Singapore
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|
Not Applicable
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(State or other jurisdiction of
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|
(I.R.S. Employer
|
incorporation or organization)
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Identification No.)
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2 Changi South Lane,
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|
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Singapore
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486123
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(Address of registrant’s principal executive offices)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Emerging growth company
o
|
|
|
|
|
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Class
|
|
Outstanding at July 25, 2018
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Ordinary Shares, No Par Value
|
|
532,762,042
|
|
|
Page
|
|
|
|
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||
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||
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||
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/s/ DELOITTE & TOUCHE LLP
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San Jose, California
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August 2, 2018
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|
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As of June 29, 2018
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As of March 31, 2018
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||||
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(In thousands, except share amounts)
(Unaudited) |
||||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
1,254,639
|
|
|
$
|
1,472,424
|
|
Accounts receivable, net of allowance for doubtful accounts of $62,141 and $60,051 as of June 29, 2018 and March 31, 2018, respectively
|
2,890,227
|
|
|
2,517,695
|
|
||
Contract assets
|
323,599
|
|
|
—
|
|
||
Inventories
|
3,984,571
|
|
|
3,799,829
|
|
||
Other current assets
|
1,231,773
|
|
|
1,380,466
|
|
||
Total current assets
|
9,684,809
|
|
|
9,170,414
|
|
||
Property and equipment, net
|
2,190,080
|
|
|
2,239,506
|
|
||
Goodwill
|
1,094,776
|
|
|
1,121,170
|
|
||
Other intangible assets, net
|
390,827
|
|
|
424,433
|
|
||
Other assets
|
949,196
|
|
|
760,332
|
|
||
Total assets
|
$
|
14,309,688
|
|
|
$
|
13,715,855
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
|
|
|
|
||
Bank borrowings and current portion of long-term debt
|
$
|
42,903
|
|
|
$
|
43,011
|
|
Accounts payable
|
5,709,079
|
|
|
5,122,303
|
|
||
Accrued payroll
|
377,461
|
|
|
383,332
|
|
||
Other current liabilities
|
1,665,432
|
|
|
1,719,418
|
|
||
Total current liabilities
|
7,794,875
|
|
|
7,268,064
|
|
||
Long-term debt, net of current portion
|
2,877,089
|
|
|
2,897,631
|
|
||
Other liabilities
|
528,405
|
|
|
531,587
|
|
||
Shareholders’ equity
|
|
|
|
|
|
||
Flex Ltd. shareholders’ equity
|
|
|
|
|
|
||
Ordinary shares, no par value; 582,975,757 and 578,317,848 issued, and 532,736,402 and 528,078,493 outstanding as of June 29, 2018 and March 31, 2018, respectively
|
6,657,745
|
|
|
6,636,747
|
|
||
Treasury stock, at cost; 50,239,355 shares as of June 29, 2018 and March 31, 2018
|
(388,215
|
)
|
|
(388,215
|
)
|
||
Accumulated deficit
|
(2,989,377
|
)
|
|
(3,144,114
|
)
|
||
Accumulated other comprehensive loss
|
(170,834
|
)
|
|
(85,845
|
)
|
||
Total shareholders’ equity
|
3,109,319
|
|
|
3,018,573
|
|
||
Total liabilities and shareholders’ equity
|
$
|
14,309,688
|
|
|
$
|
13,715,855
|
|
|
Three-Month Periods Ended
|
||||||
|
June 29, 2018
|
|
June 30, 2017
|
||||
|
(In thousands, except per share amounts)
(Unaudited) |
||||||
Net sales
|
$
|
6,423,956
|
|
|
$
|
6,008,272
|
|
Cost of sales
|
6,046,102
|
|
|
5,601,340
|
|
||
Gross profit
|
377,854
|
|
|
406,932
|
|
||
Selling, general and administrative expenses
|
262,882
|
|
|
250,811
|
|
||
Intangible amortization
|
18,517
|
|
|
19,901
|
|
||
Interest and other, net
|
41,742
|
|
|
26,876
|
|
||
Other income, net
|
(86,924
|
)
|
|
(36,165
|
)
|
||
Income before income taxes
|
141,637
|
|
|
145,509
|
|
||
Provision for income taxes
|
25,602
|
|
|
20,799
|
|
||
Net income
|
$
|
116,035
|
|
|
$
|
124,710
|
|
|
|
|
|
||||
Earnings per share:
|
|
|
|
|
|
||
Basic
|
$
|
0.22
|
|
|
$
|
0.24
|
|
Diluted
|
$
|
0.22
|
|
|
$
|
0.23
|
|
Weighted-average shares used in computing per share amounts:
|
|
|
|
|
|
||
Basic
|
529,380
|
|
|
530,268
|
|
||
Diluted
|
535,454
|
|
|
538,633
|
|
|
Three-Month Periods Ended
|
||||||
|
June 29, 2018
|
|
June 30, 2017
|
||||
|
(In thousands)
(Unaudited) |
||||||
Net income
|
$
|
116,035
|
|
|
$
|
124,710
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||
Foreign currency translation adjustments, net of zero tax
|
(44,086
|
)
|
|
10,836
|
|
||
Unrealized loss on derivative instruments and other, net of zero tax
|
(40,903
|
)
|
|
(2,169
|
)
|
||
Comprehensive income
|
$
|
31,046
|
|
|
$
|
133,377
|
|
|
Three-Month Periods Ended
|
||||||
|
June 29, 2018
|
|
June 30, 2017
|
||||
|
(In thousands)
(Unaudited)
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||
Net income
|
$
|
116,035
|
|
|
$
|
124,710
|
|
Depreciation, amortization and other impairment charges
|
121,763
|
|
|
131,396
|
|
||
Gain from deconsolidation of a subsidiary entity
|
(91,025
|
)
|
|
—
|
|
||
Changes in working capital and other
|
(818,581
|
)
|
|
(951,862
|
)
|
||
Net cash used in operating activities
|
(671,808
|
)
|
|
(695,756
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||
Purchases of property and equipment
|
(172,247
|
)
|
|
(124,851
|
)
|
||
Proceeds from the disposition of property and equipment
|
2,336
|
|
|
5,476
|
|
||
Acquisition of businesses, net of cash acquired
|
—
|
|
|
(213,718
|
)
|
||
Proceeds from divestiture of businesses, net of cash held in divested businesses
|
—
|
|
|
(616
|
)
|
||
Cash collections of deferred purchase price
|
656,766
|
|
|
834,272
|
|
||
Other investing activities, net
|
(15,218
|
)
|
|
(18,549
|
)
|
||
Net cash provided by investing activities
|
471,637
|
|
|
482,014
|
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||
Proceeds from bank borrowings and long-term debt
|
150,313
|
|
|
—
|
|
||
Repayments of bank borrowings and long-term debt
|
(150,344
|
)
|
|
(7,554
|
)
|
||
Payments for repurchases of ordinary shares
|
—
|
|
|
(73,864
|
)
|
||
Net proceeds from issuance of ordinary shares
|
45
|
|
|
696
|
|
||
Other financing activities, net
|
—
|
|
|
57,628
|
|
||
Net cash provided by (used in) financing activities
|
14
|
|
|
(23,094
|
)
|
||
Effect of exchange rates on cash and cash equivalents
|
(17,628
|
)
|
|
(11,642
|
)
|
||
Net decrease in cash and cash equivalents
|
(217,785
|
)
|
|
(248,478
|
)
|
||
Cash and cash equivalents, beginning of period
|
1,472,424
|
|
|
1,830,675
|
|
||
Cash and cash equivalents, end of period
|
$
|
1,254,639
|
|
|
$
|
1,582,197
|
|
|
|
|
|
|
|
||
Non-cash investing activities:
|
|
|
|
|
|
||
Unpaid purchases of property and equipment
|
$
|
148,535
|
|
|
$
|
84,472
|
|
Non-cash proceeds from sale of Wink
|
$
|
—
|
|
|
$
|
59,000
|
|
Non-cash investment in AutoLab (Note 2)
|
$
|
132,052
|
|
|
$
|
—
|
|
Leased Asset to AutoLab (Note 2)
|
$
|
76,531
|
|
|
$
|
—
|
|
•
|
Communications & Enterprise Compute ("CEC"), which includes telecom business of radio access base stations, remote radio heads, and small cells for wireless infrastructure; networking business which includes optical, routing, broadcasting, and switching products for the data and video networks; server and storage platforms for both enterprise and cloud-based deployments; next generation storage and security appliance products; and rack level solutions, converged infrastructure and software-defined product solutions;
|
•
|
Consumer Technologies Group ("CTG"), which includes consumer-related businesses in connected living, wearables, gaming, augmented and virtual reality, fashion and apparel, and mobile devices; and including various supply chain solutions for notebook personal computers, tablets, and printers;
|
•
|
Industrial and Emerging Industries ("IEI"), which is comprised of energy including advanced metering infrastructure, energy storage, smart lighting, electric vehicle infrastructure, smart solar energy, semiconductor and capital equipment, office solutions, industrial, home and lifestyle, industrial automation, and kiosks; and
|
•
|
High Reliability Solutions ("HRS"), which is comprised of health solutions business, including consumer health, digital health, disposables, precision plastics, drug delivery, diagnostics, life sciences and imaging equipment; automotive business, including vehicle electrification, connectivity, autonomous vehicles, and clean technologies.
|
Condensed Consolidated Balance Sheet
|
|
|
|
|||
|
Impact of Adopting ASC 606
|
|||||
(In thousands)
(Unaudited) |
Balance at March 31, 2018
|
Adjustments
|
Balance at April 1, 2018
|
|||
|
|
|
|
|||
ASSETS
|
|
|
|
|||
Contract assets
|
—
|
|
412,787
|
|
412,787
|
|
Inventories
|
3,799,829
|
|
(409,252
|
)
|
3,390,577
|
|
Other current assets
|
1,380,466
|
|
(51,479
|
)
|
1,328,987
|
|
|
|
|
|
|||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|||
Other current liabilities
|
1,719,418
|
|
(87,897
|
)
|
1,631,521
|
|
Other liabilities
|
531,587
|
|
2,098
|
|
533,685
|
|
|
|
|
|
|||
Accumulated deficit
|
(3,144,114
|
)
|
(37,855
|
)
|
(3,181,969
|
)
|
Condensed Consolidated Balance Sheet
|
|
|
|
|||
As of June 29, 2018
|
|
|
|
|||
|
Impact of Adopting ASC 606
|
|||||
(In thousands)
(Unaudited) |
As Reported
|
Adjustments
|
Balance without ASC 606 Adoption
|
|||
ASSETS
|
|
|
|
|||
Contract assets
|
323,599
|
|
(323,599
|
)
|
—
|
|
Inventories
|
3,984,571
|
|
321,710
|
|
4,306,281
|
|
Other current assets
|
1,231,773
|
|
39,184
|
|
1,270,957
|
|
|
|
|
|
|||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|||
Other current liabilities
|
1,665,432
|
|
70,317
|
|
1,735,749
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
(2,989,377
|
)
|
(33,022
|
)
|
(3,022,399
|
)
|
Condensed Consolidated Statement of Operations
|
|
|
|
||||||
Three-months ended June 29, 2018
|
|
|
|
||||||
|
Impact of Adopting ASC 606
|
||||||||
(In thousands)
(Unaudited)
|
As Reported
|
Adjustments
|
Balance without ASC 606 Adoption
|
||||||
Net sales
|
$
|
6,423,956
|
|
$
|
101,974
|
|
$
|
6,525,930
|
|
Cost of sales
|
6,046,102
|
|
97,141
|
|
6,143,243
|
|
|||
Gross profit
|
377,854
|
|
4,833
|
|
382,687
|
|
|||
Net income
|
$
|
116,035
|
|
$
|
4,833
|
|
$
|
120,868
|
|
•
|
The Company elected to not disclose information about remaining performance obligations as its performance obligations generally have an expected durations of one year or less.
|
•
|
In accordance with ASC 606-10-25-18B the Company will account for certain shipping and handling as activities to fulfill the promise to transfer the good, instead of a promised service to its customer.
|
•
|
In accordance with ASC 606-10-32-18 the Company elected to not adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will generally be one year or less.
|
|
As of June 29, 2018
|
|
As of March 31, 2018
|
||||
|
(In thousands)
|
||||||
Raw materials
|
$
|
3,096,814
|
|
|
$
|
2,760,410
|
|
Work-in-progress
|
403,625
|
|
|
450,569
|
|
||
Finished goods
|
484,132
|
|
|
588,850
|
|
||
|
$
|
3,984,571
|
|
|
$
|
3,799,829
|
|
|
HRS
|
|
CTG
|
|
IEI
|
|
CEC
|
|
Amount
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Balance, beginning of the year
|
$
|
550,983
|
|
|
$
|
107,748
|
|
|
$
|
337,707
|
|
|
$
|
124,732
|
|
|
$
|
1,121,170
|
|
Foreign currency translation adjustments (1)
|
(26,394
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,394
|
)
|
|||||
Balance, end of the period
|
$
|
524,589
|
|
|
$
|
107,748
|
|
|
$
|
337,707
|
|
|
$
|
124,732
|
|
|
$
|
1,094,776
|
|
(1)
|
During the
three-month period ended
June 29, 2018
, the Company recorded
$26.4 million
of foreign currency translation adjustments primarily related to the goodwill associated with the acquisition of Mirror Controls International ("MCi") and AGM Automotive ("AGM"), as the U.S. Dollar fluctuated against foreign currencies.
|
|
As of June 29, 2018
|
|
As of March 31, 2018
|
||||||||||||||||||||
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net
Carrying Amount |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net
Carrying Amount |
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Customer-related intangibles
|
$
|
303,790
|
|
|
$
|
(88,667
|
)
|
|
$
|
215,123
|
|
|
$
|
306,943
|
|
|
$
|
(79,051
|
)
|
|
$
|
227,892
|
|
Licenses and other intangibles
|
286,177
|
|
|
(110,473
|
)
|
|
175,704
|
|
|
304,007
|
|
|
(107,466
|
)
|
|
196,541
|
|
||||||
Total
|
$
|
589,967
|
|
|
$
|
(199,140
|
)
|
|
$
|
390,827
|
|
|
$
|
610,950
|
|
|
$
|
(186,517
|
)
|
|
$
|
424,433
|
|
Fiscal Year Ending March 31,
|
Amount
|
||
|
(In thousands)
|
||
2019 (1)
|
$
|
54,200
|
|
2020
|
66,514
|
|
|
2021
|
62,135
|
|
|
2022
|
53,323
|
|
|
2023
|
45,089
|
|
|
Thereafter
|
109,566
|
|
|
Total amortization expense
|
$
|
390,827
|
|
(1)
|
Represents estimated amortization for the remaining
nine
-month period ending
March 31, 2019
.
|
|
Contract Assets
|
||
Beginning balance, April 1, 2018
|
$
|
—
|
|
Cumulative effect adjustment at April 1, 2018
|
412,787
|
|
|
Revenue recognized
|
1,560,734
|
|
|
Amounts collected or invoiced
|
(1,649,922
|
)
|
|
Ending balance, June 29, 2018
|
$
|
323,599
|
|
|
HRS
|
|
CTG
|
|
IEI
|
|
CEC
|
|
Total
|
||||||||||
Timing of Transfer
|
|
|
|
|
|
|
|
|
|
||||||||||
Point in time
|
$
|
1,005,180
|
|
|
$
|
1,300,637
|
|
|
$
|
1,063,898
|
|
|
$
|
1,493,507
|
|
|
$
|
4,863,222
|
|
Over time
|
210,245
|
|
|
507,297
|
|
|
382,413
|
|
|
460,779
|
|
|
1,560,734
|
|
|||||
Total segment
|
$
|
1,215,425
|
|
|
$
|
1,807,934
|
|
|
$
|
1,446,311
|
|
|
$
|
1,954,286
|
|
|
$
|
6,423,956
|
|
|
Three-Month Periods Ended
|
||||||
|
June 29, 2018
|
|
June 30, 2017
|
||||
|
(In thousands)
|
||||||
Cost of sales
|
$
|
5,404
|
|
|
$
|
3,319
|
|
Selling, general and administrative expenses
|
15,549
|
|
|
18,477
|
|
||
Total share-based compensation expense
|
$
|
20,953
|
|
|
$
|
21,796
|
|
|
Three-Month Periods Ended
|
||||||
|
June 29, 2018
|
|
June 30, 2017
|
||||
|
(In thousands, except per share amounts)
|
||||||
Net income
|
$
|
116,035
|
|
|
$
|
124,710
|
|
Shares used in computation:
|
|
|
|
|
|
||
Weighted-average ordinary shares outstanding
|
529,380
|
|
|
530,268
|
|
||
Basic earnings per share
|
$
|
0.22
|
|
|
$
|
0.24
|
|
|
|
|
|
||||
Diluted earnings per share:
|
|
|
|
|
|
||
Net income
|
$
|
116,035
|
|
|
$
|
124,710
|
|
Shares used in computation:
|
|
|
|
|
|
||
Weighted-average ordinary shares outstanding
|
529,380
|
|
|
530,268
|
|
||
Weighted-average ordinary share equivalents from stock options and awards (1) (2)
|
6,074
|
|
|
8,365
|
|
||
Weighted-average ordinary shares and ordinary share equivalents outstanding
|
535,454
|
|
|
538,633
|
|
||
Diluted earnings per share
|
$
|
0.22
|
|
|
$
|
0.23
|
|
|
Foreign Currency Amount
|
|
Notional Contract Value in USD
|
||||||||||
Currency
|
Buy
|
|
Sell
|
|
Buy
|
|
Sell
|
||||||
|
(In thousands)
|
||||||||||||
Cash Flow Hedges
|
|
|
|
|
|
|
|
|
|
|
|||
CNY
|
2,861,000
|
|
|
—
|
|
|
$
|
433,268
|
|
|
$
|
—
|
|
EUR
|
69,596
|
|
|
71,597
|
|
|
81,596
|
|
|
83,601
|
|
||
HUF
|
26,081,080
|
|
|
—
|
|
|
92,453
|
|
|
—
|
|
||
ILS
|
180,070
|
|
|
10,500
|
|
|
49,447
|
|
|
2,883
|
|
||
MXN
|
4,842,800
|
|
|
—
|
|
|
241,956
|
|
|
—
|
|
||
MYR
|
396,800
|
|
|
39,000
|
|
|
98,876
|
|
|
9,718
|
|
||
RON
|
163,150
|
|
|
—
|
|
|
40,664
|
|
|
—
|
|
||
SGD
|
45,950
|
|
|
—
|
|
|
33,688
|
|
|
—
|
|
||
Other
|
N/A
|
|
|
N/A
|
|
|
44,590
|
|
|
7,994
|
|
||
|
|
|
|
|
|
|
1,116,538
|
|
|
104,196
|
|
||
Other Foreign Currency Contracts
|
|
|
|
|
|
|
|
|
|
|
|
||
BRL
|
—
|
|
|
596,000
|
|
|
—
|
|
|
155,172
|
|
||
CAD
|
378,908
|
|
|
389,644
|
|
|
285,129
|
|
|
293,208
|
|
||
CNY
|
2,879,061
|
|
|
1,365,680
|
|
|
438,131
|
|
|
206,927
|
|
||
EUR
|
1,657,947
|
|
|
1,855,760
|
|
|
1,923,257
|
|
|
2,153,525
|
|
||
GBP
|
35,446
|
|
|
63,881
|
|
|
46,615
|
|
|
84,113
|
|
||
HUF
|
29,643,799
|
|
|
31,298,908
|
|
|
105,083
|
|
|
110,950
|
|
||
INR
|
3,767,477
|
|
|
1,353,258
|
|
|
55,634
|
|
|
19,751
|
|
||
MXN
|
2,403,304
|
|
|
2,017,270
|
|
|
120,074
|
|
|
100,787
|
|
||
MYR
|
541,260
|
|
|
287,330
|
|
|
134,873
|
|
|
71,598
|
|
||
SGD
|
86,283
|
|
|
48,930
|
|
|
63,257
|
|
|
35,872
|
|
||
Other
|
N/A
|
|
|
N/A
|
|
|
182,696
|
|
|
151,951
|
|
||
|
|
|
|
|
|
|
3,354,749
|
|
|
3,383,854
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||
Total Notional Contract Value in USD
|
|
|
|
|
|
|
$
|
4,471,287
|
|
|
$
|
3,488,050
|
|
|
Fair Values of Derivative Instruments
|
||||||||||||||||||
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||||||||||
|
|
|
Fair Value
|
|
|
|
Fair Value
|
||||||||||||
|
Balance Sheet
Location |
|
June 29,
2018 |
|
March 31,
2018 |
|
Balance Sheet
Location |
|
June 29,
2018 |
|
March 31,
2018 |
||||||||
|
(In thousands)
|
||||||||||||||||||
Derivatives designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency contracts
|
Other current assets
|
|
$
|
3,539
|
|
|
$
|
19,422
|
|
|
Other current liabilities
|
|
$
|
37,996
|
|
|
$
|
7,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency contracts
|
Other current assets
|
|
$
|
12,110
|
|
|
$
|
23,912
|
|
|
Other current liabilities
|
|
$
|
20,252
|
|
|
$
|
18,246
|
|
|
Three-Month Periods Ended
|
||||||||||||||||||||||
|
June 29, 2018
|
|
June 30, 2017
|
||||||||||||||||||||
|
Unrealized loss on
derivative instruments and other |
|
Foreign currency
translation adjustments |
|
Total
|
|
Unrealized loss on derivative
instruments and other |
|
Foreign currency
translation adjustments |
|
Total
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Beginning balance
|
$
|
(35,746
|
)
|
|
$
|
(50,099
|
)
|
|
$
|
(85,845
|
)
|
|
$
|
(32,426
|
)
|
|
$
|
(95,717
|
)
|
|
$
|
(128,143
|
)
|
Other comprehensive gain (loss) before reclassifications
|
(41,659
|
)
|
|
(44,086
|
)
|
|
(85,745
|
)
|
|
3,020
|
|
|
10,836
|
|
|
13,856
|
|
||||||
Net (gains) losses reclassified from accumulated other comprehensive loss
|
756
|
|
|
—
|
|
|
756
|
|
|
(5,189
|
)
|
|
—
|
|
|
(5,189
|
)
|
||||||
Net current-period other comprehensive gain (loss)
|
(40,903
|
)
|
|
(44,086
|
)
|
|
(84,989
|
)
|
|
(2,169
|
)
|
|
10,836
|
|
|
8,667
|
|
||||||
Ending balance
|
$
|
(76,649
|
)
|
|
$
|
(94,185
|
)
|
|
$
|
(170,834
|
)
|
|
$
|
(34,595
|
)
|
|
$
|
(84,881
|
)
|
|
$
|
(119,476
|
)
|
|
Fair Value Measurements as of June 29, 2018
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds and time deposits (included in cash and cash equivalents of the condensed consolidated balance sheet)
|
$
|
—
|
|
|
$
|
464,671
|
|
|
$
|
—
|
|
|
$
|
464,671
|
|
Foreign exchange contracts (Note 8)
|
—
|
|
|
15,649
|
|
|
—
|
|
|
15,649
|
|
||||
Deferred compensation plan assets:
|
|
|
|
|
|
|
|
|
|
0
|
|
||||
Mutual funds, money market accounts and equity securities
|
7,210
|
|
|
69,038
|
|
|
—
|
|
|
76,248
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
0
|
|
||||
Foreign exchange contracts (Note 8)
|
$
|
—
|
|
|
$
|
(58,248
|
)
|
|
$
|
—
|
|
|
$
|
(58,248
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Fair Value Measurements as of March 31, 2018
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds and time deposits (included in cash and cash equivalents of the condensed consolidated balance sheet)
|
$
|
—
|
|
|
$
|
452,622
|
|
|
$
|
—
|
|
|
$
|
452,622
|
|
Foreign exchange contracts (Note 8)
|
—
|
|
|
43,334
|
|
|
—
|
|
|
43,334
|
|
||||
Deferred compensation plan assets:
|
|
|
|
|
|
|
|
|
|
0
|
|
||||
Mutual funds, money market accounts and equity securities
|
7,196
|
|
|
67,532
|
|
|
—
|
|
|
74,728
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
0
|
|
||||
Foreign exchange contracts (Note 8)
|
$
|
—
|
|
|
$
|
(25,311
|
)
|
|
$
|
—
|
|
|
$
|
(25,311
|
)
|
|
As of June 29, 2018
|
|
As of March 31, 2018
|
|
|
||||||||||||
|
Carrying
Amount |
|
Fair
Value |
|
Carrying
Amount |
|
Fair
Value |
|
Fair Value
Hierarchy |
||||||||
|
(In thousands)
|
||||||||||||||||
4.625% Notes due February 2020
|
$
|
500,000
|
|
|
$
|
499,950
|
|
|
$
|
500,000
|
|
|
$
|
513,596
|
|
|
Level 1
|
Term Loan, including current portion, due in installments through November 2021
|
683,750
|
|
|
686,314
|
|
|
687,813
|
|
|
689,966
|
|
|
Level 1
|
||||
Term Loan, including current portion, due in installments through June 2022
|
477,375
|
|
|
477,375
|
|
|
483,656
|
|
|
485,470
|
|
|
Level 1
|
||||
5.000% Notes due February 2023
|
500,000
|
|
|
499,950
|
|
|
500,000
|
|
|
525,292
|
|
|
Level 1
|
||||
4.750% Notes due June 2025
|
596,492
|
|
|
599,940
|
|
|
596,387
|
|
|
627,407
|
|
|
Level 1
|
||||
Euro Term Loan due September 2020
|
55,797
|
|
|
55,797
|
|
|
59,443
|
|
|
59,443
|
|
|
Level 1
|
||||
Euro Term Loan due January 2022
|
115,942
|
|
|
115,942
|
|
|
123,518
|
|
|
123,518
|
|
|
Level 1
|
||||
Total
|
$
|
2,929,356
|
|
|
$
|
2,935,268
|
|
|
$
|
2,950,817
|
|
|
$
|
3,024,692
|
|
|
|
|
Three-Month Periods Ended
|
||||||
|
June 29, 2018
|
|
June 30, 2017
|
||||
|
(In thousands)
|
||||||
Net sales:
|
|
|
|
||||
Communications & Enterprise Compute
|
$
|
1,954,286
|
|
|
$
|
1,973,333
|
|
Consumer Technologies Group
|
1,807,934
|
|
|
1,511,969
|
|
||
Industrial & Emerging Industries
|
1,446,311
|
|
|
1,390,599
|
|
||
High Reliability Solutions
|
1,215,425
|
|
|
1,132,371
|
|
||
|
$
|
6,423,956
|
|
|
$
|
6,008,272
|
|
Segment income and reconciliation of income before tax:
|
|
|
|
||||
Communications & Enterprise Compute
|
$
|
46,017
|
|
|
$
|
48,603
|
|
Consumer Technologies Group
|
26,557
|
|
|
18,004
|
|
||
Industrial & Emerging Industries
|
51,361
|
|
|
55,376
|
|
||
High Reliability Solutions
|
93,534
|
|
|
90,212
|
|
||
Corporate and Other
|
(29,761
|
)
|
|
(34,278
|
)
|
||
Total segment income
|
187,708
|
|
|
177,917
|
|
||
Reconciling items:
|
|
|
|
|
|
||
Intangible amortization
|
18,517
|
|
|
19,901
|
|
||
Stock-based compensation
|
20,953
|
|
|
21,796
|
|
||
Distressed customers asset impairments (1)
|
17,364
|
|
|
—
|
|
||
Restructuring charges
|
8,817
|
|
|
—
|
|
||
New revenue standard adoption impact (Note 1 & Note 3)
|
9,291
|
|
|
—
|
|
||
Legal and other (2)
|
16,311
|
|
|
—
|
|
||
Other income, net (Note 7)
|
(86,924
|
)
|
|
(36,165
|
)
|
||
Interest and other, net
|
41,742
|
|
|
26,876
|
|
||
Income before income taxes
|
$
|
141,637
|
|
|
$
|
145,509
|
|
1.
|
Distressed customers asset impairments for the three-month period ended June 29, 2018 relate to additional provision for doubtful accounts receivable, inventory and other assets for certain customers experiencing significant financial difficulties.
|
2.
|
Legal and other during the three-month period ended June 29, 2018 primarily consists of costs incurred relating to the independent investigation undertaken by the Audit Committee of the Company’s Board of Directors which was completed in June 2018 and certain charges of the China based Multek operation that was divested in the second quarter of fiscal year 2019.
|
•
|
Communications & Enterprise Compute ("CEC"), which includes our telecom business of radio access base stations, remote radio heads, and small cells for wireless infrastructure; our networking business which includes optical, routing, broadcasting, and switching products for the data and video networks; our server and storage platforms for both enterprise and cloud-based deployments; next generation storage and security appliance products; and rack level solutions, converged infrastructure and software-defined product solutions;
|
•
|
Consumer Technologies Group ("CTG"), which includes our consumer-related businesses in connected living, wearables, gaming, augmented and virtual reality, fashion and apparel, and mobile devices; and including various supply chain solutions for notebook personal computers, tablets, and printers;
|
•
|
Industrial and Emerging Industries ("IEI"), which is comprised of energy including advanced metering infrastructure, energy storage, smart lighting, electric vehicle infrastructure, smart solar energy, semiconductor and capital equipment, office solutions, industrial, home and lifestyle, industrial automation, and kiosks; and
|
•
|
High Reliability Solutions ("HRS"), which is comprised of our health solutions business, including consumer health, digital health, disposables, precision plastics, drug delivery, diagnostics, life sciences and imaging equipment; our automotive business, including vehicle electrification, connectivity, autonomous vehicles, and clean technologies.
|
|
As of
|
|
As of
|
||||||||||
Property and equipment, net:
|
June 29, 2018
|
|
March 31, 2018
|
||||||||||
|
(In millions)
|
||||||||||||
Mexico
|
$
|
547
|
|
|
25
|
%
|
|
$
|
587
|
|
|
26
|
%
|
China
|
475
|
|
|
22
|
%
|
|
492
|
|
|
22
|
%
|
||
U.S.
|
308
|
|
|
14
|
%
|
|
305
|
|
|
14
|
%
|
||
Malaysia
|
150
|
|
|
7
|
%
|
|
153
|
|
|
7
|
%
|
||
Hungary
|
133
|
|
|
6
|
%
|
|
150
|
|
|
7
|
%
|
||
India
|
120
|
|
|
5
|
%
|
|
78
|
|
|
3
|
%
|
||
Other
|
456
|
|
|
21
|
%
|
|
475
|
|
|
21
|
%
|
||
|
$
|
2,190
|
|
|
|
|
|
$
|
2,240
|
|
|
|
|
•
|
changes in the macro-economic environment and related changes in consumer demand;
|
•
|
the mix of the manufacturing services we are providing, the number and size, and complexity of new manufacturing programs, the degree to which we utilize our manufacturing capacity, seasonal demand, shortages of components and other factors;
|
•
|
the effects on our business when our customers are not successful in marketing their products, or when their products do not gain widespread commercial acceptance;
|
•
|
our ability to achieve commercially viable production yields and to manufacture components in commercial quantities to the performance specifications demanded by our customers;
|
•
|
the effects on our business due to our customers’ products having short product life cycles;
|
•
|
our customers’ ability to cancel or delay orders or change production quantities;
|
•
|
our customers’ decision to choose internal manufacturing instead of outsourcing for their product requirements;
|
•
|
our exposure to financially troubled customers;
|
•
|
integration of acquired businesses and facilities;
|
•
|
increased labor costs due to adverse labor conditions in the markets we operate;
|
•
|
changes in tax legislation; and
|
•
|
changes in trade regulations and treaties.
|
|
Three-Month Periods Ended
|
||||
|
June 29, 2018
|
|
June 30, 2017
|
||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
94.1
|
|
|
93.2
|
|
Gross profit
|
5.9
|
|
|
6.8
|
|
Selling, general and administrative expenses
|
4.1
|
|
|
4.2
|
|
Intangible amortization
|
0.3
|
|
|
0.3
|
|
Interest and other, net
|
0.6
|
|
|
0.4
|
|
Other income, net
|
(1.4
|
)
|
|
(0.6
|
)
|
Income before income taxes
|
2.3
|
|
|
2.5
|
|
Provision for income taxes
|
0.4
|
|
|
0.3
|
|
Net income
|
1.9
|
%
|
|
2.2
|
%
|
|
Three-Month Periods Ended
|
||||||||||||
Segments:
|
June 29, 2018
|
|
June 30, 2017
|
||||||||||
|
(In millions)
|
||||||||||||
Communications & Enterprise Compute
|
$
|
1,954
|
|
|
30
|
%
|
|
$
|
1,973
|
|
|
33
|
%
|
Consumer Technologies Group
|
1,808
|
|
|
28
|
%
|
|
1,512
|
|
|
25
|
%
|
||
Industrial & Emerging Industries
|
1,446
|
|
|
23
|
%
|
|
1,391
|
|
|
23
|
%
|
||
High Reliability Solutions
|
1,215
|
|
|
19
|
%
|
|
1,132
|
|
|
19
|
%
|
||
|
$
|
6,423
|
|
|
|
|
|
$
|
6,008
|
|
|
|
|
|
Three-Month Periods Ended
|
||||||||||||
|
June 29, 2018
|
|
June 30, 2017
|
||||||||||
|
(In millions)
|
||||||||||||
Segment income & margin:
|
|
|
|
|
|
|
|
||||||
Communications & Enterprise Compute
|
$
|
46
|
|
|
2.4
|
%
|
|
$
|
49
|
|
|
2.5
|
%
|
Consumer Technologies Group
|
27
|
|
|
1.5
|
%
|
|
18
|
|
|
1.2
|
%
|
||
Industrial & Emerging Industries
|
51
|
|
|
3.6
|
%
|
|
55
|
|
|
4.0
|
%
|
||
High Reliability Solutions
|
94
|
|
|
7.7
|
%
|
|
90
|
|
|
8.0
|
%
|
||
Corporate and Other
|
(30
|
)
|
|
|
|
(34
|
)
|
|
|
||||
Total segment income
|
188
|
|
|
2.9
|
%
|
|
178
|
|
|
3.0
|
%
|
||
Reconciling items:
|
|
|
|
|
|
|
|
||||||
Intangible amortization
|
19
|
|
|
|
|
20
|
|
|
|
||||
Stock-based compensation
|
21
|
|
|
|
|
22
|
|
|
|
||||
Distressed customers asset impairments (1)
|
17
|
|
|
|
|
—
|
|
|
|
||||
Restructuring charges
|
9
|
|
|
|
|
—
|
|
|
|
||||
New revenue standard adoption impact (Note 1 & Note 3)
|
9
|
|
|
|
|
—
|
|
|
|
||||
Legal and other (2)
|
16
|
|
|
|
|
—
|
|
|
|
||||
Other income, net (Note 7)
|
(87
|
)
|
|
|
|
(36
|
)
|
|
|
||||
Interest and other, net
|
42
|
|
|
|
|
27
|
|
|
|
||||
Income before income taxes
|
$
|
142
|
|
|
|
|
$
|
146
|
|
|
|
1.
|
Distressed customers asset impairments for the three-month period ended June 29, 2018 relate to additional provision for doubtful accounts receivable, inventory and other assets for certain customers experiencing significant financial difficulties.
|
2.
|
Legal and other during the three-month period ended June 29, 2018 primarily consists of costs incurred relating to the independent investigation undertaken by the Audit Committee of the Company’s Board of Directors which was completed in June 2018 and certain charges of the China based Multek operation that was divested in the second quarter of fiscal year 2019.
|
|
Three-Month Periods Ended
|
||||||
|
June 29, 2018
|
|
June 30, 2017
|
||||
|
(In millions)
|
||||||
Net cash provided by operating activities
|
$
|
(672
|
)
|
|
$
|
(696
|
)
|
Cash collection of deferred purchase price
|
657
|
|
|
834
|
|
||
Purchases of property and equipment
|
(172
|
)
|
|
(125
|
)
|
||
Proceeds from the disposition of property and equipment
|
2
|
|
|
6
|
|
||
Free cash flow
|
$
|
(185
|
)
|
|
$
|
19
|
|
•
|
Designing and implementing additional site level controls related to accounting for customer contractual obligations including criteria for effective contract reviews and approvals and documentation to evidence judgments and estimates.
|
•
|
Designing and implementing a centralized Contract Management Office to determine the appropriate accounting and provide evidence of review for each material contract.
|
•
|
Designing and implementing systematic centralized reporting controls that provide enhanced visibility to the accounting for customer contracts, which improve monitoring controls that are designed to prevent or detect material errors and help ensure that proper oversight is being provided related to certain decentralized activities.
|
•
|
Enhancing the quality and frequency of training across all levels to improve awareness of Company policies and knowledge of the expected standards of conduct.
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|
Filed
|
||
Exhibit No.
|
|
Exhibit
|
|
Form
|
|
File No.
|
|
Filing Date
|
|
Exhibit No.
|
|
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description of Annual Incentive Bonus Plan for Fiscal 2019.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
Letter in lieu of consent of Deloitte & Touche LLP.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
|
|
|
|
|
|
X
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
FLEX LTD.
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
/s/ Michael M. McNamara
|
|
|
Michael M. McNamara
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
Date:
|
August 2, 2018
|
|
|
|
/s/ Christopher Collier
|
|
|
Christopher Collier
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
|
|
Date:
|
August 2, 2018
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Flex Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Michael M. McNamara
|
|
Michael M. McNamara
|
|
Chief Executive Officer
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Flex Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Christopher Collier
|
|
Christopher Collier
|
|
Chief Financial Officer
|
|
•
|
the Quarterly Report on Form 10-Q of the Company for the period ended
June 29, 2018
, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
•
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
August 2, 2018
|
/s/ Michael M. McNamara
|
|
|
Michael M. McNamara
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
Date:
|
August 2, 2018
|
/s/ Christopher Collier
|
|
|
Christopher Collier
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|