Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. PLEXUS CORP (785786) 10-Q published on May 03, 2019 at 2:11 pm
Reporting Period: Mar 29, 2019
The effective tax rates for the three and six months ended March 30, 2019, were 13.7% and 25.2%, respectively, compared to the effective tax rates of 16.5% and 297.0% for the three and six months ended March 31, 2018, respectively. The effective tax rate for the three months ended March 30, 2019 decreased from the effective tax rate for the three months ended March 31, 2018, primarily due to the $13.5 million one-time bonus paid to full-time, non-executive employees ("one-time employee bonus") paid during the three months ended March 31, 2018, and the geographical distribution of pre-tax earnings. The effective tax rate for the six months ended March 30, 2019 decreased from the effective tax rate for the six months ended March 31, 2018, primarily due to the impact of the U.S. Tax Cuts & Jobs Act (“Tax Reform”), which was enacted on December 22, 2017, and an increase in pre-tax earnings which was impacted by the one-time employee bonus in the prior year.
Performance stock units ("PSUs") are payable in shares of the Company's common stock. Beginning for fiscal 2017 grants, PSUs vest based on the relative total shareholder return ("TSR") of the Company's common stock as compared to the companies in the Russell 3000 index, a market condition, and the Company's economic return performance during the three year performance period, a performance condition. The Company uses the Monte Carlo valuation model to determine the fair value of PSUs at the date of grant for PSUs that vest based on the relative TSR of the Company's common stock. The Company uses its stock price on grant date as the fair value assigned to PSUs that vest based on the Company's economic return performance. PSUs granted in fiscal 2016 and prior years vested based solely on the relative TSR of the Company's common stock as compared to companies in the Russell 3000 Index during a three year performance period. The number of shares that may be issued pursuant to PSUs ranges from zero to 0.5 million and is dependent upon the Company's TSR and economic return performance over the applicable performance periods.
As compared to the prior year periods, the increase in cost of sales for both the three and six months ended March 30, 2019 was primarily due to the increase in net sales and customer mix changes that resulted in cost inefficiencies, partially offset by a $13.5 million one-time bonus paid to full-time, non-executive employees ("one-time employee bonus") that was approved and paid during the three months ended March 31, 2018, of which $12.6 million impacted cost of sales in that period.
Gross profit. Gross profit for the three months ended March 30, 2019 increased $17.6 million as compared to the three months ended March 31, 2018. Gross profit for the six months ended March 30, 2019 increased $26.5 million as compared to the six months ended March 31, 2018. Gross margin increased 140 and 70 basis points as compared to the three and six months ended March 31, 2018, respectively. The primary drivers of the increase in gross profit and gross margin for both periods were the net sales increase, as noted above, and the one-time employee bonus that was approved and paid during the three months ended March 31, 2018, as noted above.
The effective tax rate, as reported, for the three months ended March 30, 2019 decreased from the effective tax rate, as reported, for the three months ended March 31, 2018, primarily due to the $13.5 million one-time employee bonus paid during the three months ended March 31, 2018, and geographical distribution of pre-tax earnings. The effective tax rate, as reported, for the six months ended March 30, 2019 decreased from the effective tax rate, as reported for the six months ended March 31, 2018, primarily due to the impact of the U.S. Tax Cuts & Jobs Act (“Tax Reform”), which was enacted on December 22, 2017, and an increase in pre-tax earnings, which was impacted by a one-time employee bonus paid in the second quarter of fiscal 2018.