. The
geographic diversity of our technology and manufacturing centers allows us to
offer services from locations near our customers and major electronics markets.
We believe that this approach reduces material and transportation costs,
simplifies logistics and communications and improves inventory management. This
enables us to provide customers with a more complete, cost-effective solution.
Our facilities are described in the following table:
<TABLE>
<CAPTION>
LOCATION TYPE SIZE (SQ. FT.) OWNED/LEASED
-------- --------- -------------- ------------
<S> <C> <C> <C>
Neenah, Wisconsin (1) Manufacturing 223,000 Leased
Neenah, Wisconsin (1) Manufacturing 110,000 Owned
Juarez, Mexico (1) Manufacturing 250,000 Leased
Kelso, Scotland (2) Manufacturing 57,000 Leased
Richmond, Kentucky (3) Manufacturing 45,000 Owned
Maldon, England Manufacturing 40,000 Owned
Wheeling, Illinois (4) Manufacturing 25,000 Leased
Appleton, Wisconsin (5) NPI Plus Center 67,000 Owned
Ayer, Massachusetts NPI Plus Center 65,000 Leased
Bothell, Washington NPI Plus Center 60,000 Leased
Redmond, Washington NPI Plus Center 21,000 Leased
Blaine, Minnesota NPI Plus Center 14,000 Owned
Milpitas, California NPI Plus Center 5,000 Leased
Neenah, Wisconsin Engineering 105,000 Owned
Bothell, Washington Engineering 81,000 Leased
Louisville, Colorado Engineering 16,000 Leased
Raleigh, North Carolina Engineering 14,000 Leased
Kelso, Scotland Engineering 5,000 Leased
Neenah, Wisconsin Office/Warehouse 100,000 Leased
El Paso, Texas Office/Warehouse 13,000 Leased
Blaine, Minnesota Office/Warehouse 5,200 Leased
Redmond, Washington (6) Other 60,000 Leased
Bothell, Washington (6) Other 10,000 Leased
Kelso, Scotland (2) Other 37,000 Owned
</TABLE>
(1) Includes more than one building.
(2) The Kelso operations recently moved into a new 57,000-square-foot facility.
We currently anticipate disposing of the 37,000-square-foot facility
previously utilized for these operations.
(3) We are expanding this facility by approximately 55,000 square feet, which
is expected to be completed by November 2001.
(4) These operations are moving to a new 135,000-square-foot leased facility,
which is expected to be completed by October 2001.
(5) We acquired this facility in July 2000 and expect operations to commence in
December 2000.
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(6) These buildings are being subleased to an unrelated third party and not
used in our business operations.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings required to be
disclosed herein to which the Company is a party of or which any of its property
is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of fiscal 2000.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth our executive officers, their ages and
the positions currently held by each person:
<TABLE>
<CAPTION>
NAME AGE POSITION
----- --- --------
<S> <C> <C>
Peter Strandwitz 63 Chairman, Chief Executive Officer and Director
John L. Nussbaum 58 President, Chief Operating Officer and Director
Dean A. Foate 42 Executive Vice President and Director
Thomas B. Sabol 41 Senior Vice President and Chief Financial Officer
Joseph D. Kaufman 43 Vice President, Secretary and General Counsel
Lisa M. Kelley 34 Vice President - Finance, Treasurer and Chief
Accounting Officer
J. Robert Kronser 41 Vice President - Sales and Marketing
Paul A. Morris 39 Vice President - Information Systems Development
Charles C. Williams 64 Vice President
</TABLE>
Peter Strandwitz is a co-founder of Plexus and has served as Chairman of the
Board, Chief Executive Officer and a director since 1979.
John L. Nussbaum is a co-founder of Plexus and has served as President and a
director since 1980, and Chief Operating Officer since 1996.
Dean A. Foate joined Plexus in 1984 and has served as President of Plexus
Technology Group since 1995, Executive Vice President of Plexus since 1999 and a
director since March 2000.
Thomas B. Sabol joined Plexus in 1996 and has served as Senior Vice President
since May 2000. Previously, Mr. Sabol served as Vice President and General
Auditor for Kemper Corporation and before that as Business Assurance Manager for
Coopers & Lybrand.
Joseph D. Kaufman joined Plexus in 1986 and has served as Vice President,
Secretary and General Counsel of Plexus since 1990.
Lisa M. Kelley joined Plexus in 1992. Positions held within Plexus included
Manager, Subsidiary Controller and Corporate Controller. Since 1998, Ms. Kelley
has served as Treasurer. In May 2000, Ms. Kelley became Vice President -
Finance.
J. Robert Kronser joined Plexus in 1981 serving in various engineering roles.
From 1993 to 1999, Mr. Kronser managed the Advanced Manufacturing Center. Since
May 1999, Mr. Kronser has served as Vice President of Sales and Marketing.
Paul A. Morris joined Plexus in 1984. Positions held within Plexus include
Subsidiary Controller and Corporate Controller. Since May 2000, Mr. Morris has
served as Vice President of Information Systems Development.
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Charles C. Williams joined Plexus in 1982 and has been a Vice President since
1989.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
For the years ended September 30, 2000 and 1999, the Company's Common
Stock has traded on the NASDAQ National Market System. The price information
below represents high and low sale prices for each period.
<TABLE>
<CAPTION>
Fiscal Year Ended September 30, 2000 Fiscal Year Ended September 30, 1999
------------------------------------ ------------------------------------
High Low High Low
------ ------ ------ ------
<S> <C> <C> <S> <C> <C>
First Quarter $24.50 $12.22 First Quarter $17.38 $ 8.50
Second Quarter $37.00 $20.22 Second Quarter $20.13 $12.81
Third Quarter $57.63 $26.00 Third Quarter $17.38 $13.38
Fourth Quarter $81.00 $43.38 Fourth Quarter $17.19 $13.94
</TABLE>
As of December 12, 2000, there were approximately 528 shareholders of
record.
The Company has not paid any cash dividends. We anticipate that all
earnings in the foreseeable future will be retained to finance the development
of our business. See also Item 7 "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources"
for a discussion of the Company's dividend intentions.
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ITEM 6. SELECTED FINANCIAL DATA
FINANCIAL HIGHLIGHTS (1)
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED SEPTEMBER 30,
--------------------------------------------------------------
2000 1999 1998 1997 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
OPERATING STATEMENT DATA
Net sales $ 751,639 $ 492,414 $ 466,795 $ 438,565 $ 342,254
Gross profit 107,164 66,409(3) 60,147 51,232 31,160
Gross margin 14.3% 13.5% 12.9% 11.7% 9.1%
Operating income 69,870(2) 34,428(3) 36,393 30,769 15,614
Operating margin 9.3% 7.0% 7.8% 7.0% 4.6%
Net income 40,196(2) 20,311(3) 22,937 18,893 8,350
Earnings per share (diluted) $ 1.04(2) $ 0.55(3) $ 0.63 $ 0.54 $ 0.26
CASH FLOW STATEMENT DATA
Cash flows (used in) provided by operations $ (51,392) $ 19,727 $ 33,520 $ 18,347 $ 28,947
Capital equipment additions 44,228 18,196 11,997 13,488 5,636
BALANCE SHEET DATA
Working capital $ 213,596 $ 110,411 $ 91,159 $ 70,544 $ 55,683
Total assets 515,608 229,636 184,354 152,453 122,301
Long-term debt 141,409 142 2,587 3,516 16,658
Shareholders' equity 209,362 146,403 115,863 89,404 53,788
Return on average assets 10.8% 9.8% 13.6% 13.8% 6.8%
Return on average equity 22.6% 15.5% 22.3% 26.4% 16.8%
Inventory turnover ratio 4.4x 6.2x 7.1x 6.6x 5.6x
</TABLE>
(1) As a result of the fiscal 1999 merger with SeaMED Corporation ("SeaMED"),
prior historical results have been restated utilizing the pooling of
interests method of accounting. Historical results have not been restated
for the fiscal 2000 merger with Agility, Incorporated ("Agility") as they
would not differ materially from reported results. See Notes 1 and 8 in the
Notes to Consolidated Financial Statements.
(2) In connection with the acquisitions of Agility, Keltek (Holdings) Limited
("Keltek"), and the turnkey electronics manufacturing services operations
of Elamex, S.A. de C.V. ("Mexico turnkey operations"), the Company recorded
one-time merger and acquisition-related charges of $1.1 million ($0.9
million after-tax). Excluding these charges, operating income would have
been $71 million (9.4% of sales), net income would have been $41.1 million
(5.5% of sales) and diluted earnings per share would have been $1.06.
(3) In connection with the acquisition of SeaMED, the Company recorded merger
and other one-time related charges of $7.7 million ($6.0 million
after-tax). Excluding these charges, gross profit would have been $68.6
million (13.9% of sales), and operating income would have been $42.1
million (8.6 % of sales). Net income excluding this charge would have been
$26.3 million (5.3% of sales), and diluted earnings per share would have
been $0.71.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Plexus provides product realization services to original equipment
manufacturers, or OEMs, in the networking/datacommunications, medical,
industrial, computer and transportation industries. We provide advanced
electronics design, manufacturing and testing services to our customers and
focus on complex, high-end products. We offer our customers the ability to
outsource all stages of product realization, including: development and design,
materials procurement and management, prototyping and new product introduction,
testing, manufacturing and after-market support. The following information
should be read in conjunction with our consolidated financial statements
included herein and the "Risk Factors" section beginning on page 14.
We provide contract manufacturing services on either a turnkey basis,
where we procure some or all of the materials required for product assembly, or
on a consignment basis, where the customer supplies some, or occasionally all,
materials necessary for product assembly. Turnkey services include materials
procurement and warehousing in addition to manufacturing and involve greater
resource investment and inventory risk management than consignment services.
Turnkey manufacturing currently represents almost all of our net sales. Turnkey
sales typically generate higher sales and higher gross profit dollars with lower
gross margin percentages than consignment sales due to the inclusion of
component costs, and related markup, in our net sales. However, turnkey
manufacturing involves the risk of inventory management, and a change in
component costs can directly impact average selling prices, gross margins and
our net sales. Due to the nature of turnkey manufacturing, our quarterly and
annual results are affected by the level and timing of customer orders,
fluctuations in materials costs and the degree of automation used in the
assembly process.
MERGERS AND ACQUISITIONS
On July 14, 2000, we acquired all of the outstanding capital stock of
Keltek, headquartered in Kelso, Scotland, with an additional facility in Maldon,
England. We accounted for the acquisition of Keltek using the purchase method of
accounting. The results of Keltek's operations have been included in our results
from the date of acquisition. The acquisition of Keltek provides us with a
presence in Western Europe to serve both current and new customers.
On May 23, 2000, we completed our acquisition of the Mexico turnkey
operations located in Juarez, Mexico. We accounted for this acquisition using
the purchase method of accounting, and the Mexico turnkey operations' results
are included in our results from the date of acquisition. We anticipate that the
Mexico turnkey operations will provide our existing and potential customers with
a proven low-cost-labor solution for many of our product realization services.
In addition, the acquisition provides the existing customers of the Mexico
turnkey operations with access to our engineering, test and technology
capabilities.
On April 28, 2000, we acquired Agility, a privately held, Boston-based
EMS provider. The transaction was accounted for as a pooling of interests.
However, our prior results were not restated, as they would not differ
materially from reported results. Agility's results are included only for the
last six months of fiscal 2000. The addition of Agility establishes a stronger
presence with our current East Coast customers and increases our capacity to
assemble complex printed circuit boards with complete final product and system
box build.
On December 31, 1999, we acquired certain printed circuit board
assembly manufacturing assets in the Seattle, Washington, area from an unrelated
party. The acquisition was accounted for as a purchase transaction and the
results from operations of the acquired assets are reflected only from the date
of acquisition.
Plexus had recently announced its pending acquisition of e2E, a
privately held printed circuit board design and engineering service provider for
electronic OEMs. Plexus will exchange approximately $20.6 million of its common
stock for all the outstanding capital stock of e2E. This merger will be
accounted for as a pooling of interest; however, prior results are not expected
to be restated as they would not differ materially from reported results. The
transaction is
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expected to be completed in December 2000, but is subject to customary closing
conditions. The debt of e2E is estimated to be approximately $3.1 million at the
time of the closing.
RESULTS OF OPERATIONS
Net sales. Net sales for the year ended September 30, 2000, increased
53 percent to $752 million from $492 million for the year ended September 30,
1999. This increase was due primarily to growth in the networking/
datacommunications and medical industries from both existing and new customers
obtained through internal growth and through our acquisitions. Our acquisitions
during fiscal 2000 accounted for slightly more than 9 percent of sales for the
year ended September 30, 2000. The growth in the networking/datacommunications
and medical industries was offset somewhat by a reduction in sales to the
transportation industry and reduced sales volumes at our Seattle area
manufacturing operations. We believe that our overall sales growth reflects the
continuing trend toward outsourcing within the electronics industry.
Sales for the year ended September 30, 1999, increased 5 percent to
$492 million from $467 million for the year ended September 30, 1998. Sales
growth was impacted by industry-wide pressure on average selling prices,
component prices and our continued focus to move toward higher-end technology
business. In addition, sales by SeaMED decreased approximately $8 million from
fiscal 1998 levels.
Our largest customers for the year ended September 30, 2000, were
Lucent Technologies and General Electric, which accounted for 23 percent and
slightly less than 10 percent of sales, respectively, compared to the year ended
September 30, 1999 when Lucent Technologies and General Electric accounted for
16 percent and 12 percent of sales, respectively. No customers accounted for
more than 10 percent of our sales for the year ended September 30, 1998. Sales
to our ten largest customers accounted for 63 percent of sales for the year
ended September 30, 2000, compared to 61 percent for the years ended September
30, 1999 and 1998. As with sales to most of our customers, sales to our largest
customers may vary from time to time depending on the size and timing of
customer program commencement, termination, delays, modifications and
transitions. For example, in reviewing anticipated future program changes over
the next twelve months for Lucent Technologies, we believe that sales to Lucent
Technologies may decrease somewhat, even though Lucent Technologies should
remain a significant customer and represent approximately 10 percent of our
sales. In addition, based on customer-forecasted demand, we currently anticipate
that Cisco Systems will become our largest customer for fiscal 2001 and
represent up to approximately 20 percent of our sales. We remain dependent on
continued sales to Lucent Technologies, General Electric, Cisco Systems and our
other significant customers, and we generally do not obtain firm, long-term
purchase commitments from our customers. In addition, we expect an increasing
percentage of our sales will come from emerging technology companies, including
start-ups, mainly in the networking/datacommunications market sector. Customer
forecasts can and do change as a result of their end-market demand and other
factors. Although any material change in orders from these or other customers
could materially affect our results of operations, we are dedicated to
diversifying our customer base and decreasing our dependence on any particular
customer or customers.
Our sales for the years ended September 30, 2000 and 1999,
respectively, by industry were as follows: networking/datacommunications 36
percent (24 percent), medical 27 percent (31 percent), industrial 19 percent (23
percent), computer 10 percent (14 percent) and transportation/other 8 percent (8
percent). Based upon current forecasts from our customers, we expect the
percentage of sales to the networking/datacommunications industry to continue to
grow in fiscal 2001.
Gross profit. Gross profit for the year ended September 30, 2000,
increased 61 percent to $107.2 million from $66.4 million for the year ended
September 30, 1999. The gross margin for the year ended September 30, 2000, was
14.3 percent, compared to 13.5 percent for the year ended September 30, 1999.
The gross margin increase was due primarily to the inclusion of $2.2 million of
one-time SeaMED merger-related charges from the write down of obsolete inventory
and a loss on an engineering contract for the year ended September 30, 1999.
Gross profit for the year ended September 30, 1999, increased 10
percent to $66.4 million from $60.1 million for the year ended September 30,
1998. The gross margin for the year ended September 30, 1999, was 13.5 percent,
compared to 12.9 percent for the year ended September 30, 1998. The improvement
in gross margin in fiscal 1999 compared to fiscal 1998 reflects the Company's
focus on business mix, leading-technology products and
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markets, and continued operating efficiencies which were partially offset by
increased costs for expansion of engineering and technical manufacturing
capabilities to meet customer demands and the one-time fiscal 1999 SeaMED
merger-related charges.
Most of the research and development we conduct is paid for by our
customers and is, therefore, included in the cost of sales. We conduct other
research and development, but that research and development is not specifically
identified and we believe such expenses are less than one percent of our net
sales. Our gross margin reflects a number of factors that can vary from period
to period, including product mix, the level of start-up costs and efficiencies
of new programs, product life cycles, sales volumes, price erosion within the
electronics industry, capacity utilization of surface mount and other equipment,
labor costs and efficiencies, the management of inventories, component pricing
and shortages, average sales prices, the mix of turnkey and consignment
business, fluctuations and timing of customer orders, changing demand for
customers' products and competition within the electronics industry. Overall
gross margins continue to be affected by SeaMED's reduced sales volume, the
effect of which may continue until synergies and efficiencies are realized and
SeaMED's cost structure is aligned with its reduced sales volume, or until sales
volumes increase. In addition, we expect gross margins resulting from the Mexico
turnkey and Keltek operations to be below our historical gross margins. These
and other factors can cause variations in our operating results. Although our
focus is on maintaining and expanding gross margins, there can be no assurance
that gross margins will not decrease in future periods. Gross margins are
expected to decrease in the near-term due to our recent acquisitions.
Operating expenses. Selling and administrative (S&A) expenses for the
year ended September 30, 2000, increased to $35.0 million from $26.3 million and
$23.6 million for the years ended September 30, 1999 and 1998, respectively. As
a percentage of net sales, S&A expenses were 4.7 percent for the year ended
September 30, 2000, compared to 5.3 percent and 5.1 percent for the years ended
September 30, 1999 and 1998, respectively. The increase in dollar terms was due
primarily to increases in our sales and marketing efforts and information
systems support, while the decrease as a percentage of net sales was
attributable to efficiencies associated with additional sales. We anticipate
that future S&A expenses will increase in absolute dollars, but will remain at
approximately five percent of net sales, as we continue to expand these support
areas.
Acquisition costs of approximately $1.1 million for the year ended
September 30, 2000, related to costs associated with the Keltek, Agility and
Mexico turnkey operations acquisitions. In fiscal 1999, we also had one-time
merger costs of $4.6 million and other one-time merger-related charges
(primarily plant closings, relocations and severance) of $1.0 million associated
with the acquisition of SeaMED.
Income taxes. Income taxes increased to $28.4 million for the year
ended September 30, 2000, from $15.8 million and $14.3 million for the years
ended September 30, 1999 and 1998, respectively. Our effective income tax rate
has remained at approximately 40 percent excluding non-tax-deductible merger
expenses. This rate approximates the blended federal and state statutory rate.
The effective tax rate increased slightly upon the completion of the Mexico
turnkey operations and Keltek acquisitions arising from the tax treatment of
goodwill and is expected to slightly impact the first quarter of 2001. In fiscal
2001, we expect the annual effective tax rate to decrease slightly as foreign
operations increase as a percentage of the Company's total operations.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows used in operating activities were $51.4 million for the year
ended September 30, 2000, compared to cash flows provided by operating
activities of $19.7 million and $33.5 million for the years ended September 30,
1999 and 1998, respectively. During fiscal 2000, cash used in operating
activities primarily related to increases in accounts receivable and inventories
to support increased sales offset in part by increases in net income, accounts
payable and accrued liabilities. The increase in our inventory levels was due to
our decision to support anticipated future sales growth, and to maintain higher
levels of components going forward in view of the tightening of certain
component markets. The increase also reflected lower inventory turns at our new
Mexico turnkey operations. As a result, annualized inventory turnover decreased
to 4.4 turns for the year ended September 30, 2000, from 6.2 turns for the year
ended September 30, 1999. Due primarily to the increase in sales for the year
ended September 30, 2000, accounts receivable and accounts payable increased
significantly.
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Cash flows used in investing activities totaled $100.3 million for the
year ended September 30, 2000. The primary uses were for the acquisitions of
Keltek and the Mexico turnkey operations, and payments for property, plant and
equipment, partially offset by the sale and maturity of short-term investments.
We utilize available cash, debt and operating leases to fund our
operating requirements. We utilize operating leases primarily in situations
where technical obsolescence concerns are determined to outweigh the benefits of
financing the equipment purchase. We currently estimate capital expenditures for
fiscal 2001 will be approximately $75 million to $80 million. This includes
planned expansions at our manufacturing facilities in Kentucky and Illinois and
additional manufacturing equipment. This estimate does not include any
acquisitions which Plexus may undertake.
Cash flows provided by financing activities totaled $141.4 million for
the year ended September 30, 2000, primarily representing net borrowings under
our credit facility and proceeds from the exercise of stock options. The ratio
of total debt to equity was 1.5 to 1 and 0.6 to 1 as of September 30, 2000 and
1999, respectively.
On October 25, 2000, Plexus entered into a new unsecured revolving
credit facility (the "Credit Facility") with a group of banks. The Credit
Facility allows us to borrow up to $250 million. Borrowing capacity utilized
under the Credit Facility will be either through revolving or other loans or
through guarantees of commercial paper. Interest on borrowings is computed at
the applicable Eurocurrency rate on the agreed currency, plus any commitment
fees. The Credit Facility matures on October 25, 2003, and requires among other
things maintenance of minimum interest expense coverage and maximum leverage
ratios.
Pursuant to a public offering of shares of common stock on October 13,
2000, and the underwriters exercise of a related over-allotment option on
November 7, 2000, Plexus issued 3.45 million shares of common stock for $50 per
share, with an underwriters discount of $2.375 per share. The Company received
net proceeds of approximately $164.3 million, after discounts and commissions to
the underwriters of approximately $8.2 million. Additional expenses are
estimated to be approximately $0.6 million. The aggregate net proceeds from the
offering are expected to refinance, in part, existing debt and finance, in part,
capital expenditures, capacity expansion, potential future acquisitions and be
used for general corporate purposes and working capital.
On October 6, 2000, Plexus entered into an agreement to sell up to $50
million of trade accounts receivable without recourse to Plexus ABS Inc.
("ABS"), a wholly owned, limited purpose subsidiary of the Company. ABS is a
separate corporate entity that sells participating interests in a pool of the
Company's accounts receivable to financial institutions. The financial
institutions then receive an ownership and security interest in the pool of
receivables.
Our credit facilities, leasing capabilities, the proceeds of our
October 13, 2000, offering, cash and short-term investments and projected cash
from operations should be sufficient to meet our working capital and capital
requirements through fiscal 2001 and the foreseeable future. We have not paid
cash dividends in the past, and do not anticipate paying them in the foreseeable
future. We anticipate using earnings to support our business.
NEW ACCOUNTING PRONOUNCEMENTS
In October 2000, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,
a replacement of SFAS No. 125." The statement revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral, and requires certain disclosures and it continues most of SFAS No.
125's provisions without reconsideration. The statement will be effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after March 31, 2001, and is not expected to have a significant
material effect on the Company's financial statements.
In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin ("SAB") No. 101. "Revenue Recognition in Financial
Statements." This bulletin summarizes certain views of the SEC staff for
applying generally accepted accounting principles to revenue recognition in
financial statements. SAB No. 101
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will be effective for the Company's fourth quarter of fiscal 2001 and is not
expected to have a significant material effect on the Company's financial
statements.
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" was issued and was effective for all fiscal years beginning
after June 15, 1999. The effective date of SFAS No. 133 was deferred and will
now be effective for fiscal years beginning after June 15, 2000, with early
adoption permitted. SFAS No. 133, as amended, requires the Company to recognize
all derivatives as either assets or liabilities and measure those instruments at
fair value. Upon adoption, the Company will be required to report derivative and
hedging instruments at fair value in the balance sheet and recognize changes in
the fair value of derivatives in net earnings or other comprehensive income, as
appropriate. This Statement will be effective for the Company's fiscal year 2001
first quarter financial statements and restatement of prior years will not be
permitted. Given the Company's current derivative and hedging activities,
management has determined that the Statement is not expected to have a
significant material effect on its financial position or results of operations.
RISK FACTORS
OUR CUSTOMER REQUIREMENTS AND OPERATING RESULTS VARY SIGNIFICANTLY FROM QUARTER
TO QUARTER, WHICH COULD NEGATIVELY IMPACT THE PRICE OF OUR COMMON STOCK.
Our quarterly and annual results may vary significantly depending on
various factors, many of which are beyond our control. These factors include:
-- the volume of customer orders relative to our capacity
-- the timing of customer orders, particularly in light of the fact that
some of our customers release a significant percentage of their orders
during the last few weeks of a quarter
-- the typical short life cycle of our customers' products
-- market acceptance of and demand for our customers' products
-- changes in our sales mix to our customers
-- the timing of our expenditures in anticipation of future orders
-- our effectiveness in managing manufacturing processes
-- changes in cost and availability of labor and components
-- changes in economic conditions
-- local events that may affect our production volume, such as local
holidays.
Due to the nature of turnkey manufacturing services, our quarterly and
annual results are affected by the level and timing of customer orders,
fluctuations in material costs and availability, and the degree of automation
used in the manufacturing process.
OUR CUSTOMERS MAY CANCEL THEIR ORDERS, CHANGE PRODUCTION QUANTITIES OR DELAY
PRODUCTION.
Electronics manufacturing service providers must provide increasingly
rapid product turnaround for their customers. We generally do not obtain firm,
long-term purchase commitments from our customers and we continue to experience
reduced lead-times in customer orders. Customers may cancel their orders, change
production quantities or delay production for a number of reasons. The success
of our customers' products in the market affects our business. Cancellations,
reductions or delays by a significant customer or by a group of customers could
seriously harm our operating results.
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In addition, we make significant decisions, including determining the
levels of business that we will seek and accept, production schedules, component
procurement commitments, personnel needs and other resource requirements, based
on our estimates of customer requirements. The short-term nature of our
customers' commitments and the possibility of rapid changes in demand for their
products reduces our ability to estimate accurately the future requirements of
those customers.
On occasion, customers may require rapid increases in production, which
can stress our resources and reduce operating margins. Although we have
increased our manufacturing capacity and plan further increases, we may not have
sufficient capacity at any given time to meet all of our customers' demands. In
addition, because many of our costs and operating expenses are relatively fixed,
a reduction in customer demand can harm our gross margins and operating results.
WE MAY NOT BE ABLE TO OBTAIN RAW MATERIALS OR COMPONENTS FOR OUR ASSEMBLIES ON A
TIMELY BASIS OR AT ALL.
We rely on a limited number of suppliers for many components used in
the assembly process. We do not have any long-term supply agreements. At various
times, there have been shortages of some of the electronic components that we
use, and suppliers of some components have lacked sufficient capacity to meet
the demand for these components. Over the past 12-plus months, component
shortages have become more prevalent in our industry. In some cases, supply
shortages and delays in deliveries of particular components have resulted in
curtailed production, or delays in production, of assemblies using that
component, which has contributed to an increase in our inventory levels. We
expect that shortages and delays in deliveries of some components will continue.
If we are unable to obtain sufficient components on a timely basis, we may
experience manufacturing and shipping delays, which could harm our relationships
with customers and reduce our sales.
A significant portion of our sales is derived from turnkey
manufacturing in which we provide materials procurement. While most of our
customer contracts permit quarterly or other periodic adjustments to pricing
based on decreases and increases in component prices and other factors, we
typically bear the risk of component price increases that occur between any such
repricings or, if such repricing is not permitted, during the balance of the
term of the particular customer contract. Accordingly, component price increases
could adversely affect our operating results.
THE MAJORITY OF OUR SALES COMES FROM A SMALL NUMBER OF CUSTOMERS AND IF WE LOSE
ANY OF THESE CUSTOMERS, OUR SALES AND OPERATING RESULTS COULD DECLINE
SIGNIFICANTLY.
Sales to our ten largest customers have represented a majority of our
sales in recent periods. Our ten largest customers accounted for approximately
63% and 61% of our net sales for the years ended September 30, 2000 and 1999,
respectively. The identities of our principal customers have varied from year to
year, and our principal customers may not continue to purchase services from us
at current levels, if at all. Significant reductions in sales to any of these
customers, or the loss of major customers, could seriously harm our business. If
we are not able to timely replace expired, canceled or reduced contracts with
new business, our sales will decrease.
WE MAY HAVE INCREASING NEW CUSTOMER RELATIONSHIPS WITH EMERGING COMPANIES, WHICH
MAY PRESENT MORE RISKS THAN WITH ESTABLISHED COMPANIES.
We currently anticipate that an increasing percentage of our sales will
be to emerging companies, including start-ups, particularly in the
networking/datacommunications market. However, similar to our other customer
relationships, there are no volume purchase commitments under these new
programs, and the revenues we actually achieve may not meet our expectations. In
anticipation of future activities under these programs, we incur substantial
expenses as we add personnel and manufacturing capacity and procure materials.
Because emerging companies do not have a history of operations, it will be
harder for us to anticipate needs and requirements than with established
customers. Our operating results will be harmed if sales do not develop to the
extent and within the time frame we anticipate.
Customer relationships with emerging companies also present special
risks. For example, because they do not have an extensive product history, there
is less demonstration of market acceptance of their products.
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Additionally, the typical lack of prior earnings, and the frequent dependence on
financing, of these companies increases their credit risks.
WE MAY FAIL TO COMPLETE SUCCESSFULLY FUTURE ACQUISITIONS AND MAY NOT INTEGRATE
SUCCESSFULLY ACQUIRED BUSINESSES, WHICH COULD ADVERSELY AFFECT OUR OPERATING
RESULTS.
We have pursued a strategy that has included growth through
acquisitions. We cannot assure you that we will be able to complete successfully
future acquisitions, due primarily to increased competition for the acquisition
of electronics manufacturing service operations. If we are unable to acquire
additional businesses, our growth could be inhibited. Similarly, we cannot
assure you that we will be able to integrate successfully the operations and
management of our recent acquisitions or future acquisitions. Acquisitions
involve significant risks that could have a material adverse effect on us. These
risks include:
OPERATING RISKS, SUCH AS THE:
-- inability to integrate successfully our acquired operations'
businesses and personnel
-- inability to realize anticipated synergies, economies of scale or
other value
-- difficulties in scaling up production and coordinating management
of operations at new sites
-- strain placed on our personnel, systems and resources -- possible
modification or termination of an acquired business customer
program, including cancellation of current or anticipated programs
-- loss of key employees of acquired businesses.
FINANCIAL RISKS, SUCH AS THE:
-- dilutive effect of the issuance of additional equity securities
-- incurrence of additional debt and related interest costs
-- inability to achieve expected operating margins to offset the
increased fixed costs associated with acquisitions
-- incurrence of large write-offs or write-downs
-- amortization of goodwill or other intangible assets
-- unforeseen liabilities of the acquired businesses.
EXPANSION OF OUR BUSINESS AND OPERATIONS MAY NEGATIVELY IMPACT OUR BUSINESS.
We may expand our operations by establishing or acquiring new
facilities or by expanding capacity in our current facilities. We may expand
both in geographical areas in which we currently operate and in new geographical
areas within the United States and internationally. We may not be able to find
suitable facilities on a timely basis or on terms satisfactory to us. Expansion
of our business and operations involves numerous business risks, including the:
-- inability to integrate successfully additional facilities or capacity
and to realize anticipated synergies, economies of scale or other value
-- additional fixed costs which may not be fully absorbed by the new
business
-- difficulties in the timing of expansions, including delays in the
implementation of construction and manufacturing plans
-- diversion of management's attention from other business areas during
the planning and implementation of expansions
-- strain placed on our operational, financial, management, technical and
information systems and resources
-- disruption in manufacturing operations
-- incurrence of significant costs and expenses
-- inability to locate enough customers or employees to support the
expansion.
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OPERATING IN FOREIGN COUNTRIES EXPOSES US TO INCREASED RISKS.
We recently acquired operations in Mexico and the United Kingdom as a
result of purchasing the Mexico turnkey operations and the stock of Keltek. We
may in the future expand into other international regions. We have limited
experience in managing geographically dispersed operations and in operating in
Mexico and the United Kingdom. We also purchase a significant number of
components manufactured in foreign countries. Because of these international
aspects of our operations, we are subject to the following risks that could
materially impact our operating results:
-- economic or political instability
-- transportation delays or interruptions and other effects of less
developed infrastructure in many countries
-- foreign exchange rate fluctuations
-- utilization of different systems and equipment
-- difficulties in staffing and managing foreign personnel and diverse
cultures.
In addition, changes in policies by the U.S. or foreign governments
could negatively affect our operating results due to changes in duties, tariffs,
taxes or limitations on currency or fund transfers. Also, our Mexico based
operation utilizes the Maquiladora program, which provides reduced tariffs and
eases import regulations, and we could be adversely affected by changes in that
program.
WE MAY NOT BE ABLE TO MAINTAIN OUR ENGINEERING, TECHNOLOGICAL AND MANUFACTURING
PROCESS EXPERTISE.
The markets for our manufacturing and engineering services are
characterized by rapidly changing technology and evolving process development.
The continued success of our business will depend upon our ability to:
-- hire, retain and expand our qualified engineering and technical
personnel
-- maintain and enhance our technological capabilities
-- develop and market manufacturing services which meet changing customer
needs
-- successfully anticipate or respond to technological changes in
manufacturing processes on a cost-effective and timely basis.
Although we believe that our operations utilize the assembly and
testing technologies, equipment and processes that are currently required by our
customers, we cannot be certain that we will develop the capabilities required
by our customers in the future. The emergence of new technology industry
standards or customer requirements may render our equipment, inventory or
processes obsolete or noncompetitive. In addition, we may have to acquire new
assembly and testing technologies and equipment to remain competitive. The
acquisition and implementation of new technologies and equipment may require
significant expense or capital investment which could reduce our operating
margins and our operating results. Our failure to anticipate and adapt to our
customers' changing technological needs and requirements could have an adverse
effect on our business.
FAILURE TO MANAGE OUR GROWTH MAY SERIOUSLY HARM OUR BUSINESS.
We have experienced rapid growth, both internally and through
acquisitions. This growth has placed, and will continue to place, significant
strain on our operations. To manage our growth effectively, we must continue to
improve and expand our financial, operational and management information
systems; continue to develop the management skills of our managers and
supervisors; and continue to train, manage and motivate our employees. If we are
unable to manage our growth effectively, our operating results could be harmed.
Plexus has recently entered into a licensing arrangement for new ERP
software and related information systems. Conversions to new software and
systems are complicated processes, and can cause management and operational
disruptions which may affect Plexus. Information flow and production could also
be affected if the new software and systems do not perform as Plexus expects.
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OUR TURNKEY MANUFACTURING SERVICES INVOLVE INVENTORY RISK.
Some of our contract manufacturing services are provided on a turnkey
basis, where we purchase some or all of the materials required for designing,
product assembling and manufacturing. These services involve greater resource
investment and inventory risk management than consignment services, where the
customer provides these materials. Accordingly, various component price
increases and inventory obsolescence could adversely affect our selling price,
gross margins and operating results.
START-UP COSTS AND INEFFICIENCIES RELATED TO NEW PROGRAMS CAN ADVERSELY AFFECT
OUR OPERATING RESULTS.
Start-up costs, the management of labor and equipment resources in
connection with the establishment of new programs and new customer
relationships, and the need to estimate required resources in advance can
adversely affect our gross margins and operating results. These factors are
particularly evident in the early stages of the life cycle of new products and
new programs. These factors also affect our ability to efficiently use labor and
equipment. In addition, if any of these new programs or new customer
relationships were terminated, our operating results could be harmed,
particularly in the short term.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATIONS.
We are also subject to environmental regulations relating to the use,
storage, discharge, recycling and disposal of hazardous chemicals used in our
manufacturing process. If we fail to comply with present and future regulations,
we could be subject to future liabilities or the suspension of business. These
regulations could restrict our ability to expand our facilities or require us to
acquire costly equipment or incur significant expense. While we are not
currently aware of any material violations, we may have to spend funds to comply
with present and future regulations or be required to perform site remediation.
In addition, our medical device business, which represented
approximately 27% of our fiscal year 2000 sales, is subject to substantial
government regulation, primarily from the FDA and similar regulatory bodies in
other countries. We must comply with statutes and regulations covering the
design, development, testing, manufacturing and labeling of medical devices and
the reporting of certain information regarding their safety. Noncompliance with
these rules can result in, among other things, us and our customers being
subject to fines, injunctions, civil penalties, criminal prosecution, recall or
seizure of devices, total or partial suspension of production, failure of the
government to grant pre-market clearance or record approvals for projections or
the withdrawal of marketing approvals. The FDA also has the authority to require
repair or replacement of equipment, or refund of the cost of a device
manufactured or distributed by our customers. In addition, the failure or
noncompliance could have an adverse effect on our reputation.
OUR PRODUCTS ARE FOR THE ELECTRONICS INDUSTRY, WHICH PRODUCES TECHNOLOGICALLY
ADVANCED PRODUCTS WITH SHORT LIFE CYCLES.
Factors affecting the electronics industry, in particular the short
life cycle of products, could seriously harm our customers and, as a result, us.
These factors include:
-- the inability of our customers to adapt to rapidly changing technology
and evolving industry standards, which result in short product life
cycles
-- the inability of our customers to develop and market their products,
some of which are new and untested
-- the potential that our customers' products may become obsolete or the
failure of our customers' products to gain widespread commercial
acceptance.
INCREASED COMPETITION MAY RESULT IN DECREASED DEMAND OR PRICES FOR OUR SERVICES.
The electronics manufacturing services industry is highly competitive.
We compete against numerous U.S. and foreign electronics manufacturing services
providers with global operations, as well as those who operate on a
18
<PAGE> 20
local or regional basis. In addition, current and prospective customers
continually evaluate the merits of manufacturing products internally.
Consolidation in the electronics manufacturing services industry results in a
continually changing competitive landscape. The consolidation trend in the
industry also results in larger and more geographically diverse competitors who
have significant combined resources with which to compete against us.
Some of our competitors have substantially greater managerial,
manufacturing, engineering, technical, financial, systems, sales and marketing
resources than we do. These competitors may:
-- respond more quickly to new or emerging technologies
-- have greater name recognition, critical mass and geographic and market
presence
-- be better able to take advantage of acquisition opportunities
-- adapt more quickly to changes in customer requirements
-- devote greater resources to the development, promotion and sale of
their services
-- be better positioned to compete on price for their services.
We may be operating at a cost disadvantage compared to manufacturers
who have greater direct buying power from component suppliers, distributors and
raw material suppliers or who have lower cost structures. As a result,
competitors may procure a competitive advantage and obtain business from our
customers. Our manufacturing processes are generally not subject to significant
proprietary protection, and companies with greater resources or a greater market
presence may enter our market or increase their competition with us. Increased
competition could result in price reductions, reduced sales and margins or loss
of market share.
WE MAY FAIL TO SECURE NECESSARY ADDITIONAL FINANCING.
We have made and intend to continue to make substantial capital
expenditures to expand our operations, acquire businesses and remain competitive
in the rapidly changing electronics manufacturing services industry. Our future
success may depend on our ability to obtain additional financing and capital to
support our continued growth and operations, including our working capital
needs. We may seek to raise capital by:
-- issuing additional common stock or other equity securities
-- issuing debt securities
-- increasing available borrowings under our existing credit facility or
obtaining new credit facilities
-- obtaining off-balance-sheet financing.
We may not be able to obtain additional capital when we want or need
it, and capital may not be available on satisfactory terms. If we issue
additional equity securities or convertible debt to raise capital, it may be
dilutive to your ownership interest. Furthermore, any additional financing and
capital may have terms and conditions that adversely affect our business, such
as restrictive financial or operating covenants.
WE DEPEND ON CERTAIN KEY PERSONNEL, AND THE LOSS OF KEY PERSONNEL MAY HARM OUR
BUSINESS.
Our future success depends in large part on the continued service of
our key technical and management personnel and on our ability to continue to
attract and retain qualified employees, particularly those highly skilled
design, process and test engineers involved in the manufacture of existing
products and the development of new products and processes. The competition for
these individuals is intense, and the loss of key employees, generally none of
whom is subject to an employment agreement for a specified term or a
post-employment non-competition agreement, could harm our business. We believe
that we have a relatively small management group whose resources could be
strained as a result of expansion of our business.
PRODUCTS WE MANUFACTURE MAY CONTAIN DESIGN OR MANUFACTURING DEFECTS WHICH COULD
RESULT IN REDUCED DEMAND FOR OUR SERVICES AND LIABILITY CLAIMS AGAINST US.
We manufacture products to our customers' specifications which are
highly complex and may at times contain design or manufacturing errors or
failures. Defects have been discovered in products we manufactured in the past
and, despite our quality control and quality assurance efforts, defects may
occur in the future. Defects in the
19
<PAGE> 21
products we manufacture, whether caused by a design, manufacturing or component
failure or error, may result in delayed shipments to customers or reduced or
cancelled customer orders. If these defects occur in large quantities or too
frequently, our business reputation may also be impaired. In addition, these
defects may result in liability claims against us. The FDA investigates and
checks, occasionally on a random basis, compliance with statutory and regulatory
requirements. Violations may lead to penalties or shutdowns of a program or a
facility.
THE PRICE OF OUR COMMON STOCK HAS BEEN AND MAY CONTINUE TO BE VOLATILE.
Our stock price has fluctuated significantly. The price of our common
stock may fluctuate significantly in response to a number of events and factors
relating to our company, our competitors and the market for our services, many
of which are beyond our control.
In addition, the stock market in general, and especially the NASDAQ
National Market along with market prices for technology companies, in
particular, have experienced extreme volatility that has often been unrelated to
the operating performance of these companies. These broad market and industry
fluctuations may adversely affect the market price of our common stock,
regardless of our operating results.
Among other things, volatility in Plexus' stock price could mean that
investors will not be able to sell their shares at or above the prices which
they pay. The volatility also could impair Plexus' ability in the future to
offer common stock as a source of additional capital and/or as consideration in
the acquisition of other businesses.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in foreign exchange and
interest rates. To reduce such risks, we selectively use financial instruments.
A discussion of our accounting policy for derivative financial instruments is
incorporated by reference from our Consolidated Financial Statements and Notes
thereto, in this Form 10-K, within Note 1 -- "Description of Business and
Significant Accounting Policies."
FOREIGN CURRENCY RISK
We do not use derivative financial instruments for speculative
purposes. Our policy is to hedge our foreign currency denominated transactions
in a manner that substantially offsets the effects of changes in foreign
currency exchange rates. Presently, we use foreign currency forward contracts to
hedge only those currency exposures associated with certain assets and
liabilities denominated in non-functional currencies. Corresponding gains and
losses on the underlying transaction generally offset the gains and losses on
these foreign currency hedges. As of September 30, 2000, the foreign currency
forward contracts were scheduled to mature in less than three months and there
were no material deferred gains or losses.
INTEREST RATE RISK
We have financial instruments, including cash equivalents, short-term
investments and long-term debt, which are sensitive to changes in interest
rates. We consider the use of interest-rate swaps based on existing market
conditions. We currently do not use any interest-rate swaps or other types of
derivative financial instruments.
The primary objective of our investment activities is to preserve
principal, while maximizing yields without significantly increasing market risk.
To achieve this, we maintain our portfolio of cash equivalents and short-term
investments in a variety of securities such as money market funds and
certificates of deposit and limit the amount of principal exposure to any one
issuer.
Our only material interest rate risk is associated with our Credit
Facility. Interest on borrowings is computed at the applicable Eurocurrency rate
on the agreed currency. A 10 percent change in our weighted average interest
rate on average long-term borrowings would have impacted net interest expense by
approximately $0.3 million for fiscal 2000. There were no material long-term
borrowings during fiscal 1999. This risk was partially offset by our issuance of
3.45 million shares of common stock subsequent to September 30, 2000, which
resulted in net proceeds of approximately $164.3 million. A portion of these net
proceeds was utilized to repay approximately $68 million of outstanding
indebtedness under our Credit Facility.
20
<PAGE> 22
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See following "List of Financial Statements and Financial Statement
Schedules," and accompanying reports, statements and schedules, which follow
beginning on page 23.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information in response to this item is incorporated herein by
reference to "Election of Directors" in the Registrant's Proxy Statement for its
2001 Annual Meeting of Shareholders ("2001 Proxy Statement") and from "Security
Ownership of Certain Beneficial Owners and Management - Section 16(a) Beneficial
Ownership Reporting Compliance" in the 2001 Proxy Statement and "Executive
Officers of the Registrant" in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference to "Election of Directors - Directors'
Compensation" and "Executive Compensation" in the 2001 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference to "Security Ownership of Certain
Beneficial Owners and Management" in the 2001 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION
Incorporated herein by reference to "Certain Transactions" in the 2001
Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed
1. and 2. Financial Statements and Financial Statement Schedules.
See following list of Financial Statements and Financial
Statement Schedules on page 23 which is incorporated herein
by reference.
3. Exhibits. See Exhibit Index included as the last page of
this report, which index is incorporated herein by
reference.
(b) Reports on Form 8-K.
Plexus filed the following Reports on Form 8-K in the fourth quarter:
-- Report dated July 14, 2000, reporting the acquisition of
Keltek; and
-- Report dated September 19, 2000, reporting:
-- restated financials for Plexus' stock split;
21
<PAGE> 23
-- Plexus' shelf registration statement;
-- revisions to Plexus' credit agreement; and
-- the agreement to acquire e2E.
In addition, during the quarter, Plexus filed amendments to its Report
on Form 8-K dated May 23, 2000, filing financial statements of the acquired
Mexico turnkey operations and related pro forma financial statements. (A list of
those statements was included in Plexus' 10-Q for the quarter ended June 30,
2000.) Subsequent to September 30, 2000, Plexus filed a Report on Form 8-K dated
October 13, 2000, relating to its public offering of common stock.
22
<PAGE> 24
PLEXUS CORP. FORM 10-K
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
CONTENTS PAGES
<S> <C>
Report of Independent Accountants ....................................... 24
Consolidated Financial Statements:
Consolidated Statements of Operations for the three years ended
September 30, 2000, 1999 and 1998 .................................. 25
Consolidated Balance Sheets as of September 30, 2000 and 1999....... 26
Consolidated Statements of Shareholders' Equity and Comprehensive
Income for the three years ended September 30, 2000, 1999 and 1998.. 27
Consolidated Statements of Cash Flows for the three years ended
September 30, 2000, 1999 and 1998................................... 28
Notes to Consolidated Financial Statements .............................. 29-40
Financial Statement Schedules:
Report of Independent Accountants................................... 41
Schedule II - Valuation and Qualifying Accounts..................... 42
Report of Ernst & Young LLP, Independent Auditors for SeaMED............. 43
</TABLE>
23
<PAGE> 25
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors
Plexus Corp.:
In our opinion, based on our audits and the report of other auditors, the
accompanying consolidated balance sheets and the related consolidated statements
of operations, of shareholders' equity and of cash flows present fairly, in all
material respects, the financial position of Plexus Corp. and subsidiaries at
September 30, 2000 and 1999, and the results of their operations and their cash
flows for each of the three years in the period ended September 30, 2000, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. The consolidated financial statements give
retroactive effect to the merger of SeaMED Corporation on July 23, 1999, in a
transaction accounted for as a pooling of interests, as described in Notes 1 and
8 to the consolidated financial statements. We did not audit the financial
statements of SeaMED Corporation, which statements reflect, after restatement
for certain adjustments, total assets of $42.9 million as of June 30, 1998, and
total revenues of $70.0 million for the year then ended. Those statements were
audited by other auditors whose report thereon has been furnished to us, and our
opinion expressed herein, insofar as it relates to the amounts included for
SeaMED Corporation is based solely on the report of the other auditors. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
October 26, 2000, except for certain
information in Note 6 for which
the date is November 7, 2000
24
<PAGE> 26
PLEXUS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Net sales $ 751,639 $ 492,414 $ 466,795
Cost of sales 644,475 426,005 406,648
----------- ----------- -----------
Gross profit 107,164 66,409 60,147
Operating expenses:
Selling and administrative expenses 35,049 26,312 23,640
Amortization of goodwill 1,114 131 114
Merger and acquisition costs 1,131 4,557 -
Plant closing, relocation and severance - 981 -
----------- ----------- -----------
37,294 31,981 23,754
----------- ----------- -----------
Operating income 69,870 34,428 36,393
Other income (expense):
Interest expense (2,579) (274) (86)
Miscellaneous 1,338 1,995 975
----------- ----------- -----------
Income before income taxes 68,629 36,149 37,282
Income taxes 28,433 15,838 14,345
----------- ----------- -----------
Net income $ 40,196 $ 20,311 $ 22,937
=========== =========== ===========
Earnings per share:
Basic $ 1.12 $ 0.59 $ 0.68
=========== =========== ===========
Diluted $ 1.04 $ 0.55 $ 0.63
=========== =========== ===========
Weighted average shares outstanding:
Basic 36,026 34,646 33,688
Diluted 38,732 37,021 36,196
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
25
<PAGE> 27
PLEXUS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2000 AND 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,293 $ 15,906
Short-term investments - 17,224
Accounts receivable, net of allowance of $1,522 and $773, respectively 140,048 69,318
Inventories 215,998 79,017
Deferred income taxes 9,109 6,370
Prepaid expenses and other 4,451 3,562
----------- -----------
Total current assets 374,899 191,397
Property, plant and equipment, net 89,500 35,868
Goodwill, net 48,882 408
Other 2,327 1,963
----------- -----------
Total assets $ 515,608 $ 229,636
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 8,365 $ 10
Accounts payable 106,257 55,928
Customer deposits 10,126 8,650
Accrued liabilities:
Salaries and wages 19,039 9,820
Other 17,516 6,578
----------- -----------
Total current liabilities 161,303 80,986
Long-term debt, net of current portion 141,409 142
Deferred income taxes 1,056 215
Other liabilities 2,478 1,890
Shareholders' equity:
Preferred stock, $.01 par value, 5,000 shares authorized, none issued
or outstanding - -
Common stock, $.01 par value, 60,000 shares authorized, 37,054 and 17,545
issued and outstanding, respectively 371 175
Additional paid-in capital 72,699 51,425
Retained earnings 136,577 94,803
Accumulated other comprehensive loss (285) -
----------- -----------
209,362 146,403
----------- -----------
Total liabilities and shareholders' equity $ 515,608 $ 229,636
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
26
<PAGE> 28
PLEXUS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
Common Stock Additional Note
------------------- Paid-In Receivable Retained
Shares Amount Capital Officer Earnings
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCES, OCTOBER 1, 1997 16,845 $ 168 $ 37,377 $ (75) $ 51,934
Net income and comprehensive income -- -- -- -- 22,937
Treasury stock purchased -- -- -- -- --
Exercise of stock options,
including tax benefits 160 2 5,101 -- (1,024)
Common stock warrants exercised 11 -- -- -- --
Other treasury stock issuances -- -- -- -- (52)
------ ------- ---------- ------- --------
BALANCES, SEPTEMBER 30, 1998 17,016 170 42,478 (75) 73,795
Net income and comprehensive income -- -- -- -- 20,311
Effect of SeaMED excluded period -- -- 16 -- 1,271
Treasury stock purchased -- -- -- -- --
Exercise of stock options,
including tax benefits 529 5 8,931 -- (574)
Payment of note receivable officer -- -- -- 75 --
------ ------- ---------- ------- ---------
BALANCES, SEPTEMBER 30, 1999 17,545 175 51,425 -- 94,803
Comprehensive income:
Net income -- -- -- -- 40,196
Foreign currency translation adjustments,
net of tax benefits -- -- -- -- --
Total comprehensive income
Effect of Agility pooling 375 4 3 -- 1,578
Exercise of stock options,
including tax benefits 623 6 21,457 -- --
Two-for-one common stock split,
August 31, 2000 18,511 186 (186) -- --
------ ------- ---------- ------- --------
BALANCES, SEPTEMBER 30, 2000 37,054 $ 371 $ 72,699 $ -- $ 136,577
====== ======= ========== ======= =========
</TABLE>
<TABLE>
<CAPTION>
Accumulated
Other
Comprehensive Treasury Stock
Loss Shares Amount Total
----------------------------------------------------
<S> <C> <C> <C> <C>
BALANCES, OCTOBER 1, 1997 $ -- -- $ -- $ 89,404
Net income and comprehensive income -- -- -- 22,937
Treasury stock purchased -- (214) (3,442) (3,442)
Exercise of stock options,
including tax benefits -- 132 2,059 6,138
Common stock warrants issued -- -- -- --
Other treasury stock issuances -- 53 878 826
------ ------- ------- ---------
BALANCES, SEPTEMBER 30, 1998 -- (29) (505) 115,863
Net income and comprehensive income -- -- -- 20,311
Effect of SeaMED excluded period -- -- -- 1,287
Treasury stock purchased -- (32) (1,160) (1,160)
Exercise of stock options,
including tax benefits -- 61 1,665 10,027
Payment of note receivable officer -- -- -- 75
------ ------- ------- ---------
BALANCES, SEPTEMBER 30, 1999 -- -- -- 146,403
Comprehensive income:
Net income -- -- -- 40,196
Foreign currency translation adjustments (285) -- -- (285)
---------
Total comprehensive income 39,911
Effect of Agility pooling -- -- -- 1,585
Exercise of stock options,
including tax benefits -- -- -- 21,463
Two-for-one common stock split,
August 31, 2000 -- -- -- --
------ ------- ------- ---------
BALANCES, SEPTEMBER 30, 2000 $ (285) -- $ -- $ 209,362
====== ======= ======= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
27
<PAGE> 29
PLEXUS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
2000 1999 1998
---------- ---------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 40,196 $ 20,311 $ 22,937
Adjustments to reconcile net income to net cash flows
from operating activities:
Depreciation and amortization 16,307 9,993 8,372
Income tax benefit of stock
option exercises 13,123 4,570 3,677
Provision for inventories and accounts receivable allowances 6,849 3,330 4,092
Deferred income taxes (1,924) (1,778) (1,609)
Changes in assets and liabilities:
Accounts receivable (51,204) (8,842) (5,547)
Inventories (118,102) (25,270) (3,411)
Prepaid expenses and other (61) (1,089) (1,283)
Accounts payable 27,623 15,569 3,690
Customer deposits 1,087 1,838 2,466
Accrued liabilities 14,351 869 1,207
Other 363 226 (1,071)
---------- ---------- ---------
Cash flows (used in) provided by operating
activities (51,392) 19,727 33,520
---------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of short-term investments (48,042) (244,449) (6,632)
Sales and maturities of short-term investments 65,266 232,742 7,319
Payments for property, plant and equipment (44,228) (18,196) (11,997)
Proceeds on sale of property, plant and equipment 52 213 114
Payments for business acquisitions, net of cash acquired (73,388) - -
---------- ---------- ---------
Cash flows used in investing activities (100,340) (29,690) (11,196)
---------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt 265,268 - 3,125
Payments on debt (132,204) (4,561) (4,664)
Proceeds from exercise of stock options, including tax benefit 8,347 4,366 540
Issuances of common stock - - 671
Treasury stock purchased - (1,160) (3,442)
Treasury stock reissued - 1,091 1,861
---------- ---------- ---------
Cash flows provided by (used in) financing activities 141,411 (264) (1,909)
---------- ---------- ---------
Effect of foreign currency translation or cash (292) - -
---------- ---------- ---------
Net increase (decrease) in cash and cash equivalents (10,613) (10,227) 20,415
Cash and cash equivalents, beginning of year 15,906 24,106 3,691
Effect of SeaMED excluded period - 2,027 -
---------- ---------- ---------
Cash and cash equivalents, end of year $ 5,293 $ 15,906 $ 24,106
========== ========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
28
<PAGE> 30
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Description of Business: Plexus Corp. provides product realization
services to original equipment manufacturers (OEMs) in the
networking/datacommunications, medical, industrial, computer and
transportation industries. The Company offers a full range of services
including product development and design services, material procurement and
management, prototyping, manufacturing and assembly, functional and
in-circuit testing, final system box build, distribution and after-market
support.
The contract manufacturing services are provided on either a turnkey
basis, where the Company procures certain or all of the materials required
for product assembly, or on a consignment basis, where the customer
supplies materials necessary for product assembly. Turnkey services include
material procurement and warehousing, in addition to manufacturing, and
involve greater resource investment than consignment services. Turnkey
manufacturing currently represents almost all of the Company's sales.
Consolidation Principles: The consolidated financial statements
include the accounts of Plexus Corp. and its subsidiaries (together "the
Company"). All significant intercompany transactions have been eliminated.
On July 23, 1999, SeaMED Corporation ("SeaMED"), a public company, was
merged into Plexus. The consolidated financial statements have been
prepared following the pooling of interests method of accounting for the
merger and therefore reflect the combined financial position, operating
results and cash flows of the two companies for all periods presented.
SeaMED had a June 30 fiscal year end. Prior to fiscal 1999, the combined
financial statements reflect Plexus' September 30 financial position and
results and SeaMED's June 30 financial position and results. For fiscal
1999, the combined financial statements reflect the October 1, 1998,
through September 30, 1999, period for both companies. SeaMED's results of
operations and cash flows from July 1, 1998, to September 30, 1998, which
have been excluded from these consolidated financial statements, are
reflected as adjustments in the 1999 Consolidated Statements of
Shareholders' Equity and Cash Flows. Net sales and net income for SeaMED
for the excluded period from July 1, 1998, to September 30, 1998, were
$19.4 million and $1.3 million, respectively.
Cash Equivalents and Short-Term Investments: Cash equivalents are
highly liquid investments purchased with an original maturity of less than
three months. Short-term investments include investment-grade short-term
debt instruments with original maturities greater than three months.
Short-term investments are generally comprised of securities with
contractual maturities greater than one year but with optional or early
redemption provisions within one year.
Investments in debt securities are classified as "available-for-sale."
Such investments are recorded at fair value as determined from quoted
market prices, and the cost of securities sold is determined on the
specific identification method. If material, unrealized gains or losses are
reported as a component of comprehensive income or loss, net of related tax
effect. At September 30, 2000, 1999 and 1998, such unrealized gains and
losses were not material. In addition, there were no realized gains or
losses in fiscal 2000, 1999 and 1998.
Short-term investments as of September 30, 2000 and 1999, consist of
(in thousands):
<TABLE>
<CAPTION>
2000 1999
--------- ----------
<S> <C> <C>
State and municipal securities $ - $ 13,675
U.S. corporate and bank debt - 8,932
Other 2,751 2,000
--------- ----------
$ 2,751 $ 24,607
========= ==========
</TABLE>
All short-term investments as of September 30, 2000, are included in
cash and cash equivalents and approximately $7.4 million of the total
short-term investments as of September 30, 1999, are included in cash and
cash equivalents.
29
<PAGE> 31
Inventories: Inventories are valued primarily at the lower of cost or
market. Cost is determined by the first-in, first-out (FIFO) method.
Property, Plant and Equipment and Depreciation: These assets are
stated at cost. Depreciation, determined on the straight-line method, is
based on lives assigned to the major classes of depreciable assets as
follows:
<TABLE>
<S> <C>
Buildings and improvements 18-40 years
Machinery and equipment 3-10 years
</TABLE>
Goodwill, net: Goodwill associated with acquisitions is amortized
using the straight-line method for periods of up to 15 years. As of
September 30, 2000 and 1999, goodwill included accumulated amortization of
$1.0 million and $0.2 million, respectively.
Impairment of Long-Lived Assets: The Company reviews property, plant
and equipment for impairment whenever events or changes in circumstances
indicated that the carrying amount of an asset may not be recoverable.
Recoverability of property, plant and equipment is measured by comparison
of its carrying amount to future net cash flows which the property, plant
and equipment are expected to generate. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by
which the carrying amount of the property, plant and equipment, if any,
exceeds its fair market value. The Company assesses the recoverability of
goodwill by determining whether the unamortized goodwill balance can be
recovered through undiscounted future net cash flows of the acquired
operation. The amount of goodwill impairment, if any, is measured based on
projected discounted future net cash flows using a discounted rate
reflecting the Company's average cost of funds. As of September 30, 2000,
no adjustments to the carrying value of the Company's long-lived assets
have been required.
Revenue Recognition: Revenue is recognized primarily when products are
shipped. Revenue and profit relating to product design and development
contracts, which are short-term in duration, usually nine months or less,
are recognized as costs are incurred utilizing the percentage-of-completion
method; any losses are recognized when anticipated. Revenue from design and
development contracts is less than 10% of total revenue in fiscal 2000,
1999 and 1998. Progress towards completion of product design and
development contracts is based on units of work for labor content and cost
for component content.
Income Taxes: Deferred income taxes are provided for differences
between the bases of assets and liabilities for financial and tax reporting
purposes.
Foreign Currency: For foreign subsidiaries using the local currency as
their functional currency, assets and liabilities are translated at
exchange rates in effect at year-end, with revenues, expenses and cash
flows translated at the average of the monthly exchange rates. Adjustments
resulting from translation of the financial statements are recorded as a
component of accumulated other comprehensive income. Exchange gains and
losses arising from transactions denominated in a currency other than the
functional currency of the entity involved and remeasurement adjustments
for foreign operation where the U.S. dollar is the functional currency are
included in the statement of operations. Exchange losses on foreign
currency transactions aggregating approximately $0.2 million for the year
ended September 30, 2000, are included in miscellaneous expense, net, in
the Consolidated Statement of Operations.
Derivatives: Gains and losses on foreign currency forward exchange
contracts designated as hedges of assets and liabilities are recognized in
the same period as the underlying transaction.
Earnings Per Share: The computation of basic earnings per common share
is based upon the weighted average number of common shares outstanding and
net income. The computation of diluted earnings per common share reflects
additional dilution from stock options and warrants using the if-converted
method.
New Accounting Pronouncements: In October 2000, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards (SFAS) No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities, a replacement of SFAS
No. 125." The
30
<PAGE> 32
statement revises the standards for accounting for securitizations and
other transfers of financial assets and collateral, and requires certain
disclosures and it continues most of SFAS No. 125's provisions without
reconsideration. The statement will be effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring
after March 31, 2001, and is not expected to have a significant material
effect on the Company's financial statements.
In December 1999, the Securities and Exchange Commission released
Staff Accounting Bulletin ("SAB") No. 101. "Revenue Recognition in
Financial Statements." This bulletin summarizes certain views of the SEC
staff for applying generally accepted accounting principles to revenue
recognition in financial statements. SAB No. 101 will be effective for the
Company's fourth quarter of fiscal 2001 and is not expected to have a
significant material effect on the Company's financial statements.
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" was issued and was effective for all fiscal years
beginning after June 15, 1999. The effective date of SFAS No. 133 was
deferred and will now be effective for fiscal years beginning after June
15, 2000, with early adoption permitted. SFAS No. 133, as amended, requires
the Company to recognize all derivatives as either assets or liabilities
and measure those instruments at fair value. Upon adoption, the Company
will be required to report derivative and hedging instruments at fair value
in the balance sheet and recognize changes in the fair value of derivatives
in net earnings or other comprehensive income, as appropriate. This
Statement will be effective for the Company's fiscal year 2001 first
quarter financial statements and restatement of prior years will not be
permitted. Given the Company's current derivative and hedging activities,
management has determined that the Statement is not expected to have a
significant material effect on its financial position or results of
operations.
Use of Estimates: The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Fair Value of Financial Instruments: Cash and cash equivalents,
short-term investments, accounts receivable, accounts payable and accrued
liabilities are reflected in the consolidated financial statements at cost
because of the short-term duration of these instruments. The fair value of
long-term debt closely approximates its carrying value. The Company uses
quoted market prices, when available, or discounted cash flows to calculate
these fair values.
Business and Credit Concentrations: Financial instruments that
potentially subject the Company to concentrations of credit risk consist of
cash, cash equivalents, short-term investments and trade accounts
receivable. The Company's cash, cash equivalents and short-term investments
are managed by recognized financial institutions which follow the Company's
investment policy. Such investment policy limits the amount of credit
exposure in any one issue and the maturity date of the investment
securities that typically comprise investment grade short-term debt
instruments. Concentrations of credit risk in accounts receivable resulting
from sales to major customers are discussed in Note 11. The Company, at
times, requires advanced cash deposits for sales. The Company also closely
monitors extensions of credit and has not experienced significant credit
losses in the past.
Reclassifications: Certain amounts in prior years' consolidated
financial statements have been reclassified to conform to the 2000
presentation.
31
<PAGE> 33
2. INVENTORIES
Inventories as of September 30, 2000 and 1999, consist of (in
thousands):
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
Assembly parts $ 139,674 $ 40,616
Work-in-process 69,829 27,145
Finished goods 6,495 11,256
----------- -----------
$ 215,998 $ 79,017
=========== ===========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of September 30, 2000 and 1999,
consist of (in thousands):
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
Land, buildings and improvements $ 21,763 $ 12,009
Machinery and equipment 110,797 64,191
Construction in progress 17,485 3,830
---------- ----------
150,045 80,030
Less accumulated depreciation and amortization 60,545 44,162
---------- ----------
$ 89,500 $ 35,868
========== ==========
</TABLE>
Assets held under capital leases as of September 30, 2000, are
described below (in thousands). There were no assets held under capital
leases as of September 30, 1999.
<TABLE>
<CAPTION>
2000
---------
<S> <C>
Land, buildings and improvements $ 3,981
Machinery and equipment 2,755
---------
6,736
Less accumulated amortization 174
---------
$ 6,562
=========
</TABLE>
Amortization of assets held under capital leases totaled $174,000 for
fiscal 2000. Such capital leases for land, buildings and improvements have
been treated as a non-cash transaction for purposes of the Consolidated
Statements of Cash Flows.
4. DEBT
Debt as of September 30, 2000 and 1999, consists of (in thousands):
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
Unsecured revolving credit facility with
a weighted average interest rate of 8.3% $ 117,450 $ -
Note payable on demand with a weighted
average interest rate of 9.5% 17,000 -
Notes payable on demand to the former
shareholders of Keltek with a
weighted average interest rate of 5.5% 6,937 -
Capital lease obligations 6,054 -
Other notes and obligations 2,333 152
----------- -----------
149,774 152
Less current portion 8,365 10
----------- -----------
$ 141,409 $ 142
=========== ===========
</TABLE>
32
<PAGE> 34
On October 25, 2000, the Company entered into a new unsecured
revolving credit facility (the "Credit Facility") with a group of banks.
The Credit Facility allows the Company to borrow up to $250 million.
Borrowing capacity utilized under the Credit Facility will be either
through revolving or other loans or through guarantees of commercial paper
issued by the Company. Interest on borrowings is computed at the applicable
Eurocurrency rate on the agreed currency, plus any commitment fee. The
Credit Facility matures on October 25, 2003 and requires among other things
maintenance of minimum interest expense coverage and maximum leverage
ratios. The borrowings outstanding as of September 30, 2000, of $117.5
million under the Company's previous revolving credit agreement (see below)
have been classified in the Consolidated Balance Sheet as noncurrent based
upon the terms of the Credit Facility because the borrowings under the
Credit Facility were utilized to replace borrowings under the revolving
credit agreement and the demand note due to banks.
As of September 30, 2000, the Company had total borrowings available
of $190.0 million under the previous revolving credit agreement and a note
payable on demand dated September 15, 2000. Borrowings under the revolving
credit agreement and the note payable on demand were refinanced with
borrowings under the Company's new Credit Facility.
On July 14, 2000, the Company acquired all the outstanding capital
stock of Keltek (Holdings) Limited ("Keltek"). In connection with this
acquisition, the Company issued a note payable on demand that matures July
14, 2001. Interest is computed at 1% below the rate offered in the LIBOR
rate for three-month sterling borrowing (5.5% as of September 30, 2000).
The Company leases certain equipment and a manufacturing facility,
located in Europe, which have been recorded as capital leases.
The aggregate scheduled maturities of the Company's debt and its
obligations under capital leases as of September 30, 2000, are as follows
(in thousands):
<TABLE>
<CAPTION>
Capital
Debt leases Total
----------- ----------- ------------
<S> <C> <C> <C>
2001 $ 7,512 $ 853 $ 8,365
2002 575 323 898
2003 207 304 511
2004 134,658 206 134,864
2005 209 29 238
Thereafter 559 2,020 2,579
----------- ----------- ------------
143,720 3,735 147,455
Interest portion of capital leases -- 2,319 2,319
----------- ----------- ------------
Total $ 143,720 $ 6,054 $ 149,774
=========== =========== ============
</TABLE>
Cash paid for interest in fiscal 2000, 1999 and 1998 was $1,095,000,
$274,000, and $87,000, respectively.
On October 6, 2000, the Company entered into an agreement to sell up
to $50 million of trade accounts receivable without recourse to Plexus ABS
Inc. ("ABS"), a wholly owned, limited purpose subsidiary of the Company.
ABS is a separate corporate entity that sells participating interests in a
pool of the Company's accounts receivable to financial institutions. The
financial institutions then receive an ownership and security interest in
the pool of receivables. Accounts receivable sold to financial institutions
will be reflected as a reduction to accounts receivable in the Consolidated
Balance Sheets beginning October 6, 2000. The Company has no risk of credit
loss on such receivables as they are sold without recourse. The Company
retains collection and administrative responsibilities on the participation
interest sold as services for ABS and the financial institutions. The
agreement expires in October 2003.
33
<PAGE> 35
5. INCOME TAXES
Income tax expense for fiscal 2000, 1999 and 1998 consists of (in
thousands):
<TABLE>
<CAPTION>
2000 1999 1998
----------- ----------- ------------
<S> <C> <C> <C>
Currently payable:
Federal $ 23,895 $ 14,465 $ 13,710
State 6,207 3,151 2,244
Foreign 255 - -
----------- ----------- ------------
30,357 17,616 15,954
----------- ----------- ------------
Deferred:
Federal (1,552) (1,695) (1,489)
State (372) (83) (120)
----------- ----------- ------------
(1,924) (1,778) (1,609)
----------- ----------- ------------
$ 28,433 $ 15,838 $ 14,345
=========== =========== ============
</TABLE>
Following is a reconciliation of the Federal statutory income tax rate
to the effective tax rates reflected in the Consolidated Statements of
Operations for fiscal 2000, 1999 and 1998:
<TABLE>
<CAPTION>
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
Federal statutory income tax rate 35.0% 35.0% 34.0%
Increase resulting from:
State income taxes, net of Federal
income tax benefit 5.4 5.7 3.9
Non-deductible merger and acquisition costs 0.3 3.1 -
Other, net 0.7 - 0.6
---- ---- ----
Effective income tax rate 41.4% 43.8% 38.5%
==== ==== ====
</TABLE>
The components of the net deferred income tax asset as of September
30, 2000 and 1999, consist of (in thousands):
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
Deferred tax assets:
Inventories $ 5,757 $ 3,455
Accrued benefits 1,387 1,331
Loss carryforwards 273 156
Other 2,610 2,044
--------- ---------
10,027 6,986
Less valuation allowance - (24)
--------- ---------
10,027 6,962
Deferred tax liabilities:
Property, plant and equipment 1,974 807
--------- ---------
Net deferred income tax asset $ 8,053 $ 6,155
========= =========
</TABLE>
Cash paid for income taxes in fiscal 2000, 1999 and 1998 was $15.1
million, $16.3 million and $13.0 million, respectively.
34
<PAGE> 36
6. SHAREHOLDERS' EQUITY
On October 18, 2000 the Company issued 3.0 million shares of common
stock for $50.00 per share. The Company received net proceeds of
approximately $142.9 million subsequent to discounts and commissions to the
underwriters of approximately $7.1 million. Additional expenses are
estimated to be approximately $0.6 million. On November 7, 2000, the
underwriters exercised their over-allotment option for an additional
450,000 shares resulting in approximately $21.4 million of additional net
proceeds. The aggregate net proceeds from the offering are expected to
refinance, in part, existing debt; finance, in part, capital expenditures,
capacity expansion and potential future acquisitions; and be used for
general corporate purposes and working capital.
On August 1, 2000, the Company declared a two-for-one stock split
payable in the form of a stock dividend of one share of common stock for
every share of common stock outstanding. The new common stock was issued on
August 31, 2000, to holders of record as of August 22, 2000. Share and per
share amounts, where required, have been restated to reflect this stock
split.
On December 19, 1997, the Company's Board of Directors authorized the
repurchase of up to 2.0 million (pre-split) shares, or a maximum of $25.0
million, of the Company's common stock on the open market. On March 16,
1999, the Plexus Corp. Board of Directors rescinded the Company's stock
buyback program in contemplation of the merger with SeaMED.
SeaMED issued a warrant to purchase 15,626 (pre-split) shares of
common stock. The warrant was exercised in March 1998 in a non-cash
transaction which resulted in the issuance of 11,158 (pre-split) shares.
Income tax benefits attributable to stock options exercised are
recorded as an increase in additional paid-in capital.
7. EARNINGS PER SHARE
The following is a reconciliation of the amounts utilized in the
computation of basic and diluted earnings per share (in thousands, except
per share amounts):
<TABLE>
<CAPTION>
Year ended September 30,
------------------------------------------------
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE:
Net income $ 40,196 $ 20,311 $ 22,937
=========== =========== ===========
Basic weighted average shares outstanding 36,026 34,646 33,688
=========== =========== ===========
BASIC EARNINGS PER SHARE $ 1.12 $ 0.59 $ 0.68
=========== =========== ===========
DILUTED EARNINGS PER SHARE:
Net income $ 40,196 $ 20,311 $ 22,937
=========== =========== ===========
Weighted average shares outstanding 36,026 34,646 33,688
Effect of dilutive securities:
Stock options 2,706 2,375 2,490
Stock warrants - - 18
----------- ----------- -----------
Diluted weighted average shares outstanding 38,732 37,021 36,196
=========== =========== ===========
DILUTED EARNINGS PER SHARE $ 1.04 $ 0.55 $ 0.63
=========== =========== ===========
</TABLE>
35
<PAGE> 37
8. MERGERS AND ACQUISITIONS
Acquisitions: On July 14, 2000, the Company acquired all of the
outstanding capital stock of Keltek, headquartered in Kelso, Scotland, with
an additional facility in Maldon, England. The purchase price of $28.9
million consisted of a cash payment of $19.1 million, the assumption of
additional liabilities of $2.7 million and the issuance of a $7.1 million
note payable. The Company is accounting for the acquisition of Keltek using
the purchase method of accounting. The cost of the acquisition has been
preliminarily allocated on the basis of the estimated fair values of the
assets acquired and the liabilities assumed. The excess of the net assets
acquired has been recorded as goodwill and is being amortized over 15
years. The results of Keltek's operations have been included in the
Consolidated Statement of Operations and of Cash Flows for the period
subsequent to July 14, 2000.
On May 23, 2000, the Company acquired the turnkey electronics
manufacturing services operations of Elamex, S.A. de C.V. ("EMS"), located
in Juarez, Mexico for approximately $54.3 million in cash subject to
adjustment upon the final determination of the purchase price. The Company
is accounting for the acquisition of EMS using the purchase method of
accounting. The cost of the acquisition has been allocated on the basis of
the estimated fair values of the assets acquired and the liabilities
assumed. The excess of the cost over fair value of the net assets acquired
has been recorded as goodwill and is being amortized over 15 years. The
results of EMS's operations have been included in the Consolidated
Statement of Operations and of Cash Flows for the period subsequent to May
23, 2000.
Unaudited pro forma revenue, net income and earnings per share for
fiscal 2000 and 1999 as if Keltek and EMS had been acquired on October 1,
1999 or 1998, respectively, are as follows (in thousands, except per share
data):
<TABLE>
<CAPTION>
2000 1999
---------- -----------
<S> <C> <C>
Net sales $ 821,805 $ 625,575
========== ===========
Net income $ 38,512 $ 16,843
========== ===========
Earnings per share:
Basic $ 1.06 $ 0.49
========== ===========
Diluted $ 0.99 $ 0.45
========== ===========
</TABLE>
On December 31, 1999, the Company acquired certain printed circuit
board assembly manufacturing assets in the Seattle, Washington, area from
an unrelated party. The total purchase price of the net assets acquired was
not material to the assets, shareholders' equity or the operations of the
Company. The acquisition was accounted for as a purchase transaction and
the results from operations of the acquired assets are reflected only from
the date of acquisition. Pro forma statements of operations reflecting this
acquisition are not shown as they would not differ materially from reported
results.
On September 1, 1999, the Company acquired certain printed circuit
board assembly manufacturing assets in Chicago, Illinois. The total
purchase price of the net assets acquired was not material to the assets,
shareholders' equity or the operations of the Company. The acquisition was
accounted for as a purchase transaction and the results of operations of
the acquired assets are reflected only from the date of acquisition. Pro
forma statements of operations reflecting this acquisition are not shown,
as they would not differ materially from reported results.
Mergers: On September 29, 2000, the Company agreed to merge with e2E
Corporation (e2E), a privately held printed circuit board design and
engineering service provider for electronic OEMs. Under the terms of the
merger agreement, the Company will issue its common stock in an amount
equal in value of approximately $20.6 million at the closing date in
exchange for all the outstanding capital stock of e2E. The transaction is
expected to be accounted for as a pooling of interests. Pro forma
statements of operations reflecting this transaction are not shown and
prior results are not expected to be restated, as they would not differ
materially from reported results.
36
<PAGE> 38
On April 28, 2000, the Company acquired Agility, Incorporated, located
in Boston, Massachusetts, through the issuance of 374,997 (pre-split)
shares of its common stock. The transaction is being accounted for as a
pooling of interests. Costs associated with this merger in the amount of
$0.7 million ($0.6 million net of income tax benefit) have been expensed as
required. Pro forma statements of operations reflecting this transaction
are not shown and prior results are not restated, as they would not differ
materially from reported results.
In July 1999, Plexus acquired SeaMED. Plexus issued approximately 2.27
million (pre-split) shares of its common stock in exchange for all
outstanding common stock of SeaMED. SeaMED stock options outstanding, as of
the merger date, were exchanged for options to acquire approximately
171,764 (pre-split) shares of Plexus common stock at the same time. All
merger costs and other one-time expenses related to the SeaMED merger were
expensed as required under the pooling of interests method of accounting.
Certain merger-related costs, which included charges related to obsolete
inventories and a loss on an engineering contract, have been included in
cost of sales in the Consolidated Statement of Operations. All such costs
and expenses amounted to $6.0 million after income taxes in fiscal 1999 and
are reflected in the financial statements as follows (in thousands):
<TABLE>
<S> <C>
Cost of sales $ 2,177
Merger costs 4,557
Plant closing, relocation and severance 981
---------
7,715
Less income tax benefit 1,684
---------
Net merger and other one-time charges $ 6,031
=========
</TABLE>
9. LEASE COMMITMENTS
The Company has a number of operating lease agreements primarily
involving manufacturing facilities, manufacturing equipment and
computerized design equipment. These leases are non-cancelable and expire
on various dates through 2014. Rent expense under all operating leases for
fiscal 2000, 1999 and 1998 was approximately $12.1 million, $11.3 million
and $10.2 million, respectively. Renewal and purchase options are available
on certain of these leases. Rental income from subleases amounted to $0.9
million in fiscal 2000.
Future minimum annual payments on operating leases are as follows (in
thousands):
<TABLE>
<S> <C>
2001 $ 8,268
2002 7,372
2003 7,124
2004 6,866
2005 6,037
Thereafter 21,033
---------
$ 56,700
=========
</TABLE>
10. BENEFIT PLANS
Employee Stock Purchase Plan: On March 1, 2000, the Company
established a qualified Employee Stock Purchase Plan, the terms of which
allow for qualified employees to participate in the purchase of the
Company's common stock at a price equal to the lower of 85% of the average
high and low stock price at the beginning or end of each semi-annual stock
purchase period. The Company may issue up to 2.0 million shares of its
common stock under the plan.
401(k) Savings Plans: The Company's 401(k) savings plans cover
substantially all eligible employees. The Company matches employee
contributions, after one year of service, up to 2.5% of eligible earnings.
The Company's contributions for fiscal 2000, 1999 and 1998 totaled $1.8
million, $1.6 million and $1.4 million, respectively.
37
<PAGE> 39
Stock Option Plans: The Company has reserved 12.0 million shares of
common stock for grant to officers and key employees under an employee
stock option plan, of which 9.2 million shares have been granted. The
exercise price of each option granted shall not be less than the fair
market value on the date of grant and options vest over a three-year period
from date of grant. The plan also authorizes the Company to grant 600,000
stock appreciation rights, none of which have been granted.
In connection with the SeaMED merger occurring in fiscal 1999, all of
the options outstanding under the former SeaMED stock option plans were
assumed by the Company and converted into options to purchase shares of the
Company's common stock on terms adjusted to reflect the merger exchange
ratio. Options to acquire a total of 429,410 SeaMED shares were converted
into options to acquire a total of 171,764 (pre-split) Plexus shares. The
SeaMED stock option plans are similar to the Plexus plans above and options
vest over a four-year period from date of grant. These plans have been
terminated; however, the outstanding options, as so adjusted, retain all of
the rights, terms and conditions of the respective plans under which they
were originally granted until their expiration.
Under a separate stock option plan, each independent outside director
of the Company is granted 1,500 stock options each December 1, with the
option pricing similar to the employee plans. These options are fully
vested upon grant and can be exercised after a minimum six-month holding
period. The 400,000 shares of common stock authorized under this plan may
come from any combination of authorized but unissued shares, treasury stock
or the open market.
A summary of the stock option activity follows:
<TABLE>
<CAPTION>
SHARES WEIGHTED AVERAGE
(IN THOUSANDS) EXERCISE PRICE
-------------- --------------
<S> <C> <C>
Options outstanding as of October 1, 1997 4,472 $ 4.38
Granted 812 11.80
Canceled (86) 6.13
Exercised (562) 3.08
-----
Options outstanding as of September 30, 1998 4,636 5.81
Effect of SeaMED excluded period 62 23.35
Granted 980 15.29
Canceled (164) 16.21
Exercised (1,092) 3.81
-----
Options outstanding as of September 30, 1999 4,422 8.26
Granted 974 36.13
Canceled (126) 18.18
Exercised (1,220) 6.93
-----
Options outstanding as of September 30, 2000 4,050 $ 15.03
=====
Options exercisable as of:
September 30, 1998 2,500 $ 3.70
===== =========
September 30, 1999 2,518 $ 5.21
===== =========
September 30, 2000 2,259 $ 6.49
===== =========
</TABLE>
38
<PAGE> 40
The following table summarizes outstanding stock option information as
of September 30, 2000 (shares in thousands):
<TABLE>
<CAPTION>
Weighted
Range of Number Weighted Average Weighted Average Number Average
Exercise Prices Outstanding Exercise Price Remaining Life Exercisable Exercise Price
--------------- ----------- ---------------- ---------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
$0.63 - $6.25 1,700 $ 4.30 4.9 years 1,692 $ 4.30
$9.31 - $21.57 1,387 $13.59 7.8 years 546 $12.70
$21.88 - $42.17 934 $35.29 9.2 years 21 $22.06
$48.88 - $78.57 29 $61.34 9.8 years - $ -
$0.63 - $78.57 4,050 $15.03 6.9 YEARS 2,259 $ 6.49
</TABLE>
The Company has elected to account for its stock option plans
under the guidelines of Accounting Principles Board Opinion No. 25.
Accordingly, no compensation cost related to the stock option plans has
been recognized in the Consolidated Statements of Operations. Had the
Company recognized compensation expense based on the fair value at the
grant date for awards under the plans, the Company's net income for
fiscal 2000, 1999 and 1998 would have been reduced by approximately
$8.0 million, $2.8 million and $2.9 million, respectively. Diluted
earnings per share would have been reduced by $0.21, $0.08 and $0.08 in
fiscal 2000, 1999 and 1998, respectively. These pro forma results will
not be representative of the impact in future years because only grants
made since October 1, 1995, were considered.
The weighted average fair value of options granted per share
during fiscal 2000, 1999 and 1998 is $20.30, $8.41 and $6.61,
respectively. The fair value of each option grant is estimated at the
date of grant using the Black-Scholes prorated straight-line
option-pricing method with the following assumption ranges: 60% to 68%
volatility, risk-free interest rates ranging from 4.1% to 6.8%,
expected option life of 4.2 to 6.0 years, and no expected dividends.
Deferred Compensation Plan: In September 1996, the Company
entered into agreements with certain of its officers under a
nonqualified deferred compensation plan. Under the plan, the Company
has agreed to pay certain amounts annually for the first 15 years
subsequent to retirement or to a designated beneficiary upon death. It
is management's intent that life insurance contracts owned by the
Company will fund this plan. Expense for this plan totaled $532,000,
$361,000 and $343,000 in fiscal 2000, 1999, and 1998, respectively.
Other: The Company is not obligated to provide any
post-retirement medical or life insurance benefits to employees.
11. CONTINGENCY
The Company (along with hundreds of other companies) has been
sued by the Lemelson Medical, Education & Research Foundation Limited
Partnership ("Lemelson") related to alleged possible infringement of
certain Lemelson patents. The Company has requested a stay of action
pending developments in other related litigation. The Company believes
the vendors from whom the patent equipment was purchased may
contractually indemnify the Company. If a judgement is rendered and/or
a license fee required, it is the opinion of management of the Company
that such judgement would not be material to the consolidated financial
position of the company or the results of its operations.
12. BUSINESS SEGMENT, GEOGRAPHIC INFORMATION AND MAJOR CUSTOMERS
The Company operates in one business segment. The Company
provides product realization services to electronic OEMs. The Company
has two reportable geographic regions: North America and Europe. The
Company has 18 manufacturing and engineering facilities in North
America and Europe to serve these OEMs. The Company uses an internal
management reporting system, which provides important financial data,
to evaluate performance and allocate the Company's resources on a
geographic basis. Interregion transactions are generally recorded at
amounts that approximate arm's length transactions. Certain corporate
expenses are allocated to these regions and are included for
performance evaluation. The accounting policies for the regions are the
same as for the Company taken as a whole. The following enterprise-wide
information is provided in accordance with SFAS No. 131. Geographic net
sales information reflects the origin of the product shipped. Assets
information is based on the physical location of the asset.
39
<PAGE> 41
<TABLE>
<CAPTION>
Year ended September 30,
------------------------------------------------
2000 1999 1998
---- ---- ----
(in thousands)
<S> <C> <C> <C>
Net sales:
North America $734,485 $492,414 $466,765
Europe 17,154 - -
-------- -------- --------
$751,639 $492,414 $466.765
======== ======== ========
Net income:
North America $ 40,589 $ 20,311 $ 22,937
Europe (652) - -
Interregion adjustments 259 - -
-------- -------- --------
$ 40,196 $ 20,311 $ 22,937
======== ======== ========
Total assets:
North America $462,355 $229,636
Europe 53,253 -
-------- --------
$515,608 $229,636
======== ========
</TABLE>
The following table summarizes the percentage of net sales to
customers that account for more than 10% of net sales in fiscal 2000,
1999 and 1998:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Lucent Technologies Inc. 23% 16% *
General Electric Company * 12% *
</TABLE>
(* represents less than 10%)
Accounts receivable related to Lucent and General Electric
represent the following percentages of the Company's total trade
accounts receivable as of September 30:
<TABLE>
<CAPTION>
2000 1999
------ ------
<S> <C> <C>
Lucent Technologies Inc. 19% 14%
General Electric Company * *
</TABLE>
(* represents less than 10%)
40
<PAGE> 42
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors
Plexus Corp.:
Our audits of the consolidated financial statements of Plexus Corp. and
subsidiaries referred to in our report dated October 26, 2000, except for
certain information in Note 6 for which the date is November 7, 2000, also
included an audit of the financial schedules listed in the index of this Form
10-K. In our opinion, these financial statement schedules present fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
October 26, 2000, except for certain
information in Note 6 for which
the date is November 7, 2000
41
<PAGE> 43
PLEXUS CORP. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the years ended September 30, 2000, 1999 and 1998
(in thousands)
<TABLE>
<CAPTION>
ADDITIONS
CHARGED TO
BALANCE AT COSTS AND BALANCE AT END
DESCRIPTIONS BEGINNING OF PERIOD EXPENSES DEDUCTIONS OF PERIOD
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2000:
Allowance for losses on accounts receivable
(deducted from the asset to which it relates) $ 773 $ 777(1) $ 28 $ 1,522
Allowance for inventory obsolescence (deducted
from the asset to which it relates) 6,860 6,492(1) 3,946 9,406
----------------------------------------------------------------------
$ 7,633 $ 7,269 $ 3,974 $ 10,928
======================================================================
1999:
Allowance for losses on accounts receivable
(deducted from the asset to which it relates) $ 993(2) $ 319 $ 539 $ 773
Allowance for inventory obsolescence
(deducted from the asset to which it relates) 5,685(2) 3,011 1,836 6,860
----------------------------------------------------------------------
$ 6,678 $ 3,330 $ 2,375 $ 7,633
======================================================================
1998:
Allowance for losses on accounts receivable
(deducted from the asset to which it relates) $ 738 $ 454 $ 181 $ 1,011
Allowance for inventory obsolescence
(deducted from the asset to which it relates) 4,495 3,638 2,567 5,566
----------------------------------------------------------------------
$ 5,233 $ 4,092 $ 2,748 $ 6,577
======================================================================
</TABLE>
---------------------------------
[FN]
(1) These amounts do not agree to the amounts appearing in the Consolidated
Statements of Cash Flows as the amounts include beginning balances related
to companies acquired during fiscal 2000.
(2) These balances do not agree to the prior year-end balances as they include
the effects of the SeaMED Corporation excluded period (see Note 1 to Notes
to Consolidated Financial Statements). The net effect of the SeaMED excluded
period on the allowance for losses on accounts receivable and inventory
obsolescence was ($18,000) and $119,000, respectively.
</FN>
42
<PAGE> 44
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors
SeaMED Corporation
We have audited the statements of income, shareholders' equity, and cash flows
for the year ended June 30, 1998 of SeaMED Corporation (not presented separately
herein). These financial statements and related schedule are the responsibility
of the company's management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and schedule referred to above present
fairly, in all material respects the results of operations of SeaMED Corporation
and its cash flows for the year ended June 30, 1998, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Seattle, Washington
August 13, 1998
43
<PAGE> 45
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
By: PLEXUS CORP. (Registrant)
/s/ Peter Strandwitz
-----------------------------
Peter Strandwitz, Chairman
December 18, 2000
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Peter Strandwitz, John L. Nussbaum and
Joseph D. Kaufman, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
to this report, and to file the same with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
and any other regulatory authority, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirement of the Security Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the date indicated.*
SIGNATURE AND TITLE
/s/ Peter Strandwitz /s/ David J. Drury
---------------------------------------- --------------------------------------
Peter Strandwitz, Chairman and David J. Drury, Director
Chief Executive Officer, and Director
/s/ John L. Nussbaum /s/ Harold R. Miller
---------------------------------------- --------------------------------------
John L. Nussbaum, President and Harold R. Miller, Director
Chief Operating Officer, and Director
/s/ Dean A. Foate /s/ Thomas J. Prosser
---------------------------------------- --------------------------------------
Dean A. Foate, Executive Vice President, Thomas J. Prosser, Director
and President of Plexus Technology Group
/s/ Thomas B. Sabol /s/ Agustin A. Ramirez
---------------------------------------- --------------------------------------
Thomas B. Sabol, Senior Vice President Agustin A. Ramirez, Director
and Chief Financial Officer
/s/ Lisa M. Kelley /s/ Jan Ver Hagen
---------------------------------------- --------------------------------------
Lisa M. Kelley, Vice President-Finance, Jan Ver Hagen, Director
Treasurer and Chief Accounting Officer
* Each of the above signatures is affixed as of December 18, 2000.
44
<PAGE> 46
EXHIBIT INDEX
PLEXUS CORP.
10-K FOR YEAR ENDED SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
INCORPORATED BY FILED
EXHIBIT NO. EXHIBIT REFERENCE TO HEREWITH
----------- ------- --------------- --------
<S> <C> <C> <C>
3(i) Restated Articles of Plexus Corp., as Exhibit 3(i) to Plexus' Report on
amended through August 13, 1998 Form 10-K for the year ended
September 30, 1998 ("1998 10-K")
3(ii) Bylaws of Plexus Corp., as amended Exhibit 3(ii) to Plexus' Report on
through November 14, 1996 Form 10-K for the year ended
September 30, 1996 ("1996 10-K")
4.1 Restated Articles of Incorporation of Exhibit 3(i) above
Plexus Corp.
4.2 Amended and Restated Shareholder Rights Exhibit 1 to Plexus'
Agreement, dated as of August 13, 1998, Form 8-A/A filed
(as amended through November 14, 2000) on December 6, 2000
between Plexus and Firstar Bank, N.A.
as Rights Agent, including form of
Rights Certificates
10.1 Supplemental Executive Retirement
Agreements dated as of September 19,
1996**
(a) Peter Strandwitz Exhibit 10.1(a) to 1996 10-K
(b) John Nussbaum Exhibit 10.1(b) to 1996 10-K
(c) John Nussbaum Description thereof in the 2001
amendment effective fiscal 2000 Annual Meeting Proxy Statement
(d) Gerald Pitner Exhibit 10.1(c) to Plexus' Report
on Form 10-K for the year ended
September 30, 1997 ("1997 10-K")
10.2 Forms of Change of Control Agreements
dated August 1, 1998 with **
(a) Peter Strandwitz Exhibit 10.2(a) to 1998 10-K
John L. Nussbaum
Thomas B. Sabol
Charles C. Williams
Joseph D. Kaufman
Dean A. Foate
J. Robert Kronser
</TABLE>
45
<PAGE> 47
<TABLE>
<S> <C> <C> <C>
(b) Lisa M. Kelley Exhibit 10.2(b) to 1998 10-K
Paul A. Morris
10.3 Employee Savings Plan and Trust**:
(a) Plan Document Exhibit 10.3(a) to 1996 10-K
(b) Non-Standardized Form Adoption Agreement Exhibit 10.3(b) to 1996 10-K
10.4 Plexus Corp. 1998 Option Plan** Exhibit A to the Registrant's
definitive proxy statement for its
1998 Annual Meeting of Shareholders
10.5(a) Credit Agreement dated as of March 20, Exhibit 10.5(a) to 1997 10-K
1997, among Firstar Bank Milwaukee,
National Association, Harris Trust and
Savings Bank, and Bank One, Wisconsin
(the "Credit Agreement")***
(b) Corporate Guarantee Agreements related Exhibits 10.5(b)(i) and (ii) to
thereto dated as of March 20, 1997 10-K
1997, by Electronic Assembly Corporation
("EAC") and Technology Group, Inc. ***
(c) Amended and Restated Credit Agreement Exhibit 10.1 to Plexus' Report on
dated as of June 15, 2000, among Form 8-K dated July 14, 2000
Plexus, Firstar Bank, NA, ("7/14/00 8-K")
Harris Trust and Savings Bank, and
Bank One, NA ***
(d) Demand Note dated July 24, 2000*** Exhibit 10.1 to Plexus' Report on
Form 10Q for the quarter ended June
30, 2000
(e) Amendment to Amended and Restated Exhibit 10.1 to Plexus' Report on
Credit Agreement dates as of August 15, Form 8-K dated September 19, 2000
2000 *** ("9/1//00 8-k")
(f) Waiver and Related Demand Note, dated Exhibit 10.2 to 9/19/00 8-K
September 15, 2000 ***
10.6 (a) Credit Agreement dates as of X
October 25, 2000, among Plexus, certain
Plexus subsidiaries and various
signatory lending institutions whose
agents are ABN Amro Bank N.V., Firstar
Bank, N.A. and Bank One, N.A.
(b) Exhibits thereto X
</TABLE>
46
<PAGE> 48
<TABLE>
<S> <C> <C> <C>
10.7 (a) Lease Agreement between Neenah (WI) Exhibit 10.8(a) to Plexus' Report
QRS 11-31, Inc. ("QRS: 11-31") and EAC, on Form 10-K for the year ended
dated August 11, 1994* September 30, 1994 ("1994 10-K")
(b) Guaranty and Suretyship Agreement Exhibit 10.8(c) to 1994 10-K
between Plexus Corp. and QRS: 11-31
dated August 11, 1994, together with
related Guarantor's Certificate of
Plexus Corp.
10.8 Plexus Corp. 1995 Directors' Stock Exhibit 10.10 to 1994 10-K
Option Plan**
10.9 Plexus Corp. 1998 Management Incentive Exhibit 10.10 to 1997 10-K
Compensation Plan**
10.10 Lease Agreement dated February 12, Exhibit 10.16 to Plexus' Quarterly
1996, between Plexus and Oneida Nation Report on Form 10-Q for the quarter
Electronics*** ended March 31, 1996
10.11 Agreement and Plan of Merger between Exhibit 2.1 to Plexus' Quarterly
Plexus Corp. and SeaMED Corporation and Report on Form 10-Q for the quarter
PS Acquisition Corp. dated as of March ended March 31, 1999
16, 1999*
10.12 Agreement and Plan of Merger dated as Exhibit 2.1 to Plexus' Report on
of March 3, 2000, by and among Plexus, Form 8-K dated April 28, 2000
PPatriot Corp. and Agility,
Incorporated *
10.13 Stock Purchase Agreement dated March Exhibit 2.1 to Plexus' Report on
13, 2000, among Plexus, Elamex, SA de Form 10-Q for the quarter ended
CV and Servicios Administrativos march 31, 2000 ("3/31/00 10-Q")
Elamex, SA de CV*
10.14 Promissory Note from Thomas Sabol dated Exhibit 10.1 to 3/31/00 10-Q
March 13, 2000
10.15 (a) Share Purchase Agreement dated as Exhibit 2.1 to 7/14/00 8-K
of June 26, 2000, among Plexus Corp.
Limited (f/k/a "Lycidas (323)
Limited"), Plexus and the shareholders
of Keltek (Holding) Limited *
(b) Related form of Loan Notes of Exhibit 2.2 to 7/14/00 8-K
Plexus Corp. Limited
10.16 (a) Receivables Purchase Agreement X
dated as of October 6, 2000, among
Plexus, Preferred Receivables Funding
Corporation and Bank One, NA
(b) Receivables Sale Agreement dated as X
of October 6, 2000, among Electronic
Assembly Corporation, Technology Group,
Inc., SeaMED Corporation and Plexus
ABS, Inc.
</TABLE>
47
<PAGE> 49
<TABLE>
<S> <C> <C> <C>
10.17 Plexus Corp. Executive Deferred X
Compensation Plan**
10.18 Form of Split Dollar Life Insurance X
Agreements between Plexus and each
of:**
Thomas B. Sabol
Dean A. Foate
J. Robert Kronser
Joseph D. Kaufman
10.19 Underwriting Agreement dated October Exhibit 1.1 Plexus' Report on Form
13, 2000, among Plexus, Robertson 8-K dated October 13, 2000
Stephens, Inc. and the other
Underwriters named therein
21 List of Subsidiaries X
23.1 Consent of PricewaterhouseCoopers LLP X
23.2 Consent of Ernst & Young LLP X
24 Power of Attorney (Signature Page
Hereto)
27 Financial Data Schedules X
</TABLE>
----------------------
[FN]
* Excludes certain schedules and/or exhibits, which will be furnished to the
Commission upon request.
** Designates management compensatory plans or agreements.
*** Superceded or terminated.
</FN>
48
