UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the quarterly period ended July 2, 2010
or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
Commission file number 0-23354
FLEXTRONICS INTERNATIONAL LTD.
(Exact name of registrant as specified in its charter)
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Singapore
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Not Applicable
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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2 Changi South Lane,
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Singapore
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486123
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(Address of registrants principal executive offices)
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(Zip Code)
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Registrants telephone number, including area code
(65) 6890 7188
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
þ
No
o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes
þ
No
o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).
Yes
o
No
þ
Indicate the number of shares outstanding of each of the registrants classes of common stock,
as of the latest practicable date.
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Class
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Outstanding at July 30, 2010
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Ordinary Shares, No Par Value
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785,457,012
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FLEXTRONICS INTERNATIONAL LTD.
INDEX
2
PART I. FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Flextronics International Ltd.
Singapore
We have reviewed the accompanying condensed consolidated balance sheet of Flextronics International
Ltd. and subsidiaries (the Company) as of July 2, 2010, and the related condensed consolidated
statements of operations and cash flows for the three-month periods ended July 2, 2010 and July 3,
2009. These interim financial statements are the responsibility of the Companys management.
We conducted our reviews in accordance with the standards of the Public Company Accounting
Oversight Board (United States). A review of interim financial information consists principally of
applying analytical procedures and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in accordance with
the standards of the Public Company Accounting Oversight Board (United States), the objective of
which is the expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to such
condensed consolidated interim financial statements for them to be in conformity with accounting
principles generally accepted in the United States of America.
As discussed in Notes 2 and 8 to the condensed consolidated financial statements, on April 1, 2010
the Company adopted new accounting standards related to the accounting for variable interest
entities and the transfers of financial assets.
We have previously audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheet of Flextronics International Ltd.
and subsidiaries as of March 31, 2010, and the related consolidated statements of operations,
shareholders equity, and cash flows for the year then ended (not presented herein); and in our
report dated May 21, 2010, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of March 31, 2010 is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
/s/ DELOITTE & TOUCHE LLP
San Jose, California
August 5, 2010
3
FLEXTRONICS INTERNATIONAL LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
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As of
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As of
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July 2, 2010
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March 31, 2010
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(In thousands,
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except share amounts)
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(Unaudited)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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1,730,533
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$
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1,927,556
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Accounts receivable, net of allowance for doubtful accounts of $11,514 and
$13,163 as of July 2, 2010 and March 31, 2010, respectively
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2,873,859
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2,438,950
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Inventories
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3,320,940
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2,875,819
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Other current assets
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715,175
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747,676
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Total current assets
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8,640,507
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7,990,001
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Property and equipment, net
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2,148,672
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2,118,576
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Goodwill and other intangible assets, net
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235,417
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254,717
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Other assets
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270,630
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279,258
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Total assets
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$
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11,295,226
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$
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10,642,552
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LIABILITIES AND SHAREHOLDERS EQUITY
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Current liabilities:
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Bank borrowings, current portion of long-term debt and capital lease
obligations
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$
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415,103
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$
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266,551
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Accounts payable
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4,919,997
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4,447,968
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Accrued payroll
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341,709
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347,324
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Other current liabilities
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1,386,963
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1,285,368
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Total current liabilities
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7,063,772
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6,347,211
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Long-term debt and capital lease obligations, net of current portion
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1,978,683
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1,990,258
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Other liabilities
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281,684
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320,516
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Commitments and contingencies (Note 10)
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Shareholders equity
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Ordinary shares, no par value; 845,223,642 and 843,208,876 shares issued, and
793,546,425 and 813,429,154 outstanding as of July 2, 2010 and
March 31, 2010, respectively
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8,941,462
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8,924,769
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Treasury stock, at cost; 51,677,217 and 29,779,722 shares as of July 2, 2010
and March 31, 2010, respectively
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(395,914
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)
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(260,074
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)
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Accumulated deficit
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(6,546,545
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)
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(6,664,723
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)
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Accumulated other comprehensive loss
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(27,916
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)
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(15,405
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)
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Total shareholders equity
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1,971,087
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1,984,567
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Total liabilities and shareholders equity
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$
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11,295,226
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$
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10,642,552
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
FLEXTRONICS INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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Three-Month Periods Ended
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July 2, 2010
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July 3, 2009
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(In thousands, except per share
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amounts)
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(Unaudited)
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Net sales
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$
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6,565,880
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$
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5,782,679
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Cost of sales
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6,195,062
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5,506,575
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Restructuring charges
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52,109
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Gross profit
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370,818
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223,995
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Selling, general and administrative expenses
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195,718
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201,692
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Intangible amortization
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17,990
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23,334
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Restructuring charges
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12,730
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Other charges, net
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107,399
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Interest and other expense, net
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27,529
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36,886
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Income (loss) before income taxes
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129,581
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(158,046
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)
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Provision for (benefit from) income taxes
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11,403
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(4,003
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)
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Net income (loss)
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$
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118,178
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$
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(154,043
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)
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Earnings (loss) per share:
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Basic
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$
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0.15
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$
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(0.19
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)
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Diluted
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$
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0.14
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$
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(0.19
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)
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Weighted-average shares used in computing per share amounts:
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Basic
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810,637
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810,174
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Diluted
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824,017
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810,174
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
FLEXTRONICS INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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Three-Month Periods Ended
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July 2, 2010
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July 3, 2009
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(In thousands)
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(Unaudited)
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net income (loss)
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$
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118,178
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$
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(154,043
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)
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Depreciation, amortization and other impairment charges
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111,464
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257,075
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Changes in working capital and other
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(140,878
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)
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3,834
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Net cash provided by operating activities
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88,764
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106,866
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Purchases of property and equipment
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(119,045
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)
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(45,939
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)
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Proceeds from the disposition of property and equipment
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20,710
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7,304
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Acquisition of businesses, net of cash acquired
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(477
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)
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(8,652
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)
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Other investments and notes receivable, net
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(5,136
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)
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1,860
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Net cash used in investing activities
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(103,948
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)
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(45,427
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)
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Proceeds from bank borrowings and long-term debt
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512,350
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782,167
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Repayments of bank borrowings, long-term debt and
capital lease obligations
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(589,506
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)
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(788,055
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)
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Payments for repurchase of long-term debt
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(7,029
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)
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(203,183
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)
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Payments for repurchase of ordinary shares
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(104,875
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)
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Net proceeds from issuance of ordinary shares
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2,203
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|
1,067
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|
|
|
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Net cash used in financing activities
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(186,857
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)
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(208,004
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)
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Effect of exchange rates on cash
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|
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5,018
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|
|
|
1,258
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|
|
|
|
|
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Net decrease in cash and cash equivalents
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|
|
(197,023
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)
|
|
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(145,307
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)
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Cash and cash equivalents, beginning of period
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|
|
1,927,556
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|
|
|
1,821,886
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|
|
|
|
|
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Cash and cash equivalents, end of period
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$
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1,730,533
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$
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1,676,579
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|
|
|
|
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|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION OF THE COMPANY
Flextronics International Ltd. (Flextronics or the Company) was incorporated in the
Republic of Singapore in May 1990. The Company is a leading provider of advanced design and
electronics manufacturing services (EMS) to original equipment manufacturers (OEMs) of a broad
range of products in the following markets: infrastructure; mobile communication devices;
computing; consumer digital devices; industrial, semiconductor capital equipment, clean technology,
aerospace and defense, and white goods; automotive and marine; and medical devices. The Companys
strategy is to provide customers with a full range of cost competitive, vertically-integrated
global supply chain services through which the Company designs, builds, ships and services a
complete packaged product for its OEM customers. OEM customers leverage the Companys services to
meet their product requirements throughout the entire product life cycle.
The Companys service offerings include rigid printed circuit board and flexible circuit
fabrication, systems assembly and manufacturing (including enclosures, testing services, materials
procurement and inventory management), logistics, after-sales services (including product repair,
re-manufacturing and maintenance) and multiple component product offerings. Additionally, the
Company provides market-specific design and engineering services ranging from contract design
services (CDM), where the customer purchases services on a time and materials basis, to original
product design and manufacturing services, where the customer purchases a product that was
designed, developed and manufactured by the Company (commonly referred to as original design
manufacturing, or ODM). ODM products are then sold by the Companys OEM customers under the OEMs
brand names. The Companys CDM and ODM services include user interface and industrial design,
mechanical engineering and tooling design, electronic system design and printed circuit board
design. The Company also provides after market services such as logistics, repair and warranty
services.
2. SUMMARY OF ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in
accordance with accounting principles generally accepted in the United States of America (U.S.
GAAP or GAAP) for interim financial information and in accordance with the requirements of Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by U.S. GAAP for complete financial statements, and should be read in conjunction with the
Companys audited consolidated financial statements as of and for the fiscal year ended March 31,
2010 contained in the Companys Annual Report on Form 10-K. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) considered necessary for a fair
presentation have been included. Operating results for the three-month period ended July 2, 2010
are not necessarily indicative of the results that may be expected for the fiscal year ended
March 31, 2011.
The first fiscal quarters ended on July 2, 2010 and July 3, 2009, respectively, and the second
fiscal quarter ends on October 1, 2010 and October 2, 2009, respectively. The Companys third
fiscal quarter ends on December 31, and the fourth fiscal quarter and year ends on March 31 of each
year.
7
Inventories
The components of inventories, net of applicable lower of cost or market write-downs, were as
follows:
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As of
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As of
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July 2, 2010
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March 31, 2010
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(In thousands)
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Raw materials
|
|
$
|
2,244,864
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$
|
1,874,244
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Work-in-progress
|
|
|
539,984
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|
|
|
480,216
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Finished goods
|
|
|
536,092
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|
|
|
521,359
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|
|
|
|
|
|
|
|
|
|
$
|
3,320,940
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|
|
$
|
2,875,819
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|
|
|
|
|
|
|
|
Property and Equipment
Depreciation expense associated with property and equipment amounted to approximately $93.5
million and $94.5 million for the three-month periods ended July 2, 2010 and July 3, 2009,
respectively.
Goodwill and Other Intangibles
The following table summarizes the activity in the Companys goodwill account during the
three-month period ended July 2, 2010:
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Amount
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(In thousands)
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Balance, beginning of the year
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|
$
|
84,360
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|
Foreign currency translation adjustments
|
|
|
(1,035
|
)
|
|
|
|
|
Balance, end of the quarter, net of accumulated impairment of $5,949,977
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$
|
83,325
|
|
|
|
|
|
The components of acquired intangible assets are as follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of July 2, 2010
|
|
|
As of March 31, 2010
|
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Gross
|
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|
|
|
|
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Net
|
|
|
Gross
|
|
|
|
|
|
|
Net
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
|
|
Amount
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|
|
Amortization
|
|
|
Amount
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
|
(In thousands)
|
|
|
(In thousands)
|
|
Intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer-related
|
|
$
|
500,699
|
|
|
$
|
(365,781
|
)
|
|
$
|
134,918
|
|
|
$
|
506,595
|
|
|
$
|
(355,409
|
)
|
|
$
|
151,186
|
|
Licenses and other
|
|
|
52,485
|
|
|
|
(35,311
|
)
|
|
|
17,174
|
|
|
|
54,792
|
|
|
|
(35,621
|
)
|
|
|
19,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
553,184
|
|
|
$
|
(401,092
|
)
|
|
$
|
152,092
|
|
|
$
|
561,387
|
|
|
$
|
(391,030
|
)
|
|
$
|
170,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The gross carrying amounts of intangible assets are removed when the recorded amounts have
been fully amortized. Total intangible amortization expense was $18.0 million and $23.3 million
during the three-month periods ended July 2, 2010 and July 3, 2009, respectively. The estimated
future annual amortization expense for acquired intangible assets is as follows:
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
Amount
|
|
|
|
(In thousands)
|
|
2011 (1)
|
|
$
|
46,168
|
|
2012
|
|
|
42,311
|
|
2013
|
|
|
28,786
|
|
2014
|
|
|
18,964
|
|
2015
|
|
|
9,506
|
|
Thereafter
|
|
|
6,357
|
|
|
|
|
|
Total amortization expense
|
|
$
|
152,092
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents estimated amortization for the nine-month period ending March 31, 2011.
|
8
Other Assets
The Company has certain equity investments in non-publicly traded companies which are included
within other assets in the Companys Condensed Consolidated Balance Sheets. As of July 2, 2010 and
March 31, 2010, the Companys equity investments in these non-publicly traded companies totaled
$32.0 million and $27.3 million, respectively. The Company monitors these investments for
impairment and makes appropriate reductions in carrying values as required. Fair values of these
investments, when required, are estimated using unobservable inputs, which are primarily discounted
cash flow projections.
In August of 2009, we sold our interest in one of our non-majority owned investments and
related note receivable for approximately $252.2 million, net of closing costs and recognized an
impairment charge associated with the sale of $107.4 million in the three-month period ended July
3, 2009.
Provision for income taxes
The Company has tax loss carryforwards attributable to operations for which the Company has
recognized deferred tax assets. The Companys policy is to provide a reserve against those
deferred tax assets that in managements estimate are not more likely than not to be realized.
During the three-month periods ended July 2, 2010 and July 3, 2009, the provision for income taxes
includes a benefit of approximately $8.4 million and $11.9 million, respectively, for the net
change in the liability for unrecognized tax benefits and settlements in various tax
jurisdictions.
Recent Accounting Pronouncements
In June 2009, a new accounting standard was issued which amends the consolidation guidance
applicable to variable interest entities (VIEs), the approach for determining the primary
beneficiary of a VIE, and disclosure requirements of a companys involvement with VIEs. Also in
June 2009, a new accounting standard was issued which removes the concept of a qualifying
special-purpose entity, creates more stringent conditions for reporting a transfer of a portion of
a financial asset as a sale, clarifies other sale-accounting criteria, and changes the initial
measurement of a transferors interest in transferred financial assets. These standards are
effective for fiscal years beginning after November 15, 2009 and were adopted by the Company
effective April 1, 2010. The adoption of these standards did not impact the Companys consolidated
statement of operations. Upon adoption, accounts receivables sold in the Global Asset-Backed
Securitization program, as currently structured, are consolidated by the Company and remain on its
balance sheet; cash received from the program is treated as a bank borrowing on the Companys
balance sheet and as a financing activity in the statement of cash flows. As a result of the
adoption of these standards, the Company recorded accounts receivables and related bank borrowings
of $217.1 million as of April 1, 2010; subsequent changes to these balances are reflected as an
operating activity and a financing activity, respectively, on a net basis in the consolidated
statement of cash flows for the three-month period ended July 2, 2010. The Company is currently
investigating alternative structures to amend or replace the Global Asset-Backed Securitization
program such that sales of accounts receivable under the amended program will be removed from the
Consolidated Balance Sheet.
The North American Asset-Backed Securitization program and the accounts receivable factoring
program were amended such that sales of accounts receivable from these programs continue to be
accounted for as sales of financial assets and are removed from the consolidated balance sheets.
Cash received from the sale of accounts receivables, under these programs, including amounts
received for the beneficial interest that are paid upon collection of accounts receivables, are
reported as cash provided by operating activities in the statement of cash flows (see Note 8).
3. STOCK-BASED COMPENSATION
The Company historically granted equity compensation awards to acquire the Companys ordinary
shares under four plans; effective July 23, 2010, future equity awards will be granted under the
Companys 2010 Equity Incentive Plan, which was approved by the Companys shareholders at the 2010
Annual General Meeting. These plans collectively are referred to as the Companys equity
compensation plans below. For further discussion of these Plans, refer to Note 2, Summary of
Accounting Policies, of the Notes to Consolidated Financial Statements in the Companys Annual
Report on Form 10-K for the fiscal year ended March 31, 2010 and the Companys Definitive Proxy
Statement, which was filed with the Securities and Exchange Commission on June 7, 2010.
9
Compensation expense for the Companys stock options and unvested share bonus awards was as
follows:
|
|
|
|
|
|
|
|
|
|
|
Three-Month Periods Ended
|
|
|
|
July 2, 2010
|
|
|
July 3, 2009
|
|
|
|
(In thousands)
|
|
Cost of sales
|
|
$
|
2,723
|
|
|
$
|
2,640
|
|
Selling, general and administrative expenses
|
|
|
11,767
|
|
|
|
12,564
|
|
|
|
|
|
|
|
|
Total stock-based compensation expense
|
|
$
|
14,490
|
|
|
$
|
15,204
|
|
|
|
|
|
|
|
|
For the three months ended July 2, 2010, the Company granted 616,410 stock options, at a
weighted average fair
value per option of $2.83. Total unrecognized compensation expense related to stock options
is $51.6 million, net of estimated forfeitures, and will be recognized over a weighted average
vesting period of 1.9 years. As of July 2, 2010, total unrecognized compensation expense related to
unvested share bonus awards is $92.0 million, net of estimated forfeitures, and will be recognized
over a weighted average vesting period of 2.8 years. Approximately $26.4 million of the
unrecognized compensation cost is related to awards where vesting is contingent upon meeting both a
service requirement and achievement of longer-term goals. As of July 2, 2010, management believes
achievement of these goals is probable for approximately 315,000 of these awards and approximately
$2.4 million of compensation expense is expected to be recognized in fiscal year 2011.
The number of options outstanding and exercisable was 62.3 million and 30.0 million,
respectively, as of July 2, 2010, at weighted average exercise prices of $7.23 and $9.48,
respectively.
The following table summarizes share bonus award activity for the Companys equity
compensation plans during the three-month period ended July 2, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Average
|
|
|
|
Number of
|
|
|
Grant-Date
|
|
|
|
Shares
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
Unvested share bonus awards as of March 31, 2010
|
|
|
8,801,609
|
|
|
$
|
10.31
|
|
Granted
|
|
|
8,222,675
|
|
|
|
6.97
|
|
Vested
|
|
|
(1,095,920
|
)
|
|
|
10.81
|
|
Forfeited
|
|
|
(745,536
|
)
|
|
|
10.99
|
|
|
|
|
|
|
|
|
|
Unvested share bonus awards as of July 2, 2010
|
|
|
15,182,828
|
|
|
$
|
8.43
|
|
|
|
|
|
|
|
|
|
Of the 8.2 million share bonus awards granted during the three-month period ended July 2,
2010, approximately 1.2 million represents the target amount of grants made to certain key
employees whereby vesting is contingent on meeting a certain market condition. The number of shares
that ultimately will vest are based on a measurement of Flextronicss total shareholder return
against the Standard and Poors (S&P) 500 Composite Index. The actual number of shares issued can
range from zero to 1.8 million. These awards vest over a period of four years, subject to
achievement of total shareholder return levels relative to the S&P 500 Composite Index. The
grant-date fair value of these awards was estimated to be $7.32 per share and was calculated using
a Monte Carlo simulation.
10
4. EARNINGS PER SHARE
The following table reflects the basic and diluted weighted-average ordinary shares
outstanding used to calculate basic and diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
Three-Month Periods Ended
|
|
|
|
July 2, 2010
|
|
|
July 3, 2009
|
|
|
|
(In thousands, except per share
|
|
|
|
amounts)
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
118,178
|
|
|
$
|
(154,043
|
)
|
Shares used in computation:
|
|
|
|
|
|
|
|
|
Weighted-average ordinary shares outstanding
|
|
|
810,637
|
|
|
|
810,174
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
$
|
0.15
|
|
|
$
|
(0.19
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
118,178
|
|
|
$
|
(154,043
|
)
|
Shares used in computation:
|
|
|
|
|
|
|
|
|
Weighted-average ordinary shares outstanding
|
|
|
810,637
|
|
|
|
810,174
|
|
Weighted-average ordinary share equivalents from stock options and awards
(1)
|
|
|
13,380
|
|
|
|
|
|
Weighted-average ordinary share equivalents from convertible notes (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average ordinary shares and ordinary share equivalents outstanding
|
|
|
824,017
|
|
|
|
810,174
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share
|
|
$
|
0.14
|
|
|
$
|
(0.19
|
)
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Ordinary share equivalents from stock options to purchase
approximately 26.7 million and 57.2 million shares outstanding during
the three-month periods ended July 2, 2010 and July 3, 2009,
respectively, were excluded from the computation of diluted earnings
per share primarily because the exercise price of these options was
greater than the average market price of the Companys ordinary shares
during the respective periods. As a result of the Companys net loss
for the three-month period ended July 3, 2009, ordinary share
equivalents from approximately 4.7 million options and share bonus
awards were excluded from the calculation of diluted earnings (loss)
per share.
|
|
(2)
|
|
The Company has the positive intent and ability to settle the
principal amount of its 1% Convertible Subordinated Notes due August
2010 in cash, approximately 15.5 million ordinary share equivalents
related to the principal portion of the Notes are excluded from the
computation of diluted earnings per share. The Company intends to
settle any conversion spread (excess of the conversion value over
conversion price) in stock. The conversion price is $15.525 per share
(subject to certain adjustments). During the three-month periods
ended July 2, 2010 and July 3, 2009, the conversion obligation was
less than the principal portion of these notes and accordingly, no
additional shares were included as ordinary share equivalents. On
August 2, 2010 the Company redeemed its 1% Convertible Subordinated
Notes at par and issued no ordinary shares for the conversion spread.
|
|
|
|
Additionally, for the three-month period ended July 3, 2009, the
Company had outstanding Zero Coupon Convertible Junior Subordinated
Notes. On July 31, 2009, the principal amount of the Zero Coupon
Convertible Junior Subordinated Notes was settled in cash upon
maturity. These notes carried conversion provisions to issue shares to
settle any conversion spread (excess of the conversion value over the
conversion price) in stock. The conversion price was $10.50 per
share. On the maturity date, the Companys stock price was less than
the conversion price, and therefore no shares were issued.
|
5. OTHER COMPREHENSIVE INCOME
The following table summarizes the components of other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
Three-Month Periods Ended
|
|
|
|
July 2, 2010
|
|
|
July 3, 2009
|
|
|
|
(In thousands)
|
|
Net income (loss)
|
|
$
|
118,178
|
|
|
$
|
(154,043
|
)
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
(9,319
|
)
|
|
|
10,292
|
|
Unrealized gain (loss) on derivative instruments, and other income (loss)
|
|
|
(3,192
|
)
|
|
|
11,430
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
105,667
|
|
|
$
|
(132,321
|
)
|
|
|
|
|
|
|
|
11
6. BANK BORROWINGS AND LONG-TERM DEBT
Bank borrowings and long-term debt are as follows:
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
As of
|
|
|
|
July 2, 2010
|
|
|
March 31, 2010
|
|
|
|
(In thousands)
|
|
Short-term bank borrowings
|
|
$
|
158,828
|
|
|
$
|
6,688
|
|
1.00% convertible subordinated notes due August 2010
|
|
|
238,395
|
|
|
|
234,240
|
|
6.25% senior subordinated notes due November 2014
|
|
|
302,172
|
|
|
|
302,172
|
|
Term Loan Agreement, including current portion, due in installments
through October 2014
|
|
|
1,687,440
|
|
|
|
1,691,775
|
|
Other
|
|
|
5,239
|
|
|
|
19,955
|
|
|
|
|
|
|
|
|
|
|
|
2,392,074
|
|
|
|
2,254,830
|
|
Current portion
|
|
|
(414,563
|
)
|
|
|
(265,954
|
)
|
|
|
|
|
|
|
|
Non-current portion
|
|
$
|
1,977,511
|
|
|
$
|
1,988,876
|
|
|
|
|
|
|
|
|
As of July 2, 2010 and March 31, 2010, there were no borrowings outstanding under the
Companys $2.0 billion credit facility, and the Company was in compliance with the financial
covenants under this credit facility. Short-term bank borrowings includes approximately $149.9
million in proceeds received from the sale of accounts receivable under our Global Asset-Backed
Securitization program, see Note 8 for further discussion.
During May 2010, the Company repurchased approximately $7.0 million of other debt and
recognized an immaterial loss in connection with the transaction.
During June 2009, the Company paid approximately $203.2 million to purchase an aggregate
principal amount of $99.8 million of its outstanding 6.5% Senior Subordinated Notes due 2013 and an
aggregate principal amount of
$99.9 million of its outstanding 6.25% Senior Subordinated Notes due 2014 collectively
referred to as the Notes in a cash tender offer. The cash paid included $8.8 million in consent
fees paid to holders of the Notes that were tendered but not purchased as well as to holders that
consented but did not tender, which were capitalized and are being recognized as a component of
interest expense over the remaining life of the Notes. The Company recognized an immaterial gain
during fiscal year 2009 associated with the partial extinguishment of the Notes, net of
approximately $5.3 million for transaction costs and the write-down of related debt issuance costs,
which is included in Other charges, net in the Condensed Consolidated Statement of Operations.
On August 2, 2010 the Company paid $240.0 million to redeem the entire principal amount of its
1% Convertible Subordinated Notes at par plus accrued interest. The notes carried conversion
provisions to issue shares to settle any conversion spread (excess of conversion value over the
conversion price of $15.525 per share). On the maturity date, the Companys stock price was less
than the conversion price, and therefore, no ordinary shares were issued in connection with the
redemption.
Fair Values
As of July 2, 2010, the approximate fair values of the Companys 6.25% Senior Subordinated
Notes and debt outstanding under its Term Loan Agreement were 100.5% and 93.2% of the face values
of the debt obligations, respectively, based on broker trading prices. Due to the short remaining
maturity, the carrying amount of the 1% Convertible Subordinated Notes approximates fair value.
Interest Expense
During the three-month periods ended July 2, 2010 and July 3, 2009, the Company recognized
interest expense of $31.3 million and $46.2 million, respectively, on its debt obligations
outstanding during the period.
12
7. FINANCIAL INSTRUMENTS
Foreign Currency Contracts
The Company enters into cash flow hedges, forward contracts and foreign currency swap
contracts to manage the foreign currency risk associated with monetary accounts and anticipated
foreign currency denominated transactions. The Company hedges committed exposures and does not
engage in speculative transactions. As of July 2, 2010, the aggregate notional amount of the
Companys outstanding foreign currency forward and swap contracts was $2.2 billion as summarized
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
Notional
|
|
|
|
|
|
|
|
Currency
|
|
|
Contract Value
|
|
Currency
|
|
Buy/Sell
|
|
|
Amount
|
|
|
in USD
|
|
|
|
|
|
|
|
(In thousands)
|
|
Cash Flow Hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
CNY
|
|
Buy
|
|
|
787,385
|
|
|
$
|
116,118
|
|
EUR
|
|
Buy
|
|
|
22,368
|
|
|
|
27,594
|
|
EUR
|
|
Sell
|
|
|
9,936
|
|
|
|
13,788
|
|
HUF
|
|
Buy
|
|
|
14,911,000
|
|
|
|
64,153
|
|
MXN
|
|
Buy
|
|
|
1,554,000
|
|
|
|
120,486
|
|
MYR
|
|
Buy
|
|
|
273,750
|
|
|
|
84,687
|
|
SGD
|
|
Buy
|
|
|
47,224
|
|
|
|
33,818
|
|
Other
|
|
Buy
|
|
|
N/A
|
|
|
|
77,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
537,803
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Forward/Swap Contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
CAD
|
|
Buy
|
|
|
24,858
|
|
|
|
23,473
|
|
CAD
|
|
Sell
|
|
|
83,856
|
|
|
|
79,343
|
|
EUR
|
|
Buy
|
|
|
128,940
|
|
|
|
161,488
|
|
EUR
|
|
Sell
|
|
|
274,557
|
|
|
|
338,136
|
|
GBP
|
|
Buy
|
|
|
36,404
|
|
|
|
54,445
|
|
GBP
|
|
Sell
|
|
|
48,576
|
|
|
|
72,720
|
|
JPY
|
|
Buy
|
|
|
11,458,308
|
|
|
|
126,788
|
|
JPY
|
|
Sell
|
|
|
8,629,130
|
|
|
|
97,460
|
|
SEK
|
|
Buy
|
|
|
2,017,001
|
|
|
|
258,743
|
|
SEK
|
|
Sell
|
|
|
522,979
|
|
|
|
67,130
|
|
Other
|
|
Buy
|
|
|
N/A
|
|
|
|
239,103
|
|
Other
|
|
Sell
|
|
|
N/A
|
|
|
|
144,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,663,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Notional Contract Value in USD
|
|
|
|
|
|
|
|
|
|
$
|
2,200,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain of these contracts are designed to economically hedge the Companys exposure to
monetary assets and liabilities denominated in a non-functional currency and are not treated as
hedges under the accounting standards. Accordingly, changes in fair value of these instruments are
recognized in earnings during the period of change as a component of Interest and other expense,
net in the Condensed Consolidated Statement of Operations. As of July 2, 2010 and July 3, 2009 the
amount recognized in earnings related to these contracts was not material. As of July 2, 2010 and
March 31, 2010, the Company also has included net deferred gains and losses, respectively, in other
comprehensive income, a component of shareholders equity in the Condensed Consolidated Balance
Sheet, relating to changes in fair value of its foreign currency contracts that are accounted for
as cash flow hedges. These deferred gains and losses were not material, and the deferred gains as
of July 2, 2010 are expected to be recognized as a component of gross profit in the Condensed
Consolidated Statement of Operations over the next twelve month period. The gains and losses
recognized in earnings due to hedge ineffectiveness were not material for all fiscal periods
presented and are included as a component of Interest and other expense, net in the Condensed
Consolidated Statement of Operations.
13
The following table presents the Companys assets and liabilities related to foreign currency
contracts measured at fair value on a recurring basis as of July 2, 2010, aggregated by level in
the fair-value hierarchy within which those measurements fall:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
(In thousands)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
|
$
|
|
|
|
$
|
19,133
|
|
|
$
|
|
|
|
$
|
19,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
|
|
|
|
|
|
(26,752
|
)
|
|
|
|
|
|
|
(26,752
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
|
|
|
$
|
(7,619
|
)
|
|
$
|
|
|
|
$
|
(7,619
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There were no transfers between levels in the fair value hierarchy during the three-month
period ended July 2, 2010. The Companys foreign currency forward contracts are measured on a
recurring basis at fair value based on foreign currency spot and forward rates quoted by banks or
foreign currency dealers.
The following table presents the fair value of the Companys derivative instruments located on
the Condensed Consolidated Balance Sheets utilized for foreign currency risk management purposes at
July 2, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Values of Derivative Information
|
|
|
|
Asset Derivatives
|
|
|
Liability Derivatives
|
|
|
|
Balance Sheet
|
|
Fair
|
|
|
Balance Sheet
|
|
Fair
|
|
|
|
Location
|
|
Value
|
|
|
Location
|
|
Value
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
|
Other current assets
|
|
$
|
5,356
|
|
|
Other current liabilities
|
|
$
|
(9,918
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging
instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
|
Other current assets
|
|
$
|
13,777
|
|
|
Other current liabilities
|
|
$
|
(16,834
|
)
|
Interest Rate Swap Agreements
The Company is also exposed to variability in cash flows associated with changes in short-term
interest rates primarily on borrowings under its revolving credit facility and term loan agreement.
Swap contracts that were outstanding during the three-month period ended July 2, 2010, which were
entered into during fiscal years 2009 and 2008 to mitigate the exposure to interest rate risk
resulting from unfavorable changes in interest rates resulting from the term loan agreement, are
summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional Amount
|
|
Fixed Interest
|
|
|
Interest Payment
|
|
|
|
|
|
|
|
(in millions)
|
|
Rate Payable
|
|
|
Received
|
|
|
Term
|
|
|
Expiration Date
|
|
Fiscal 2009 Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$100.0
|
|
|
1.00
|
%
|
|
1-Month Libor
|
|
12 month
|
|
April 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2008 Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$250.0
|
|
|
3.61
|
%
|
|
1-Month Libor
|
|
34 months
|
|
October 2010
|
$250.0
|
|
|
3.61
|
%
|
|
1-Month Libor
|
|
34 months
|
|
October 2010
|
$175.0
|
|
|
3.60
|
%
|
|
3-Month Libor
|
|
36 months
|
|
January 2011
|
$72.0
|
|
|
3.57
|
%
|
|
3-Month Libor
|
|
36 months
|
|
January 2011
|
These contracts provide for the receipt of interest payments at rates equal to the terms of
the various tranches of the underlying borrowings outstanding under the term loan arrangement
(excluding the applicable margin), other than the two $250.0 million swaps, expiring October 2010.
These swaps provided for the receipt of interest at one-month Libor while the underlying borrowings
are based on three-month Libor. As of July 2, 2010, the Company had an aggregate notional amount
of $747.0 million in swaps outstanding with a weighted average fixed interest rate of 3.60%.
14
All of the Companys interest rate swap agreements are accounted for as cash flow hedges, and
there was no charge for ineffectiveness during the three-month periods ended July 2, 2010 and July
3, 2009. For the three-months ended July 2, 2010 and July 3, 2009, the net amount recorded as
interest expense from these swaps was not material. As of July 2, 2010 and March 31, 2010, the fair
value of the Companys interest rate swaps was not material and is included in Other current
liabilities in the Condensed Consolidated Balance Sheets, with a corresponding decrease in other
comprehensive income. The deferred losses included in other comprehensive income will effectively
be released through earnings as the Company makes fixed, and receives variable, interest payments
over the remaining term of the swaps through January 2011.
8. TRADE RECEIVABLES SECURITIZATION
The Company continuously sells designated pools of trade receivables under two asset backed
securitization programs and under an accounts receivable factoring program.
Global Asset-Backed Securitization Agreement
The Company continuously sells a designated pool of trade receivables to a special purpose
entity, which in turn sells an undivided ownership interest to a commercial paper conduit,
administered by an unaffiliated financial institution. In addition to the commercial paper
conduit, the Company participates in the securitization agreement as an investor in the conduit.
The securitization agreement allows the operating subsidiaries participating in the securitization
program to receive a cash payment for sold receivables, less a deferred purchase price receivable.
The Company continues to service, administer and collect the receivables on behalf of the
special purpose entity and receives a servicing fee of 1.00% of serviced receivables per annum.
Servicing fees recognized during the three-month periods ended July 2, 2010 and July 3, 2009 were
not material and are included in Interest and other expense, net within the Condensed Consolidated
Statements of Operations. As the Company estimates the fee it receives in return for its obligation
to service these receivables is at fair value, no servicing assets and liabilities are recognized.
Effective April 1, 2010, the Company adopted two new accounting standards, the first of which
removed the concept of a qualifying special purpose entity and created more stringent conditions
for reporting the transfer of a financial asset as a sale. The second standard also amended the
consolidation guidance for determining the primary beneficiary of a variable interest entity, such
that the Company is deemed the primary beneficiary of this special purpose entity and as such is
required to consolidate the special purpose entity. Upon adoption of these standards, the balance
of receivables sold as of March 31, 2010, totaling $217.1 million, was recorded as accounts
receivables and short-term bank borrowings in the opening balance sheet of fiscal 2011 and the
collection of those accounts receivables was classified as a repayment of bank borrowings in the
Condensed Consolidated Statements of Cash Flows during the three-month period ended July 2, 2010.
Beginning April 1, 2010, accounts receivable sold under this program remain on the Companys
balance sheet, as currently structured, and cash received from the program is accounted for as a
borrowing on the Companys balance sheet and as a financing activity in the statement of cash
flows. As of July 2, 2010, $326.4 million in receivables were sold to this special purpose entity
and the Company received $149.9 million in net cash proceeds, which was reported as short-term bank
borrowings in the Condensed Consolidated Balance Sheet and as cash received from financing
activities in the Condensed Consolidated Statement of Cash Flows.
As of March 31, 2010, approximately $352.5 million of the Companys accounts receivable had
been sold to a third-party qualified special purpose entity. The third-party special purpose entity
was a qualifying special purpose entity, and accordingly, the Company did not consolidate this
entity. The amount represented the face amount of the total outstanding trade receivables on all
designated customer accounts on that date. The accounts receivable balances that were sold under
this agreement were removed from the Condensed Consolidated Balance Sheet and the amount received
were included as cash provided by operating activities in the Condensed Consolidated Statements of
Cash Flows. The Company had a recourse obligation that was limited to the deferred purchase price
receivable, which approximated 5% of the total sold receivables, and its own investment
participation, the total of which was approximately $135.4 million as of March 31, 2010, and was
recorded in Other current assets in the Consolidated Balance Sheet. As the recoverability of the
trade receivables underlying the Companys own investment participation was determined in
conjunction with the Companys accounting policies for determining provisions for doubtful accounts
prior to sale into the third party qualified special purpose entity, the fair value of the
Companys own investment participation reflected the estimated recoverability of the underlying
trade receivables.
15
North American Asset-Backed Securitization Agreement
The Company continuously sells a designated pool of trade receivables to an affiliated special
purpose vehicle, which in turn sells such receivables to an agent on behalf of two commercial paper
conduits administered by unaffiliated financial institutions. The Company continues to service,
administer and collect the receivables on behalf of the special purpose entity and received a
servicing fee of 0.50% per annum on the outstanding balance of the serviced receivables. Servicing
fees recognized during the three-month periods ended July 2, 2010 and July 3, 2009 were not
material and were included in Interest and other expense, net within the Condensed Consolidated
Statements of Operations. As the Company estimates that the fee it receives in return for its
obligation to service these receivables is at fair value, no servicing assets or liabilities are
recognized.
The maximum investment limit of the two commercial paper conduits is $300.0 million. The
Company pays commitment fees of 0.80% per annum on the aggregate amount of the liquidity
commitments of the financial institutions under the facility (which approximates the maximum
investment limit) and an additional program fee of 0.70% on the aggregate amounts invested under
the facility by the conduits to the extent funded through the issuance of commercial paper.
The Company has the power to direct the activities of the special purpose vehicle and had the
obligation to absorb the majority of expected losses or the rights to receive benefits from
transfers of trade receivables into the special purpose vehicle and, as such, was deemed the
primary beneficiary of the special purpose vehicle. Accordingly, the Company consolidated the
special purpose vehicle and only those receivables sold to the two commercial paper conduits for
cash have been removed from the Condensed Consolidated Balance Sheet. Effective April 1, 2010, the
securitization agreement was amended to provide for the sale by the special purpose vehicle of 100%
of the eligible receivables to the commercial paper conduits. The transferred receivables are
isolated from the Company and its affiliates as a result of the special purpose entity, and
effective control is passed to the conduits, which have the right to pledge or sell the
receivables. As a result, although the Company still consolidates the special purpose vehicle,
100% of the receivables sold to the commercial paper conduits are removed from the Condensed
Consolidated Balance Sheet beginning April 1, 2010.
A portion of the purchase price for the receivables is paid by the two commercial paper
conduits in cash and the balance is in a new asset, a deferred purchase price receivable, which is
paid to the special purpose vehicle as payments on the receivables are collected from account
debtors. The deferred purchase price receivable represents a beneficial interest in the
transferred financial assets and is recognized at fair value as part of the sale transaction. The
Company sold approximately $316.9 million of accounts receivable to the two commercial paper
conduits as of July 2, 2010, and received approximately $205.0 million in net cash proceeds for the
sales. The deferred purchase price receivable was approximately $111.2 million, and was recorded in
Other current assets in the Condensed Consolidated Balance Sheets. The deferred purchase price
receivable was valued using unobservable inputs (i.e., level three inputs), primarily discounted
cash flow, and due to its high credit quality and short maturity the fair value approximated
book value. The accounts receivable balances sold under this agreement were removed from the
Condensed Consolidated Balance Sheets and were reflected as cash provided by operating activities
in the Condensed Consolidated Statements of Cash Flows. The amount of the Companys deferred
purchase price receivable will vary primarily depending on the financing requirements of the
Company and the performance of the receivables sold.
As of March 31, 2010, the Company had transferred approximately $356.9 million of receivables
into the special purpose vehicle. The Company sold approximately $200.7 million of this $356.9
million to the two commercial paper conduits as of March 31, 2010, and received approximately
$200.0 million in net cash proceeds for the sales. The accounts receivable balances that were sold
to the two commercial paper conduits under this agreement were removed from the Condensed
Consolidated Balance Sheets and were reflected as cash provided by operating activities in the
Condensed Consolidated Statements of Cash Flows, and the difference between the amount sold and net
cash proceeds received was recognized as a loss on sale of the receivables, and was recorded in
Interest and other expense, net in the Condensed Consolidated Statements of Operations. The
remaining trade receivables transferred into the special purpose vehicle and not sold to the two
commercial paper conduits comprised the primary assets of that entity, and were included in trade
accounts receivable, net in the Condensed Consolidated Balance Sheets of the Company. The
recoverability of these trade receivables, both those included in the Condensed Consolidated
Balance Sheets and those sold but uncollected by the commercial paper conduits, were determined in
conjunction with the Companys accounting policies for determining provisions for doubtful
accounts. Although the special purpose vehicle is fully consolidated by the Company, it is a
separate corporate entity and its assets are available first to satisfy the claims of its
creditors.
16
Factored Accounts Receivable
Effective April 1, 2010, the Company amended its accounts receivable factoring program under
which the Company sells accounts receivables in their entirety to certain third-party banking
institutions. The outstanding balance of receivables sold and not yet collected was approximately
$246.4 million and $164.2 million as of July 2, 2010 and March 31, 2010, respectively. These
receivables that were sold were removed from the Condensed Consolidated Balance Sheets and were
reflected as cash provided by operating activities in the Condensed Consolidated Statement of Cash
Flows.
9. RESTRUCTURING CHARGES
The Company did not recognize restructuring charges during the three-month period ended July
2, 2010.
The Company recognized restructuring charges of approximately $64.8 million during the
three-month period ended July 3, 2009 as a part of its restructuring plans previously announced in
March 2009 in order to rationalize the Companys global manufacturing capacity and infrastructure
as a result of macroeconomic conditions. The Company classified approximately $52.1 million of
these charges as a component of cost of sales.
The following table summarizes the provisions, respective payments, and remaining accrued
balance as of July 2, 2010 for charges incurred in fiscal year 2010 and prior periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Severance
|
|
|
Exit Costs
|
|
|
Total
|
|
|
|
(In thousands)
|
|
Balance as of March 31, 2010
|
|
$
|
28,216
|
|
|
$
|
36,029
|
|
|
$
|
64,245
|
|
Cash payments for charges incurred in fiscal year 2010
|
|
|
(6,692
|
)
|
|
|
(416
|
)
|
|
|
(7,108
|
)
|
Cash payments for charges incurred in fiscal year 2009 and prior
|
|
|
(2,333
|
)
|
|
|
(4,535
|
)
|
|
|
(6,868
|
)
|
|
|
|
|
|
|
|
|
|
|
Balance as of July 2, 2010
|
|
|
19,191
|
|
|
|
31,078
|
|
|
|
50,269
|
|
Less: current portion (classified as other current liabilities)
|
|
|
(18,244
|
)
|
|
|
(14,588
|
)
|
|
|
(32,832
|
)
|
|
|
|
|
|
|
|
|
|
|
Accrued restructuring costs, net of current portion (classified as
other liabilities)
|
|
$
|
947
|
|
|
$
|
16,490
|
|
|
$
|
17,437
|
|
|
|
|
|
|
|
|
|
|
|
|
As of July 2, 2010 and March 31, 2010, the remaining accrued balance for restructuring charges
incurred during fiscal year 2010 were approximately $6.6 million and $13.7 million, respectively,
the entire amount of which was classified as current. As of July 2, 2010 and March 31, 2010, the
remaining accrued balance for restructuring charges incurred during fiscal years 2009 and prior
were approximately $43.7 million and $50.6 million, respectively, of which approximately $17.4
million and $22.2 million, respectively, were classified as long-term
obligations.
As of July 2, 2010 and March 31, 2010, assets that were no longer in use and held for sale,
totaled approximately $40.1 million and $46.9 million, respectively, primarily representing
manufacturing facilities that have been closed as part of the Companys historical facility
consolidations. These assets are recorded at the lesser of carrying value or fair value, which is
based on comparable sales from prevailing market data. For assets held for sale, depreciation
ceases and an impairment loss is recognized if the carrying amount of the asset exceeds its fair
value less cost to sell. Assets held for sale are included in Other current assets in the Condensed
Consolidated Balance Sheets.
17
For further discussion of the Companys historical restructuring activities, refer to Note 9
Restructuring Charges to the Consolidated Financial Statements in the Companys Annual Report on
Form 10-K for the fiscal year ended March 31, 2010.
10. COMMITMENTS AND CONTINGENCIES
The Company is subject to legal proceedings, claims, and litigation arising in the ordinary
course of business. The Company defends itself vigorously against any such claims. Although the
outcome of these matters is currently not determinable, management does not expect that the
ultimate costs to resolve these matters will have a material adverse effect on its condensed
consolidated financial position, results of operations, or cash flows.
11. BUSINESS AND ASSET ACQUISITIONS
During the three-month period ended July 3, 2009, the Company paid $8.7 million relating to
the deferred purchase price from a certain historical acquisition. The purchase price for certain
historical acquisitions is subject to adjustments for contingent consideration and generally has
not been recorded as part of the purchase price, pending the outcome of the contingency.
12. SHARE REPURCHASE PLAN
On May 26, 2010, the Companys Board of Directors authorized the repurchase of up to $200.0
million of the Companys outstanding ordinary shares. Until the Companys 2010 Annual General
Meeting, held on July 23, 2010, the Company was authorized under its shareholder approved Share
Purchase Mandate to repurchase up to approximately 81.2 million shares (representing 10% of the
outstanding shares on the date of the 2009 Annual General Meeting.). Following shareholder
approval at the 2010 Extraordinary General Meeting, the amount authorized for repurchase under the
Share Purchase Mandate is approximately 78.5 million shares (representing 10% of the outstanding
shares on the date of the 2010 Extraordinary General Meeting). The Company may not exceed in the
aggregate the $200.0 million repurchase authorized by the Board in May without further Board
action. Share repurchases will be made in the open market at such times and in such amounts as
management deems appropriate. The timing and actual number of shares repurchased will depend on a
variety of factors including price, market conditions and applicable legal requirements. The share
repurchase program does not obligate the Company to repurchase any specific number of shares and
may be suspended or terminated at any time without prior notice. During the three-month period
ended July 2, 2010, the Company repurchased approximately 21.9 million shares under this plan for
an aggregate purchase price of $135.4 million for which the Company made $104.9 million in cash
payments during the quarter. Since the end of our first fiscal quarter, we have purchased
additional shares resulting in aggregate repurchases in the amount of $200.0 million.
18
ITEM 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless otherwise specifically stated, references in this report to Flextronics, the
Company, we, us, our and similar terms mean Flextronics International Ltd. and its
subsidiaries.
This report on Form 10-Q contains forward-looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933,
as amended. The words expects, anticipates, believes, intends, plans and similar
expressions identify forward-looking statements. In addition, any statements which refer to
expectations, projections or other characterizations of future events or circumstances are
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
Form 10-Q with the Securities and Exchange Commission. These forward-looking statements are subject
to risks and uncertainties, including, without limitation, those discussed in this section, as well
as in Part II, Item 1A, Risk Factors of this report on Form 10-Q, and in Part I, Item 1A, Risk
Factors and in Part II, Item 7, Managements Discussion and Analysis of Financial Condition and
Results of Operations in our Annual Report on Form 10-K for the year ended March 31, 2010. In
addition, new risks emerge from time to time and it is not possible for management to predict all
such risk factors or to assess the impact of such risk factors on our business. Accordingly, our
future results may differ materially from historical results or from those discussed or implied by
these forward-looking statements. Given these risks and uncertainties, the reader should not place
undue reliance on these forward-looking statements.
OVERVIEW
We are a leading global provider of advanced design and electronics manufacturing services
(EMS) to original equipment manufacturers (OEMs) of a broad range of products in the following
markets: infrastructure; mobile communication devices; computing; consumer digital devices;
industrial, semiconductor capital equipment, clean technology, aerospace and defense, and white
goods; automotive and marine; and medical devices. We provide a full range of vertically-integrated
global supply chain services through which we can design, build, ship and service a complete
packaged product for our customers. Customers leverage our services to meet their product
requirements throughout the entire product life cycle. Our vertically-integrated service offerings
include: design; rigid printed circuit board and flexible circuit fabrication; systems assembly and
manufacturing; after-sales services; and multiple component product offerings including, camera
modules for consumer products such as mobile devices and power supplies for computing and other
electronic devices.
We are one of the worlds largest EMS providers, with revenues of $6.6 billion during the
three-month period ended July 2, 2010, and $24.1 billion in fiscal year 2010. As of March 31, 2010,
our total manufacturing capacity was approximately 26.6 million square feet. We help customers
design, build, ship and service electronics products through a network of facilities in 30
countries across four continents. The following tables set forth net sales and net property and
equipment, by country, based on the location of our manufacturing site:
|
|
|
|
|
|
|
|
|
|
|
Three-Month Periods Ended
|
|
Net sales:
|
|
July 2, 2010
|
|
|
July 3, 2009
|
|
|
|
(In thousands)
|
|
China
|
|
$
|
2,275,329
|
|
|
$
|
1,894,996
|
|
Mexico
|
|
|
959,402
|
|
|
|
884,953
|
|
U.S.
|
|
|
807,241
|
|
|
|
873,122
|
|
Malaysia
|
|
|
647,914
|
|
|
|
489,101
|
|
Hungary
|
|
|
571,756
|
|
|
|
374,603
|
|
Other
|
|
|
1,304,238
|
|
|
|
1,265,904
|
|
|
|
|
|
|
|
|
|
|
$
|
6,565,880
|
|
|
$
|
5,782,679
|
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
As of
|
|
Property and equipment, net:
|
|
July 2, 2010
|
|
|
March 31, 2010
|
|
|
|
(In thousands)
|
|
China
|
|
$
|
883,546
|
|
|
$
|
879,440
|
|
Mexico
|
|
|
371,925
|
|
|
|
361,492
|
|
U.S.
|
|
|
164,403
|
|
|
|
165,029
|
|
Hungary
|
|
|
155,147
|
|
|
|
154,759
|
|
Malaysia
|
|
|
149,950
|
|
|
|
131,606
|
|
Other
|
|
|
423,701
|
|
|
|
426,250
|
|
|
|
|
|
|
|
|
|
|
$
|
2,148,672
|
|
|
$
|
2,118,576
|
|
|
|
|
|
|
|
|
We believe that the combination of our extensive design and engineering services, significant
scale and global presence, vertically-integrated end-to-end services, advanced supply chain
management, industrial campuses in low-cost geographic areas and operational track record provide
us with a competitive advantage in the market for designing, manufacturing and servicing
electronics products for leading multinational OEMs. Through these services and facilities, we
offer our OEM customers the ability to simplify their global product development, their
manufacturing process, and their after sales services, and enable them to achieve meaningful time
to market and cost savings.
Our operating results are affected by a number of factors, including the following:
|
|
|
changes in the macroeconomic environment and related changes in consumer demand;
|
|
|
|
the mix of the manufacturing services we are providing, the number and size 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 increased components offerings which have required that we make substantial
investments in the resources necessary to design and develop these products;
|
|
|
|
our ability to achieve commercially viable production yields and to manufacture
components in commercial quantities to the performance specifications demanded by our OEM
customers (recent difficulties in product ramping have adversely affected our ability to
achieve desired operating performance);
|
|
|
|
the effect 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; and
|
|
|
|
integration of acquired businesses and facilities.
|
20
Historically, the EMS industry experienced significant change and growth as an increasing
number of companies elected to outsource some or all of their design and manufacturing
requirements. We have seen an increase in the penetration of the global OEM manufacturing
requirements since the 2001 2002 technology downturn as more and more OEMs pursued the benefits
of outsourcing rather than internal manufacturing. In the second half of fiscal 2009, we
experienced dramatically deteriorating macroeconomic conditions and demand for our customers
products slowed in all of the industries we served. This global economic crisis, and related
decline in demand for our customers products, put pressure on certain of our OEM customers cost
structures and caused them to reduce their manufacturing and supply chain outsourcing requirements.
In response, we announced in March 2009 restructuring plans intended to rationalize our global
manufacturing capacity and infrastructure with the intent to improve our operational efficiencies
by reducing excess workforce and capacity. We have recognized approximately $258.1 million of
associated charges since the announcement, with approximately $107.5 million and $150.6 million
recognized during fiscal years 2010 and 2009, respectively. We do not anticipate additional
material charges in future periods relating to these restructuring plans. Beginning in the second
half of fiscal year 2010, we began seeing some positive signs that demand for our OEM customers
end products was improving, and this trend of accelerated revenue continued in the quarter ended
July 2, 2010. We believe the long-term, future growth prospects for
outsourcing of advanced manufacturing capabilities, design and engineering services and
after-market services remains strong.
We procure a wide assortment of materials, including electronic components, plastics and
metals. We experienced shortages of numerous commodity components, such as capacitors, connectors,
semiconductor and power components, during the quarter ended July 2, 2010. We estimated that these
shortages reduced our revenue by approximately $200.0 million, but did not have a material impact
on profitability. We anticipate that these shortages will begin to abate during our second fiscal
quarter, and become less significant in the following quarters.
We have experienced significant volume
increases in our component product solution services. This steep growth is
challenging due to the complexities of the products and processes involved. We
are encouraged by the increased demand for these product solutions and the
successful achievement of acceptance in the market, and we are intensely
focused on improving our manufacturing efficiencies for these component product
offerings. Our component product solution services, on a combined basis, was
less than 10% of our consolidated revenue for the quarter ended July 2,
2010.
Our cash provided by operations declined approximately $18.1 million to $88.8 million for the
quarter ended July 2, 2010 as compared with $106.9 million for the quarter ended July 3, 2009. As
discussed further in Liquidity and Capital Resources below, primarily as a result of higher sales
and anticipated growth our accounts receivable, inventory and accounts payable all increased, which
resulted in cash being used to increase our working capital. Our free cash flow, which we define
as cash from operating activities less net purchases of property and equipment, was negative $9.6
million for the quarter ended July 2, 2010 as we invested in our current and anticipated growth.
We did not redeem or repurchase a significant amount of debt during the quarter ended July 2, 2010,
however, since we began our deleveraging efforts in June 2008 our consolidated debt has been
reduced by approximately $1.3 billion.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We believe the accounting policies discussed under Item 7, Managements Discussion and
Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for
the fiscal year ended March 31, 2010, affect our more significant judgments and estimates used in
the preparation of the Condensed Consolidated Financial Statements.
Recent Accounting Pronouncements
Information regarding recent accounting pronouncements is provided in Note 2, Summary of
Accounting Policies of the Notes to Condensed Consolidated Financial Statements.
21
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain statements of operations
data expressed as a percentage of net sales. The financial information and the discussion below
should be read in conjunction with the Condensed Consolidated Financial Statements and notes
thereto included in this document. In addition, reference should be made to our audited
Consolidated Financial Statements and notes thereto and related Managements Discussion and
Analysis of Financial Condition and Results of Operations included in our 2010 Annual Report on
Form 10-K.
|
|
|
|
|
|
|
|
|
|
|
Three-Month Periods Ended
|
|
|
|
July 2, 2010
|
|
|
July 3, 2009
|
|
Net sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Cost of sales
|
|
|
94.4
|
|
|
|
95.2
|
|
Restructuring charges
|
|
|
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
5.6
|
|
|
|
3.8
|
|
Selling, general and administrative expenses
|
|
|
3.0
|
|
|
|
3.5
|
|
Intangible amortization
|
|
|
0.3
|
|
|
|
0.4
|
|
Restructuring charges
|
|
|
|
|
|
|
0.2
|
|
Other charges, net
|
|
|
|
|
|
|
1.9
|
|
Interest and other expense, net
|
|
|
0.3
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
2.0
|
|
|
|
(2.8
|
)
|
Provision for (benefit from) income taxes
|
|
|
0.2
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
1.8
|
%
|
|
|
(2.7
|
)%
|
|
|
|
|
|
|
|
Net sales
Net sales during the three-month period ended July 2, 2010 totaled $6.6 billion, representing
an increase of $0.8 billion, or 14%, from $5.8 billion during the three-month period ended July 3,
2009, primarily due to an improved macroeconomic environment as we recognize increased sales from
many of our major customers. Sales increased across most of the markets we serve, consisting of:
(i) $492.5 million in the industrial, automotive, medical and other markets, (ii) $152.3 million in
the computing market, (iii) $132.9 million in the mobile communications market, and (iv) $70.2
million in the consumer digital market. Net sales decreased $64.7 million in the infrastructure
market. Net sales increased across all of the geographic regions we serve including $612.1 million
in Asia, $19.7 million in the Americas, and $151.4 million in Europe.
The following tables set forth net sales by market:
|
|
|
|
|
|
|
|
|
|
|
Three-Month Periods Ended
|
|
Market:
|
|
July 2, 2010
|
|
|
July 3, 2009
|
|
|
|
(In thousands)
|
|
Infrastructure
|
|
$
|
1,801,971
|
|
|
$
|
1,866,627
|
|
Industrial, Automotive, Medical and Other
|
|
|
1,457,178
|
|
|
|
964,675
|
|
Mobile
|
|
|
1,328,616
|
|
|
|
1,195,723
|
|
Computing
|
|
|
1,261,956
|
|
|
|
1,109,659
|
|
Consumer digital
|
|
|
716,159
|
|
|
|
645,995
|
|
|
|
|
|
|
|
|
|
|
$
|
6,565,880
|
|
|
$
|
5,782,679
|
|
|
|
|
|
|
|
|
Our ten largest customers during the three-month periods ended July 2, 2010 and July 3, 2009
accounted for approximately 48% and 49% of net sales, respectively, with no customer accounting for
greater than 10% of our net sales in either period.
Gross profit
Gross profit is affected by a number of factors, including the number and size of new
manufacturing programs, product mix, component costs and availability, product life cycles, unit
volumes, pricing, competition, new product introductions, capacity utilization and the expansion
and consolidation of manufacturing facilities. Gross profit during the three-month period ended
July 2, 2010 increased $146.8 million to $370.8 million, or 5.6% of net sales, from $224.0 million,
or 3.8% of net sales, during the three-month period ended July 3, 2009. The increase in gross
margin was primarily attributable to increased demand resulting in improved capacity utilization
driven by the 14% increase in our revenues, and in part, due to the completion of our restructuring
activities and there being no restructuring costs for the three-month period ended July 2, 2010
versus restructuring costs of $52.1 million for the three-month period ended July 3, 2009.
22
Restructuring charges
We did not incur restructuring charges during the three-month period ended July 2, 2010 and
have completed all activities associated with previously announced plans. We recognized
approximately $64.8 million during the three-month period ended July 3, 2009 in connection with our
restructuring plans announced in March 2009 to rationalize our global manufacturing capacity and
infrastructure as a result of weak macroeconomic conditions. Our restructuring activities were
intended to improve our operational efficiencies by reducing excess workforce and capacity. The
cost associated with these restructuring activities included employee severance, costs related to
owned and leased facilities and equipment that is no longer in use and is to be disposed of, and
costs associated with the exit of certain contractual arrangements due to facility closures. As of
July 2, 2010, there have been no changes to these plans. See Note 9, Restructuring Charges in the
Notes to the Condensed Consolidated Financial Statements for a summary of the current quarter
payments and remaining accrued balance as of July 2, 2010 for charges incurred in fiscal year 2010
and prior periods. The cost reductions associated with the restructuring activities, primarily
reduced wages and benefits due to employee terminations, decreased depreciation expense resulting
from equipment impairments and
reduced costs associated with leased equipment and buildings have been achieved as
anticipated. The overall impact on future operating results and cash flows from these restructuring
activities is difficult to measure as there are offsetting reductions in revenues at affected
locations as well as increases in certain costs at other locations related to transition activities
for transferred programs or increased production ramp up costs. We do not separately track all of
the interrelated components of these activities.
Refer to Note 9, Restructuring Charges, of the Notes to Condensed Consolidated Financial
Statements for further discussion of our restructuring activities.
Selling, general and administrative expenses
Selling, general and administrative expenses, or SG&A, amounted to $195.7 million, or 3.0% of
net sales, during the three-month period ended July 2, 2010, decreasing $6.0 million from $201.7
million, or 3.5% of net sales, during the three-month period ended July 3, 2009. The overall
decreases in SG&A expense and SG&A as a percentage of sales during the three-month period ended
July 2, 2010 were primarily the result of our discretionary cost reduction efforts offset by an
increase in corporate support activities, such as information technology and supply chain
management, necessary to support the growth of our operations.
Intangible amortization
Amortization of intangible assets during the three-month period ended July 2, 2010 decreased
by $5.3 million to $18.0 million from $23.3 million during the three-month period ended July 3,
2009, primarily due to the use of the accelerated method of amortization for certain customer
related intangibles, which results in decreasing expense over time.
Other charges, net
During the three-month period ended July 3, 2009, we recognized an approximate $107.4 million
impairment charge associated with the sale of our interest in one of our non-majority owned
investments.
Interest and other expense, net
Interest and other expense, net was $27.5 million during the three-month period ended July 2,
2010 compared to $36.9 million during the three-month period ended July 3, 2009, a decrease of $9.4
million. The decrease in expense is the result of less debt outstanding during the period
resulting from the approximate $400.0 million tender and redemption of the 6.5% Senior Subordinated
Notes and the $100.0 million tender of the 6.25% Senior Subordinated Notes. Further reduction in
interest expense was due to lower interest rates as a result of $400.0 million in fixed rate debt
associated with interest rate swaps expiring and converting to variable rate debt, and a $4.3
million decrease in non-cash interest expense from the redemption of our Zero Coupon Convertible
Junior Subordinated Notes in July 2009. This decrease in interest expense was partially offset by
less interest income resulting from the reduction in other notes receivable that were sold during
the third quarter of fiscal year 2010.
23
Income taxes
Certain of our subsidiaries have, at various times, been granted tax relief in their
respective countries, resulting in lower income taxes than would otherwise be the case under
ordinary tax rates. Refer to Note 8, Income Taxes, of the Notes to the Consolidated Financial
Statements in our Annual Report on Form 10-K for the fiscal year ended March 31, 2010 for further
discussion.
We have tax loss carryforwards attributable to operations for which we have recognized
deferred tax assets. Our policy is to provide a reserve against those deferred tax assets that in
managements estimate are not more likely than not to be realized. During the three-month periods
ended July 2, 2010 and July 3, 2009, the provision for income taxes includes a benefit of
approximately $8.4 million and $11.9 million, respectively, for the net change in the liability for
unrecognized tax benefits as a result of settlements in various tax jurisdictions.
The consolidated effective tax rate for a particular period varies depending on the amount of
earnings from different jurisdictions, operating loss carryforwards, income tax credits, changes in
previously established valuation allowances for deferred tax assets based upon our current analysis
of the realizability of these deferred tax assets, as well as certain tax holidays and incentives
granted to our subsidiaries primarily in China, Malaysia, Israel, Poland and Singapore.
LIQUIDITY AND CAPITAL RESOURCES
As of July 2, 2010, we had cash and cash equivalents of approximately $1.7 billion and bank
and other borrowings of approximately $2.4 billion. We also had a $2.0 billion credit facility,
under which we had no borrowings outstanding as of July 2, 2010. As of July 2, 2010, we were in
compliance with the covenants under the Companys indentures and credit facilities.
Cash provided by operating activities amounted to $88.8 million during the three-month period
ended July 2, 2010. This resulted primarily from $118.2 million of net income for the period before
adjustments to include approximately $111.5 million of non-cash expenses for depreciation and
amortization. Our working capital accounts increased $125.4 million on a net basis, primarily due
to higher sales and anticipated growth resulting in increases in inventory of $462.3 million and
accounts receivable of $210.4 million, partially offset by increases in accounts payable of $465.9
million and other current liabilities of $80.3 million.
As a result of the adoption of new accounting standards, accounts receivables sold under our
Global Asset-Backed Securitization program totaling $326.4 million remained on the Condensed
Consolidated Balance Sheet and proceeds of $149.9 million were reported as short-term bank
borrowings. Accounts receivable sold under our North American Asset-Backed Securitization program
totaling $316.9 million were removed from our Condensed Consolidated Balance Sheet and the
Companys deferred purchase price receivable associated with the sale of $111.2 million was
recorded in Other current assets in the Condensed Consolidated Balance Sheet. In addition, we sold
$246.4 million of accounts receivable under our accounts receivable factoring program which were
removed from our Condensed Consolidated Balance Sheet.
For the quarterly periods indicated, certain of managements key liquidity metrics were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Periods Ended
|
|
|
|
July 2,
|
|
|
March 31,
|
|
|
December 31,
|
|
|
October 2,
|
|
|
July 3,
|
|
|
|
2010
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Days in trade accounts receivable
|
|
37 days
|
|
37 days
|
|
33 days
|
|
34 days
|
|
35 days
|
Days in inventory
|
|
46 days
|
|
46 days
|
|
40 days
|
|
44 days
|
|
47 days
|
Days in accounts payable
|
|
69 days
|
|
72 days
|
|
62 days
|
|
63 days
|
|
63 days
|
24
Days in trade accounts receivable was calculated as the average accounts receivable for the
current and prior quarters divided by annualized sales for the current quarter by day. During the
three-month period ended July 2, 2010, days in trade accounts receivable increased by two days to
37 days compared to the three-month period ended July 3, 2009. This increase in trade accounts
receivable was primarily attributable to our adoption of new accounting standards, which requires
that receivables sold under our Global Asset-Backed Securitization program remain on the Condensed
Consolidated Balance Sheet. Days in trade receivables excludes the effect of approximately $111.2
million of the deferred purchase price from the North American Asset-Backed Securitization program
which was recorded in Other current assets in the Condensed Consolidated Balance Sheet. See Note 8
in our Notes to Condensed Consolidated Financial Information regarding changes to our accounting of
accounts receivables sold under our asset-backed securitization and factoring programs as a result
of the adoption of a new accounting standard effective April 1, 2010.
Days in inventory was calculated as the average inventory for the current and prior quarters
divided by annualized cost of sales for the current quarter by day. During the three-month period
ended July 2, 2010, days in inventory
decreased one day compared to the three-month period ended July 3, 2009. The component
shortages discussed above have hampered our efforts to reduce our inventory days on hand.
Days in accounts payable was calculated as the average accounts payable for the current and
prior quarters divided by annualized cost of sales for the current quarter by day. During the
three-month period ended July 2, 2010, days in accounts payable increased six days to 69 days
compared to the three-month period ended July 3, 2009 primarily due to the increase in inventory as
a result of component shortages and anticipated growth.
Cash used by investing activities amounted to $103.9 million. This resulted primarily from
$98.3 million in net capital expenditures for property and equipment.
Cash used in financing activities amounted to $186.9 million during the three-month period
ended July 2, 2010, which was primarily from $104.9 million in payments to repurchase 21.9 million
of our ordinary shares. The net use of $67.2 million of cash for the repayments of bank
borrowings, long-term debt and capital lease obligations resulted primarily from net repayments
related to our Global Asset-Backed Securitization program in connection with the adoption of new
accounting standards, effective April 1, 2010.
As of July 2, 2010, quarterly maturities of our bank borrowings and long-term debt were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
|
|
Fiscal Year
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Total
|
|
|
|
(In thousands)
|
|
2011
|
|
$
|
|
|
|
$
|
401,893
|
|
|
$
|
4,252
|
|
|
$
|
4,209
|
|
|
$
|
410,354
|
|
2012
|
|
|
4,209
|
|
|
|
4,167
|
|
|
|
4,167
|
|
|
|
4,167
|
|
|
|
16,710
|
|
2013
|
|
|
4,167
|
|
|
|
479,662
|
|
|
|
2,937
|
|
|
|
2,937
|
|
|
|
489,703
|
|
2014
|
|
|
2,937
|
|
|
|
2,937
|
|
|
|
305,079
|
|
|
|
2,907
|
|
|
|
313,860
|
|
2015
|
|
|
2,907
|
|
|
|
1,153,301
|
|
|
|
|
|
|
|
|
|
|
|
1,156,208
|
|
Thereafter (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,392,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents cumulative maturities for years subsequent to March 31, 2015.
|
We continue to assess our capital structure, and evaluate the merits of redeploying available
cash to reduce existing debt or repurchase shares.
On August 2, 2010, we paid $240.0 million to redeem the entire principal amount of the 1%
Convertible Subordinated Notes at par plus accrued interest. On the maturity date, our stock price
was less than the conversion price, and therefore, no ordinary shares were issued in connection
with the redemption. Additionally, on May 26, 2010, our Board of Directors authorized the
repurchase of up to $200.0 million of our outstanding ordinary shares. During the quarter ended
July 2, 2010, we repurchased approximately 21.9 million shares for an aggregate purchase price of
$135.4 million. Since the end of our first fiscal quarter, we have purchased additional shares
resulting in aggregate repurchases in the amount of $200.0 million.
25
Liquidity is affected by many factors, some of which are based on normal ongoing operations of
our business and some of which arise from fluctuations related to global economics and markets.
Cash balances are generated and held in many locations throughout the world. Local government
regulations may restrict our ability to move cash balances to meet cash needs under certain
circumstances. We do not currently expect such regulations and restrictions to impact our ability
to pay vendors and conduct operations throughout our global organization. We believe that our
existing cash balances, together with anticipated cash flows from operations and borrowings
available under our existing credit facilities, will be sufficient to fund our operations through
at least the next twelve months.
Future liquidity needs will depend on fluctuations in levels of our working capital
requirements, the maturity profile of our existing debt, the timing of capital expenditures for new
equipment, the extent to which we utilize operating leases for new facilities and equipment, timing
of cash outlays associated with historical restructuring and integration activities, and levels of
shipments and changes in volumes of customer orders.
Historically, we have funded our operations from existing cash and cash equivalents, cash
generated from operations, proceeds from public offerings of equity and debt securities, bank debt
and lease financings. We also continuously sell a designated pool of trade receivables under
asset-backed securitization programs and sell certain trade receivables to certain third-party
banking institutions with limited recourse under our accounts receivable factoring program. Our
asset-backed securitization programs include certain limits on customer default rates. Given the
current macroeconomic environment, it is possible that we will experience default rates in excess
of those limits, which, if not waived by the counterparty, could impair our ability to sell
receivables under these arrangements in the future.
We may enter into debt and equity financings, sales of accounts receivable and lease
transactions to fund acquisitions and future growth. The sale or issuance of equity or convertible
debt securities could result in dilution to current shareholders. Additionally, we may issue debt
securities that have rights and privileges senior to those of holders of ordinary shares, and the
terms of this debt could impose restrictions on operations and could increase debt service
obligations. This increased indebtedness could limit our flexibility as a result of debt service
requirements and restrictive covenants, potentially affect our credit ratings, and may limit our
ability to access additional capital or execute our business strategy. Any downgrades in credit
ratings could adversely affect our ability to borrow by resulting in more restrictive borrowing
terms.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
Information regarding our long-term debt payments, operating lease payments, capital lease
payments and other commitments is provided in Item 7, Managements Discussion and Analysis of
Financial Condition and Results of Operations of our Annual Report on our Form 10-K for the fiscal
year ended March 31, 2010. Aside from the foregoing, there have been no material changes in our
contractual obligations since March 31, 2010.
OFF-BALANCE SHEET ARRANGEMENTS
As a result of new accounting guidance effective April 1, 2010 and an amendment to our North
American Asset-Backed Securitization program, 100% of the accounts receivable sold under this
program are removed from our balance sheet. We continuously sell a designated pool of trade
receivables to investment conduits administered by an unaffiliated financial institution under this
program, and in addition to cash, we receive a deferred purchase price receivable for the
receivables sold. The deferred purchase price receivable we retain serves as additional credit
support to the investment conduits and is recorded at its estimated fair value. The fair value of
our deferred purchase price receivable was approximately $111.2 million as of July 2, 2010. At
March 31, 2010, under our Global Asset-Backed Securitization program, we sold a designated pool of
receivables to a third-party qualified special purpose entity, which in turn sold an undivided
interest to an investment conduit administered by an unaffiliated financial institution. We
participate in this securitization arrangement as an investor in the conduit. The fair value of our
investment participation, together with our recourse obligation that approximated 5% of the total
receivables sold, was approximately $135.4 million. The adoption of new accounting guidance,
effective April 1, 2010, eliminated the concept of a qualifying special purpose entity and we are
now required to consolidate this special purpose entity. As a result, as currently structured, 100%
of the accounts receivable sold under this program remain on our balance sheet and cash received
from the program is accounted for as a secured borrowing. The receivables we retain that previously
represented our investment participation and our recourse obligation under the prior accounting
guidance continues to serve as additional credit support to the investment conduits and is recorded
at its estimated fair value within accounts receivable. As of July 2, 2010, the fair value of these
receivables was approximately $176.4 million.
26
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There were no material changes in our exposure to market risk for changes in interest and
foreign currency exchange rates for the three-month period ended July 2, 2010 as compared to the
fiscal year ended March 31, 2010.
ITEM 4.
CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our
disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of July 2,
2010, the end of the quarterly fiscal period covered by this quarterly report. Based on that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of July 2,
2010, such disclosure controls and procedures were effective in ensuring that information required
to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934,
as amended, is (i) recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commissions rules and forms and (ii) accumulated and communicated
to our management, including our principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding required disclosure.
(b) Changes in Internal Control Over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred during
our first quarter of fiscal year 2011 that have materially affected, or are reasonably likely to
materially affect, our internal controls over financial reporting.
27
PART II. OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
We are subject to legal proceedings, claims, and litigation arising in the ordinary course of
business. We defend ourselves vigorously against any such claims. Although the outcome of these
matters is currently not determinable, management does not expect that the ultimate costs to
resolve these matters will have a material adverse effect on our consolidated financial position,
results of operations, or cash flows.
ITEM 1A.
RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider
the factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the
year ended March 31, 2010, which could materially affect our business, financial condition or
future results. The risks described in our Annual Report on Form 10-K are not the only risks
facing our Company. Additional risks and uncertainties not currently known to us or that we
currently deem to be not material also may materially adversely affect our business, financial
condition and/or operating results.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table provides information regarding purchases of our ordinary shares made by us
for the period from April 1, 2010 through July 2, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of Shares
|
|
|
Approximate Dollar Value
|
|
|
|
Total Number
|
|
|
|
|
|
|
Purchased as Part of
|
|
|
of Shares that May Yet
|
|
|
|
of Shares
|
|
|
Average Price
|
|
|
Publicly Announced
|
|
|
Be Purchased Under the
|
|
Period
|
|
Purchased (1)
|
|
|
Paid per Share
|
|
|
Plans or Programs (2)
|
|
|
Plans or Programs (2)
|
|
April 1 April 30, 2010
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
200,000,000
|
|
May 1 May 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000,000
|
|
June 1 July 2, 2010
|
|
|
21,897,495
|
|
|
|
6.19
|
|
|
|
21,897,495
|
|
|
|
64,559,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
21,897,495
|
|
|
|
6.19
|
|
|
|
21,897,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
During the period from April 1, 2010 through July 2, 2010 all
purchases were made pursuant to the program discussed below in open
market transactions. All purchases were made in accordance with Rule
10b-18 under the Securities Exchange Act of 1934.
|
|
(2)
|
|
On May 26, 2010, our Board of Directors authorized the purchase of up
to $200.0 million of the Companys outstanding ordinary shares.
|
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.
(REMOVED AND RESERVED)
ITEM 5.
OTHER INFORMATION
None.
28
ITEM 6.
EXHIBITS
|
|
|
|
|
Exhibit No.
|
|
Exhibit
|
|
|
|
|
|
|
10.01
|
|
|
Flextronics International Ltd. 2010 Equity Incentive Plan*
|
|
10.02
|
|
|
Form of Share Option Award Agreement under 2010 Equity Incentive Plan
|
|
10.03
|
|
|
Form of Restricted Share Unit Award Agreement under 2010 Equity Incentive Plan
|
|
10.04
|
|
|
Form of Share Bonus Unit Award Agreement under 2001 Equity Incentive Plan
|
|
10.05
|
|
|
Description of Annual Incentive Bonus Plan for Fiscal 2011
|
|
10.06
|
|
|
Executive Incentive Compensation Recoupment Policy
|
|
10.07
|
|
|
Compensation Arrangements of Executive Officers of Flextronics International Ltd.
|
|
10.08
|
|
|
Award Agreement for Francois Barbier under Senior Management Deferred Compensation Plan,
dated July 22, 2005
|
|
10.09
|
|
|
Award Agreement for Werner Widmann Deferred Compensation Plan, dated as of July 22, 2005**
|
|
10.10
|
|
|
Addendum to Award Agreement for Werner Widmann Deferred Compensation Plan, dated as of
June 30, 2006***
|
|
10.11
|
|
|
Description of Non-Executive Chairmans Compensation
|
|
15.01
|
|
|
Letter in lieu of consent of Deloitte & Touche LLP.
|
|
31.01
|
|
|
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.
|
|
31.02
|
|
|
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.
|
|
32.01
|
|
|
Certification of Chief Executive 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.****
|
|
32.02
|
|
|
Certification of 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.****
|
101.INS
|
|
|
XBRL Instance Document****
|
101.SCH
|
|
|
XBRL Taxonomy Extension Scheme Document****
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document****
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document****
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase Document****
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document****
|
|
|
|
*
|
|
Incorporated by reference to Exhibit 10.01 to the Companys Current Report on Form 8-K filed with
the Securities and Exchange Commission on July 28, 2010.
|
|
**
|
|
Incorporated by reference to Exhibit 10.01 to the Companys Current Report on Form 8-K filed
with the Securities and Exchange Commission on July 7, 2006.
|
|
***
|
|
Incorporated by reference to Exhibit 10.02 to the Companys Current Report on Form 8-K filed
with the Securities and Exchange Commission on July 7, 2006.
|
|
****
|
|
This exhibit is furnished with this Quarterly Report on Form 10-Q, is not deemed filed with
the Securities and Exchange Commission, and is not incorporated by reference into any filing of
Flextronics International Ltd. under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of
any general incorporation language contained in such filing.
|
29
SIGNATURES
Pursuant to the requirements 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.
|
|
|
|
|
|
FLEXTRONICS INTERNATIONAL LTD.
(Registrant)
|
|
|
/s/ Michael M. McNamara
|
|
|
Michael M. McNamara
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
Date: August 5, 2010
|
|
|
|
|
|
|
/s/ Paul Read
|
|
|
Paul Read
|
|
|
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|
Date: August 5, 2010
|
|
|
30
EXHIBIT INDEX
|
|
|
|
|
Exhibit No.
|
|
Exhibit
|
|
|
|
|
|
|
10.01
|
|
|
Flextronics International Ltd. 2010 Equity Incentive Plan*
|
|
10.02
|
|
|
Form of Share Option Award Agreement under 2010 Equity Incentive Plan
|
|
10.03
|
|
|
Form of Restricted Share Unit Award Agreement under 2010 Equity Incentive Plan
|
|
10.04
|
|
|
Form of Share Bonus Award Agreement under 2001 Equity Incentive Plan
|
|
10.05
|
|
|
Description of Annual Incentive Bonus Plan for Fiscal 2011
|
|
10.06
|
|
|
Executive Incentive Compensation Recoupment Policy
|
|
10.07
|
|
|
Compensation Arrangements of Executive Officers of Flextronics International Ltd.
|
|
10.08
|
|
|
Award Agreement for Francois Barbier under Senior Management Deferred Compensation Plan,
dated July 22, 2005
|
|
10.09
|
|
|
Award Agreement for Werner Widmann Deferred Compensation Plan, dated as of July 22, 2005**
|
|
10.10
|
|
|
Addendum to Award Agreement for Werner Widmann Deferred Compensation Plan, dated as of
June 30, 2006***
|
|
10.11
|
|
|
Description of Non-Executive Chairmans Compensation
|
|
15.01
|
|
|
Letter in lieu of consent of Deloitte & Touche LLP.
|
|
31.01
|
|
|
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.
|
|
31.02
|
|
|
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.
|
|
32.01
|
|
|
Certification of Chief Executive 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.****
|
|
32.02
|
|
|
Certification of 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.****
|
101.INS
|
|
|
XBRL Instance Document****
|
101.SCH
|
|
|
XBRL Taxonomy Extension Scheme Document****
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document****
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document****
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase Document****
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document****
|
|
|
|
*
|
|
Incorporated by reference to Exhibit 10.01 to the Companys Current Report on Form 8-K filed with
the Securities and Exchange Commission on July 28, 2010.
|
|
**
|
|
Incorporated by reference to Exhibit 10.01 to the Companys Current Report on Form 8-K filed
with the Securities and Exchange Commission on July 7, 2006.
|
|
***
|
|
Incorporated by reference to Exhibit 10.02 to the Companys Current Report on Form 8-K filed
with the Securities and Exchange Commission on July 7, 2006.
|
|
****
|
|
This exhibit is furnished with this Quarterly Report on Form 10-Q, is not deemed filed with
the Securities and Exchange Commission, and is not incorporated by reference into any filing of
Flextronics International Ltd. under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of
any general incorporation language contained in such filing.
|
31
EXHIBIT 10.02
FLEXTRONICS INTERNATIONAL LTD.
2010 EQUITY INCENTIVE PLAN
FORM OF SHARE OPTION AWARD AGREEMENT
This Share Option Agreement (the
Agreement
) is made and entered into as of the date of grant set
forth below (the
Date of Grant
) by and between Flextronics International Ltd., a Singapore
corporation (the
Company
), and the participant named below (the
Participant
). Capitalized
terms not defined herein shall have the meaning ascribed to them in the Companys 2010 Equity
Incentive Plan (the
Plan
) and this Agreement. The Participant understands and agrees that this
share option (
Option
) is granted subject to and in accordance with the express terms and
conditions of the Plan and the Agreement including any country-specific provisions set forth in
Exhibit B and the Participant further agrees to be bound by the terms and conditions of the Plan
and the Agreement.
The Participant acknowledges receipt of a copy of the official prospectus for the Plan.
The
Agreement
and
Plan Prospectus
are available on the Companys website at
http://home.sjc.flextronics.com/options/reference.asp
or by request from the Companys
Stock Administration Department. The Participant hereby agrees that these documents are deemed to
be delivered to the Participant.
|
|
|
Option Number:
|
|
<<Option Number>>
|
|
|
|
Participant:
|
|
<<First Name>> <<Last Name>>
|
|
|
|
Total Option Shares:
|
|
<<
Number of Shares>>
|
|
|
|
Exercise Price Per Share:
|
$
|
<<Price per Share>>
|
|
|
|
Date of Grant:
|
|
<<Grant Date>>
|
|
|
|
Expiration Date:
|
|
<<
Expiration Date>>
|
Type of Option and Vesting:
The Option is a non-qualified stock option (
NQSO
), subject to
vesting as set forth in the chart below (provided the Participant continues to provide services to
the Company or to any Parent or Subsidiary or Affiliate of the Company):
Option Share Vesting Table
|
|
|
|
|
Number of NQSOs Vesting
|
25% of shares granted:
|
|
Will vest on 1st Anniversary of Grant Date
|
75% of shares granted:
|
|
Will vest in equal increments over XX months
beginning the first month after the 1st Anniversary
of the Date of Grant [
TBC
]
|
1.
Grant of Option
. The Company hereby grants to the Participant an Option to purchase the
total number of shares of Ordinary Shares of the Company set forth above as Total Option Shares
(the
Shares
) at the Exercise Price Per Share set forth above (the
Exercise Price
), subject to
all of the terms and conditions of this Agreement, including any country-specific provisions set
forth in Exhibit B to this Agreement and the Plan. This Option is not intended to qualify as an
Incentive Stock Option. Instead, this Option shall be a NQSO. Capitalized terms not defined
herein shall have the meaning ascribed to them in the Plan.
2.
Vesting; Exercise Period
.
2.1
Vesting of Right to Exercise Option
. This Option shall be exercisable as
indicated in this Agreement. Subject to the terms and conditions of the Plan and this Agreement
(including any Exhibits thereto), this Option shall vest and become exercisable as to portions of
the Shares pursuant to the Vesting Schedule specified above. If application of the vesting
percentage causes a fractional Share, such Share shall be rounded down to the nearest whole Share
for each month except for the last month in such vesting period, at the end of which last month
this Option shall become vested for the full remainder of the Shares. This Option shall cease to
vest upon the Participants Termination of Service and the Participant shall in no event be
entitled under this Option to purchase a number of Shares greater than the Total Option Shares as
set forth above.
2.2
Expiration
. This Option shall expire on the Expiration Date set forth above and
must be exercised, if at all, on or before the earlier of the Expiration Date or the date on which
this Option is earlier terminated in accordance with the provisions of Section 3.
3.
Termination of Service
.
3.1
Termination for Any Reason except Death, Disability or Cause
. In the event of the
Participants Termination of Service for any reason except the Participants death, Disability or
Cause, then this Option, to the extent (and only to the extent) that it is vested in accordance
with the schedule set forth above on the Termination Date, may be exercised by the Participant no
later than three (3) months after the Termination Date, but in any event no later than the
Expiration Date.
3.2
Termination Because of Death or Disability
. In the event of the Participants
Termination of Service because of death or Disability of the Participant (or the Participant dies
within three (3) months after Termination of Service other than for Cause or because of
Disability), then this Option, to the extent that it is vested in accordance with the schedule set
forth above, may be exercised by the Participant (or the Participants legal representative) no
later than twelve (12) months after the Termination Date, but in any event no later than the
Expiration Date.
3.3
Termination for Cause
. In the event of the Participants Termination of Service
for Cause, this Option will automatically expire on the Participants Termination Date.
3.4
No Obligation to Employ
. Nothing in the Plan or this Agreement shall confer on
the Participant any right to continue in the employ of, or other relationship with, the Company or
any Parent Subsidiary, or Affiliate, or limit in any way the right of the Company or any Parent,
Subsidiary or Affiliate to terminate the Participants employment or service relationship at any
time, with or without cause.
4.
Manner of Exercise
.
4.1
Share Option Exercise Agreement
. To exercise this Option, the Participant (or in
the case of exercise after the Participants death, the Participants executor, administrator, heir
or legatee, as the case may be) must deliver to the Company an executed share option exercise
agreement in the form attached hereto as
Exhibit A
, or in such other form as may be
approved by the Company from time to time (the
Exercise Agreement
), which shall set forth,
inter
alia
, the Participants election to exercise this Option, the number of
Shares being purchased, any restrictions imposed on the Shares and any
representations, warranties and agreements regarding the Participants investment intent and access
to information as may be required by the Company to comply with applicable securities laws. If
someone other than the Participant exercises this Option, then such person must submit
documentation reasonably acceptable to the Company that such person has the right to exercise this
Option.
4.2
Limitations on Exercise
. This Option may not be exercised unless such exercise is
in compliance with all applicable federal, state, local or foreign securities laws, as they are in
effect on the date of exercise. This Option may not be exercised as to fewer than 100 Shares
unless it is exercised as to all Shares as to which this Option is then exercisable.
4.3
Payment
. The Exercise Agreement shall be accompanied by full payment of the
Exercise Price for the Shares being purchased in cash (by check), or where permitted by law:
(a) the surrender of Shares or delivery of a properly executed form of attestation of
ownership of Shares as the Committee may require (including withholding of Shares otherwise
deliverable upon exercise of the Award) which have a Fair Market Value on the date of surrender or
attestation equal to the aggregate Exercise Price of the Shares as to which the Option shall be
exercised;
(b) through a same day sale commitment by the Participant and a broker-dealer that is a
member of the Financial Industry Regulatory Authority (a
FINRA
dealer) whereby the
Participant irrevocably elects to exercise the Option and to sell a portion of the Shares so
purchased to pay the Exercise Price, and whereby the FINRA dealer irrevocably commits upon receipt
of such Shares, to remit such amounts to the Company;
(c) any other methods acceptable to the Committee, including through the delivery of a notice
that the Participant has placed a market sell order with a broker with respect to Shares then
issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient
portion of the net proceeds of the sale to the Company in satisfaction of the Exercise Price;
provided
that payment of such proceeds is then made to the Company upon settlement of such sale; or
(d) by any combination of the foregoing.
4.4
Tax Obligations and Issuance of Shares
.
(a) Regardless of any action the Company or the Participants employer (the Employer) takes
with respect to any or all income tax, social insurance, payroll tax, payment on account or other
tax-related items arising out of the Participants participation in the Plan and legally applicable
to the Participant (Tax-Related Items), the Participant acknowledges that the ultimate liability
for all Tax-Related Items is and remains the Participants responsibility and may exceed the amount
actually withheld by the company and/or the Employer. The Participant further acknowledges that
the Company and/or the Employer (a) make no representations or undertakings regarding the treatment
of any Tax-Related Items in connection with any aspect of the Option, including but not limited to,
the grant, vesting or exercise of this Option, the subsequent sale of Shares acquired pursuant to
such exercise and the receipt of any dividends; and (b) do not commit and are under no obligation
to structure the terms of the grant or any aspect of this Option to reduce or eliminate the
Participants liability for Tax-Related Items or achieve any particular tax result. Furthermore,
if the Participant has become subject to tax in more than one jurisdiction between the Date of
Grant and the date of any relevant taxable event, the Participant acknowledges that the Company
and/or the Employer (or former employer, as applicable) may be required to withhold or account for
Tax-Related Items in more than one jurisdiction.
(b) Prior to the relevant taxable or tax withholding event, as applicable, the Participant
shall pay or make arrangements satisfactory to the Company and/or the Employer to satisfy all
Tax-Related Items. In this regard, the Participant authorizes the Company and/or the Employer, or
their respective agents, at their discretion, to satisfy the Tax-Related Items by one or a
combination of the following (1) withholding from the Participants wages or other cash
compensation paid to the Participant by the Company, the Employer, or any Parent, Subsidiary or
Affiliate; or (2) withholding from the proceeds of the sale of Shares acquired at exercise of this
Option either through a voluntary sale or through a mandatory sale arranged by the Company (on the
Participants behalf pursuant to this authorization); or (3) withholding in Shares to be issued at
exercise of this Option.
(c) To avoid any negative accounting treatment, the Company may withhold or account for
Tax-Related Items by considering applicable minimum statutory withholding amounts or other
applicable withholding rates. If the obligation for the Tax-Related Items is satisfied by
withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full
number of Shares subject to the exercised Option, notwithstanding that a number of Shares are held
back solely for the purpose of paying the Tax-Related Items due as a result of the Participants
participation in the Plan.
(d) The Participant shall pay to the Company or the Employer any amount of Tax-Related Items
that the Company or the Employer may be required to withhold or account for as a result of the
Participants participation in the Plan that cannot be satisfied by the means previously described
in this section. The Company may refuse to issue or deliver the Shares or the proceeds from the
sale of Shares, if the Participant fails to comply with his or her obligations in connection with
the Tax-Related Items.
4.5
Issuance of Shares
. Provided that the Exercise Agreement and payment are in form
and substance satisfactory to counsel for the Company, the Company shall issue the Shares
registered in the name of the Participant, or the Participants legal representative, and shall
deliver certificates representing the Shares with the appropriate legends affixed thereto.
5.
Compliance with Laws and Regulations
.
The exercise of this Option and the issuance and
allotment of Shares shall be subject to compliance by the Company and the Participant with all
applicable requirements of federal, state, local and foreign securities laws and with all
applicable requirements of any stock exchange on which the Companys Shares may be listed at the
time of such issuance or allotment. The Participant understands that the Company is under no
obligation to register or qualify the Shares with the Securities and Exchange Commission, any state
securities commission or any stock exchange to effect such compliance.
6.
Nontransferability of Option
.
This Option may not be transferred in any manner other
than by will or by the laws of descent and distribution and may be exercised during the lifetime of
the Participant only by the Participant. The terms of this Option shall be binding upon the
executors, administrators, successors and assigns of Participant.
7.
Nature of Grant
. In accepting this Option, the Participant acknowledges and agrees
that:
(a) the Plan is established voluntarily by the Company, is discretionary in nature and may be
amended, suspended or terminated by the Company at any time;
(b) the grant of this Option is voluntary and occasional and does not create any contractual
or other right to receive future grants of options, or benefits in lieu of options, even if options
have been granted repeatedly in the past;
(d) all decisions with respect to future option grants, if any, will be at the sole discretion
of the Company;
(e) the Participants participation in the Plan is voluntary;
(f) the Participants participation in the Plan shall not create a right to further employment
with the Company or the Employer and shall not interfere with the ability of the Company or the
Employer to terminate the Participants employment relationship at any time;
(g) this Option is an extraordinary item that does not constitute compensation of any kind for
services of any kind rendered to the Employer, the Company or any Parent, Subsidiary, or Affiliate
of the Company and that is outside the scope of the Participants employment or service contract,
if any;
(h) the future value of the Shares underlying this Option is unknown and cannot be predicted
with certainty;
(i) if the Participant exercises this Option and acquires Shares, the value of such Shares may
increase or decrease in value, even below the Exercise Price;
(j) no claim or entitlement to compensation or damages shall arise from the forfeiture of the
Option or the diminution of value of the Shares issued upon exercise resulting from the
Participants Termination of Service (for any reason whatsoever and whether or not in breach of
local labor laws), and in consideration of this Option to which the Participant is otherwise not
entitled, the Participant irrevocably agrees never to institute any claim against the Company
and/or the Employer, waives the Participants ability, if any, to bring any such claim, and
releases the Company and/or the Employer from any such claim; if, notwithstanding the foregoing,
any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan,
the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to
execute any and all documents necessary to request dismissal or withdrawal of such claims; and
(k) for the Participants residing outside of the U.S.A:
(A) this Option and any Shares acquired under the Plan are not intended to replace any pension
rights or compensation;
(B) this Option is not part of normal or expected compensation or salary for any purposes,
including, but not limited to, calculating any severance, resignation, termination, redundancy, end
of service payments, dismissal, bonuses, long-service awards, pension or retirement or welfare
benefits or similar payments and in no event should be considered as compensation for, or relating
in any way to past services for the Employer, the Company or any Parent, Subsidiary or Affiliate;
and
(C) in the event of the Participants Termination of Service (whether or not in breach of
local labor laws), the Participants right to vest in the Option under the Plan, if any, will
terminate effective as of the date of Termination of Service and; the Committee shall have the
exclusive discretion to determine when the Participant is no longer actively providing service for
purposes of this Option.
8.
No Advice Regarding Grant
. The Company is not providing any tax, legal or financial
advice, nor is the Company making any recommendations regarding the Participants participation in
the Plan, or the Participants purchase or sale of the Shares acquired upon exercise of this
Option. The Participant is hereby advised to consult with his or her own personal tax, legal and
financial advisors regarding his or her participation in the Plan before taking any action related
to the Plan.
9.
Data Privacy
. The Participant hereby explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of the Participants personal data as
described in this Agreement and any other Option grant materials by and among, as applicable, the
Employer, the Company and its Parent, Subsidiaries and Affiliates for the exclusive purpose of
implementing, administering and managing the Participants participation in the Plan.
The Participant understands that the Company and the Employer may hold certain personal
information about the Participant, including, but not limited to, the Participants name, home
address and telephone number, date of birth, social insurance number or other identification
number, salary, nationality, job title, any Shares or directorships held in the Company, details of
all Options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or
outstanding in the Participants favor, for the exclusive purpose of implementing, administering
and managing the Plan (Data).
The Participant understands that Data will be transferred to the Company stock plan service
provider as may be selected by the Company in the future, which is assisting the Company with the
implementation, administration and management of the Plan. The Participant understands that the
recipients of the Data may be located in the United States or elsewhere, and that the recipients
country (
e.g.
, the United States) may have different data privacy laws and protections from the
Participants country. The Participant understands that he or she may request a list with the
names and addresses of any potential recipients of the Data by contacting his or her local human
resources representative. The Participant authorizes the Company, the Company stock plan service
provider and any other possible recipients which may assist the Company (presently or in the
future) with implementing, administering and managing the Plan to receive, possess, use, retain and
transfer the Data, in electronic or other form, for the sole purpose of implementing, administering
and managing his or her participation in the Plan. The Participant understands that Data will be
held only as long as is necessary to implement, administer and manage the Participants
participation in the Plan. The Participant understands that he or she may, at any time, view Data,
request additional information about the storage and processing of Data, require any necessary
amendments to Data or refuse or withdraw the consents herein, in any case without cost, by
contacting in writing his or her local human resources representative. The Participant
understands, however, that refusing or withdrawing his or her consent may affect the Participants
ability to participate in the Plan. For more information on the consequences of the Participants
refusal to consent or withdrawal of consent, the Participant understands that he or she may contact
his or her local human resources representative.
10.
Privileges of Share Ownership
.
The Participant shall not have any of the rights of a
shareholder with respect to any Shares until the Participant exercises this Option, pays the
Exercise Price and Shares are issued to the Participant.
11.
Interpretation
.
Any dispute regarding the interpretation of this Agreement shall be
submitted by the Participant or the Company to the Committee for review. The resolution of such a
dispute by the Committee shall be final and binding on the Company and the Participant.
12.
Entire Agreement
.
The Plan and this Agreement, together with all its Exhibits,
constitute the entire agreement and understanding of the parties with respect to the subject matter
of this Agreement, and supersede all prior understandings and agreements, whether oral or written,
between the parties hereto with respect to the specific subject matter hereof.
13.
Notices
.
Any notice required to be given or delivered to the Company under the terms
of this Agreement shall be in writing and addressed to the Corporate Treasurer of the Company at
its corporate offices at 847 Gibraltar Drive, Milpitas, California 95035. Any notice required to
be given or delivered to the Participant shall be in writing and addressed to the Participant at
the address indicated above or to such other address as such party may designate in writing from
time to time to the Company. All notices shall be deemed to have been given or delivered upon:
personal delivery; three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit with any return
receipt express courier (prepaid); or one (1) business day after transmission by rapifax or
telecopier.
14.
Successors and Assigns
.
The Company may assign any of its rights under this Agreement.
This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer set forth herein, this Agreement shall be binding
upon the Participant and the Participants heirs, executors, administrators, legal representatives,
successors and assigns.
15.
Governing Law
.
This Agreement shall be governed by and construed in accordance with
the laws of the State of California, without regard to the conflict of law provisions, as provided
in the Plan. For purposes of litigating any dispute that arises directly or indirectly from the
relationship of the parties evidenced by this Option or the Agreement, the parties hereby submit to
and consent to the exclusive jurisdiction of the State of California and agree that such litigation
shall be conducted only in the courts of Santa Clara County, California, or the federal courts for
the United States for the Northern District of California, and no other courts, where this grant is
made and/or to be performed.
16.
Language
.
If the Participant has received this Agreement or any other document related
to the Plan translated into a language other than English and if the meaning of the translated
version is different from the English version, the English version will control.
17.
Severability
.
The provisions of this Agreement are severable and if any one or more
provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the
remaining provisions shall nevertheless be binding and enforceable.
18.
Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any
documents related to current or future participation in the Plan by electronic means. The
Participant hereby consents to receive such documents by electronic delivery and agrees to
participate in the Plan through an on-line or electronic system established and maintained by the
Company or a third party designated by the Company.
19.
Exhibit B
. Notwithstanding any provision in this Agreement to the contrary, this
Option shall be subject to any special terms and provisions as set forth in Exhibit B to this
Agreement for the Participants country. Moreover, if the Participant relocates to one of the
countries included in Exhibit B, the special terms and conditions for such country will apply to
the Participant, to the extent the Company determines that the application of such terms and
conditions is necessary or advisable in order to comply with local law or facilitate the
administration of the Plan. Exhibit B constitutes part of this Agreement.
20.
Imposition of Other Requirements
. The Company reserves the right to impose other
requirements on the Participants participation in the Plan, on this Option and on any Shares
acquired under the Plan, to the extent the Company determines it is necessary or advisable in order
to comply with local law or facilitate the administration of the Plan, and to require the
Participant to sign any additional agreements or undertakings that may be necessary to accomplish
the foregoing.
21.
Acceptance
.
The Participant hereby acknowledges receipt of a copy of the Plan and this
Agreement. The Participant has read and understands the terms and provisions thereof, and accepts
this Option subject to all the terms and conditions of the Plan and this Agreement (including
Exhibit B). The Participant acknowledges that there may be adverse tax consequences upon exercise
of this Option or disposition of the Shares and that the Company has advised the Participant to
consult a tax advisor prior to such exercise or disposition.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.
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FLEXTRONICS INTERNATIONAL LTD.
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PARTICIPANT
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By:
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By:
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Name: Michael McNamara
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Name:
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Title: Chief Executive Officer
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Address:
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EXHIBIT 10.02
Exhibit A
FLEXTRONICS INTERNATIONAL LTD.
2010 EQUITY INCENTIVE PLAN
SHARE OPTION EXERCISE AGREEMENT
I hereby elect to purchase the number of Shares of the Company as set forth below:
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Participant (and/or assignee):
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Number of Shares Purchased:
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Social Security Number/ Personal Id Number:
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Purchase Price per Share:
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Aggregate Purchase Price:
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Date of Option Agreement:
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Type of Option:
o
Incentive Option
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Exact Name of Title to Shares:
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Nonqualified Option
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1. Delivery of Purchase Price
. The Participant hereby delivers to the Company the Aggregate
Exercise Price, to the extent permitted in the Agreement, as follows (check as applicable and
complete):
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o
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in cash (by check) in the amount of $
, receipt of which is
acknowledged by the Company;
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o
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the surrender of Shares or delivery of a properly executed form of
attestation of ownership of Shares (including withholding of Shares otherwise
deliverable upon exercise of the Award) in the amount of $
, receipt of which
is acknowledged by the Company;
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o
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by the waiver hereby of compensation due or accrued to the Participant for
services rendered in the amount of $
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through a same-day-sale commitment, delivered herewith, from the
Participant and the FINRA Dealer named therein, in the amount of
$
; or
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through a margin commitment, delivered herewith from the Participant and
the broker named by the Participant, in the amount of
$
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2. Tax Consequences
.
THE PARTICIPANT UNDERSTANDS THAT THE PARTICIPANT MAY SUFFER ADVERSE TAX
CONSEQUENCES AS A RESULT OF THE PARTICIPANTS PURCHASE OR DISPOSITION OF THE SHARES. THE
PARTICIPANT REPRESENTS THAT THE PARTICIPANT HAS CONSULTED WITH ANY TAX CONSULTANT(S) THE
PARTICIPANT DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND THAT
THE PARTICIPANT IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.
3. Entire Agreement
. The Plan, and the Agreement (including all Exhibits thereto) are incorporated
herein by reference. This Exercise Agreement, the Plan, the Agreement constitute the entire
agreement and understanding of the parties and supersede in their entirety all prior understandings
and agreements of the Company and the Participant with respect to the subject matter hereof, and
are governed by California law except for that body of law pertaining to choice of law or conflict
of law.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.
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FLEXTRONICS INTERNATIONAL LTD.
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PARTICIPANT
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By:
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By:
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Name:
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Name:
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Title:
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Address:
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FLEXTRONICS INTERNATIONAL LTD.
2010 EQUITY INCENTIVE PLAN
EXHIBIT B TO THE
SHARE OPTION AGREEMENT
FOR NON-U.S. PARTICIPANTS
Terms and Conditions
This Exhibit B includes additional terms and conditions that govern the Option granted to the
Participant under the Plan if the Participant resides in one of the countries listed below.
Certain capitalized terms used but not defined in this Exhibit B have the meanings set forth in the
Plan and/or the Agreement.
Notifications
This Exhibit B also includes information regarding exchange controls and certain other issues of
which the Participant should be aware with respect to his or her participation in the Plan. The
information is based on the securities, exchange control and other laws in effect in the respective
countries as of July 2010. Such laws are often complex and change frequently. As a result, the
Company strongly recommends that the Participant not rely on the information in this Exhibit B as
the only source of information relating to the consequences of the Participants participation in
the Plan because the information may be out of date at the time that the Option vests, the
Participant exercises his or her Option, or the Participant sells Shares acquired upon exercise of
the Option under the Plan.
In addition, the information contained herein is general in nature and may not apply to the
Participants particular situation, and the Company is not in a position to assure the Participant
of a particular result. Accordingly, the Participant is advised to seek appropriate professional
advice as to how the relevant laws in the Participants country may apply to his or her situation.
Finally, if the Participant is a citizen or resident of a country other than the one in which he or
she is currently working or transfers employment after the Date of Grant, the information contained
herein may not be applicable to the Participant.
AUSTRIA
Notifications
Exchange Control Information
. If the Participant holds Shares acquired under the Plan outside of
Austria, the Participant must submit a report to the Austrian National Bank. An exemption applies
if the value of the shares as of any given quarter does not exceed
30,000,000 or as of December 31
does not exceed
5,000,000. If the former threshold is exceeded, quarterly obligations are
imposed, whereas if the latter threshold is exceeded, annual reports must be given. The annual
reporting date is December 31 and the deadline for filing the annual report is March 31 of the
following year.
When the Participant sells Shares issued upon exercise of the Option under the Plan, there may be
exchange control obligations if the cash received is held outside Austria. If the transaction
volume of all the Participants accounts abroad exceeds
3,000,000, the movements and balances of
all accounts must be reported monthly, as of the last day of the month, on or before the fifteenth
day of the following month.
Consumer Protection Information
. To the extent that the provisions of the Austrian Consumer
Protection Act are applicable to the Agreement and the Plan, the Participant may be entitled to
revoke his or her acceptance of the Agreement if the conditions listed below are met:
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(i)
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If the Participant accepts the Option outside of the business premises of the
Company, the Participant may be entitled to revoke his or her acceptance of the
Agreement, provided the revocation is made within one week after the Participant
accepts the Agreement.
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(ii)
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The revocation must be in written form to be valid. It is sufficient if the
Participant returns the Agreement to the Company or the Companys representative with
language that can be understood as the Participants refusal to conclude or honor the
Agreement, provided the revocation is sent within the period set forth above.
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BRAZIL
Notifications
Compliance with Law.
By accepting the Option, the Participant acknowledges his or her agreement to
comply with applicable Brazilian laws and to pay any and all applicable taxes associated with the
exercise of the Option, the receipt of any dividends, and the sale of Shares issued upon exercise
of the Option under the Plan.
Exchange Control Information
. If the Participant is a resident or domiciled in Brazil, he or she
will be required to submit an annual declaration of assets and rights held outside of Brazil to the
Central Bank of Brazil if the aggregate value of such assets and rights is equal to or greater than
US$100,000 (approximately BRL175,950 as of July 2010). Please note that foreign individuals
holding Brazilian visas are considered Brazilian residents for purposes of this reporting
requirement and must declare at least the assets held abroad that were acquired subsequent to the
Participants date of admittance as a resident of Brazil. Assets and rights that must be reported
include Shares issued upon exercise of the Option under the Plan.
CANADA
Terms and Conditions
French Language Provision
. The following provision will apply if the Participant is a resident of
Quebec:
The parties acknowledge that it is their express wish that the Agreement, as well as all documents,
notices and legal proceedings entered into, given or instituted pursuant hereto or relating
directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la rédaction en anglais de la convention, ainsi que de tous
documents exécutés, avis donnés et procédures judiciaries intentées, directement ou indirectement,
relativement à ou suite à la présente convention.
Termination of Service
. This provision supplements Section 3 of the Agreement.
In the event of involuntary Termination of Service (whether or not in breach of local labor laws),
the Participants right to receive and vest in the Option under the Plan, if any, will terminate
effective as of the date that is the earlier of: (1) the date the Participant receives notice of
Termination of Service from the Company or the Employer, or (2) the date the Participant is no
longer actively providing service to the Company or his or her Employer regardless of any notice
period or period of pay in lieu of such notice required under local law
(including, but not limited to, statutory law, regulatory law and/or common law); the Committee
shall have the exclusive discretion to determine when the Participant no longer actively providing
service for purposes of the Option grant.
Data Privacy.
This provision supplements Section 9 of the Agreement:
The Participant hereby authorizes the Company and the Companys representatives to discuss with and
obtain all relevant information from all personnel, professional or not, involved in the
administration and operation of the Plan. The Participant further authorizes the Company, any
Parent, Subsidiary or Affiliate and the Administrator of the Plan to disclose and discuss the Plan
with their advisors. The Participant further authorizes the Company and any Parent, Subsidiary or
Affiliate to record such information and to keep such information in the Participants employee
file.
Notifications
Grant of Option
. Notwithstanding anything contrary in the Agreement or the Plan, the Option does
not constitute compensation nor is in any way related to the Participants past services and/or
employment to the Company, the Employer, and/or a Parent, Subsidiary or Affiliate.
CHINA
Terms and Conditions
Manner of Exercise
. This provision supplements Section 4 of the Agreement:
Notwithstanding anything to the contrary in Section 4.3 of the Agreement, due to exchange control
laws in China, the Participant will be required to exercise his or her Option using the cashless
sell-all exercise method pursuant to which all Shares subject to the exercised Option will be sold
immediately upon exercise and the proceeds of sale, less the Exercise Price, any Tax-Related Items
and brokers fees or commissions, will be remitted to the Participant in accordance with any
applicable exchange control laws and regulations. The Company reserves the right to provide
additional methods of exercise depending on the development of local law. This restriction will
not apply to non-PRC citizens.
Exchange Control Requirements
. The Participant understands and agrees that, pursuant to local
exchange control requirements, the Participant will be required to immediately repatriate the cash
proceeds from the cashless sell-all exercise of the Option to China. The Participant further
understands that, under local law, such repatriation of his or her cash proceeds may need to be
effectuated through a special exchange control account established by the Company, Parent,
Subsidiary, Affiliate or the Employer, and the Participant hereby consents and agrees that any
proceeds from the sale of Shares may be transferred to such special account prior to being
delivered to the Participant. The Company is under no obligation to secure any exchange conversion
rate, and the Company may face delays in converting the proceeds to local currency due to exchange
control restrictions in China. The Participant agrees to bear any currency fluctuation risk
between the time the Shares are sold and the time the sale proceeds are distributed through any
such special exchange account. The Participant further agrees to comply with any other requirements
that may be imposed by the Company in the future in order to facilitate compliance with exchange
control requirements in China. These requirements will not apply to non-PRC citizens.
CZECH REPUBLIC
Notifications
Exchange Control Information.
Upon request of the Czech National Bank, the Participant may need to
file a notification within 15 days of the end of the calendar quarter in which he or she acquires
Shares.
DENMARK
Notifications
Danish Stock Options Act
. The Participant will receive an Employer Statement pursuant to the
Danish Act on Stock Options.
Exchange Control/Tax Reporting Information
. If the Participant holds Shares issued upon exercise
of the Option under the Plan in a brokerage account with a broker or bank outside Denmark, the
Participant is required to inform the Danish Tax Administration about the account. For this
purpose, the Participant must file a Form V (
Erklaering V
) with the Danish Tax Administration. The
Form V must be signed both by the Participant and by the applicable broker or bank where the
account is held. By signing the Form V, the broker or bank undertakes to forward information to
the Danish Tax Administration concerning the Shares in the account without further request each
year. By signing the Form V, the Participant authorizes the Danish Tax Administration to examine
the account. A sample of the Form V can be found at the following website:
www.skat.dk
.
In addition, if the Participant opens a brokerage account (or a deposit account with a U.S. bank)
for the purpose of holding cash outside Denmark, the Participant is also required to inform the
Danish Tax Administration about this account. To do so, the Participant must also file a Form K
(
Erklaering K
) with the Danish Tax Administration. The Form K must be signed both by the
Participant and by the applicable broker or bank where the account is held. By signing the Form K,
the broker/bank undertakes an obligation, without further request each year, to forward information
to the Danish Tax Administration concerning the content of the account. By signing the Form K, the
Participant authorizes the Danish Tax Administration to examine the account. A sample of Form K
can be found at the following website:
www.skat.dk
.
FINLAND
There are no country specific provisions.
FRANCE
Term and Conditions
Language Consent
. By accepting the Option, the Participant confirms having read and understood the
documents relating to this grant (the Plan, the Agreement and this Exhibit B) which were provided
in English language. The Participant accepts the terms of those documents accordingly.
En acceptant lattribution, vous confirmez ainsi avoir lu et compris les documents relatifs à cette
attribution (le Plan, le contrat et cette Annexe) qui ont été communiqués en langue anglaise. Vous
acceptez les termes en connaissance de cause.
GERMANY
Notifications
Exchange Control Information
. Cross-border payments in excess of
12,500 must be reported monthly
to the German Federal Bank. If the Participant uses a German bank to effect a cross-border payment
in excess of
12,500 in connection with the sale of Shares acquired under the Plan, the bank will
make the report for the Participant. In addition, the Participant must report any receivables or
payables or debts in foreign currency exceeding an amount of
5,000,000 on a monthly basis.
Finally, the Participant must report Shares on an annual basis that exceeds 10% of the total voting
capital of the Company.
HONG KONG
Terms and Conditions
Warning: The Option and Shares acquired upon exercise of the Option do not constitute a public
offering of securities under Hong Kong law and are available only to employees of the Company, its
Parent, Subsidiary or Affiliates. The Agreement, including this Exhibit B, the Plan and other
incidental communication materials have not been prepared in accordance with and are not intended
to constitute a prospectus for a public offering of securities under the applicable securities
legislation in Hong Kong. Nor have the documents been reviewed by any regulatory authority in Hong
Kong. The Option is intended only for the personal use of each eligible Employee of the Employer,
the Company or any Parent, Subsidiary or Affiliate and may not be distributed to any other person.
If the Participant is in any doubt about any of the contents of the Agreement, including this
Exhibit B, or the Plan, the Participant should obtain independent professional advice.
Sale Restriction.
Notwithstanding anything contrary in the Notice, the Agreement or the Plan, in
the event the Participants Option vests and the Participant or his or her heirs and
representatives exercise the Option such that Shares are issued to the Participant or his or her
heirs and representatives within six months of the Date of Grant, the Participant agrees that the
Participant or his or her heirs and representatives will not dispose of any Shares acquired prior
to the six-month anniversary of the Date of Grant.
Notifications
Nature of Scheme
. The Company specifically intends that the Plan will not be an occupational
retirement scheme for purposes of the Occupational Retirement Schemes Ordinance.
HUNGARY
There are no country specific provisions.
INDIA
Terms and Conditions
Manner of Exercise.
This provision supplements Section 4 of the Agreement:
Notwithstanding anything to the contrary in Section 4.3 of the Agreement, due to legal restrictions
in India, the Participant may not exercise his or her Option using a cashless sell-to-cover
exercise, whereby the Participant directs a broker to sell some (but not all) of the Shares subject
to the exercised Option and deliver to the Company the amount of the sale proceeds to pay the
Exercise Price and any Tax-Related Items. However,
payment of the Exercise Price may be made by any of the other methods of payment set forth in the
Agreement. The Company reserves the right to provide the Participant with this method of payment
depending on the development of local law.
Notifications
Exchange Control Information.
Regardless of what method of exercise is used to purchase Shares,
the Participant must repatriate the proceeds from the sale of Shares and any dividends received in
relation to the Shares to India within 90 days after receipt. The Participant must maintain the
foreign inward remittance certificate received from the bank where the foreign currency is
deposited in the event that the Reserve Bank of India or the Employer requests proof of
repatriation. It is the Participants responsibility to comply with applicable exchange control
laws in India.
IRELAND
Notifications
Director Notification Obligation
. Directors, shadow directors and secretaries of the Companys
Irish Subsidiary or Affiliate are subject to certain notification requirements under the Irish
Companies Act. Directors, shadow directors and secretaries must notify the Irish Subsidiary or
Affiliate in writing of their interest in the Company and the number and class of Shares or rights
to which the interest relates within five days of the issuance or disposal of Shares or within five
days of becoming aware of the event giving rise to the notification. This disclosure requirement
also applies to any rights or Shares acquired by the directors spouse or children (under the age
of 18).
ISRAEL
Terms and Conditions
Manner of Exercise
. This provision supplements Section 4 of the Agreement:
Notwithstanding anything to the contrary in Section 4.3 of the Agreement, due to tax laws in
Israel, the Participant will be required to exercise his or her Option using the cashless sell-all
exercise method whereby all Shares subject to the exercised Option will be sold immediately upon
exercise and the proceeds of sale, less the aggregate Exercise Price, any Tax-Related Items and
brokers fees or commissions, will be remitted to the Participant in accordance with any applicable
laws and regulations. The Participant will not be permitted to acquire and hold Shares upon
exercise. The Company reserves the right to provide additional methods of exercise to the
Participant depending on the development of local law.
ITALY
Terms and Conditions
Manner of Exercise
. This provision supplements Section 4 of the Agreement:
Notwithstanding anything to the contrary in Section 4.3 of the Agreement, due to legal restrictions
in Italy, the Participant will be required to exercise his or her Option using the cashless
sell-all exercise method whereby all Shares subject to the exercised Option will be sold
immediately upon exercise and the proceeds of sale, less the exercise price, any Tax-Related Items
and brokers fees or commissions, will be remitted to the Participant in accordance with any
applicable laws and regulations. The Participant will not be permitted to acquire and hold
Shares upon exercise. The Company reserves the right to provide additional methods of exercise to
the Participant depending on the development of local law.
Data Privacy.
This provision replaces Section 9 of the Agreement:
The Participant understands that the Company and the Employer as the Privacy Representative of the
Company in Italy, may hold certain personal information about the Participant, including, but not
limited to, the Participants name, home address and telephone number, date of birth, social
insurance or other identification number, salary, nationality, job title, any Shares or
directorships held in the Company or any Subsidiary or Affiliate, details of all Options or any
other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the
Participants favor, and that the Company and the Employer will process said data and other data
lawfully received from third party (Personal Data) for the exclusive purpose of managing and
administering the Plan and complying with applicable laws, regulations and Community legislation.
The Participant also understands that providing the Company with Personal Data is mandatory for
compliance with laws and is necessary for the performance of the Plan and that the Participants
denial to provide Personal Data would make it impossible for the Company to perform its contractual
obligations and may affect the Participants ability to participate in the Plan. The Participant
understands that Personal Data will not be publicized, but it may be accessible by the Employer as
the Privacy Representative of the Company and within the Employers organization by its internal
and external personnel in charge of processing, and by the data Processor, if appointed. The
updated list of Processors and of the subjects to which Data are communicated will remain available
upon request at the Employer. Furthermore, Personal Data may be transferred to banks, other
financial institutions or brokers involved in the management and administration of the Plan. The
Participant understands that Personal Data may also be transferred to the independent registered
public accounting firm engaged by the Company, and also to the legitimate addressees under
applicable laws. The Participant further understands that the Company and its Subsidiaries or
Affiliates will transfer Personal Data amongst themselves as necessary for the purpose of
implementation, administration and management of the Participants participation in the Plan, and
that the Company and its Subsidiaries or Affiliates may each further transfer Personal Data to
third parties assisting the Company in the implementation, administration and management of the
Plan, including any requisite transfer of Personal Data to a broker or other third party with whom
the Participant may elect to deposit any Shares acquired under the Plan or any proceeds from the
sale of such Shares. Such recipients may receive, possess, use, retain and transfer Personal Data
in electronic or other form, for the purposes of implementing, administering and managing the
Participants participation in the Plan. The Participant understands that these recipients may be
acting as Controllers, Processors or persons in charge of processing, as the case may be, according
to applicable privacy laws, and that they may be located in or outside the European Economic Area,
such as in the United States or elsewhere, in countries that do not provide an adequate level of
data protection as intended under Italian privacy law.
Should the Company exercise its discretion in suspending all necessary legal obligations connected
with the management and administration of the Plan, it will delete Personal Data as soon as it has
accomplished all the necessary legal obligations connected with the management and administration
of the Plan.
The Participant understands that Personal Data processing related to the purposes specified above
shall take place under automated or non-automated conditions, anonymously when possible, that
comply with the purposes for which Personal Data is collected and with confidentiality and security
provisions as set forth by applicable laws and regulations, with specific reference to Legislative
Decree no. 196/2003.
The processing activity, including communication, the transfer of Personal Data abroad, including
outside of the European Economic Area, as specified herein and pursuant to applicable laws and
regulations, does not require the Participants consent thereto as the processing is necessary to
performance of law and contractual
obligations related to implementation, administration and management of the Plan. The Participant
understands that, pursuant to section 7 of the Legislative Decree no. 196/2003, he or she has the
right at any moment to, including, but not limited to, obtain confirmation that Personal Data
exists or not, access, verify its contents, origin and accuracy, delete, update, integrate,
correct, blocked or stop, for legitimate reason, the Personal Data processing. To exercise privacy
rights, the Participant should contact the Employer. Furthermore, the Participant is aware that
Personal Data will not be used for direct marketing purposes. In addition, Personal Data provided
can be reviewed and questions or complaints can be addressed by contacting the Participants human
resources department.
Plan Document Acknowledgement
. The Participant acknowledges that the Participant has read and
specifically and expressly approves the following sections of the Agreement: Section 1: Grant of
Option; Section 2: Vesting; Exercise Period; Section 3: Termination of Service; Section 4: Manner
of Exercise; Section 5: Compliance with Laws and Regulations; Section 6: Nontransferability of
Option; Section 7: Nature of Grant; Section 8: No Advice Regarding Grant; Section 15: Governing
Law; Section 16: Language; Section 17: Severability; Section 18: Electronic Delivery; Section 19:
Exhibit B; Section 20: Imposition of Other Requirements; and the Data Privacy section of this
Exhibit B.
Notifications
Exchange Control Information
. To participate in the Plan, the Participant must comply with
exchange control regulations in Italy. The Participant is required to report in his or her annual
tax return: (a) any transfers of cash or Shares to or from Italy exceeding
10,000; (b) any foreign
investments or investments held outside of Italy at the end of the calendar year exceeding
10,000
if such investments (Shares, vested Options) that may give rise to taxable income in Italy that
combined with other foreign assets exceeds
10,000; and (c) the amount of the transfers to and from
Italy which have had an impact during the calendar year on the Participants foreign investments or
investments held outside of Italy. The Participant may be exempt from the requirement in (a) if
the transfer or investment is made through an authorized broker resident in Italy, as the broker
will generally comply with the reporting obligation on his or her behalf.
JAPAN
Notifications
Exchange Control Information.
If the Participant pays more than ¥30,000,000 in a single
transaction for the purchase of Shares when he or she exercises the Option, the Participant must
file a Payment Report with the Ministry of Finance through the Bank of Japan by the 20th day of the
month following the month in which the payment was made. The precise reporting requirements vary
depending on whether the relevant payment is made through a bank in Japan.
KOREA
Notifications
Exchange Control Information
. To remit funds out of Korea to exercise the Option by means of a
cash exercise method, the Participant must obtain a confirmation of the remittance by a foreign
exchange bank in Korea. The Participant likely will need to present to the bank processing the
transaction supporting documentation evidencing the nature of the remittance.
If the Participant realizes US$500,000 (approximately KRW 601,975,000 as of July 2010) or more from
the sale of Shares, Korean exchange laws require the Participant to repatriate the proceeds to
Korea within eighteen months of the sale.
MALAYSIA
Notifications
Malaysian Insider Trading Notification.
The Participant should be aware of the Malaysian
insider-trading rules, which may impact his or her acquisition or disposal of Shares or rights to
Shares under the Plan. Under the Malaysian insider-trading rules, the Participant is prohibited
from purchasing or selling Shares (
e.g.
, a vested Option, Shares) when he or she is in possession
of information which is not generally available and which he or she knows or should know will have
a material effect on the price of Shares once such information is generally available.
Director Notification Obligation.
If the Participant is a director of the Companys Malaysian
Subsidiary, he or she is subject to certain notification requirements under the Malaysian Companies
Act. Among these requirements is an obligation to notify the Malaysian Subsidiary in writing when
the Participant receives or disposes of an interest (
e.g.
, Option, Shares) in the Company or any
related company. Such notifications must be made within 14 days of receiving or disposing of any
interest in the Company or any related company.
MEXICO
Terms and Conditions
No Entitlement for Claims or Compensation
. The following section supplements Section 7 of the
Agreement:
Modification
. By accepting the Option, the Participant understands and agrees that any
modification of the Plan or the Agreement or its termination shall not constitute a change or
impairment of the terms and conditions of employment.
Policy Statement
. The Option grant the Company is making under the Plan is unilateral and
discretionary and, therefore, the Company reserves the absolute right to amend it and discontinue
it at any time without any liability.
The Company, with registered offices at One Marina Boulevard, #28-00, Singapore 018989, is solely
responsible for the administration of the Plan, and participation in the Plan and the grant of the
Option do not, in any way, establish an employment relationship between the Participant and the
Company since he or she is participating in the Plan on a wholly commercial basis and the sole
employer is Availmed Servicios S.A. de C.V., Grupo Flextronics S.A. de C.V., Flextronics Servicios
Guadalajara S.A. de C.V., Flextronics Servicios Mexico S. de R.L. de C.V. and Flextronics
Aguascalientes Servicios S.A. de C.V., nor does it establish any rights between the Participant
and the Employer.
Plan Document Acknowledgment
. By accepting the Option, the Participant acknowledges that he or she
has received copies of the Plan, has reviewed the Plan and the Agreement in their entirety, and
fully understands and accepts all provisions of the Plan and the Agreement.
In addition, the Participant further acknowledges that he or she has read and specifically and
expressly approves the terms and conditions in the Nature of Grant section of the Agreement, in
which the following is clearly
described and established: (i) participation in the Plan does not constitute an acquired right;
(ii) the Plan and participation in the Plan is offered by the Company on a wholly discretionary
basis; (iii) participation in the Plan is voluntary; and (iv) the Company and any Parent,
Subsidiary or Affiliates are not responsible for any decrease in the value of the Shares acquired
upon exercise of the Option.
Finally, the Participant hereby declares that he or she does not reserve any action or right to
bring any claim against the Company for any compensation or damages as a result of his or her
participation in the Plan and therefore grants a full and broad release to the Employer, the
Company and any Parent, Subsidiary or Affiliates with respect to any claim that may arise under the
Plan.
Spanish Translation
Condiciones y Duración
Sin Derecho a Reclamo o Compensación
. La siguiente sección complementa la sección 7 de este
Acuerdo:
Modificación
. Al aceptar la Opción, el Participante entiende y acuerda que cualquier modificación
del Plan o del Acuerdo o su extinción, no constituirá un cambio o disminución de los términos y
condiciones de empleo.
Declaración de Política
. El otorgamiento de Opción por parte de la Compañía es efectuada bajo el
Plan en forma unilateral y discrecional y por lo tanto, la Compañía se reserva el derecho absoluto
de modificar y discontinuar la Opción en cualquier momento sin responsabilidad alguna hacia la
Compañía.
La Compañía, con oficinas registradas en One Marina Boulevard, #28-00, Singapore 018989 es la única
responsable de la administración de los Planes y de la participación en los mismos y el
otorgamamiento de la Opción no establece de forma alguna una relación de trabajo entre el
Participante y la Compañía, ya que su participación en el Plan es completamente comercial y el
único empleador es Availmed Servicios S.A. de C.V., Grupo Flextronics S.A. de C.V., Flextronics
Servicios Guadalajara S.A. de C.V., Flextronics Servicios Mexico S. de R.L. de C.V. and Flextronics
Aguascalientes, así como tampoco establece ningún derecho entre el Participante y el Empleador.
Reconocimiento del Documento del Plan
. Al aceptar la Opción, el Participante reconoce que ha
recibido copias de los Planes, ha revisado los mismos, al igual que la totalidad del Acuerdo y, que
ha entendido y aceptado completamente todas las disposiciones contenidas en los Planes y en el
Acuerdo.
Además, el Partcipante reconoce que ha leído, y que aprueba específica y expresamente los términos
y condiciones contenidos en la sección Naturaleza del Orotgamiento en el cual se encuentra
claramente descripto y establecido lo siguiente: (i) la participación en los Planes no constituye
un derecho adquirido; (ii) los Planes y la participación en los mismos es ofrecida por la Compañía
de forma enteramente discrecional; (iii) la participación en los Planes es voluntaria; y (iv) la
Compañía, así como su Sociedad controlante, Subsidiaria o Filiales no son responsables por
cualquier disminución en el valor de las Acciones adquiridas a través de la Opción.
Finalmente, el Partcipante declara que no se reserva ninguna acción o derecho para interponer una
demanda en contra de la Compañía por compensación, daño o perjuicio alguno como resultado de su
participación en el Plan y, en consecuencia, otorga el más amplio finiquito al Empleador, así como
a la Compañía, a su Sociedad controlante, Subsidiaria o filiales con respecto a cualquier demanda
que pudiera originarse en virtud de los Planes.
NETHERLANDS
Notifications
Securities Law Information.
The Participant should be aware of the Dutch insider-trading rules,
which may impact the sale of Shares acquired upon exercise of the Option. In particular, the
Participant may be prohibited from effectuating certain transactions if the Participant has inside
information about the Company.
Under Article 5:56 of the Dutch Financial Supervision Act, anyone who has insider information
related to an issuing company is prohibited from effectuating a transaction in securities in or
from the Netherlands. Inside information is defined as knowledge of specific information
concerning the issuing company to which the securities relate or the trade in securities issued by
such company, which has not been made public and which, if published, would reasonably be expected
to affect the share price, regardless of the development of the price. The insider could be any
Employee in the Netherlands who has inside information as described herein.
Given the broad scope of the definition of inside information, certain Employees working at a
Subsidiary or Affiliate in the Netherlands may have inside information and, thus, would be
prohibited from effectuating a transaction in securities in the Netherlands at a time when the
Participant has such inside information.
If the Participant is uncertain whether the insider-trading rules apply to him or her, he or she
should consult his or her personal legal advisor.
NORWAY
There are no country specific provisions.
POLAND
Terms and Conditions
Restriction on Type of Shares Issued
. Due to tax regulations in Poland, as necessary, the
Participants Option will be over newly issued Shares only. Treasury Shares will not be used to
satisfy the Option exercise.
ROMANIA
Notifications
Exchange Control Information.
If the Participant remits foreign currency into or out of Romania
(
e.g
., the Exercise Price or the proceeds from the sale of his or her Shares), the Participant may
have to provide the Romanian bank assisting with the transaction with appropriate documentation
explaining the source of the income.
The Participant should consult his or her personal legal
advisor to determine whether the Participant will be required to submit such documentation to the
Romanian bank
.
SINGAPORE
Notifications
Securities Law Information
.
The Option is being granted to the Participant pursuant to the
Qualifying Person exemption under section 273(1)(f) of the Singapore Securities and Futures Act
(Chapter 289, 2006 Ed.) (SFA). The Plan have not been lodged or registered as a prospectus with
the Monetary Authority of Singapore. The
Participant should note that the Option grant is subject to section 257 of the SFA and the
Participant will not be able to make any subsequent sale in Singapore, or any offer of such
subsequent sale of the Shares underlying the Option unless such sale or offer in Singapore is made
pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of
the SFA (Cap 289, 2006 Ed.).
Director Notification Obligation.
If the Participant is a director, associate director or shadow
director of the Company or a Singapore Subsidiary or Affiliate, the Participant is subject to
certain notification requirements under the Singapore Companies Act. Among these requirements is
an obligation to notify the Singaporean Subsidiary in writing when the Participant receives an
interest (
e.g
., Option, Shares) in the Company or any related companies. Please contact the
Company to obtain a copy of the notification form. In addition, the Participant must notify the
Company or Singapore Subsidiary or Affiliate when the Participant sells Shares of the Company or
any related company (including when the Participant sell Shares acquired under the Plan). These
notifications must be made within two days of acquiring or disposing of any interest in the Company
or any related company. In addition, a notification must be made of the Participants interests in
the Company or any related company within two days of becoming a director.
SLOVAK REPUBLIC
There are no country specific provisions.
SOUTH AFRICA
Terms and Conditions
Tax Obligations
. The following provision supplements Section 4.4 of the Agreement:
By accepting the Option, the Participant agrees to notify the Employer of the amount of any gain
realized at exercise of the Option. If the Participant fails to advise the Employer of the gain
realized at exercise of the Option, he or she may be liable for a fine.
Notifications
Tax Clearance for Cash Exercises.
If the Participant exercises the Option using a cash exercise
method, the Participant must obtain and provide to the Employer, or any third party designated by
the Employer or the Company, a Tax Clearance Certificate (with respect to Foreign Investments)
bearing the official stamp and signature of the Exchange Control Department of the South African
Revenue Service (SARS). The Participant must renew this Tax Clearance Certificate every twelve
months, or at such other interval as may be required by the SARS. If the Participant uses a
cashless exercise method whereby no funds are remitted out of South Africa, no Tax Clearance
Certificate is required.
Exchange Control Information.
The Participant is subject to a lifetime offshore investment
allowance of ZAR4,000,000. This is a cumulative allowance, and the Participants ability to remit
funds for the purchase of Shares will be reduced if his or her foreign investment limit is utilized
to make a transfer of funds offshore. If the Participant exercises his or her Option with cash,
the Participant will be subject to this limit. If the ZAR4,000,000 limit will be exceeded, the
Participant may still transfer funds for the exercise of the Option; however, the Shares obtained
from the exercise must be sold immediately and the full proceeds repatriated to South Africa.
If the Participant exercises the Option using a cashless method of exercise, the value of the
Shares acquired using the cashless exercise method will not be counted against the ZAR2,000,000
limit. The sale proceeds of such Shares may be held offshore and will not count against the
investment limit.
The Participant should consult his or her personal advisor to ensure compliance with applicable
exchange control regulations in South Africa, as such regulations are subject to frequent change
.
The Participant is solely responsible for complying with all exchange control laws in South Africa,
and neither the Company nor the Employer will be liable for any fines or penalties resulting from
the Participants failure to comply with South African exchange control laws.
SWEDEN
There are no country specific provisions.
SWITZERLAND
Notifications
Securities Law Information
. The Option is considered a private offering in Switzerland; therefore,
it is not subject to registration.
TAIWAN
Notifications
Exchange Control Information
. The Participant may acquire and remit foreign currency (including
proceeds from the sale of Shares) into and out of Taiwan up to US$5,000,000 (approximately TWD
160,580,024 as of July 2010) per year. If the transaction amount is TWD 500,000 or more in a
single transaction, the Participant must submit a Foreign Exchange Transaction Form and also
provide supporting documentation to the satisfaction of the remitting bank.
TURKEY
Notifications
Exchange Control Information
. Exchange control regulations require Turkish residents to buy Shares
through intermediary financial institutions that are approved under the Capital Market Law (
i.e.
,
banks licensed in Turkey). Therefore, if the Participant uses cash to exercise his or her Option,
the funds must be remitted through a bank or other financial institution licensed in Turkey. A
wire transfer of funds by a Turkish bank will satisfy this requirement. This requirement does not
apply to cashless exercises, as no funds leave Turkey.
Securities Law Information
. Under Turkish law, the Participant is not permitted to sell the Shares
issued upon exercise in Turkey.
UNITED KINGDOM
Terms and Conditions
Tax Obligations.
The following provisions supplement Section 4.4 of the Agreement:
The Participant agrees that, if Participant does not pay or the Employer or the Company does not
withhold from the Participant the full amount of Tax-Related Items that the Participant owes at
exercise of the Option, or the release or assignment of the Option for consideration, or the
receipt of any other benefit in connection with the Option (the Taxable Event) within 90 days
after the Taxable Event, or such other period specified in section 222(1)(c) of the U.K. Income Tax
(Earnings and Pensions) Act 2003, then the amount that should have been withheld shall constitute a
loan owed by the Participant to the Employer, effective 90 days after the Taxable Event. The
Participant agrees that the loan will bear interest at the HMRCs official rate and will be
immediately due and repayable by the Participant, and the Company and/or the Employer may recover
it at any time thereafter by withholding the funds from salary, bonus or any other funds due to the
Participant by the Employer, by withholding in Shares issued upon exercise of the Option or from
the cash proceeds from the sale of Shares or by demanding cash or a check from the Participant. The
Participant also authorizes the Company to delay the issuance of any Shares unless and until the
loan is repaid in full.
Notwithstanding the foregoing, if the Participant is an officer or executive director (as within
the meaning of section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), the
terms of the immediately foregoing provision will not apply. In the event that the Participant is
an officer or executive director and Tax-Related Items are not collected from or paid by
Participant within 90 days of the Taxable Event, the amount of any uncollected Tax-Related Items
may constitute a benefit to the Participant on which additional income tax and National Insurance
Contributions may be payable. The Participant acknowledges that the Company or the Employer may
recover any such additional income tax and National Insurance Contributions at any time thereafter
by any of the means referred to in Section 4.4 of the Agreement, although the Participant
acknowledges that he/she ultimately will be responsible for reporting any income tax or National
Insurance Contributions due on this additional benefit directly to the HMRC under the
self-assessment regime.
National Insurance Contributions Acknowledgment.
As a condition of participation in the Plan and
the exercise of the Option, the Participant agrees to accept any liability for secondary Class 1
National Insurance Contributions which may be payable by the Company and/or the Employer in
connection with the Option and any event giving rise to Tax-Related Items (the Employer NICs).
To accomplish the foregoing, the Participant agrees to execute a joint election with the Company,
the form of such joint election being formally approved by HMRC (the Joint Election), and any
other required consent or election. The Participant further agrees to execute such other joint
elections as may be required between the Participant and any successor to the Company and/or the
Employer. The Participant further agrees that the Company and/or the Employer may collect the
Employer NICs from the Participant by any of the means set forth in Section 4.4 of the Agreement.
If the Participant does not enter into a Joint Election prior to exercising the Option or if
approval of the Joint Election has been withdrawn by HMRC, the Option shall become null and void
without any liability to the Company and/or the Employer and may not be exercised by the
Participant.
EXHIBIT 10.03
No. «GrantID»
FLEXTRONICS INTERNATIONAL LTD.
2010 EQUITY INCENTIVE PLAN
FORM OF RESTRICTED SHARE UNIT AWARD AGREEMENT
This Restricted Share Unit Award Agreement (the
Agreement
) is made and entered into as of [insert
date], (the
Effective Date
) by and between Flextronics International Ltd., a Singapore
corporation (the
Company
), and the participant named below (the
Participant
). Capitalized terms
not defined herein shall have the meaning ascribed to them in the Flextronics International Ltd.
2010 Equity Incentive Plan (the
Plan
). The Participant understands and agrees that this
Restricted Share Unit Award (the
RSU Award
) is granted subject to and in accordance with the
express terms and conditions of the Plan and this Agreement including any country-specific terms
set forth in Exhibit A to this Agreement. The Participant further agrees to be bound by the terms
and conditions of the Plan and the terms and conditions of this Agreement. The Participant
acknowledges receipt of a copy of Plan and the official prospectus for the Plan. A copy of the Plan
and the official prospectus for the Plan are available on the Flextronics website at
http://home.sjc.flextronics.com/options/reference.asp
and at the offices of the Company and the
Participant hereby agrees that the Plan and the official prospectus for the Plan are deemed
delivered to the Participant.
|
|
|
Participant:
|
|
«Name», «First»
|
|
|
|
Restricted Share Unit Award:
|
|
«Shares»
|
|
|
|
Total Fair Market Value of
RSU Award:
|
|
$
«Market_Value»
|
|
|
|
Date of Grant:
|
|
«Grant Date»
|
|
|
|
First Vesting Date:
|
|
«Vesting Date»
|
|
|
|
Vesting Criteria:
|
|
Provided the Participant continues to provide
services to the Company or to any Parent,
Subsidiary, or Affiliate, the shares underlying
this RSU Award shall be issued as follows:
[insert vesting schedule [
not less than three
years
]]
|
1.
Grant of RSU Award
.
1.1
Grant of RSU Award
. Subject to the terms and conditions of the Plan and this
Agreement, including any country-specific terms set forth in Exhibit A to this Agreement, the
Company hereby grants to the Participant an RSU Award for the number of ordinary shares set forth
above under RSU Award (the
Shares
).
(a)
Vesting Criteria
. The RSU Award shall vest, and the Shares shall be issuable to the
Participant, according to the Vesting Criteria set forth above. If application of the Vesting
Criteria causes vesting of a fractional Share, such Share shall be rounded down to the nearest
whole Share. Shares that vest and are issuable pursuant to the Vesting Criteria are
Vested
Shares
.
(c)
Termination of Service
. The RSU Award, all of the Companys obligations and the
Participants rights under this Agreement, shall terminate on the earlier of the Participants
Termination Date (as defined in the Plan) or the date when all the Shares that are subject to the
RSU Award have been allotted and issued, or forfeited in the case of any portion of the RSU Award
that fails to vest.
(d)
Allotment and Issuance of Vested Shares
. The Company shall allot and issue the Vested
Shares as soon as practicable after such Shares have vested pursuant to the Vesting Criteria. The
Company shall have no obligation to allot and issue, and the Participant will have no right or
title to, any Shares, and no Shares will be allotted and issued to the Participant, until
satisfaction of the Vesting Criteria.
(e)
No Obligation to Employ
. Nothing in the Plan or this Agreement shall confer on the
Participant any right to continue in the employ of, or other relationship with, the Company or any
Parent, Subsidiary or Affiliate or limit in any way the right of the Company or any Parent,
Subsidiary or Affiliate to terminate the Participants employment or service relationship at any
time, with or without cause.
(f)
Nontransferability of RSU Award
. None of the Participants rights under this Agreement or
under the RSU Award may be transferred in any manner other than by will or by the laws of descent
and distribution. Notwithstanding the foregoing, the Participants in the U.S. may transfer or
assign the RSU Award to Family Members (as defined in the Plan) through a gift or a domestic
relations order (and not in a transfer for value), or as otherwise allowed by the Plan. The terms
of this Agreement shall be binding upon the executors, administrators, successors and assigns of
the Participant.
(g)
Privileges of Share Ownership
. The Participant shall not have any of the rights of a
shareholder until the Vested Shares are allotted and issued after the applicable vest date.
(h)
Interpretation
. Any dispute regarding the interpretation of the terms and provisions with
respect to the RSU Award and this Agreement shall be submitted by the Participant or the Company to
the Committee for review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and on the Participant.
1.2
Title to Shares
. Title will be provided in the Participants individual name on
the Companys records unless the Participant otherwise notifies Stock Administration of an
alternative designation in compliance with the terms of this Agreement and applicable laws.
2.
Delivery
.
2.1
Deliveries by Participant
. The Participant hereby delivers to the Company this
Agreement.
2.2
Deliveries by the Company
. The Company will issue a duly executed share
certificate or other documentation evidencing the Vested Shares in the name specified in Section
1.2 above upon vesting, provided the Participant has delivered and executed this Agreement prior to
the applicable vesting date and has remained continuously employed by the Company or a Parent,
Subsidiary, or Affiliate through each applicable vesting date.
- 2 -
3.
Compliance with Laws and Regulations
.
The issuance and transfer of the Shares to the
Participant shall be subject to and conditioned upon compliance by the Company and the Participant
with all applicable requirements of any share exchange or automated quotation system on which the
Companys Ordinary Shares may be listed at the time of such issuance or transfer. The Participant
understands that the Company is under no obligation to register or qualify the Shares with the U.S.
Securities and Exchange Commission, any state, local or foreign securities commission or any share
exchange to effect such compliance.
4.
Rights as Shareholder
.
Subject to the terms and conditions of this Agreement, the
Participant will have all of the rights of a shareholder of the Company with respect to the Vested
Shares which have been allotted and issued to the Participant until such time as the Participant
disposes of such Vested Shares.
5.
Stop-Transfer Orders
.
5.1
Stop-Transfer Instructions
. The Participant agrees that, to ensure compliance
with the restrictions imposed by this Agreement, the Company may issue appropriate stop-transfer
instructions to its transfer agent, if any, and if the Company administers transfers of its own
securities, it may make appropriate notations to the same effect in its own records.
5.2
Refusal to Transfer
. The Company will not be required (i) to register in its
books any Shares that have been sold or otherwise transferred in violation of any of the provisions
of this Agreement or (ii) to treat as owner of such Shares, or to accord the right to vote or pay
dividends to any Participant or other transferee to whom such Shares have been so transferred.
6.
Taxes and Disposition of Shares
.
6.1
Tax Obligations
.
(a) Regardless of any action the Company or the Participants employer (the Employer) takes
with respect to any or all income tax, social insurance, payroll tax, payment on account or other
tax-related items arising out of the Participants participation in the Plan and legally applicable
to the Participant (Tax-Related Items), the Participant acknowledges that the ultimate liability
for all Tax-Related Items is and remains the Participants responsibility and may exceed the amount
actually withheld by the Company and/or the Employer. The Participant further acknowledges that
the Company and/or the Employer (a) make no representations or undertakings regarding the treatment
of any Tax-Related Items in connection with any aspect of the RSU Award, including but not limited
to, the grant, vesting or issuance of Vested Shares underlying the RSU Award, the subsequent sale
of Vested Shares acquired upon vesting and the receipt of any dividends; and (b) do not commit and
are under no obligation to structure the terms of the grant or any aspect of the RSU Award to
reduce or eliminate the Participants liability for Tax-Related Items or achieve any particular tax
result. Furthermore, if the Participant has become subject to tax in more than one jurisdiction
between the Date of Grant and the date of any relevant taxable event, the Participant acknowledges
that the Company and/or the Employer (or former employer, as applicable) may be required to
withhold or account for Tax-Related Items in more than one jurisdiction.
(b) Prior to the relevant taxable or tax withholding event, as applicable, the Participant
shall pay or make arrangements satisfactory to the Company and/or the Employer to satisfy all
Tax-Related Items. In this regard, the Participant authorizes the Company and/or the Employer, or
their respective agents, at their discretion, to satisfy the Tax-Related Items by one or a
combination of the following (1) withholding from the Participants wages or other cash
compensation paid to the Participant by the Company, the Employer, or any Parent or Subsidiary of
the Company; or (2) withholding from the proceeds of the sale of Vested Shares either through a
voluntary sale or through a mandatory sale arranged by the Company (on the Participants behalf
pursuant to this authorization); or (3) withholding in Shares to be issued at vesting of the RSU
Award.
- 3 -
(c) To avoid any negative accounting treatment, the Company may withhold or account for
Tax-Related Items by considering applicable minimum statutory withholding amounts or other
applicable withholding rates. If the obligation for the Tax-Related Items is satisfied by
withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full
number of Vested Shares, notwithstanding that a number of Shares are held back solely for the
purpose of paying the Tax-Related Items due as a result of the Participants participation in the
Plan.
(d) The Participant shall pay to the Company or the Employer any amount of Tax-Related Items
that the Company or the Employer may be required to withhold or account for as a result of the
Participants participation in the Plan that cannot be satisfied by the means previously described
in this section. The Company may refuse to issue or deliver the Vested Shares or the proceeds from
the sale of Shares, if the Participant fails to comply with his or her obligations in connection
with the Tax-Related Items.
6.2
Disposition of Shares
. Participant hereby agrees that the Participant shall make
no disposition of the Shares (other than as permitted by this Agreement) unless and until the
Participant shall have complied with all requirements of this Agreement applicable to the
disposition of the Shares.
7.
Nature of Grant
. In accepting the RSU Award, the Participant acknowledges and agrees
that:
(a) the Plan is established voluntarily by the Company, is discretionary in nature and may be
amended, suspended or terminated by the Company at any time;
(b) the grant of the RSU Award is voluntary and occasional and does not create any contractual
or other right to receive future RSU Awards, or benefits in lieu of RSU Awards, even if RSU Awards
have been granted repeatedly in the past;
(d) all decisions with respect to future RSU Awards, if any, will be at the sole discretion of
the Company;
(e) the Participants participation in the Plan is voluntary;
(f) the future value of the Shares underlying the RSU Award is unknown and cannot be predicted
with certainty;
(g) no claim or entitlement to compensation or damages shall arise from the forfeiture of the
RSU Award resulting from a Termination of Service (for any reason whatsoever and whether or not in
breach of local labor laws), and in consideration of the RSU Award to which the Participant is
otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the
Company and/or the Employer, waives the Participants ability, if any, to bring any such claim, and
releases the Company and/or the Employer from any such claim; if, notwithstanding the foregoing,
any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan,
the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to
execute any and all documents necessary to request dismissal or withdrawal of such claims; and
(h) for the Participants residing outside of the U.S.A.:
(A) the RSU Award and any Shares acquired under the Plan are not intended to replace any
pension rights or compensation;
- 4 -
(B) the RSU Award is not part of normal or expected compensation or salary for any purposes,
including, but not limited to, calculating any severance, resignation, termination, redundancy, end
of service payments, dismissal, bonuses, long-service awards, pension or retirement or welfare
benefits or similar payments and in no event should be considered as compensation for, or relating
in any way to past services for the Employer, the Company or any Parent, Subsidiary or Affiliate;
and
(C) in the event of the Participants Termination of Service (whether or not in breach of
local labor laws), the Participants right to vest in the RSU Award under the Plan, if any, will
terminate effective as of the date of Termination of Service and; the Committee shall have the
exclusive discretion to determine when the Participant is no longer actively providing service for
purposes of this RSU Award.
8.
No Advice Regarding Grant
. The Company is not providing any tax, legal or financial
advice, nor is the Company making any recommendations regarding the Participants participation in
the Plan, or the sale of the Shares acquired upon vesting of the RSU Award. The Participant is
hereby advised to consult with his or her own personal tax, legal and financial advisors regarding
his or her participation in the Plan before taking any action related to the Plan.
9.
Data Privacy
.
(a) The Participant hereby explicitly and unambiguously consents to the collection, use and
transfer, in electronic or other form, of the Participants personal data as described in this
Agreement and any other RSU Award materials by and among, as applicable, the Employer, the Company
and its Parent, Subsidiaries and Affiliates for the exclusive purpose of implementing,
administering and managing the Participants participation in the Plan.
(b) The Participant understands that the Company and the Employer may hold certain personal
information about the Participant, including, but not limited to, the Participants name, home
address and telephone number, date of birth, social insurance number or other identification
number, salary, nationality, job title, any Shares or directorships held in the Company, details of
all RSU Awards or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or
outstanding in the Participants favor, for the exclusive purpose of implementing, administering
and managing the Plan (Data).
(c) The Participant understands that Data will be transferred to the Company stock plan
service provider as may be selected by the Company in the future, which is assisting the Company
with the implementation, administration and management of the Plan. The Participant understands
that the recipients of the Data may be located in the United States or elsewhere, and that the
recipients country (
e.g.
, the United States) may have different data privacy laws and protections
from the Participants country. The Participant understands that he or she may request a list with
the names and addresses of any potential recipients of the Data by contacting his or her local
human resources representative. The Participant authorizes the Company, the Company stock plan
service provider and any other possible recipients which may assist the Company (presently or in
the future) with implementing, administering and managing the Plan to receive, possess, use, retain
and transfer the Data, in electronic or other form, for the sole purpose of implementing,
administering and managing his or her participation in the Plan. The Participant understands that
Data will be held only as long as is necessary to implement, administer and manage the
Participants participation in the Plan. The Participant understands that he or she may, at any
time, view Data, request additional information about the storage and processing of Data, require
any necessary amendments to Data or refuse or withdraw the consents herein, in any case without
cost, by contacting in writing his or her local human resources representative. The Participant
understands, however, that refusing or withdrawing his or her consent may affect the Participants
ability to participate in the Plan. For more information on the consequences of the Participants
refusal to consent or withdrawal of consent, the Participant understands that he or she may contact
his or her local human resources representative.
- 5 -
10.
Successors and Assigns
.
The Company may assign any of its rights under this Agreement.
This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer set forth in this Agreement and in the Plan, this
Agreement will be binding upon the Participant and the Participants heirs, executors,
administrators, legal representatives, successors and assigns.
11.
Governing Law; Venue; Severability
.
This Agreement shall be governed by and construed
in accordance with the internal laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed entirely within
California, excluding that body of laws pertaining to conflict of laws. For purposes of litigating
any dispute that arises directly or indirectly from the relationship of the parties evidenced by
the RSU Award or this Agreement, the parties hereby submit to and consent to the exclusive
jurisdiction of the State of California and agree that such litigation shall be conducted only in
the courts of Santa Clara County, California, or the federal courts for the United States for the
Northern District of California, and no other courts, where this Agreement is made and/or to be
performed. If any provision of this Agreement is determined by a court of law to be illegal or
unenforceable, then such provision will be enforced to the maximum extent possible and the other
provisions will remain fully effective and enforceable.
12.
Notices
.
Any notice required to be given or delivered to the Company shall be in
writing and addressed to the Vice President of Finance of the Company at its corporate offices at
847 Gibraltar Drive, Milpitas, California 95035. Any notice required to be given or delivered to
the Participant shall be in writing and addressed to the Participant at the address indicated on
the signature page hereto or to such other address as the Participant may designate in writing from
time to time to the Company. All notices shall be deemed effectively given upon personal delivery,
three (3) days after deposit in the United States mail by certified or registered mail (return
receipt requested), one (1) business day after its deposit with any return receipt express courier
(prepaid), or one (1) business day after transmission by facsimile.
13.
Headings
.
The captions and headings of this Agreement are included for ease of
reference only and will be disregarded in interpreting or construing this Agreement. All
references herein to Sections will refer to Sections of this Agreement.
14.
Language
.
If the Participant has received this Agreement or any other document related
to the Plan translated into a language other than English and if the meaning of the translated
version is different from the English version, the English version will control.
15.
Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any
documents related to current or future participation in the Plan by electronic means. The
Participant hereby consents to receive such documents by electronic delivery and agrees to
participate in the Plan through an on-line or electronic system established and maintained by the
Company or a third party designated by the Company.
16
.
Exhibit A
. Notwithstanding any provision in this Agreement to the contrary, the RSU
Award shall be subject to any special terms and provisions as set forth in Exhibit A to this
Agreement for the Participants country. Moreover, if the Participant relocates to one of the
countries included in Exhibit A, the special terms and conditions for such country will apply to
the Participant, to the extent the Company determines that the application of such terms and
conditions is necessary or advisable in order to comply with local law or facilitate the
administration of the Plan. Exhibit A constitutes part of this Agreement.
- 6 -
17.
Code Section 409A
. With respect to U.S. taxpayers, it is intended that the terms of
the RSU Award will comply with the provisions of Section 409A of the Code and the Treasury
Regulations relating thereto so as not to subject the Participant to the payment of additional
taxes and interest under Section 409A of the Code, and this Agreement will be interpreted, operated
and administered in a manner that is consistent with this intent. In furtherance of this intent,
the Committee may adopt such amendments to this Agreement or adopt other policies and procedures
(including amendments, policies and procedures with retroactive effect), or take any other actions,
in each case, without the consent of the Participant, that the Committee determines are reasonable,
necessary or appropriate to comply with the requirements of Section 409A of the Code and related
U.S. Department of Treasury guidance. In that light, the Company makes no representation or
covenant to ensure that the RSU Awards that are intended to be exempt from, or compliant with,
Section 409A of the Code are not so exempt or compliant or for any action taken by the Committee
with respect thereto.
18.
Imposition of Other Requirements
. The Company reserves the right to impose other
requirements on the Participants participation in the Plan, on the RSU Award and on any Shares
acquired under the Plan, to the extent the Company determines it is necessary or advisable in order
to comply with local law or facilitate the administration of the Plan, and to require the
Participant to sign any additional agreements or undertakings that may be necessary to accomplish
the foregoing.
19.
Entire Agreement
.
The Plan and this Agreement, together with all its Exhibits,
constitute the entire agreement and understanding of the parties with respect to the subject matter
of this Agreement, and supersede all prior understandings and agreements, whether oral or written,
between the parties hereto with respect to the specific subject matter hereof.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.
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FLEXTRONICS INTERNATIONAL LTD.
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PARTICIPANT
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By:
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By:
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Name:
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Name:
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Title:
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Address:
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- 7 -
FLEXTRONICS INTERNATIONAL LTD. 2010 EQUITY INCENTIVE PLAN
EXHIBIT A TO THE
RESTRICTED SHARE UNIT AWARD AGREEMENT
FOR NON-U.S. PARTICIPANTS
Terms and Conditions
This Exhibit A includes additional terms and conditions that govern the RSU Award granted to the
Participant under the Plan if the Participant resides in one of the countries listed below.
Certain capitalized terms used but not defined in this Exhibit A have the meanings set forth in the
Plan and/or the Agreement.
Notifications
This Exhibit A also includes information regarding exchange controls and certain other issues of
which the Participant should be aware with respect to his or her participation in the Plan. The
information is based on the securities, exchange control and other laws in effect in the respective
countries as of July 2010. Such laws are often complex and change frequently. As a result, the
Company strongly recommends that the Participant not rely on the information in this Exhibit A as
the only source of information relating to the consequences of the Participants participation in
the Plan because the information may be out of date at the time that the RSU Award vests and Shares
are issued to the Participant or the Participant sells Shares acquired upon vesting of the RSU
Award under the Plan.
In addition, the information contained herein is general in nature and may not apply to the
Participants particular situation, and the Company is not in a position to assure the Participant
of a particular result. Accordingly, the Participant is advised to seek appropriate professional
advice as to how the relevant laws in the Participants country may apply to his or her situation.
Finally, if the Participant is a citizen or resident of a country other than the one in which he or
she is currently working or transfers employment after the Date of Grant, the information contained
herein may not be applicable to the Participant.
AUSTRIA
Notifications
Exchange Control Information
. If the Participant holds Shares acquired under the Plan outside of
Austria, the Participant must submit a report to the Austrian National Bank. An exemption applies
if the value of the shares as of any given quarter does not exceed
30,000,000 or as of December 31
does not exceed
5,000,000. If the former threshold is exceeded, quarterly obligations are
imposed, whereas if the latter threshold is exceeded, annual reports must be given. The annual
reporting date is December 31 and the deadline for filing the annual report is March 31 of the
following year.
When the Participant sells Vested Shares issued under the Plan, there may be exchange control
obligations if the cash received is held outside Austria. If the transaction volume of all the
Participants accounts abroad exceeds
3,000,000, the movements and balances of all accounts must
be reported monthly, as of the last day of the month, on or before the fifteenth day of the
following month.
Consumer Protection Information
. To the extent that the provisions of the Austrian Consumer
Protection Act are applicable to the Agreement and the Plan, the Participant may be entitled to
revoke his or her acceptance of the Agreement if the conditions listed below are met:
(i) If the Participant accepts the RSU Award outside of the business premises of the Company, the
Participant may be entitled to revoke his or her acceptance of the Agreement, provided the
revocation is made within one week after the Participant accepts the Agreement.
(ii) The revocation must be in written form to be valid. It is sufficient if the Participant
returns the Agreement to the Company or the Companys representative with language that can be
understood as the Participants refusal to conclude or honor the Agreement, provided the revocation
is sent within the period set forth above.
- 8 -
BRAZIL
Notifications
Compliance with Law.
By accepting the RSU Award, the Participant acknowledges his or her agreement
to comply with applicable Brazilian laws and to pay any and all applicable taxes associated with
the RSU Award, the receipt of any dividends, and the sale of Vested Shares issued under the Plan.
Exchange Control Information
. If the Participant is a resident or domiciled in Brazil, he or she
will be required to submit an annual declaration of assets and rights held outside of Brazil to the
Central Bank of Brazil if the aggregate value of such assets and rights is equal to or greater than
US$100,000 (approximately BRL175,950 as of July 2010). Foreign individuals holding Brazilian visas
are considered Brazilian residents for purposes of this reporting requirement and must declare at
least the assets held abroad that were acquired subsequent to the Participants date of admittance
as a resident of Brazil. Assets and rights that must be reported include Shares issued upon vesting
of the RSU Award under the Plan.
CANADA
Terms and Conditions
French Language Provision
. The following provision will apply if the Participant is a resident of
Quebec:
The parties acknowledge that it is their express wish that the Agreement, as well as all documents,
notices and legal proceedings entered into, given or instituted pursuant hereto or relating
directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de
tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés
directement ou indirectement à, la présente convention.
Termination of Service
. This provision supplements Section 1.1(c) of the Agreement:
In the event of involuntary Termination of Service (whether or not in breach of local labor laws),
the Participants right to receive and vest in the RSU Award under the Plan, if any, will terminate
effective as of the date that is the earlier of: (1) the date the Participant receives notice of
Termination of Service from the Company or the Employer, or (2) the date the Participant is no
longer actively providing service by the Company or his or her Employer regardless of any notice
period or period of pay in lieu of such notice required under local law (including, but not limited
to, statutory law, regulatory law and/or common law); the Committee shall have the exclusive
discretion to determine when the Participant no longer actively providing service for purposes of
the RSU Award.
Data Privacy.
This provision supplements Section 9 of the Agreement:
The Participant hereby authorizes the Company and the Companys representatives to discuss with and
obtain all relevant information from all personnel, professional or not, involved in the
administration and operation of the Plan. The Participant further authorizes the Company, any
Parent, Subsidiary or Affiliate and the Committee to disclose and discuss the Plan with their
advisors. The Participant further authorizes the Company and any Parent, Subsidiary or Affiliate
to record such information and to keep such information in the Participants employee file.
- 9 -
Notifications
Grant of RSU Award
. The RSU Award does not constitute compensation nor is in any way related to
the Participants past services and/or employment to the Company, the Employer, and/or a Parent,
Subsidiary or Affiliate of the Company.
CHINA
Terms and Conditions
Issuance of Vested Shares and Sale of Shares
. This provision supplements Section 1.1(d) of the
Agreement:
Due to local regulatory requirements, upon the vesting of the RSU Award, the Participant agrees to
the immediate sale of any Vested Shares to be issued to the Participant upon vesting and settlement
of the RSU Award. The Participant further agrees that the Company is authorized to instruct its
designated broker to assist with the mandatory sale of such Vested Shares (on the Participants
behalf pursuant to this authorization) and the Participant expressly authorizes the Companys
designated broker to complete the sale of such Vested Shares. The Participant acknowledges that
the Companys designated broker is under no obligation to arrange for the sale of the Vested Shares
at any particular price. Upon the sale of the Vested Shares, the Company agrees to pay the
Participant the cash proceeds from the sale, less any brokerage fees or commissions and subject to
any obligation to satisfy Tax-Related Items.
Exchange Control Requirements
. The Participant understands and agrees that, pursuant to local
exchange control requirements, the Participant will be required to immediately repatriate the cash
proceeds from the sale of Vested Shares underlying the RSU Award to China. The Participant further
understands that, under local law, such repatriation of his or her cash proceeds may need to be
effectuated through a special exchange control account established by the Company, any Parent,
Subsidiary, Affiliate or the Employer, and the Participant hereby consents and agrees that any
proceeds from the sale of Vested Shares may be transferred to such special account prior to being
delivered to the Participant. The Company is under no obligation to secure any exchange conversion
rate, and the Company may face delays in converting the proceeds to local currency due to exchange
control restrictions in China. The Participant agrees to bear any currency fluctuation risk
between the time the Vested Shares are sold and the time the sale proceeds are distributed through
any such special exchange account. The Participant further agrees to comply with any other
requirements that may be imposed by the Company in the future in order to facilitate compliance
with exchange control requirements in China. These requirements will not apply to non-PRC
citizens.
CZECH REPUBLIC
Notifications
Exchange Control Information.
Upon request of the Czech National Bank, the Participant may need to
file a notification within 15 days of the end of the calendar quarter in which he or she acquires
Shares pursuant to the Plan.
- 10 -
DENMARK
Notifications
Danish Stock Options Act
. The Participant will receive an Employer Statement pursuant to the
Danish Act on Stock Options.
Exchange Control/Tax Reporting Information
. If the Participant holds Shares acquired under the
Plan in a brokerage account with a broker or bank outside Denmark, the Participant is required to
inform the Danish Tax Administration about the account. For this purpose, the Participant must
file a Form V (
Erklaering V
) with the Danish Tax Administration. The Form V must be signed both by
the Participant and by the applicable broker or bank where the account is held. By signing the
Form V, the broker or bank undertakes to forward information to the Danish Tax Administration
concerning the Vested Shares in the account without further request each year. By signing the Form
V, the Participant authorizes the Danish Tax Administration to examine the account. A sample of
the Form V can be found at the following website:
www.skat.dk
.
In addition, if the Participant opens a brokerage account (or a deposit account with a U.S. bank)
for the purpose of holding cash outside Denmark, the Participant is also required to inform the
Danish Tax Administration about this account. To do so, the Participant must also file a Form K
(
Erklaering K
) with the Danish Tax Administration. The Form K must be signed both by the
Participant and by the applicable broker or bank where the account is held. By signing the Form K,
the broker/bank undertakes an obligation, without further request each year, to forward information
to the Danish Tax Administration concerning the content of the account. By signing the Form K, the
Participant authorizes the Danish Tax Administration to examine the account. A sample of Form K
can be found at the following website:
www.skat.dk
.
FINLAND
There are no country specific provisions.
FRANCE
Term and Conditions
Language Consent
. By accepting the RSU Award, the Participant confirms having read and understood
the documents relating to this grant (the Plan, the Agreement and this Exhibit A) which were
provided in English language. The Participant accepts the terms of those documents accordingly.
En acceptant lattribution, vous confirmez ainsi avoir lu et compris les documents relatifs à cette
attribution (le Plan, le contrat et cette Annexe) qui ont été communiqués en langue anglaise. Vous
acceptez les termes en connaissance de cause.
GERMANY
Notifications
Exchange Control Information
. Cross-border payments in excess of
12,500 must be reported monthly
to the German Federal Bank. If the Participant uses a German bank to effect a cross-border payment
in excess of
12,500 in connection with the sale of Shares acquired under the Plan, the bank will
make the report for the Participant. In addition, the Participant must report any receivables or
payables or debts in foreign currency exceeding an amount of
5,000,000 on a monthly basis.
Finally, the Participant must report Shares on an annual basis that exceeds 10% of the total voting
capital of the Company.
- 11 -
HONG KONG
Terms and Conditions
Warning: The RSU Award and Shares acquired upon vesting of the RSU Award do not constitute a
public offering of securities under Hong Kong law and are available only to employees of the
Company, its Parent, Subsidiary or Affiliates. The Agreement, including this Exhibit A, the Plan
and other incidental communication materials have not been prepared in accordance with and are not
intended to constitute a prospectus for a public offering of securities under the applicable
securities legislation in Hong Kong. Nor have the documents been reviewed by any regulatory
authority in Hong Kong. The RSU Award is intended only for the personal use of each eligible
Employee of the Employer, the Company or any Parent, Subsidiary or Affiliate and may not be
distributed to any other person. If the Participant is in any doubt about any of the contents of
the Agreement, including this Exhibit A, or the Plan, the Participant should obtain independent
professional advice.
Sale Restriction.
Notwithstanding anything contrary in the Notice, the Agreement or the Plan, in
the event the Participants RSU Award vests such that Vested Shares are issued to the Participant
or his or her heirs and representatives within six months of the Date of Grant, the Participant
agrees that the Participant or his or her heirs and representatives will not dispose of any Vested
Shares acquired prior to the six-month anniversary of the Date of Grant.
Notifications
Nature of Scheme
. The Company specifically intends that the Plan will not be an occupational
retirement scheme for purposes of the Occupational Retirement Schemes Ordinance.
HUNGARY
There are no country specific provisions.
INDIA
Notifications
Exchange Control Information.
The Participant must repatriate the proceeds from the sale of
Vested Shares acquired under the Plan within 90 days after receipt. The Participant must maintain
the foreign inward remittance certificate received from the bank where the foreign currency is
deposited in the event that the Reserve Bank of India or the Employer requests proof of
repatriation. It is the Participants responsibility to comply with applicable exchange control
laws in India.
IRELAND
Notifications
Director Notification Obligation
. Directors, shadow directors and secretaries of the Companys
Irish Subsidiary or Affiliate are subject to certain notification requirements under the Irish
Companies Act. Directors, shadow directors and secretaries must notify the Irish Subsidiary or
Affiliate in writing of their interest in the Company and the number and class of Shares or rights
to which the interest relates within five days of the issuance or disposal of Shares or within five
days of becoming aware of the event giving rise to the notification. This disclosure requirement
also applies to any rights or Shares acquired by the directors spouse or children (under the age
of 18).
- 12 -
ISRAEL
There are no country specific provisions.
ITALY
Terms and Conditions
Data Privacy.
This provision replaces Section 9 of the Agreement:
The Participant understands that the Company and the Employer as the Privacy Representative of the
Company in Italy, may hold certain personal information about the Participant, including, but not
limited to, the Participants name, home address and telephone number, date of birth, social
insurance or other identification number, salary, nationality, job title, any Shares or
directorships held in the Company or any Parent, Subsidiary or Affiliate, details of all RSU Awards
or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in
the Participants favor, and that the Company and the Employer will process said data and other
data lawfully received from third party (Personal Data) for the exclusive purpose of managing and
administering the Plan and complying with applicable laws, regulations and Community legislation.
The Participant also understands that providing the Company with Personal Data is mandatory for
compliance with laws and is necessary for the performance of the Plan and that the Participants
denial to provide Personal Data would make it impossible for the Company to perform its contractual
obligations and may affect the Participants ability to participate in the Plan. The Participant
understands that Personal Data will not be publicized, but it may be accessible by the Employer as
the Privacy Representative of the Company and within the Employers organization by its internal
and external personnel in charge of processing, and by the data Processor, if appointed. The
updated list of Processors and of the subjects to which Data are communicated will remain available
upon request at the Employer. Furthermore, Personal Data may be transferred to banks, other
financial institutions or brokers involved in the management and administration of the Plan. The
Participant understands that Personal Data may also be transferred to the independent registered
public accounting firm engaged by the Company, and also to the legitimate addressees under
applicable laws. The Participant further understands that the Company and any Parent, Subsidiary or
Affiliate will transfer Personal Data amongst themselves as necessary for the purpose of
implementation, administration and management of the Participants participation in the Plan, and
that the Company and any Parent, Subsidiary or Affiliate may each further transfer Personal Data to
third parties assisting the Company in the implementation, administration and management of the
Plan, including any requisite transfer of Personal Data to a broker or other third party with whom
the Participant may elect to deposit any Vested Shares acquired under the Plan or any proceeds from
the sale of such Shares. Such recipients may receive, possess, use, retain and transfer Personal
Data in electronic or other form, for the purposes of implementing, administering and managing the
Participants participation in the Plan. The Participant understands that these recipients may be
acting as Controllers, Processors or persons in charge of processing, as the case may be, according
to applicable privacy laws, and that they may be located in or outside the European Economic Area,
such as in the United States or elsewhere, in countries that do not provide an adequate level of
data protection as intended under Italian privacy law.
Should the Company exercise its discretion in suspending all necessary legal obligations connected
with the management and administration of the Plan, it will delete Personal Data as soon as it has
accomplished all the necessary legal obligations connected with the management and administration
of the Plan.
- 13 -
The Participant understands that Personal Data processing related to the purposes specified above
shall take place under automated or non-automated conditions, anonymously when possible, that
comply with the purposes for which Personal Data is collected and with confidentiality and security
provisions as set forth by applicable laws and regulations, with specific reference to Legislative
Decree no. 196/2003.
The processing activity, including communication, the transfer of Personal Data abroad, including
outside of the European Economic Area, as specified herein and pursuant to applicable laws and
regulations, does not require the Participants consent thereto as the processing is necessary to
performance of law and contractual obligations related to implementation, administration and
management of the Plan. The Participant understands that, pursuant to section 7 of the Legislative
Decree no. 196/2003, he or she has the right at any moment to, including, but not limited to,
obtain confirmation that Personal Data exists or not, access, verify its contents, origin and
accuracy, delete, update, integrate, correct, blocked or stop, for legitimate reason, the Personal
Data processing. To exercise privacy rights, the Participant should contact the Employer.
Furthermore, the Participant is aware that Personal Data will not be used for direct marketing
purposes. In addition, Personal Data provided can be reviewed and questions or complaints can be
addressed by contacting the Participants human resources department.
Plan Document Acknowledgement
. The Participant acknowledges that the Participant has read and
specifically and expressly approves the following sections of the Agreement: Section 1: Grant of
RSU Award; Section 2: Delivery; Section 3: Compliance with Laws and Regulations; Section 4: Rights
as Shareholder; Section 5: Stop-Transfer Orders; Section 6: Taxes and Disposition of Shares;
Section 7: Nature of Grant; Section 8: No advice Regarding Grant; Section 11: Governing Law; Venue;
Section 15: Electronic Delivery; Section 16: Exhibit A; Section 18: Imposition of Other
Requirements; and the Data Privacy section of this Exhibit A.
Notifications
Exchange Control Information
. To participate in the Plan, the Participant must comply with
exchange control regulations in Italy. The Participant is required to report in his or her annual
tax return: (a) any transfers of cash or Vested Shares to or from Italy exceeding
10,000; (b) any
foreign investments or investments held outside of Italy at the end of the calendar year exceeding
10,000 if such investments (Vested Shares) that may give rise to taxable income in Italy that
combined with other foreign assets exceeds
10,000; and (c) the amount of the transfers to and from
Italy which have had an impact during the calendar year on the Participants foreign investments or
investments held outside of Italy. The Participant may be exempt from the requirement in (a) if
the transfer or investment is made through an authorized broker resident in Italy, as the broker
will generally comply with the reporting obligation on his or her behalf.
- 14 -
JAPAN
There are no country specific provisions.
KOREA
Notifications
Exchange Control Information
. If the Participant realizes US$500,000 (approximately KRW
601,975,000 as of July 2010) or more from the sale of Shares, Korean exchange laws require the
Participant to repatriate the proceeds to Korea within eighteen months of the sale.
MALAYSIA
Notifications
Malaysian Insider Trading Notification.
The Participant should be aware of the Malaysian
insider-trading rules, which may impact his or her acquisition or disposal of Shares or rights to
Shares under the Plan. Under the Malaysian insider-trading rules, the Participant is prohibited
from selling Shares when he or she is in possession of information which is not generally available
and which he or she knows or should know will have a material effect on the value of the Shares
once such information is generally available.
Director Notification Obligation.
If the Participant is a director of the Companys Malaysian
Subsidiary, he or she is subject to certain notification requirements under the Malaysian Companies
Act. Among these requirements is an obligation to notify the Malaysian Subsidiary in writing when
the Participant receives or disposes of an interest (
e.g.
, RSU Award, Shares) in the Company or any
related company. Such notifications must be made within 14 days of receiving or disposing of any
interest in the Company or any related company.
MEXICO
Terms and Conditions
No Entitlement for Claims or Compensation
. The following section supplements Section 7 of the
Agreement:
Modification
. By accepting the RSU Award, the Participant understands and agrees that any
modification of the Plan or the Agreement or its termination shall not constitute a change or
impairment of the terms and conditions of employment.
Policy Statement
. The RSU Award grant the Company is making under the Plan is unilateral and
discretionary and, therefore, the Company reserves the absolute right to amend it and discontinue
it at any time without any liability.
The Company, with registered offices at One Marina Boulevard, #28-00, Singapore 018989, is solely
responsible for the administration of the Plan, and participation in the Plan and the grant of the
RSU Award do not, in any way, establish an employment relationship between the Participant and the
Company since he or she is participating in the Plan on a wholly commercial basis and the sole
employer is Availmed Servicios S.A. de C.V., Grupo Flextronics S.A. de C.V., Flextronics Servicios
Guadalajara S.A. de C.V., Flextronics Servicios Mexico S. de R.L. de C.V. and Flextronics
Aguascalientes Servicios S.A. de C.V., nor does it establish any rights between the Participant
and the Employer.
- 15 -
Plan Document Acknowledgment
. By accepting the RSU Award, the Participant acknowledges that he or
she has received copies of the Plan, has reviewed the Plan and the Agreement in their entirety, and
fully understands and accepts all provisions of the Plan and the Agreement.
In addition, the Participant further acknowledges that he or she has read and specifically and
expressly approves the terms and conditions in the Nature of Grant section of the Agreement, in
which the following is clearly described and established: (i) participation in the Plan does not
constitute an acquired right; (ii) the Plan and participation in the Plan is offered by the Company
on a wholly discretionary basis; (iii) participation in the Plan is voluntary; and (iv) the Company
and any Parent, Subsidiary or Affiliates are not responsible for any decrease in the value of the
Shares acquired upon vesting of the RSU Award.
Finally, the Participant hereby declares that he or she does not reserve any action or right to
bring any claim against the Company for any compensation or damages as a result of his or her
participation in the Plan and therefore grants a full and broad release to the Employer, the
Company and any Parent, Subsidiary or Affiliates with respect to any claim that may arise under the
Plan.
Spanish Translation
Condiciones y duración
Sin derecho a reclamo o compensación
: La siguiente sección complementa la sección 7 de este
Acuerdo:
Modificación
: Al aceptar el Otorgamiento de Acciones por Bonificación, el Participante entiende y
acuerda que cualquier modificación del Plan o del Acuerdo o su extinción, no constituirá un cambio
o disminución de los términos y condiciones de empleo.
Declaración de Política
: El Otorgamiento de Acciones por Bonificación por parte de la Compañía es
efectuada bajo el Plan en forma unilateral y discrecional y por lo tanto, la Compañía se reserva el
derecho absoluto de modificar y discontinuar el Otorgamiento de Acciones en cualquier momento sin
responsabilidad alguna hacia la Compañía.
La Compañía, con oficinas registradas en One Marina Boulevard, #28-00, Singapore 018989 es la única
responsable de la administración de los Planes y de la participación en los mismos y el
otorgamamiento de el Otorgamiento de Acciones por Bonificación no establece de forma alguna una
relación de trabajo entre el Participante y la Compañía, ya que su participación en el Plan es
completamente comercial y el único empleador es Availmed Servicios S.A. de C.V., Grupo Flextronics
S.A. de C.V., Flextronics Servicios Guadalajara S.A. de C.V., Flextronics Servicios Mexico S. de
R.L. de C.V. and Flextronics Aguascalientes, así como tampoco establece ningún derecho entre el
Participante y el Empleador.
Reconocimiento del Documento del Plan
.
Al aceptar la el Otorgamiento de Acciones por
Bonificación, el Participante reconoce que ha recibido copias de los Planes, ha revisado los
mismos, al igual que la totalidad del Acuerdo y, que ha entendido y aceptado completamente todas
las disposiciones contenidas en los Planes y en el Acuerdo.
- 16 -
Además, el Partcipante reconoce que ha leído, y que aprueba específica y expresamente los términos
y condiciones contenidos en la sección Naturaleza del Orotgamiento en el cual se encuentra
claramente descripto y establecido lo siguiente: (i) la participación en los Planes no constituye
un derecho adquirido; (ii) los Planes y la participación en los mismos es ofrecida por la Compañía
de forma enteramente discrecional; (iii) la participación en los Planes es voluntaria; y (iv) la
Compañía, así como su Sociedad controlante, Subsidiaria o Filiales no son responsables por
cualquier disminución en el valor de las Acciones adquiridas a través del conferimiento del
Otorgamiento de Acciones por Bonificación.
Finalmente, el Partcipante declara que no se reserva ninguna acción o derecho para interponer una
demanda en contra de la Compañía por compensación, daño o perjuicio alguno como resultado de su
participación en el Plan y, en consecuencia, otorga el más amplio finiquito al Empleador, así como
a la Compañía, a su Sociedad controlante, Subsidiaria o Filiales con respecto a cualquier demanda
que pudiera originarse en virtud de los Planes.
NETHERLANDS
Notifications
Securities Law Information.
The Participant should be aware of the Dutch insider-trading rules,
which may impact the sale of Shares acquired under the Plan. In particular, the Participant may be
prohibited from effectuating certain transactions if the Participant has inside information about
the Company.
Under Article 5:56 of the Dutch Financial Supervision Act, anyone who has insider information
related to an issuing company is prohibited from effectuating a transaction in securities in or
from the Netherlands. Inside information is defined as knowledge of specific information
concerning the issuing company to which the securities relate or the trade in securities issued by
such company, which has not been made public and which, if published, would reasonably be expected
to affect the share price, regardless of the development of the price. The insider could be any
Employee in the Netherlands who has inside information as described herein.
Given the broad scope of the definition of inside information, certain Employees working at a
Parent, Subsidiary or Affiliate in the Netherlands may have inside information and, thus, would be
prohibited from effectuating a transaction in securities in the Netherlands at a time when the
Participant has such inside information.
If the Participant is uncertain whether the insider-trading rules apply to him or her, he or she
should consult his or her personal legal advisor.
NORWAY
There are no country specific provisions.
POLAND
Terms and Conditions
Restriction on Type of Shares Issued
. Due to tax regulations in Poland, as necessary, the
Participants Vested Shares will be settled in newly issued Shares only. Treasury Shares will not
be used to satisfy the RSU Award upon vesting.
- 17 -
ROMANIA
Notifications
Exchange Control Information.
If the Participant remits foreign currency into or out of Romania
(
e.g
., the proceeds from the sale of his or her Vested Shares), the Participant may have to provide
the Romanian bank assisting with the transaction with appropriate documentation explaining the
source of the income.
The Participant should consult his or her personal legal advisor to
determine whether the Participant will be required to submit such documentation to the Romanian
bank
.
SINGAPORE
Notifications
Securities Law Information
.
The RSU Award is being granted to the Participant pursuant to the
Qualifying Person exemption under section 273(1)(f) of the Singapore Securities and Futures Act
(Chapter 289, 2006 Ed.) (SFA). The Plan have not been lodged or registered as a prospectus with
the Monetary Authority of Singapore. The Participant should note that the RSU Award is subject to
section 257 of the SFA and the Participant will not be able to make any subsequent sale in
Singapore of the Shares acquired under the Plan, or any offer of such subsequent sale of the Shares
acquired under the Plan unless such sale or offer in Singapore is made pursuant to the exemptions
under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA (Cap 289, 2006
Ed.).
Director Notification Obligation.
If the Participant is a director, associate director or shadow
director of the Company or a Singapore Subsidiary or Affiliate, the Participant is subject to
certain notification requirements under the Singapore Companies Act. Among these requirements is
an obligation to notify the Company or the Singaporean Subsidiary or Affiliate in writing when the
Participant receives an interest (
e.g
., RSU Award, Shares) in the Company or any related companies.
Please contact the Company to obtain a copy of the notification form. In addition, the
Participant must notify the Company or the Singapore Subsidiary or Affiliate when the Participant
sells Shares of the Company or any related company (including when the Participant sell Shares
acquired under the Plan). These notifications must be made within two days of acquiring or
disposing of any interest in the Company or any related company. In addition, a notification must
be made of the Participants interests in the Company or any related company within two days of
becoming a director.
SLOVAK REPUBLIC
There are no country specific provisions.
SOUTH AFRICA
Terms and Conditions
Tax Obligations
. The following provision supplements Section 6.1 of the Agreement:
By accepting the RSU Award, the Participant agrees to notify the Employer of the amount of any gain
realized at vesting and settlement of the RSU Award. If the Participant fails to advise the
Employer of the gain realized at vesting and settlement of the RSU Award, he or she may be liable
for a fine.
- 18 -
Notifications
Exchange Control Information.
The Participant should consult his or her personal advisor to ensure
compliance with applicable exchange control regulations in South Africa, as such regulations are
subject to frequent change
. The Participant is solely responsible for complying with all exchange
control laws in South Africa, and neither the Company nor the Employer will be liable for any fines
or penalties resulting from the Participants failure to comply with South African exchange control
laws.
SWEDEN
There are no country specific provisions.
SWITZERLAND
Notifications
Securities Law Information
. The RSU Award is considered a private offering in Switzerland;
therefore, it is not subject to registration.
TAIWAN
Notifications
Exchange Control Information
. The Participant may acquire and remit foreign currency (including
proceeds from the sale of Shares) into and out of Taiwan up to US$5,000,000 (approximately TWD
160,580,024 as of July 2010) per year. If the transaction amount is TWD 500,000 or more in a
single transaction, the Participant must submit a Foreign Exchange Transaction Form and also
provide supporting documentation to the satisfaction of the remitting bank.
TURKEY
Notifications
Securities Law Information
. Under Turkish law, the Participant is not permitted to sell the Shares
acquired under the Plan in Turkey.
UNITED KINGDOM
Terms and Conditions
Tax Obligations.
The following provisions supplement Section 6.1 of the Agreement:
The Participant agrees that, if Participant does not pay or the Employer or the Company does not
withhold from the Participant the full amount of Tax-Related Items that the Participant owes at
vesting/settlement of the RSU Award, or the release or assignment of the RSU Award for
consideration, or the receipt of any other benefit in connection with the RSU Award (the Taxable
Event) within 90 days after the Taxable Event, or such other period specified in section 222(1)(c)
of the U.K. Income Tax (Earnings and Pensions) Act 2003, then the amount that should have been
withheld shall constitute a loan owed by the Participant to the Employer, effective 90 days after
the Taxable Event. The Participant agrees that the loan will bear interest at the HMRCs official
rate and will be immediately due and repayable by the Participant, and the Company and/or the
Employer may recover it at any time thereafter by withholding the funds from salary, bonus or any
other funds due to the Participant by the Employer, by withholding in Shares issued upon vesting of
the RSU Award or from the cash proceeds from the sale of Vested Shares or by demanding cash or a
check from the Participant. The Participant also authorizes the Company to delay the issuance of
any Vested Shares unless and until the loan is repaid in full.
- 19 -
Notwithstanding the foregoing, if the Participant is an officer or executive director (as within
the meaning of section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), the
terms of the immediately foregoing provision will not apply. In the event that the Participant is
an officer or executive director and Tax-Related Items are not collected from or paid by
Participant within 90 days of the Taxable Event, the amount of any uncollected Tax-Related Items
may constitute a benefit to the Participant on which additional income tax and National Insurance
Contributions may be payable. The Participant acknowledges that the Company or the Employer may
recover any such additional income tax and National Insurance Contributions at any time thereafter
by any of the means referred to in Section 6.1 Agreement, although the Participant acknowledges
that he/she ultimately will be responsible for reporting any income tax or National Insurance
Contributions due on this additional benefit directly to the HMRC under the self-assessment regime.
National Insurance Contributions Acknowledgment.
As a condition of participation in the Plan and
the vesting of the RSU Award, the Participant agrees to accept any liability for secondary Class 1
National Insurance Contributions which may be payable by the Company and/or the Employer in
connection with the RSU Award and any event giving rise to Tax-Related Items (the Employer NICs).
To accomplish the foregoing, the Participant agrees to execute a joint election with the Company,
the form of such joint election being formally approved by HMRC (the Joint Election), and any
other required consent or election. The Participant further agrees to execute such other joint
elections as may be required between the Participant and any successor to the Company and/or the
Employer. The Participant further agrees that the Company and/or the Employer may collect the
Employer NICs from the Participant by any of the means set forth in Section 6.1 of the Agreement.
If the Participant does not enter into a Joint Election prior to vesting of the RSU Award or if
approval of the Joint Election has been withdrawn by HMRC, the RSU Award shall become null and void
without any liability to the Company and/or the Employer and the Company may choose not to issue or
deliver Shares upon vesting of the RSU Award.
- 20 -
EXHIBIT 10.04
No. <<Option Number>>
FLEXTRONICS INTERNATIONAL LTD.
2001 EQUITY INCENTIVE PLAN
FORM OF SHARE BONUS AWARD AGREEMENT
This Share Bonus Award Agreement (the
Agreement
) is made and entered into as of _______________ (the
Effective Date
) by and between Flextronics International Ltd., a Singapore
corporation (the
Company
), and the participant named below (the
Participant
). Capitalized
terms not defined herein shall have the meaning ascribed to them in the Companys 2001 Equity
Incentive Plan (the
Plan
). The Participant understands and agrees that this Share Bonus Award is
granted subject to and in accordance with the express terms and conditions of the Plan. The
Participant further agrees to be bound by the terms and conditions of the Plan and the terms and
conditions of this Agreement, including any country-specific Exhibit thereto. The Participant
acknowledges receipt of a copy of Plan and the official prospectus for the Plan. A copy of the
Plan and the official prospectus for the Plan are available on the Flextronics website at
http://home.sjc.flextronics.com/options/reference.asp and at the offices of the Company and the
Participant hereby agrees that the Plan and the official prospectus for the Plan are deemed
delivered to the Participant.
The Participant acknowledges and consents that, in connection with this grant, Flextronics may
use personal data which the Participant has provided to Flextronics. This personal data may
include the Participants name, address or other personal identifying information, as delivered
under applicable laws relating to the protection of individuals with regard to the processing of
personal data and on the free movement of such data (the privacy laws). The Participant further
consents to the transfer of such personal data within the Flextronics group of companies for the
purposes of the Flextronics stock plan administration program and other purposes relevant to
employee benefits and human resources administration. The Participant further consents that
Flextronics may, for the same purposes, transfer such personal information to third parties who may
be selected to administer such programs on Flextronicss behalf, and which may be located in the
USA or other countries.
|
|
|
PRIMARY INFORMATION
|
|
|
|
|
|
Participant:
|
|
<<First Name>> <<Last Name>>
|
|
|
|
Target Shares:
|
|
<<
Number of Target Shares>>
|
|
|
|
Maximum Shares:
|
|
<<
Number of Maximum Shares>>
|
|
|
|
Total Fair Market Value:
|
|
$ <<
Target Market Value>> /
$ <<
Maximum Market Value>>
|
|
|
|
Date of Grant:
|
|
<<Grant Date>>
|
|
|
|
Performance Criteria:
|
|
Vesting is based on the relative Total Shareholder Return (TSR) versus the S&P 500 Index.
|
|
|
|
Payout Table:
|
|
Payouts can range from 0 150% of the Target Shares based on the achievement levels set forth in the
chart below:
|
|
|
|
|
|
|
Flextronics TSR as a percentage of the S&P
|
|
Awards Earned as a
|
|
500 Index Average TSR
|
|
% of the Target
|
|
Maximum
|
|
Above 150% of S&P
|
|
150
|
%
|
|
|
Above 125% of S&P
|
|
125
|
%
|
Target Shares
|
|
Above 100% of S&P
|
|
100
|
%
|
|
|
Above 75% of S&P
|
|
75
|
%
|
Threshold
|
|
Above 50% of S&P
|
|
50
|
%
|
|
|
Below 50% of S&P
|
|
0
|
%
|
|
|
|
Performance Period:
|
|
Vesting is contingent on achieving the
Performance Criteria, respectively, at the
3
rd
and 4
th
year
anniversaries of the Grant Date, as set forth
more specifically in the definition of
Measurement Period, below. 50% of the Maximum
Shares are available for vesting based on
achievement of the Performance Criteria on the
3
rd
anniversary, and 50% of the
Maximum Shares are available for vesting based
on achievement of the Performance Criteria on
the 4
th
anniversary.
|
|
|
|
DEFINITIONS AND ADDITIONAL INFORMATION
|
|
|
|
S&P 500 Index:
|
|
The S&P 500 is a capitalization-weighted index
operated by Standard and Poors and used as a
Leading Indicator of United States economy.
The Index trades with the ticker symbol of $SPX
or ^GSPC.
|
|
|
|
Total Shareholder Return:
|
|
Total Shareholder Return (TSR) is used to
represent the cumulative return of an investment
and includes both the change in the stock price
as well as Dividend Value from a specified start
and ending period. The formula for the
calculation is as follows:
|
|
|
|
|
|
TSR = (Price
End
-
Price
Begin
+ Dividend Value) / Price
Begin
|
|
|
|
Payout Calculation:
|
|
The Payout Calculation is determined by comparing the Flextronics Total
Shareholder Return as a percentage of the S&P 500 Index. The formula is as
follows:
|
|
|
|
|
|
Payout % = ((FLEX
TSR%
- S&P
TSR%
) / S&P
TSR%
) + 100%
|
|
|
|
Payout Interpolation:
|
|
If the minimum payout is not reached, then the shares will be forfeited. If
performance payouts are reached, shares will be rewarded on an interpolated basis
between 50% and 150% of the target shares per the Payout Table above. Fractional
percentage points will be rounded to nearest % point and fractional shares awarded
will be rounded down the nearest whole share.
|
|
|
|
20-Day Trading Average
for Measuring Performance:
|
|
To avoid the effects of short-term
price fluctuations, a 20-Day
Trading Average will be used for
measuring the Performance Criteria,
and will be calculated using a
basic average of Flextronicss and
the S&P 500s Closing Prices on the
previous 20 trading days prior to
the Date of Grant and Measurement
Periods for the 3
rd
and
4
th
anniversaries of the
Date of Grant.
|
|
|
|
|
|
20-Day Trading Average = (Sum of
Prior 20 day Closing Prices) / 20
|
|
|
|
Measurement Period:
|
|
The Measurement Period used to calculate the
TSR will start on June 15, 2010 (the Date of
Grant) and end June 14, 2013 and June 13, 2014.
|
|
|
|
Vesting / Release Date:
|
|
If the Performance Criteria is met, shares will
vest or be released on the next business day
following the 3
rd
and 4
th
anniversaries of June 15
th
.
Therefore, the respective Release Dates will be
June 17, 2013 and June 16, 2014. Applicable
tax withholding and reporting will be
contingent on the Closing Price of Flextronics
Stock on the Release Date.
|
|
|
|
Closing Price Methodology:
|
|
Only the Daily Closing Price will be used to
determine Total Shareholder Return values as by
reported by the Wall Street Journal or any
other reputable financial services information
provider.
|
|
|
|
Dividend Value and
Stock Splits:
|
|
Dividends will be assumed reinvested at the Closing
Price on the Payout Date and all calculations will be
adjusted for Stock Splits.
|
- 2 -
EXAMPLES
Assumptions:
The examples below assume that 90,000 Target Shares / 135,000 Maximum Shares are awarded and that
Flextronicss and the S&P Index 20-Day Trading Averages are $7.00 and $1,000 respectively on June
15, 2010.
Maximum Target:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price Begin
|
|
|
Dividend Value
|
|
|
Price End
|
|
|
TSR Calculation
|
|
S&P 500
|
|
$
|
1,000
|
|
|
$
|
100.00
|
|
|
$
|
1,100
|
|
|
|
(1,100 - 1,000 + 100) / 1,000 = 20
|
%
|
Flextronics
|
|
$
|
7.00
|
|
|
$
|
0.00
|
|
|
$
|
10.50
|
|
|
|
(10.50 - 7.00 + 0) / 7.00 = 50
|
%
|
|
|
|
Payout Calculation:
|
|
((50% - 20%) / 20%) + 100% = 250%
|
|
|
|
Target Awarded:
|
|
250% is above the 150% Maximum Target so Maximum
Payout of 150% or 135,000 shares is achieved
|
Interpolated Target:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price Begin
|
|
|
Dividend Value
|
|
|
Price End
|
|
|
TSR Calculation
|
|
S&P 500
|
|
$
|
1,000
|
|
|
$
|
0.00
|
|
|
$
|
700
|
|
|
|
(700 - 1,000 + 0) / 1,000 = (30
|
)%
|
Flextronics
|
|
$
|
7.00
|
|
|
$
|
0.00
|
|
|
$
|
5.25
|
|
|
|
(5.25 - 7.00 + 0) / 7.00 = (25
|
)%
|
|
|
|
Payout Calculation:
|
|
((-25% + 30%) / -30%) +100% = 117%
|
|
|
|
Target Awarded:
|
|
117% is above the Minimum and below the Maximum
Targets so an interpolated Payout of 117% of the
Target Shares or 105,300 shares is achieved.
|
Forfeited:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Price Begin
|
|
|
Dividend Value
|
|
|
Price End
|
|
|
TSR Calculation
|
|
S&P 500
|
|
$
|
1,000
|
|
|
$
|
0.00
|
|
|
$
|
1,200
|
|
|
|
(1,200 - 1,000 + 0) / 1,000 = 20
|
%
|
Flextronics
|
|
$
|
7.00
|
|
|
$
|
0.00
|
|
|
$
|
7.65
|
|
|
|
(7.65 - 7 + 0) / 7.00 = 9.3
|
%
|
|
|
|
Payout Calculation:
|
|
((9.3% - 20%) / 20%) +100% = 47%
|
|
|
|
Target Awarded:
|
|
47% is below the 50% Minimum Target so no Payout is achieved
|
- 3 -
GENERAL TERMS AND CONDITIONS OF AWARD ISSUANCE
1.
Grant
.
1.1
Grant of Share Bonus Award
. Subject to the terms and conditions of the Plan and
this Agreement, the Company hereby grants to the Participant the contingent right (the
Share Bonus
Award
) to receive up to the maximum number of ordinary shares in the capital of the Company
(
Ordinary Shares
) set forth above as Share Bonus Award (the
Shares
).
(a)
Vesting Criteria
. The Share Bonus Award shall vest, and the Shares shall be issued to the
Participant, according to the Vesting Criteria set forth above. If application of the vesting
criteria causes vesting of a fractional Share, such Share shall be rounded down to the nearest
whole Share. Shares that are vested pursuant to the Vesting Criteria are
Vested Shares
.
(b)
Change of Control.
In the event of (i) a dissolution or liquidation of the Company, (ii)
a merger or consolidation in which the Company is not the surviving corporation (other than a
merger or consolidation with a wholly-owned subsidiary, a reincorporation of the Company in a
different jurisdiction, or other transaction in which there is no substantial change in the
shareholders of the Company or their relative shareholdings and the Share Bonus Award is assumed,
converted or replaced by the successor corporation), (iii) a merger in which the Company is the
surviving corporation but after which the shareholders of the Company immediately prior to such
merger (other than any shareholder that merges, or which owns or controls another corporation that
merges, with the Company in such merger) cease to own their shares or other equity interest in the
Company, (iv) the sale of substantially all of the assets of the Company, or (v) the acquisition,
sale, or transfer of more than 50% of the outstanding shares of the Company by tender offer or
similar transaction (each, a
Corporate Transaction
), the vesting of the Share Bonus Award shall
automatically accelerate so that the Share Bonus Award shall, immediately prior to the specified
effective date for the Corporate Transaction, become fully vested with respect to the total number
of Shares at the time subject to such Share Bonus Award. However, the vesting of the Share Bonus
Award shall not so accelerate if and to the extent such Share Bonus Award is, in connection with
the Corporate Transaction, either to be assumed by the successor corporation or parent thereof or
to be replaced with a comparable Share Bonus Award of shares of the capital stock of the successor
corporation or parent thereof. The determination of Share Bonus Award comparability shall be made
by the Committee, and its determination shall be final, binding and conclusive.
(c)
Termination
. The Share Bonus Award, all of the Companys obligations and the
Participants rights under this Agreement, shall terminate on the earlier of the Participants
Termination Date (as defined in the Plan) or the date when all the Shares that are subject to the
Share Bonus Award have been allotted and issued, or cancelled in the case of Shares that fail to
vest.
(d)
Allotment and Issuance of Vested Shares
. The Company shall allot and issue the Vested
Shares as soon as practicable after such Shares have vested pursuant to the Vesting Criteria. The
Company shall have no obligation to allot and issue, and the Participant will have no right or
title to, any Shares, and no Shares will be allotted and issued to the Participant, until
satisfaction of the Vesting Criteria.
(e)
No Obligation to Employ
. Nothing in the Plan or this Agreement shall confer on the
Participant any right to continue in the employ of, or other relationship with, the Company or any
Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent or
Subsidiary of the Company to terminate the Participants employment or other relationship at any
time, with or without cause.
- 4 -
(f)
Nontransferability of Share Bonus Award
. None of the Participants rights under this
Agreement or under the Share Bonus Award may be transferred in any manner other than by will or by
the laws of descent and distribution. Notwithstanding the foregoing, the Participant may transfer
or assign the Share Bonus Award to Family Members (as defined in the Plan) through a gift or a
domestic relations order (and not in a transfer for value), or as otherwise allowed by the Plan.
The terms of this Share Bonus Award Agreement shall be binding upon the executors, administrators,
successors and assigns of the Participant.
(g)
Privileges of Share Ownership
. The Participant shall not have any of the rights of a
shareholder until the Vested Shares are allotted and issued.
(h)
Interpretation
. Any dispute regarding the interpretation of the terms and provisions with
respect to the Bonus shall be submitted by the Participant or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and binding on the
Company and on the Participant.
1.2
Title to Shares
. Title will be provided in the Participants individual name on
the Companys records unless the Participant otherwise notifies Stock Administration of an
alternative designation in compliance with the terms of this Agreement.
2.
Delivery
.
2.1
Deliveries by Participant
. The Participant hereby delivers to the Company this
Agreement.
2.2
Deliveries by the Company
. Upon its receipt of the Agreement to be executed and
delivered by Participant to the Company under Section 2.1, the Company will issue a duly executed
share certificate evidencing the Vested Shares in the name specified in Section 1.2 above and at
such time as specified in Section 1.1(c) above.
3.
Compliance with Laws and Regulations
.
The issuance and transfer of the Shares shall be
subject to and conditioned upon compliance by the Company and the Participant with all applicable
requirements of any share exchange or automated quotation system on which the Companys Ordinary
Shares may be listed at the time of such issuance or transfer. The Participant understands that
the Company is under no obligation to register or qualify the Shares with the U.S. Securities and
Exchange Commission, any state, local or foreign securities commission or any share exchange to
effect such compliance.
4.
Rights as Shareholder
.
Subject to the terms and conditions of this Agreement, the
Participant will have all of the rights of a shareholder of the Company with respect to the Vested
Shares which have been allotted and issued to the Participant until such time as the Participant
disposes of such Vested Shares.
5.
Stop-Transfer Orders
.
5.1
Stop-Transfer Instructions
. The Participant agrees that, to ensure compliance
with the restrictions imposed by this Agreement, the Company may issue appropriate stop-transfer
instructions to its transfer agent, if any, and if the Company administers transfers of its own
securities, it may make appropriate notations to the same effect in its own records.
- 5 -
5.2
Refusal to Transfer
. The Company will not be required (i) to register in its
books any Shares that have been sold or otherwise transferred in violation of any of the provisions
of this Agreement or (ii) to treat as owner of such Shares, or to accord the right to vote or pay
dividends to any Participant or other transferee to whom such Shares have been so transferred.
6.
Taxes and Disposition of Shares
.
6.1
Tax Obligations
.
(a) Regardless of any action the Company or the Participants employer (the Employer) takes
with respect to any or all income tax, social insurance, payroll tax, payment on account or other
tax-related items arising out of the Participants participation in the Plan and legally applicable
to the Participant (Tax-Related Items), the Participant acknowledges that the ultimate liability
for all Tax-Related Items is and remains the Participants responsibility and may exceed the amount
actually withheld by the Company and/or the Employer. The Participant further acknowledges that
the Company and/or the Employer (a) make no representations or undertakings regarding the treatment
of any Tax-Related Items in connection with any aspect of the Share Bonus Award, including but not
limited to, the grant, vesting or issuance of Vested Shares underlying the Share Bonus Award, the
subsequent sale of Vested Shares acquired upon vesting and the receipt of any dividends; and (b) do
not commit and are under no obligation to structure the terms of the grant or any aspect of the
Share Bonus Award to reduce or eliminate the Participants liability for Tax-Related Items or
achieve any particular tax result. Furthermore, if the Participant has become subject to tax in
more than one jurisdiction between the Date of Grant and the date of any relevant taxable event,
the Participant acknowledges that the Company and/or the Employer (or former employer, as
applicable) may be required to withhold or account for Tax-Related Items in more than one
jurisdiction.
(b) Prior to the relevant taxable or tax withholding event, as applicable, the Participant
shall pay or make arrangements satisfactory to the Company and/or the Employer to satisfy all
Tax-Related Items. In this regard, the Participant authorizes the Company and/or the Employer, or
their respective agents, at their discretion, to satisfy the Tax-Related Items by one or a
combination of the following (1) withholding from the Participants wages or other cash
compensation paid to the Participant by the Company, the Employer, or any Parent or Subsidiary of
the Company; or (2) withholding from the proceeds of the sale of Shares acquired upon vesting of
the Share Bonus Award either through a voluntary sale or through a mandatory sale arranged by the
Company (on the Participants behalf pursuant to this authorization); or (3) withholding in Shares
to be issued at vesting of the Share Bonus Award.
(c) To avoid any negative accounting treatment, the Company may withhold or account for
Tax-Related Items by considering applicable minimum statutory withholding amounts or other
applicable withholding rates. If the obligation for the Tax-Related Items is satisfied by
withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full
number of Shares subject to the Share Bonus Award, notwithstanding that a number of Shares are held
back solely for the purpose of paying the Tax-Related Items due as a result of the Participants
participation in the Plan.
(d) The Participant shall pay to the Company or the Employer any amount of Tax-Related Items
that the Company or the Employer may be required to withhold or account for as a result of the
Participants participation in the Plan that cannot be satisfied by the means previously described
in this section. The Company may refuse to issue or deliver the Shares or the proceeds from the
sale of Shares, if the Participant fails to comply with his or her obligations in connection with
the Tax-Related Items.
- 6 -
6.2
Disposition of Shares
. Participant hereby agrees that the Participant shall make
no disposition of the Shares (other than as permitted by this Agreement) unless and until the
Participant shall have complied with all requirements of this Agreement applicable to the
disposition of the Shares.
7.
Nature of Grant
. In accepting the Share Bonus Award, the Participant acknowledges and
agrees that:
|
(a)
|
|
the Plan is established voluntarily by the Company, is discretionary in nature
and may be amended, suspended or terminated by the Company at any time;
|
|
(b)
|
|
the grant of the Share Bonus Award is voluntary and occasional and does not
create any contractual or other right to receive future Share Bonus Awards, or benefits
in lieu of Share Bonus Awards, even if Share Bonus Awards have been granted repeatedly
in the past;
|
|
(d)
|
|
all decisions with respect to future Share Bonus Awards, if any, will be at the
sole discretion of the Company;
|
|
(e)
|
|
the Participants participation in the Plan is voluntary;
|
|
(f)
|
|
the Share Bonus Award and any Shares acquired under the Plan are not intended
to replace any pension rights or compensation;
|
|
(g)
|
|
the Share Bonus Award is not part of normal or expected compensation or salary
for any purposes, including, but not limited to, calculating any severance,
resignation, termination, redundancy, end of service payments, dismissal, bonuses,
long-service awards, pension or retirement or welfare benefits or similar payments and
in no event should be considered as compensation for, or relating in any way to past
services for the Employer, the Company or any Parent, Subsidiary or affiliate of the
Company;
|
|
(h)
|
|
the future value of the Shares underlying the Share Bonus Award is unknown and
cannot be predicted with certainty;
|
|
(i)
|
|
no claim or entitlement to compensation or damages shall arise from termination
of the Share Bonus Award or the diminution of value of the Vested Shares acquired upon
vesting of the Share Bonus Award resulting from a termination of the Participants
employment (for any reason whatsoever and whether or not in breach of local labor
laws), and in consideration of the Share Bonus Award to which the Participant is
otherwise not entitled, the Participant irrevocably agrees never to institute any claim
against the Company and/or the Employer, waives the Participants ability, if any, to
bring any such claim, and releases the Company and/or the Employer from any such claim;
if, notwithstanding the foregoing, any such claim is allowed by a court of competent
jurisdiction, then, by participating in the Plan, the Participant shall be deemed
irrevocably to have agreed not to pursue such claim and agrees to execute any and all
documents necessary to request dismissal or withdrawal of such claims; and
|
|
(j)
|
|
the Share Bonus Award and the benefits under the Plan, if any, will not
automatically transfer to another company in the case of a merger, take-over or
transfer of liability.
|
8.
No Advice Regarding Grant
. The Company is not providing any tax, legal or financial
advice, nor is the Company making any recommendations regarding the Participants participation in
the Plan, or the sale of the Shares acquired upon vesting of the Share Bonus Award. The
Participant is hereby advised to consult with his or her own personal tax, legal and financial
advisors regarding his or her participation in the Plan before taking any action related to the
Plan.
- 7 -
9.
Data Privacy
.
(a) The Participant hereby explicitly and unambiguously consents to the collection, use and
transfer, in electronic or other form, of the Participants personal data as described in this
Agreement and any other Share Bonus Award materials by and among, as applicable, the Employer, the
Company and its Parent, Subsidiaries and affiliates for the exclusive purpose of implementing,
administering and managing the Participants participation in the Plan.
(b) The Participant understands that the Company and the Employer may hold certain personal
information about the Participant, including, but not limited to, the Participants name, home
address and telephone number, date of birth, social insurance number or other identification
number, salary, nationality, job title, any Shares or directorships held in the Company, details of
all Share Bonus Awards or any other entitlement to Shares awarded, canceled, exercised, vested,
unvested or outstanding in the Participants favor, for the exclusive purpose of implementing,
administering and managing the Plan (Data).
(c) The Participant understands that Data will be transferred to the Company stock plan
service provider as may be selected by the Company in the future, which is assisting the Company
with the implementation, administration and management of the Plan. The Participant understands
that the recipients of the Data may be located in the United States or elsewhere, and that the
recipients country (
e.g.
, the United States) may have different data privacy laws and protections
from the Participants country. The Participant understands that he or she may request a list with
the names and addresses of any potential recipients of the Data by contacting his or her local
human resources representative. The Participant authorizes the Company, the Company stock plan
service provider and any other possible recipients which may assist the Company (presently or in
the future) with implementing, administering and managing the Plan to receive, possess, use, retain
and transfer the Data, in electronic or other form, for the sole purpose of implementing,
administering and managing his or her participation in the Plan. The Participant understands that
Data will be held only as long as is necessary to implement, administer and manage the
Participants participation in the Plan. The Participant understands that he or she may, at any
time, view Data, request additional information about the storage and processing of Data, require
any necessary amendments to Data or refuse or withdraw the consents herein, in any case without
cost, by contacting in writing his or her local human resources representative. The Participant
understands, however, that refusing or withdrawing his or her consent may affect the Participants
ability to participate in the Plan. For more information on the consequences of the Participants
refusal to consent or withdrawal of consent, the Participant understands that he or she may contact
his or her local human resources representative.
10.
Successors and Assigns
.
The Company may assign any of its rights under this Agreement.
This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer set forth in this Agreement and in the Plan, this
Agreement will be binding upon the Participant and the Participants heirs, executors,
administrators, legal representatives, successors and assigns.
11.
Governing Law; Venue; Severability
.
This Agreement shall be governed by and construed
in accordance with the internal laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed entirely within
California, excluding that body of laws pertaining to conflict of laws. For purposes of litigating
any dispute that arises directly or indirectly from the relationship of the parties evidenced by
the Share Bonus Award or the Agreement, the parties hereby submit to and consent to the exclusive
jurisdiction of the State of California and agree that such litigation shall be conducted only in
the courts of Santa Clara County, California, or the federal courts for the United States for the
Northern District of California, and no other courts, where this Agreement is made and/or to be
performed. If any provision of this Agreement is determined by a court of law to be illegal or
unenforceable, then such provision will be enforced to the maximum extent possible and the other
provisions will remain fully effective and enforceable.
- 8 -
12.
Notices
.
Any notice required to be given or delivered to the Company shall be in
writing and addressed to the Vice President of Finance of the Company at its principal corporate
offices. Any notice required to be given or delivered to the Participant shall be in writing and
addressed to the Participant at the address indicated on the signature page hereto or to such other
address as the Participant may designate in writing from time to time to the Company. All notices
shall be deemed effectively given upon personal delivery, three (3) days after deposit in the
United States mail by certified or registered mail (return receipt requested), one (1) business day
after its deposit with any return receipt express courier (prepaid), or one (1) business day after
transmission by facsimile.
13.
Headings
.
The captions and headings of this Agreement are included for ease of
reference only and will be disregarded in interpreting or construing this Agreement. All
references herein to Sections will refer to Sections of this Agreement.
14.
Language
.
If the Participant has received this Agreement or any other document related
to the Plan translated into a language other than English and if the meaning of the translated
version is different from the English version, the English version will control.
15.
Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any
documents related to current or future participation in the Plan by electronic means. The
Participant hereby consents to receive such documents by electronic delivery and agrees to
participate in the Plan through an on-line or electronic system established and maintained by the
Company or a third party designated by the Company.
16
.
Exhibit A
. Notwithstanding any provision in this Agreement to the contrary, the Share
Bonus Award shall be subject to any special terms and provisions as set forth in Exhibit A to this
Agreement for the Participants country. Moreover, if the Participant relocates to one of the
countries included in Exhibit A, the special terms and conditions for such country will apply to
the Participant, to the extent the Company determines that the application of such terms and
conditions is necessary or advisable in order to comply with local law or facilitate the
administration of the Plan. Exhibit A constitutes part of this Agreement.
17.
Imposition of Other Requirements
. The Company reserves the right to impose other
requirements on the Participants participation in the Plan, on the Share Bonus Award and on any
Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable
in order to comply with local law or facilitate the administration of the Plan, and to require the
Participant to sign any additional agreements or undertakings that may be necessary to accomplish
the foregoing.
- 9 -
18.
Entire Agreement
.
The Plan and this Agreement, together with all its Exhibits,
constitute the entire agreement and understanding of the parties with respect to the subject matter
of this Agreement, and supersede all prior understandings and agreements, whether oral or written,
between the parties hereto with respect to the specific subject matter hereof.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.
|
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FLEXTRONICS INTERNATIONAL LTD.
|
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PARTICIPANT
|
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By:
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By:
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Name:
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Name:
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Title:
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Address:
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- 10 -
FLEXTRONICS INTERNATIONAL LTD. 2001 EQUITY INCENTIVE PLAN
FLEXTRONICS INTERNATIONAL LTD. 2002 INTERIM INCENTIVE PLAN
AND THE SOLECTRON CORPORATION 2002 STOCK OPTION PLAN
EXHIBIT A TO THE
SHARE OPTION AGREEMENT
FOR NON-US PARTICIPANTS
Terms and Conditions
This Exhibit includes additional terms and conditions that govern the Option granted to the
Participant participating in the Offer to Exchange eligible options for a grant of new options
under the Flextronics International Ltd. 2001 Equity Incentive Plan, the Flextronics International
Ltd. 2002 Interim Incentive Plan and/or the Solectron Corporation 2002 Stock Option Plan (the
"
Plans
) if the Participant resides in one of the countries listed below. Certain capitalized terms
used but not defined in this Exhibit have the meanings set forth in the Plans and/or the
Participants relevant Share Option Agreement for Non-U.S. Participants each, (the
Agreement
).
Notifications
This Exhibit also includes information regarding exchange controls and certain other issues of
which the Participant should be aware with respect to his or her participation in the Offer to
Exchange and the grant of new options pursuant to the terms and conditions of the Plans. The
information is based on the securities, exchange control and other laws in effect in the respective
countries as of June 2009. Such laws are often complex and change frequently. As a result,
Flextronics International Ltd. (the
Company
) strongly recommends that the Participant not rely on
the information in this Exhibit as the only source of information relating to the consequences of
the Participants participation in the Plans because the information may be out of date at the time
that the Option vests, the Participant exercises his or her Option, or the Participant sells Shares
acquired upon exercise of the Option under the Plans.
In addition, the information contained herein is general in nature and may not apply to the
Participants particular situation, and the Company is not in a position to assure the Participant
of a particular result. Accordingly, the Participant is advised to seek appropriate professional
advice as to how the relevant laws in the Participants country may apply to his or her situation.
Finally, if the Participant is a citizen or resident of a country other than the one in which he or
she is currently working, the information contained herein may not be applicable to the
Participant.
AUSTRIA
Notifications
Exchange Control Information
. If the Participant holds Shares acquired under the Plans outside of
Austria, the Participant must submit a report to the Austrian National Bank. An exemption applies
if the value of the shares as of any given quarter does not exceed 30,000,000 or as of December 31
does not exceed 5,000,000. If the former threshold is exceeded, quarterly obligations are imposed,
whereas if the latter threshold is exceeded, annual reports must be given. The annual reporting
date is December 31 and the deadline for filing the annual report is March 31 of the following
year.
When the Participant sells Shares issued upon exercise of the Option under the Plans, there may be
exchange control obligations if the cash received is held outside Austria. If the transaction
volume of all the Participants accounts abroad exceeds 3,000,000, the movements and balances of
all accounts must be reported monthly, as of the last day of the month, on or before the fifteenth
day of the following month.
Consumer Protection Information
. To the extent that the provisions of the Austrian Consumer
Protection Act are applicable to the Agreement and the Plans, the Participant may be entitled to
revoke his or her acceptance of the Agreement if the conditions listed below are met:
(i) If the Participant accepts the Option outside of the business premises of the Company, the
Participant may be entitled to revoke his or her acceptance of the Agreement, provided the
revocation is made within one week after the Participant accepts the Agreement.
(ii) The revocation must be in written form to be valid. It is sufficient if the Participant
returns the Agreement to the Company or the Companys representative with language that can be
understood as the Participants refusal to conclude or honor the Agreement, provided the revocation
is sent within the period set forth above.
BRAZIL
Notifications
Compliance with Law.
By accepting the Option, the Participant acknowledges his or her agreement to
comply with applicable Brazilian laws and to pay any and all applicable taxes associated with the
exercise of the Option, the receipt of any dividends, and the sale of Shares issued upon exercise
of the Option under the Plans.
Exchange Control Information
. If the Participant is a resident or domiciled in Brazil, he or she
will be required to submit an annual declaration of assets and rights held outside of Brazil to the
Central Bank of Brazil if the aggregate value of such assets and rights is equal to or greater than
US$100,000 (approximately BRL197,257 as of June 2009). Assets and rights that must be reported
include Shares issued upon exercise of the Option under the Plans.
CANADA
Terms and Conditions
French Language Provision
. The following provision will apply if the Participant is a resident of
Quebec:
The parties acknowledge that it is their express wish that the Agreement, as well as all documents,
notices and legal proceedings entered into, given or instituted pursuant hereto or relating
directly or indirectly hereto, be drawn up in English.
- 11 -
Les parties reconnaissent avoir exigé la rédaction en anglais de la convention, ainsi que de tous
documents exécutés, avis donnés et procédures judiciaries intentées, directement ou indirectement,
relativement à ou suite à la présente convention.
Termination of Employment
. This provision supplements the Termination of Employment sections of the
Agreement.
In the event of involuntary termination of the Participants employment (whether or not in breach
of local labor laws), the Participants right to receive and vest in the Option under the Plans, if
any, will terminate effective as of the date that is the earlier of: (1) the date the Participant
receives notice of termination of employment from the Company or the Participants Employer, or (2)
the date the Participant is no longer actively employed by the Company or his or her Employer
regardless of any notice period or period of pay in lieu of such notice required under local law
(including, but not limited to, statutory law, regulatory law and/or common law); the Committee or
Administrator, as applicable, shall have the exclusive discretion to determine when the Participant
no longer actively employed for purposes of the Option grant.
Data Privacy.
This provision supplements the Data Privacy section of the Agreement:
The Participant hereby authorizes the Company and the Companys representatives to discuss with and
obtain all relevant information from all personnel, professional or not, involved in the
administration and operation of the Plans. The Participant further authorizes the Company, any
Parent, Subsidiary or affiliate and the Administrator of the Plans to disclose and discuss the
Plans with their advisors. The Participant further authorizes the Company and any Parent,
Subsidiary or affiliate to record such information and to keep such information in the
Participants employee file.
Notifications
Grant of Option
. Notwithstanding anything contrary in the Notice, the Agreement or the Plans, the
Option grant does not constitute compensation nor is in any way related to the Participants past
services and/or employment to the Company, the Employer, and/or a Parent, Subsidiary or affiliate
of the Company.
CHINA
Terms and Conditions
Manner of Exercise
. This provision supplements the Manner of Exercise section of the Agreement:
Notwithstanding anything to the contrary in the Notice, the Agreement or the Plans, due to exchange
control laws in China, the Participant will be required to exercise his or her Option using the
cashless sell-all exercise method pursuant to which all Shares subject to the exercised Option will
be sold immediately upon exercise and the proceeds of sale, less the exercise price, any
Tax-Related Items and brokers fees or commissions, will be remitted to the Participant in
accordance with any applicable exchange control laws and regulations. The Company reserves the
right to provide additional methods of exercise depending on the development of local law. This
restriction will not apply to non-PRC citizens.
Exchange Control Requirements
. The Participant understands and agrees that, pursuant to local
exchange control requirements, the Participant will be required to immediately repatriate the cash
proceeds from the cashless exercise of the Option to China. The Participant further understands
that, under local law, such repatriation of his or her cash proceeds may need to be effectuated
through a special exchange control account established by the Company, Parent, Subsidiary,
affiliate or the Employer, and the Participant hereby consents and agrees that any proceeds from
the sale of Shares may be transferred to such special account prior to being delivered to the
Participant. The Participant further agrees to comply with any other requirements that may be
imposed by the Company in the future in order to facilitate compliance with exchange control
requirements in China. These requirements will not apply to non-PRC citizens.
FINLAND
There are no country specific provisions.
FRANCE
Term and Conditions
Language Consent
. By accepting the Option, the Participant confirms having read and understood the
documents relating to this grant (the Plan, the Agreement and this Exhibit) which were provided in
English language. The Participant accepts the terms of those documents accordingly.
En acceptant lattribution, vous confirmez ainsi avoir lu et compris les documents relatifs à cette
attribution (le Plan, le contrat et cette Annexe) qui ont été communiqués en langue anglaise. Vous
acceptez les termes en connaissance de cause.
GERMANY
Notifications
Exchange Control Information
. Cross-border payments in excess of 12,500 must be reported monthly to
the German Federal Bank. If the Participant uses a German bank to effect a cross-border payment in
excess of 12,500 in connection with the sale of Shares acquired under the Plans, the bank will make
the report for the Participant. In addition, the Participant must report any receivables or
payables or debts in foreign currency exceeding an amount of 5,000,000 on a monthly basis. Finally,
the Participant must report Shares on an annual basis that exceeds 10% of the total voting capital
of the Company.
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HONG KONG
Terms and Conditions
Warning: The Option and Shares acquired through participation in the Offer to Exchange upon the
exercise of the new Option do not constitute a public offering of securities under Hong Kong law
and are available only to employees of the Company, its Parent, Subsidiary or affiliates. The Offer
to Exchange, the Agreement, including this Exhibit, the Plans and other incidental communication
materials have not been prepared in accordance with and are not intended to constitute a
prospectus for a public offering of securities under the applicable securities legislation in
Hong Kong. Nor have the documents been reviewed by any regulatory authority in Hong Kong. The
Option is intended only for the personal use of each eligible employee of the Employer, the Company
or any Parent, Subsidiary or affiliate and may not be distributed to any other person. The
Participant is advised to exercise caution in related to the Offer to Exchange. If the Participant
is in any doubt about any of the contents of the Agreement, including this Exhibit, or the Plans,
the Participant should obtain independent professional advice.
Sale Restriction.
Notwithstanding anything contrary in the Notice, the Agreement or the Plans, in
the event the Participants Option vests and the Participant or his or her heirs and
representatives exercise the Option such that Shares are issued to the Participant or his or her
heirs and representatives within six months of the Date of Grant, the Participant agrees that the
Participant or his or her heirs and representatives will not dispose of any Shares acquired prior
to the six-month anniversary of the Date of Grant.
Notifications
Nature of Scheme
. The Company specifically intends that the Plans will not be an occupational
retirement scheme for purposes of the Occupational Retirement Schemes Ordinance.
HUNGARY
There are no country specific provisions.
IRELAND
Director Notification Obligation
. Directors, shadow directors and secretaries of the Companys
Irish Subsidiary or affiliate are subject to certain notification requirements under the Irish
Companies Act. Directors, shadow directors and secretaries must notify the Irish Subsidiary or
affiliate in writing of their interest in the Company and the number and class of Shares or rights
to which the interest relates within five days of the acquisition or disposal of Shares or within
five days of becoming aware of the event giving rise to the notification. This disclosure
requirement also applies to any rights or Shares acquired by the directors spouse or children
(under the age of 18).
ISRAEL
Terms and Conditions
Manner of Exercise
. This provision supplements the Manner of Exercise section of the Agreement:
Notwithstanding anything to the contrary in the Notice, the Agreement or the Plans, due to tax laws
in Israel, the Participant will be required to exercise his or her Option using the cashless
sell-all exercise method whereby all Shares subject to the exercised Option will be sold
immediately upon exercise and the proceeds of sale, less the aggregate Exercise Price, any
Tax-Related Items and brokers fees or commissions, will be remitted to the Participant in
accordance with any applicable laws and regulations. The Participant will not be permitted to
acquire and hold Shares upon exercise. The Company reserves the right to provide additional methods
of exercise to the Participant depending on the development of local law.
MALAYSIA
Notifications
Malaysian Insider Trading Notification.
The Participant should be aware of the Malaysian
insider-trading rules, which may impact his or her acquisition or disposal of Shares or rights to
Shares under the Plans. Under the Malaysian insider-trading rules, the Participant is prohibited
from purchasing or selling Shares (
e.g.
, an Option, Shares) when he or she is in possession of
information which is not generally available and which he or she knows or should know will have a
material effect on the price of Shares once such information is generally available.
Director Notification Obligation.
If the Participant is a director of the Companys Malaysian
Subsidiary, he or she is subject to certain notification requirements under the Malaysian Companies
Act. Among these requirements is an obligation to notify the Malaysian Subsidiary in writing when
the Participant receives or disposes of an interest (
e.g.
, Option, Shares) in the Company or any
related company. Such notifications must be made within 14 days of receiving or disposing of any
interest in the Company or any related company.
MEXICO
Terms and Conditions
No Entitlement for Claims or Compensation
. The following section supplements the Nature of Grant
section of the Agreement:
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Modification
. By accepting the Option, the Participant understands and agrees that any modification
of the Plans or the Agreement or its termination shall not constitute a change or impairment of the
terms and conditions of employment.
Policy Statement
. The Option grant the Company is making under the Plans is unilateral and
discretionary and, therefore, the Company reserves the absolute right to amend it and discontinue
it at any time without any liability.
The Company, with registered offices at One Marina Boulevard, #28-00, Singapore 018989, is solely
responsible for the administration of the Plans, and participation in the Plans and the grant of
the Option do not, in any way, establish an employment relationship between the Participant and the
Company since he or she is participating in the Plans on a wholly commercial basis and the sole
employer is Availmed Servicios S.A. de C.V., Grupo Flextronics S.A. de C.V., Flextronics Servicios
Guadalajara S.A. de C.V., Flextronics Servicios Mexico S. de R.L. de C.V. and Flextronics
Aguascalientes Servicios S.A. de C.V. , nor does it establish any rights between the Participant
and the Employer.
Plans Document Acknowledgment
. By accepting the Option, the Participant acknowledges that he or she
has received copies of the Plans, has reviewed the Plans and the Agreement in their entirety, and
fully understands and accepts all provisions of the Plans and the Agreement.
In addition, the Participant further acknowledges that he or she has read and specifically and
expressly approves the terms and conditions in the Nature of Grant section of the Agreement, in
which the following is clearly described and established: (i) participation in the Plans does not
constitute an acquired right; (ii) the Plans and participation in the Plans is offered by the
Company on a wholly discretionary basis; (iii) participation in the Plans is voluntary; and (iv)
the Company and any Parent, Subsidiary or affiliates are not responsible for any decrease in the
value of the Shares acquired upon exercise of the Option.
Finally, the Participant hereby declares that he or she does not reserve any action or right to
bring any claim against the Company for any compensation or damages as a result of his or her
participation in the Plans and therefore grants a full and broad release to the Employer, the
Company and any Parent, Subsidiary or affiliates with respect to any claim that may arise under the
Plans.
Spanish Translation
Condiciones y Duración
Sin Derecho a Reclamo o Compensación
. La siguiente sección complementa la sección Naturaleza del
Otorgamiento de este Acuerdo:
Modificación
. Al aceptar la Opción, el Participante entiende y acuerda que cualquier modificación
del Plan o del Acuerdo o su extinción, no constituirá un cambio o disminución de los términos y
condiciones de empleo.
Declaración de Política
. El otorgamiento de Opción por parte de la Compañía es efectuada bajo el
Plan en forma unilateral y discrecional y por lo tanto, la Compañía se reserva el derecho absoluto
de modificar y discontinuar la Opción en cualquier momento sin responsabilidad alguna hacia la
Compañía.
La Compañía, con oficinas registradas en One Marina Boulevard, #28-00, Singapore 018989 es la única
responsable de la administración de los Planes y de la participación en los mismos y el
otorgamamiento de la Opción no establece de forma alguna una relación de trabajo entre el
Participante y la Compañía, ya que su participación en el Plan es completamente comercial y el
único empleador esAvailmed Servicios S.A. de C.V., Grupo Flextronics S.A. de C.V., Flextronics
Servicios Guadalajara S.A. de C.V., Flextronics Servicios Mexico S. de R.L. de C.V. and Flextronics
Aguascalientes, así como tampoco establece ningún derecho entre el Participante y el Empleador.
Reconocimiento del Documento del Plan
.Al aceptar la Opción, el Participante reconoce que ha
recibido copias de los Planes, ha revisado los mismos, al igual que la totalidad del Acuerdo y, que
ha entendido y aceptado completamente todas las disposiciones contenidas en los Planes y en el
Acuerdo.
Además, el Partcipante reconoce que ha leído, y que aprueba específica y expresamente los términos
y condiciones contenidos en la sección Naturaleza del Orotgamiento en el cual se encuentra
claramente descripto y establecido lo siguiente: (i) la participación en los Planes no constituye
un derecho adquirido; (ii) los Planes y la participación en los mismos es ofrecida por la Compañía
de forma enteramente discrecional; (iii) la participación en los Planes es voluntaria; y (iv) la
Compañía, así como su Sociedad controlante, Subsidiaria o Filiales no son responsables por
cualquier disminución en el valor de las Acciones adquiridas a través de la Opción.
Finalmente, el Partcipante declara que no se reserva ninguna acción o derecho para interponer una
demanda en contra de la Compañía por compensación, daño o perjuicio alguno como resultado de su
participación en el Plan y, en consecuencia, otorga el más amplio finiquito al Empleador, así como
a la Compañía, a su Sociedad controlante, Subsidiaria o Filiales con respecto a cualquier demanda
que pudiera originarse en virtud de los Planes.
NETHERLANDS
Notifications
Securities Law Information.
The Participant should be aware of the Dutch insider-trading rules,
which may impact the sale of Shares acquired at exercise of the Option. In particular, the
Participant may be prohibited from effectuating certain transactions if the Participant has inside
information about the Company.
By accepting the grant of the Option and participating in the Plans, the Participant acknowledges
having read and understood this Securities Law Information and further acknowledges that it is the
Participants responsibility to comply with the following Dutch insider trading rules.
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Under Article 46 of the Act on the Supervision of the Securities Trade 1995, anyone who has
insider information related to an issuing company is prohibited from effectuating a transaction
in securities in or from the Netherlands. Inside information is defined as knowledge of details
concerning the issuing company to which the securities relate that is not public and which, if
published, would reasonably be expected to affect the stock price, regardless of the development of
the price. The insider could be any employee of the Company or a Subsidiary in the Netherlands who
has inside information as described herein.
Given the broad scope of the definition of inside information, a Participant working at a
Subsidiary or affiliate in the Netherlands may have inside information and, thus, would be
prohibited from effectuating a transaction in securities in the Netherlands at a time when the
Participant had such inside information.
If the Participant is uncertain whether the insider-trading rules apply to him or her, he or she
should consult his or her personal legal advisor.
SINGAPORE
Notifications
Securities Law Information
.
The Offer to Exchange document has not been lodged or registered as a
prospectus with the Monetary Authority of Singapore. Accordingly, the Offer to Exchange and any
other document or material in connection with the offer or sale, or invitation for subscription or
purchase, of options may not be circulated or distributed, nor may the options be offered or sold,
or be made the subject of an invitation for subscription or purchase, whether directly or
indirectly, to persons in Singapore other than (i) to a qualifying person under Section 273(1)(f)
of the Securities and Futures Act, Chapter 289 of Singapore (the Act) or (ii) otherwise pursuant
to, and in accordance with the conditions of, any other applicable provision of the Act.
Director Notification Obligation.
If the Participant is a director, associate director or shadow
director of a Singapore Subsidiary of the Company, the Participant is subject to certain
notification requirements under the Singapore Companies Act. Among these requirements is an
obligation to notify the Singaporean Subsidiary in writing when the Participant receives an
interest (
e.g
., Option, Shares) in the Company or any related companies. Please contact the Company
to obtain a copy of the notification form. In addition, the Participant must notify the Singapore
Subsidiary when the Participant sells Shares of the Company or any related company (including when
the Participant sell Shares acquired under the Plans). These notifications must be made within two
days of acquiring or disposing of any interest in the Company or any related company. In addition,
a notification must be made of the Participants interests in the Company or any related company
within two days of becoming a director.
SWEDEN
There are no country specific provisions.
TAIWAN
Notifications
Exchange Control Information
. The Participant may acquire and remit foreign currency (including
proceeds from the sale of Shares) into and out of Taiwan up to US$5,000,000 (approximately
TWD$16,144,767 as of June 2009) per year. If the transaction amount is TWD$500,000 or more in a
single transaction, the Participant must submit a Foreign Exchange Transaction Form and also
provide supporting documentation to the satisfaction of the remitting bank.
UNITED KINGDOM
Terms and Conditions
Tax Obligations.
The following provisions supplement the Tax Obligations section of the Agreement:
The Participant agrees that, if Participant does not pay or the Employer or the Company does not
withhold from the Participant the full amount of Tax-Related Items that the Participant owes at
exercise of the Option, or the release or assignment of the Option for consideration, or the
receipt of any other benefit in connection with the Option (the Taxable Event) within 90 days
after the Taxable Event, or such other period specified in section 222(1)(c) of the U.K. Income Tax
(Earnings and Pensions) Act 2003, then the amount that should have been withheld shall constitute a
loan owed by the Participant to the Employer, effective 90 days after the Taxable Event. The
Participant agrees that the loan will bear interest at the HMRCs official rate and will be
immediately due and repayable by the Participant, and the Company and/or the Employer may recover
it at any time thereafter by withholding the funds from salary, bonus or any other funds due to the
Participant by the Employer, by withholding in Shares issued upon exercise of the Option or from
the cash proceeds from the sale of Shares or by demanding cash or a check from the Participant. The
Participant also authorizes the Company to delay the issuance of any Shares unless and until the
loan is repaid in full.
Notwithstanding the foregoing, if the Participant is an officer or executive director (as within
the meaning of section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), the
terms of the immediately foregoing provision will not apply. In the event that the Participant is
an officer or executive director and Tax-Related Items are not collected from or paid by
Participant within 90 days of the Taxable Event, the amount of any uncollected Tax-Related Items
may constitute a benefit to the Participant on which additional income tax and National Insurance
Contributions may be payable. The Participant acknowledges that the Company or the Employer may
recover any such additional income tax and National Insurance Contributions at any time thereafter
by any of the means referred to in the Tax Obligations section of the Agreement, although the
Participant acknowledges that he/she ultimately will be responsible for reporting any income tax or
National Insurance Contributions due on this additional benefit directly to the HMRC under the
self-assessment regime.
- 15 -
National Insurance Contributions Acknowledgment.
As a condition of participation in the Plans and
the exercise of the Option, the Participant agrees to accept any liability for secondary Class 1
National Insurance Contributions which may be payable by the Company and/or the Employer in
connection with the Option and any event giving rise to Tax-Related Items (the Employer NICs). To
accomplish the foregoing, the Participant agrees to execute a joint election with the Company, the
form of such joint election being formally approved by HMRC (the Joint Election), and any other
required consent or election. The Participant further agrees to execute such other joint elections
as may be required between the Participant and any successor to the Company and/or the Employer.
The Participant further agrees that the Company and/or the Employer may collect the Employer NICs
from the Participant by any of the means set forth in the Tax Obligations section of the Agreement.
If the Participant does not enter into a Joint Election prior to exercising the Option or if
approval of the Joint Election has been withdrawn by HMRC, the Option shall become null and void
without any liability to the Company and/or the Employer and may not be exercised by the
Participant.
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