SANMINA CORPORATION This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to our expectations for future events and time periods. All statements other than statements of historical fact are statements that could be deemed to be forward-looking statements, including any statements regarding trends in future revenue or results of operations, gross margin, operating margin, expenses, earnings or losses from operations, or cash flow; any statements of the plans, strategies and objectives of management for future operations and the anticipated benefits of such plans, strategies and objectives; any statements regarding future economic conditions or performance; any statements regarding litigation or pending investigations, claims or disputes; any statements regarding the timing of closing of, future cash outlays for, and benefits of acquisitions and other strategic transactions, including the joint venture withReliance Strategic Business Ventures Limited , any statements regarding expected restructuring costs and benefits; any statements concerning the adequacy of our current liquidity and the availability of additional sources of liquidity; any statements regarding the potential or expected impact of the COVID-19 pandemic on our business, results of operations and financial condition; any statements regarding the potential impact of supply chain shortages and inflation on our business; any statements regarding the future impact of tariffs on our business; any statements relating to the expected impact of accounting pronouncements not yet adopted; any statements regarding future repurchases of our common stock; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Generally, the words "anticipate," "believe," "plan," "expect," "future," "intend," "may," "will," "should," "estimate," "predict," "potential," "continue" and similar expressions identify forward-looking statements. Our forward-looking statements are based on current expectations, forecasts and assumptions and are subject to risks and uncertainties, including those contained in Part II, Item 1A of this report. As a result, actual results could vary materially from those suggested by the forward-looking statements. We undertake no obligation to publicly disclose any revisions to these forward-looking statements to reflect events or circumstances occurring subsequent to filing this report with theSecurities and Exchange Commission . Investors and others should note that Sanmina announces material financial information to our investors using our investor relations website (http://ir.sanmina.com/investor-relations/overview/default.aspx),SEC filings, press releases, public conference calls and webcasts. We use these channels to communicate with our investors and the public about Sanmina, its products and services and other issues. It is possible that the information we post on our investor relations website could be deemed to be material information. Therefore, we encourage investors, the media, and others interested in Sanmina to review the information we post on our investor relations website. The contents of our investor relations website are not incorporated by reference into this quarterly report on Form 10-Q or in any other report or document we file with theSEC .Sanmina Corporation and its subsidiaries (the "Company", "we" or "us") operate on a 52 or 53 week year ending on the Saturday nearestSeptember 30 . Fiscal 2022 and 2021 are each 52-week years. All references to years relate to fiscal years unless otherwise noted. Overview
We are a leading global provider of integrated manufacturing solutions, components, products and repair, logistics and after-market services. Our revenue is generated from sales of our products and services primarily to original equipment manufacturers (OEMs) that serve the industrial, medical, defense and aerospace, automotive, communications networks and cloud infrastructure solutions industries.
Our operations are managed as two businesses:
1.Integrated Manufacturing Solutions (IMS). Our IMS segment consists of printed circuit board assembly and test, high-level assembly and test and direct-order-fulfillment.
2.Components, Products and Services (CPS). Components include interconnect systems (printed circuit board fabrication, backplane, cable assemblies and plastic injection molding) and mechanical systems (enclosures and precision machining). Products include memory solutions from our Viking Technology division; high-performance storage platforms for hyperscale and enterprise solutions from our Viking Enterprise Solutions (VES) division; optical, radio frequency RF, optical and microelectronic (microE) design and manufacturing services from our Advanced Micro Systems Technologies division; defense and aerospace products fromSCI Technology ; and cloud-based manufacturing execution software from our 42Q division. Services include design, engineering and logistics and repair. Our only reportable segment for financial reporting purposes is IMS, which represented approximately 80% of our total revenue in the first half of 2022. Our CPS business consists of multiple operating segments which do not individually meet the quantitative thresholds for being presented as reportable segments under the accounting rules for segment reporting. 21 --------------------------------------------------------------------------------
Therefore, financial information for these operating segments is aggregated and presented in a single category entitled "Components, Products and Services".
Our strategy is to leverage our comprehensive product and service offerings, advanced technologies and global capabilities to further penetrate diverse end markets that we believe offer significant growth opportunities and have complex products that require higher value-added services. We believe this strategy differentiates us from our competitors and will help drive more sustainable revenue growth and provide opportunities for us to ultimately achieve operating margins that exceed industry standards. There are many challenges to successfully executing our strategy. For example, we compete with a number of companies in each of our key end markets. This includes companies that are much larger than we are and smaller companies that focus on a particular niche. Although we believe we are well-positioned in each of our key end markets and seek to differentiate ourselves from our competitors, competition remains intense and profitably growing our revenues has been challenging. Additionally, the COVID-19 pandemic created a unique and challenging environment in which our results of operations in 2021 and 2020 were significantly and negatively impacted. These impacts arose from rapidly changing market and economic conditions caused by the pandemic, as well as by numerous measures imposed by government authorities to try to limit the spread of the virus. These conditions and measures disrupted our operations and those of our customers, interrupted the supply of components, reduced the capacity of our logistics providers to deliver components and products and resulted in temporary closures of manufacturing sites and reduced staffing of our plants. We are unable to accurately predict the full impact that the COVID-19 pandemic will have on us due to a number of uncertainties, including the duration of ongoing supply chain constraints directly and indirectly caused by the pandemic, the extent of the impact of the pandemic on our customers' businesses, the number of employees who may become infected or exposed to infected persons, the need for temporary plant closures caused by large scale employee infections, the duration of the outbreak, the continued efficacy and availability of COVID-19 vaccines, the geographic locations of any future outbreaks, including outbreaks caused by variants of COVID-19, such as the Omicron variant and the BA.2 subvariant, and actions that government authorities may take in response. For example, although acute pandemic conditions have abated in many regions in which we operate, recent increases in infections inChina , and the measures being taken by the government in response, have disrupted the operations of certain of our plants. We believe it is likely that the pandemic and related supply chain disruptions will continue to have a negative impact on our business, results of operations and financial condition for the foreseeable future. A small number of customers have historically generated a significant portion of our net sales. Sales to our ten largest customers have typically represented approximately 50% of our net sales. Two customers represented 10% or more of our net sales for the three and six months endedApril 2, 2022 . One customer represented 10% or more of our net sales for the three and six months endedApril 3, 2021 . We typically generate about 80% of our net sales from products manufactured in our non-U.S. operations. The concentration of foreign operations has resulted primarily from a desire on the part of many of our customers to manufacture in lower cost regions such asAsia ,Latin America andEastern Europe . Historically, we have had substantial recurring sales to existing customers. We typically enter into supply agreements with our major OEM customers. These agreements generally have terms ranging from three to five years and can cover the manufacture of a range of products. Under these agreements, a customer typically purchases its requirements for specific products in particular geographic areas from us. However, these agreements generally do not obligate the customer to purchase minimum quantities of products, which can have the effect of reducing revenue and profitability. In addition, some customer contracts contain cost reduction objectives, which can also have the effect of reducing revenue from such customers. OnMarch 2, 2022 , we entered into a Share Subscription and Purchase Agreement (the "SSPA") and a Joint Venture and Shareholders' Agreement (the "Shareholders' Agreement") withReliance Strategic Business Ventures Limited ("RSVL"), a wholly-owned subsidiary of Reliance Industries Limited. Pursuant to the SSPA and the Shareholders' Agreement, the parties will establishSanmina SCI India Private Limited ("SIPL"), our existing Indian manufacturing entity, as a joint venture to engage in manufacturing inIndia of telecommunications equipment, data center and internet equipment, medical equipment, clean technology equipment and other high-tech equipment. Pursuant to the terms of the SSPA, RSVL will acquire shares of SIPL such that immediately after the closing of this transaction, RSVL will hold 50.1% of the outstanding shares of SIPL and we will hold 49.9% of the outstanding shares of SIPL. We expect the transaction to close during the fourth quarter of 2022. 22 --------------------------------------------------------------------------------
Critical Accounting Policies and Estimates
Management's discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted inthe United States ("GAAP"). We review the accounting policies used in reporting our financial results on a regular basis. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, net sales and expenses and related disclosure of contingent liabilities. On an ongoing basis, we evaluate the process used to develop estimates related to accounts receivable, inventories, income taxes, environmental matters, litigation and other contingencies. We base our estimates on historical experience and on various other assumptions that we believe are reasonable for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Due to the COVID-19 pandemic, the global economy and financial markets have been disrupted and there is a significant amount of uncertainty about the length and severity of the consequences caused by the pandemic. We have considered information available to us as of the date of issuance of these financial statements and are not aware of any specific events or circumstances that would require an update to our estimates or judgments, or a revision to the carrying value of our assets or liabilities. Our estimates may change as new events occur and additional information becomes available. Our actual results may differ materially from these estimates.
A complete description of our critical accounting policies and estimates is
contained in our Annual Report on Form 10-K for the fiscal year ended
Results of Operations
Key Operating Results
Three Months Ended Six Months Ended
April 2, April 3, April 2, April 3,
2022 2021 2022 2021
(In thousands)
Net sales $ 1,911,530 $ 1,699,677 $ 3,668,855 $ 3,454,926
Gross profit $ 152,447 $ 143,098 $ 296,936 $ 284,333
Operating income $ 82,226 $ 64,723 $ 163,659 $ 140,282
Net income $ 53,220 $ 47,037 $ 111,854 $ 95,058
Net Sales
Sales by end market were as follows (dollars in thousands):
Three Months Ended Six Months Ended
April 2, April 3, April 2, April 3,
2022 2021 Increase/(Decrease) 2022 2021 Increase/(Decrease)
Industrial, Medical, Defense and Automotive$ 1,154,720 $ 980,794 $
173,926 17.7 %
$ 196,379 9.8 % Communications Networks and Cloud Infrastructure 756,810 718,883 37,927 5.3 % 1,459,164 1,441,614 17,550 1.2 % Total$ 1,911,530 $ 1,699,677 $ 211,853 12.5 %$ 3,668,855 $ 3,454,926 $ 213,929 6.2 % Net sales increased 12.5% in the second quarter of 2022 compared to the second quarter of 2021. Net sales increased 6.2% in the six months endedApril 2, 2022 compared to the six months endedApril 3, 2021 . These increases were primarily due to stronger demand overall and new programs in our industrial and data communications segments.
Gross Margin
Gross margin decreased to 8.0% for the second quarter of 2022 from 8.4% for the second quarter of 2021. IMS gross margin increased to 7.0% for the second quarter of 2022, from 6.9% for the second quarter of 2021. CPS gross margin decreased to 12.1% for the second quarter of 2022, from 14.2% for the second quarter of 2021, primarily due to less favorable mix. Gross margin decreased to 8.1% for the six months endedApril 2, 2022 from 8.2% for the six months endedApril 3, 2021 . IMS gross margin increased to 7.2% for the six months endedApril 3, 2021 , from 7.1% for the six months endedApril 3 , 23 -------------------------------------------------------------------------------- 2021. CPS gross margin decreased to 11.9% for the six months endedApril 3, 2021 , from 13.4% for the six months endedApril 3, 2021 , primarily due to a less favorable mix of revenue between the various operating segments within CPS and unfavorable product mix within the Printed Circuit Boards operating segment of CPS. We have experienced fluctuations in gross margin in the past and may continue to do so in the future. Fluctuations in our gross margins may also be caused by a number of other factors, including: •the ongoing impacts of the COVID-19 pandemic on our operations, the operations of our suppliers and on our customers' businesses; •capacity utilization which, if lower, results in lower margins due to fixed costs being absorbed by lower volumes; •changes in the mix of high and low margin products demanded by our customers; •competition in theEMS industry and pricing pressures from OEMs due to greater focus on cost reduction; •the amount of our provisions for excess and obsolete inventory, including those associated with distressed customers; •levels of operational efficiency and production yields; and •our ability to transition the location of and ramp manufacturing and assembly operations when requested by a customer in a timely and cost-effective manner.
Selling, General and Administrative
Selling, General and Administrative expenses increased$0.7 million , from$61.1 million , or 3.6% of net sales, in the second quarter of 2021 to$61.8 million , or 3.2% of net sales, in the second quarter of 2022. Selling, General and Administrative expenses increased$3.2 million , from$120.1 million , or 3.5% of net sales, in the six months endedApril 3, 2021 to$123.3 million , or 3.4% of net sales, in the six months endedApril 2, 2022 . The increase was primarily due to higher incentive compensation and certain other expenses, partially offset by reduced headcount expenses.
Restructuring
The following table provides a summary of restructuring costs:
Restructuring Expense
Three Months Ended Six Months Ended
April 2, April 3, April 2, April 3,
2022 2021 2022 2021
(In thousands)
Severance costs $ 80 $ 10,656 $ (163) $ 11,492
Other exit costs 228 9 639 9
Total - Q1 FY20 Plan 308 10,665 476 11,501
Costs incurred for other plans 2,623 1,215 3,870 2,283
Total - all plans $ 2,931 $ 11,880 $ 4,346 $ 13,784
Q1 FY20 Plan
On October 28, 2019 , we adopted a Company-wide restructuring plan ("Q1 FY20
Plan"), under which we had incurred costs of approximately $30 million as of
April 2, 2022 . These costs consist primarily of severance, the majority of which
had been paid as of the end of the second quarter of 2022. Remaining cash
payments are expected to occur through the end of 2023. Actions under this plan
are substantially complete.
Other Restructuring Plans
Other plans include a number of plans for which costs are not expected to be material individually or in the aggregate.
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--------------------------------------------------------------------------------All Plans
Our IMS segment incurred costs of$9 million for the six months endedApril 3, 2021 and none for the six months endedApril 2, 2022 . Our CPS segment incurred costs of$4 million for each of the six months endedApril 2, 2022 andApril 3, 2021 . We had accrued liabilities of$4 million and$6 million as ofApril 2, 2022 andOctober 2, 2021 for restructuring costs (exclusive of long-term environmental remediation liabilities).
We expect to incur restructuring costs in future periods primarily for vacant facilities and former sites for which we are or may be responsible for environmental remediation.
Gain on Sale of Long-lived Assets
During the first quarter of 2022, we recognized
Other Income (Expense), Net
Other income (expense), net for the three months endedApril 2, 2022 andApril 3, 2021 , was a net expense of$1 million and a net income of$6 million , respectively. Other income (expense), net for the six months endedApril 2, 2022 andApril 3, 2021 , was a net income of$1 million and$8 million , respectively. We received settlement payments in connection with certain anti-trust class action matters during the second quarter of 2021 of approximately$5 million . In addition, there was a$3 million decline in the market value of participant investment accounts in our deferred compensation plan in the second quarter of 2022 compared to the second quarter of 2021.
Provision for Income Taxes
Our provision for income taxes for the second quarter of 2022 and 2021 was$23 million (30% of income before taxes) and$19 million (29% of income before taxes), respectively. Our provision for income taxes for the six months endedApril 2, 2022 andApril 3, 2021 was$43 million (28% of income before taxes) and$44 million (32% of income before taxes), respectively. The tax rate was lower for the six months endedApril 2, 2022 compared to the six months endedApril 3, 2021 due to a$3 million decrease in unfavorable discrete items.
It is reasonably possible that our liability for uncertain tax positions could
decrease materially during the quarter ending
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--------------------------------------------------------------------------------Liquidity and Capital Resources
Six Months Ended
April 2, April 3,
2022 2021
(In thousands)
Net cash provided by (used in):
Operating activities $ 147,273 $ 142,900
Investing activities (45,625) (25,540)
Financing activities (190,295) (22,350)Effect of exchange rate changes on cash and cash equivalents (1,486)
(360)
Increase (Decrease) in cash and cash equivalents$ (90,133)
Key Working Capital Management Measures
As of
April 2, October 2,
2022 2021
Days sales outstanding (1) 60 64
Contract asset days (2) 18 19
Inventory turns (3) 5.3 6.3
Days inventory on hand (4) 70 58
Accounts payable days (5) 91 83
Cash cycle days (6) 57 58
(1) Days sales outstanding (a measure of how quickly we collect our accounts receivable), or "DSO", is calculated as the ratio of average accounts receivable, net, to average daily net sales for the quarter.
(2) Contract asset days (a measure of how quickly we transfer contract assets to accounts receivable) are calculated as the ratio of average contract assets to average daily net sales for the quarter. (3) Inventory turns (annualized) (a measure of how quickly we sell inventory) are calculated as the ratio of four times our cost of sales for the quarter to average inventory.
(4) Days inventory on hand (a measure of how quickly we turn inventory into sales) is calculated as the ratio of average inventory for the quarter to average daily cost of sales for the quarter.
(5) Accounts payable days (a measure of how quickly we pay our suppliers), or "DPO", is calculated as the ratio of 365 days divided by accounts payable turns, in which accounts payable turns is calculated as the ratio of four times our cost of sales for the quarter to average accounts payable.
(6) Cash cycle days (a measure of how quickly we convert investments in inventory to cash) is calculated as days inventory on hand plus days sales outstanding and contract assets days minus accounts payable days.
Cash and cash equivalents were$560 million atApril 2, 2022 and$650 million atOctober 2, 2021 . Our cash levels vary during any given quarter depending on the timing of collections from customers and payments to suppliers, borrowings under our credit facilities, sales of accounts receivable under numerous programs we utilize, repurchases of common stock and other factors. Our working capital was$1.5 billion as ofApril 2, 2022 andOctober 2, 2021 . Net cash provided by operating activities was$147 million and$143 million for the six months endedApril 2, 2022 andApril 3, 2021 , respectively. Cash flows from operating activities consist of: (1) net income adjusted to exclude non-cash items such as depreciation and amortization, deferred income taxes and stock-based compensation expense, and (2) changes in net operating assets, which are comprised of accounts receivable, contract assets, inventories, prepaid expenses and other assets, accounts payable, accrued liabilities and other long-term liabilities. Our working capital metrics tend to fluctuate from quarter-to-quarter based on factors such as the linearity of our shipments to customers and purchases from suppliers, customer and supplier mix, the extent to which we factor customer receivables and the negotiation of payment terms with customers and suppliers. These fluctuations can significantly affect our cash flows from operating activities. 26 -------------------------------------------------------------------------------- During the six months endedApril 2, 2022 , we generated$194 million of cash primarily from earnings, excluding non-cash items, and used$47 million of cash due primarily to increases in accounts receivable and inventory, partially offset by increases in accounts payable and accrued liabilities. Individual components of operating assets and liabilities fluctuate for a number of reasons, including linearity of purchases and sales, the mix of customer and supplier payment terms within our accounts receivable and accounts payable, and the amount and timing of sales of accounts receivable. The increase in accounts receivable is primarily attributable to an increase in sales and billings to customers for their inventory obligations. The increase in inventory is primarily due to shortages of certain components that prevented us from shipping all products for which we had both demand and the other components necessary to build such products. The increase in accounts payable was primarily attributable to an increase in material receipts, consistent with the increase in inventory. The increase in accrued liabilities was primarily due to an increase in advance payments from customers and an increase in amounts collected under our accounts receivable purchasing program that had not been remitted as of the end of the quarter to the financial institutions that purchased the receivables. Net cash used in investing activities was$46 million and$26 million for the six months endedApril 2, 2022 andApril 3, 2021 , respectively. During the six months endedApril 2, 2022 , we used$53 million of cash for capital expenditures, purchased$1 million of long-term investments and received proceeds of$8 million primarily from the sale of a certain property. During the six months endedApril 3, 2021 , we used$26 million of cash for capital expenditures. Net cash used in financing activities was$190 million and$22 million for the six months endedApril 2, 2022 andApril 3, 2021 , respectively. During the six months endedApril 2, 2022 , we used$182 million of cash to repurchase common stock (including$13 million related to employee tax withholding on vested restricted stock units), repaid an aggregate of$9 million of long-term debt and received$1 million of net proceeds from issuances of common stock pursuant to stock option exercises. During the six months endedApril 3, 2021 , we used$15 million of cash to repurchase common stock (including$6 million related to employee tax withholdings on vested restricted stock units), repaid an aggregate of$9 million of long-term debt and received$2 million of net proceeds from issuances of common stock pursuant to stock option exercises.
Other Liquidity Matters
During the six months endedApril 2, 2022 andApril 3, 2021 , we repurchased 4.4 million and 0.4 million shares of our common stock for$169 million and$9 million , respectively, under stock repurchase programs authorized by the Board of Directors inOctober 2019 and during the first quarter of 2022. These programs have no expiration dates and the timing of repurchases will depend upon capital needs to support the growth of our business, market conditions and other factors. Although stock repurchases are intended to increase stockholder value, purchases of shares reduce our liquidity. As a result, the timing of future repurchases depends upon our future capital needs, market conditions and other factors. As ofApril 2, 2022 , an aggregate of$111 million remains available under these programs. Subsequent to the end of the second quarter of fiscal 2022, the Board of Directors approved a new$200 million stock repurchase program containing the same terms as the previously approved plans. We entered into a Receivable Purchase Agreement (the "RPA") with certain third-party banking institutions for the sale of trade receivables generated from sales to certain customers, subject to acceptance by, and a funding commitment from, the banks that are party to the RPA. As ofApril 2, 2022 , a maximum of$543 million of sold receivables can be outstanding at any point in time under this program, as amended, subject to limitations under our Amended Cash Flow Revolver. Additionally, the amount available under the RPA is uncommitted and, as such, is available at the discretion of our third-party banking institutions. OnJanuary 16, 2019 , we entered into an amendment to our Amended Cash Flow Revolver which increased the percentage of our total accounts receivable that can be sold and outstanding at any time from 30% to 40%. Trade receivables sold pursuant to the RPA are serviced by us. In addition to the RPA, we have the option to participate in trade receivables sales programs that have been implemented by certain of our customers, as in effect from time to time. We do not service trade receivables sold under these other programs. The sale of receivables under all of these programs is subject to the approval of the banks or customers involved and there can be no assurance that we will be able to sell the maximum amount of receivables permitted by these programs when desired. Under each of the programs noted above, we sell our entire interest in a trade receivable for 100% of face value, less a discount. During each of the six months endedApril 2, 2022 andApril 3, 2021 , we sold approximately$371 million of accounts receivable under these programs. Upon sale, these receivables are removed from the condensed consolidated balance 27 -------------------------------------------------------------------------------- sheets and cash received is presented as cash provided by operating activities in the condensed consolidated statements of cash flows. Discounts on sold receivables were not material for any period presented. As ofApril 2, 2022 andOctober 2, 2021 ,$92 million and$7 million , respectively, of accounts receivable sold under the RPA and subject to servicing by us remained outstanding and had not yet been collected. Our sole risk with respect to receivables we service is with respect to commercial disputes regarding such receivables. Commercial disputes include billing errors, returns and similar matters. To date, we have not been required to repurchase any receivable we have sold due to a commercial dispute. Additionally, we are required to remit amounts collected as servicer on a weekly basis to the financial institutions that purchased the receivables. As ofApril 2, 2022 andOctober 2, 2021 ,$78 million and$18 million , respectively, had been collected but not yet remitted. The unremitted amount was classified in accrued liabilities on the condensed consolidated balance sheets. We enter into forward interest rate swap agreements with independent counterparties to partially hedge the variability in cash flows due to changes in the benchmark interest rate (LIBOR) associated with anticipated variable rate borrowings. These interest rate swaps have a maturity date ofDecember 1, 2023 , and effectively convert our variable interest rate obligations to fixed interest rate obligations. These swaps are accounted for as cash flow hedges under ASC Topic 815, Derivatives and Hedging. Interest rate swaps with an aggregate notional amount of$350 million were outstanding as ofApril 2, 2022 andOctober 2, 2021 . The aggregate effective interest rate under these swaps as ofApril 2, 2022 was approximately 4.3%. As ofApril 2, 2022 , due to a decline in interest rates since the time the swaps were put in place, these interest rate swaps had a negative value of$3 million as ofApril 2, 2022 , of which the majority is included in accrued liabilities and the remaining amount is included in other long-term liabilities on the condensed consolidated balance sheets. In the ordinary course of business, we are or may become party to legal proceedings, claims and other contingencies, including environmental, regulatory, warranty and employee matters and examinations by government agencies. As ofApril 2, 2022 , we had accrued liabilities of$31 million related to such matters. We cannot accurately predict the outcome of these matters or the amount or timing of cash flows that may be required to defend ourselves or to settle such matters or that these reserves will be sufficient to fully satisfy our contingent liabilities. As ofApril 2, 2022 , we had a liability of$89 million for uncertain tax positions. Our estimate of liabilities for uncertain tax positions is based on a number of subjective assessments, including the likelihood of a tax obligation being assessed, the amount of taxes (including interest and penalties) that would ultimately be payable, and our ability to settle any such obligations on favorable terms. Therefore, the amount of future cash flows associated with uncertain tax positions may be significantly higher or lower than our recorded liability and we are unable to reliably estimate when cash settlement may occur. It is reasonably possible that our liability for uncertain tax positions could decrease materially during the quarter endingJuly 2, 2022 based upon the resolution of audits and expiration of statutes of limitations. Our liquidity needs are largely dependent on changes in our working capital, including sales of accounts receivable under our receivables sales programs and the extension of trade credit by our suppliers, investments in manufacturing inventory, facilities and equipment, repayments of obligations under outstanding indebtedness and repurchases of common stock. We generated$147 million of cash from operations in the second quarter of 2022. Our primary sources of liquidity as ofApril 2, 2022 consisted of (1) cash and cash equivalents of$560 million ; (2) our Amended Cash Flow Revolver, under which$692 million , net of outstanding borrowings and letters of credit, was available; (3) our foreign short-term borrowing facilities of$70 million , all of which was available; (4) proceeds from the sale of accounts receivable under our receivables sales programs, if accepted by the counterparties to such programs; and (5) cash generated from operations. Subject to satisfaction of certain conditions, including obtaining additional commitments from existing and/or new lenders, we may increase the revolver commitments under the Amended Cash Flow Revolver by an additional$200 million . We believe our existing cash resources and other sources of liquidity, together with cash generated from operations, will be sufficient to meet our working capital requirements through at least the next 12 months. However, should demand for our services decrease significantly over the next 12 months or should we experience significant increases in delinquent or uncollectible accounts receivable for any reason, including in particular continued or worsening economic conditions caused by the COVID-19 pandemic, our cash provided by operations could decrease significantly and we could be required to seek additional sources of liquidity to continue our operations at their current level. We distribute our cash among a number of financial institutions that we believe to be of high quality. However, there can be no assurance that one or more of such institutions will not become insolvent in the future, in which case all or a portion of our uninsured funds on deposit with such institutions could be lost. As ofApril 2, 2022 , 54% of our cash balance was held inthe United States . Should we choose or need to remit cash tothe United States from our foreign locations, we may incur tax obligations which would reduce the amount of cash ultimately available tothe United States . We believe that cash held inthe United States , together with liquidity available under our 28 --------------------------------------------------------------------------------
Amended Cash Flow Revolver and cash from foreign subsidiaries that could be
remitted to
Off-Balance Sheet Arrangements
As ofApril 2, 2022 , we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by theSEC , that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors. 29
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