Document and Entity Information
Document and Entity Information (USD $) | ||
In Billions, except Share data | 12 Months Ended
Mar. 31, 2010 | May. 14, 2010
|
Entity Registrant Name | FLEXTRONICS INTERNATIONAL LTD. | |
Entity Central Index Key | 0000866374 | |
Document Type | 10-K | |
Document Period End Date | 2010-03-31 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-31 | |
Document Fiscal Year Focus | 2,010 | |
Document Fiscal Period Focus | FY | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Ordinary Shares Outstanding | 814,611,688 | |
Entity Public Float | 5.6 |
Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | ||
In Thousands | 12 Months Ended
Mar. 31, 2010 | 12 Months Ended
Mar. 31, 2009 |
ASSETS | ||
Cash and cash equivalents | $1,927,556 | $1,821,886 |
Accounts receivable, net of allowance for doubtful accounts of $13,163 and $29,020 as of March 31, 2010 and 2009, respectively | 2,438,950 | 2,316,939 |
Inventories | 2,875,819 | 2,996,785 |
Other current assets | 747,676 | 799,396 |
Total current assets | 7,990,001 | 7,935,006 |
Property and equipment, net | 2,118,576 | 2,333,781 |
Goodwill and other intangible assets, net | 254,717 | 291,491 |
Other assets | 279,258 | 756,662 |
Total assets | 10,642,552 | 11,316,940 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Bank borrowings, current portion of long-term debt and capital lease obligations | 266,551 | 208,403 |
Accounts payable | 4,447,968 | 4,049,534 |
Accrued payroll | 347,324 | 336,123 |
Other current liabilities | 1,285,368 | 1,814,711 |
Total current liabilities | 6,347,211 | 6,408,771 |
Long-term debt and capital lease obligations, net of current portion | 1,990,258 | 2,733,680 |
Other liabilities | 320,516 | 313,321 |
Commitments and contingencies (Note 7) | ||
Shareholders' equity | ||
Ordinary shares, no par value; 843,208,876 and 839,412,939 issued, and 813,429,154 and 809,633,217 outstanding as of March 31, 2010 and 2009, respectively | 8,924,769 | 8,862,008 |
Treasury stock, at cost; 29,779,722 shares as of March 31, 2010 and 2009, respectively | (260,074) | (260,074) |
Accumulated deficit | (6,664,723) | (6,683,317) |
Accumulated other comprehensive loss | (15,405) | (57,449) |
Total shareholders' equity | 1,984,567 | 1,861,168 |
Total liabilities and shareholders' equity | $10,642,552 | $11,316,940 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | ||
In Thousands, except Share data | Mar. 31, 2010
| Mar. 31, 2009
|
Assets Current | ||
Allowance for doubtful accounts | $13,163 | $29,020 |
Shareholders' equity | ||
Ordinary shares, no par value | $0 | $0 |
Ordinary shares, issued | 843,208,876 | 839,412,939 |
Ordinary shares, outstanding | 813,429,154 | 809,633,217 |
Treasury stock, shares | 29,779,722 | 29,779,722 |
Consolidated Statements of Oper
Consolidated Statements of Operations (USD $) | |||
In Thousands, except Per Share data | 12 Months Ended
Mar. 31, 2010 | 12 Months Ended
Mar. 31, 2009 | 12 Months Ended
Mar. 31, 2008 |
Net sales | $24,110,733 | $30,948,575 | $27,558,135 |
Cost of sales | 22,800,733 | 29,513,011 | 25,972,787 |
Restructuring charges | 92,458 | 155,134 | 408,945 |
Gross profit | 1,217,542 | 1,280,430 | 1,176,403 |
Selling, general and administrative expenses | 767,134 | 979,060 | 807,029 |
Intangible amortization | 89,615 | 135,872 | 112,317 |
Goodwill impairment charge | 0 | 5,949,977 | 0 |
Restructuring charges | 15,070 | 24,651 | 38,743 |
Other charges, net | 206,895 | 89,262 | 61,078 |
Interest and other expense, net | 155,603 | 231,917 | 133,582 |
Income (loss) before income taxes | (16,775) | (6,130,309) | 23,654 |
Provision for (benefit from) income taxes | (35,369) | 5,209 | 705,037 |
Net income (loss) | $18,594 | ($6,135,518) | ($681,383) |
Earnings (loss) per share: | |||
Basic | 0.02 | -7.47 | -0.95 |
Diluted | 0.02 | -7.47 | -0.95 |
Weighted-average shares used in computing per share amounts: | |||
Basic | 811,677 | 820,955 | 720,523 |
Diluted | 821,112 | 820,955 | 720,523 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (USD $) | |||
In Thousands | 12 Months Ended
Mar. 31, 2010 | 12 Months Ended
Mar. 31, 2009 | 12 Months Ended
Mar. 31, 2008 |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income (loss) | $18,594 | ($6,135,518) | ($681,383) |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation, amortization and other impairment charges | 707,530 | 693,597 | 712,840 |
Goodwill impairment charge | 0 | 5,949,977 | 0 |
(Gain) loss on debt repurchases | 10,437 | (22,325) | 0 |
Provision for doubtful accounts | 44,066 | 73,845 | 1,090 |
Foreign currency gain on liquidation | 0 | (6,862) | 0 |
Non-cash interest income and other | 26,146 | (6,366) | 6,819 |
Stock compensation | 56,474 | 56,914 | 47,641 |
Deferred income taxes and other non-cash income taxes | (108,272) | (19,899) | 633,850 |
Gain on divestitures of operations | 0 | 0 | (9,733) |
Changes in operating assets and liabilities, net of acquisitions: | |||
Accounts receivable | (121,194) | 1,025,434 | (241,959) |
Inventories | 141,754 | 1,128,936 | 205,584 |
Other current and noncurrent assets | 19,189 | 242,525 | (82,506) |
Accounts payable | 413,053 | (1,212,108) | 335,356 |
Other current and noncurrent liabilities | (408,861) | (451,371) | 115,234 |
Net cash provided by operating activities | 798,916 | 1,316,779 | 1,042,833 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchases of property and equipment, net of disposition | (176,463) | (462,079) | (327,547) |
Acquisition of businesses, net of cash acquired | (75,901) | (214,496) | (629,182) |
Proceeds from divestitures of operations | 0 | 5,269 | 11,138 |
Other investments and notes receivable, net | 260,188 | 26,450 | 10,220 |
Net cash provided by (used in) investing activities | 7,824 | (644,856) | (935,371) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from bank borrowings and long-term debt | 792,856 | 11,259,472 | 7,861,739 |
Repayments of bank borrowings and long-term debt | (1,002,668) | (11,433,848) | (6,935,508) |
Payments for early repurchase of long-term debt | (509,486) | (226,199) | 0 |
Payments for repurchases of ordinary shares | 0 | (260,074) | 0 |
Proceeds from exercise of stock options | 6,026 | 13,848 | 35,911 |
Net cash provided by (used in) in financing activities | (713,272) | (646,801) | 962,142 |
Effect of exchange rates on cash | 12,202 | 76,816 | (64,181) |
Net increase in cash and cash equivalents | 105,670 | 101,938 | 1,005,423 |
Cash and cash equivalents, beginning of year | 1,821,886 | 1,719,948 | 714,525 |
Cash and cash equivalents, end of year | $1,927,556 | $1,821,886 | $1,719,948 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) (USD $) | |||
In Thousands | 12 Months Ended
Mar. 31, 2010 | 12 Months Ended
Mar. 31, 2009 | 12 Months Ended
Mar. 31, 2008 |
Net income (loss) | $18,594 | ($6,135,518) | ($681,383) |
Other comprehensive income: | |||
Foreign currency translation adjustment | 16,409 | (32,357) | 24,935 |
Unrealized gain (loss) on derivative instruments, and other income (loss), net of taxes | 25,635 | (22,983) | (12,704) |
Comprehensive income (loss) | $60,638 | ($6,190,858) | ($669,152) |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity (USD $) | ||||
In Thousands | Ordinary Shares
| Retained Earnings (Deficit)
| Accumulated Other Comprehensive Income (Loss)
| Total
|
Beginning balance, value at Mar. 31, 2007 (as reported) | $5,923,799 | $267,200 | ($14,340) | $6,176,659 |
Beginning balance, shares at Mar. 31, 2007 (as reported) | 607,545 | |||
Effect of adoption of new accounting standard (See Note 2) (adjustment) | 252,017 | (133,616) | 118,401 | |
Beginning balance, value at Mar. 31, 2007 | 6,175,816 | 133,584 | (14,340) | 6,295,060 |
Beginning balance, shares at Mar. 31, 2007 | 607,545 | |||
Period changes: | ||||
Issuance of ordinary shares for acquisitions, value | 2,519,670 | 2,519,670 | ||
Issuance of ordinary shares for acquisitions, shares | 221,802 | |||
Fair value of vested options assumed for acquisition | 11,282 | 11,282 | ||
Exercise of stock options, value | 35,911 | 35,911 | ||
Exercise of stock options, shares | 4,291 | |||
Issuance of vested shares under share bonus awards | 1,565 | |||
Net income (loss) | (681,383) | (681,383) | ||
Stock-based compensation, net of tax | 48,061 | 48,061 | ||
Unrealized gain (loss) on derivative instruments, and other income (loss), net of taxes | (12,704) | (12,704) | ||
Foreign currency translation adjustment | 24,935 | 24,935 | ||
Ending balance, value at Mar. 31, 2008 | 8,790,740 | (547,799) | (2,109) | 8,240,832 |
Ending balance, shares at Mar. 31, 2008 | 835,203 | |||
Period changes: | ||||
Repurchase of ordinary shares at cost, value | (260,074) | (260,074) | ||
Repurchase of ordinary shares at cost, shares | (29,780) | |||
Issuance of ordinary shares for acquisitions, value | 270 | 270 | ||
Issuance of ordinary shares for acquisitions, shares | 141 | |||
Exercise of stock options, value | 13,848 | 13,848 | ||
Exercise of stock options, shares | 2,243 | |||
Issuance of vested shares under share bonus awards | 1,826 | |||
Net income (loss) | (6,135,518) | (6,135,518) | ||
Stock-based compensation, net of tax | 57,150 | 57,150 | ||
Unrealized gain (loss) on derivative instruments, and other income (loss), net of taxes | (22,983) | (22,983) | ||
Foreign currency translation adjustment | (32,357) | (32,357) | ||
Ending balance, value at Mar. 31, 2009 | 8,601,934 | (6,683,317) | (57,449) | 1,861,168 |
Ending balance, shares at Mar. 31, 2009 | 809,633 | |||
Period changes: | ||||
Exercise of stock options, value | 6,026 | 6,026 | ||
Exercise of stock options, shares | 2,497 | |||
Issuance of vested shares under share bonus awards | 1,299 | |||
Net income (loss) | 18,594 | 18,594 | ||
Stock-based compensation, net of tax | 56,735 | 56,735 | ||
Unrealized gain (loss) on derivative instruments, and other income (loss), net of taxes | 25,635 | 25,635 | ||
Foreign currency translation adjustment | 16,409 | 16,409 | ||
Ending balance, value at Mar. 31, 2010 | $8,664,695 | ($6,664,723) | ($15,405) | $1,984,567 |
Ending balance, shares at Mar. 31, 2010 | 813,429 |
ORGANIZATION OF THE COMPANY
ORGANIZATION OF THE COMPANY | |
12 Months Ended
Mar. 31, 2010 | |
ORGANIZATION OF THE COMPANY | 1.ORGANIZATION OF THE COMPANY Flextronics International Ltd. ("Flextronics" or the "Company") was incorporated in the Republic of Singapore in May 1990. The Company's operations have expanded over the years by a combination of internal expansion and acquisitions, including the acquisition of Solectron Corporation ("Solectron") in fiscal year 2008 (see Note 12). 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 Company's strategy is to provide customers with a full range of 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 Company's services to meet their product requirements throughout the entire product life cycle. The Company's 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 Company's OEM customers under the OEM's brand names. The Company's 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. |
SUMMARY OF ACCOUNTING POLICIES
SUMMARY OF ACCOUNTING POLICIES | |
12 Months Ended
Mar. 31, 2010 | |
SUMMARY OF ACCOUNTING POLICIES | 2.SUMMARY OF ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The Company's third fiscal quarter ends on December 31, and the fourth fiscal quarter and year ends on March 31 of each year. The first fiscal quarter ended on July 3, 2009, June 27, 2008 and June 29, 2007, respectively and the second fiscal quarter ended on October 2, 2009, September 26, 2008 and September 28, 2007, respectively. Amounts included in the consolidated financial statements are expressed in U.S. dollars unless otherwise designated. The accompanying consolidated financial statements include the accounts of Flextronics and its majority-owned subsidiaries, after elimination of intercompany accounts and transactions. The Company consolidates all majority-owned subsidiaries and investments in entities in which the Company has a controlling interest. For consolidated majority-owned subsidiaries in which the Company owns less than 100%, the Company recognizes a minority interest for the ownership of the minority owners. As of March 31, 2010 and 2009, minority interest was not material. The associated minority owners' interest in the income or losses of these companies has not been material to the Company's results of operations for fiscal years 2010, 2009 and 2008, and has been classified within Interest and other expense, net, in the consolidated statements of operations. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP" or "GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates are used in accounting for, among other things: allowances for doubtful accounts; inventory write-downs; valuation allowances for deferred tax assets; uncertain tax positions; valuation and useful lives of long-lived assets including property, equipment, intangible assets and goodwill; asset impairments; fair values of financial instruments including investments, notes receivable and derivative instruments; restructuring charges; contingencies; fair values of assets and liabilities obtained in business combinations and the fair values of options granted under the Company's stock-based compensation plans. Actual results may differ from previously estimated amounts, and such differences may be material to the consolidated financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period they occur. Translation of Foreign Currencies The financial position and results of operations for certain of the Company's subsidiaries are measured using a currency other than the U.S. dollar as their functional currency. Accordingly, all assets and liabilities for these subsidiaries are translated into U.S. dollars at the current exchange rates as of the respective balance sheet date. Revenue and expense items are translated at the average exchange ra |
SUPPLEMENTAL CASH FLOW DISCLOSU
SUPPLEMENTAL CASH FLOW DISCLOSURES | |
12 Months Ended
Mar. 31, 2010 | |
SUPPLEMENTAL CASH FLOW DISCLOSURES | 3.SUPPLEMENTAL CASH FLOW DISCLOSURES The following table represents supplemental cash flow disclosures and non-cash investing and financing activities: Fiscal Year Ended March 31, 2010 2009 2008 (In thousands) Net cash paid (received) for: Interest $ 126,327 $ 178,641 $ 126,975 Income taxes $ 89,973 $ (56,315) $ 59,553 Non-cash investing and financing activities: Issuance of ordinary shares for acquisition of businesses $ $ 270 $ 2,519,670 Fair value of vested options assumed in acquisition of business $ $ $ 11,282 |
BANK BORROWINGS AND LONG-TERM D
BANK BORROWINGS AND LONG-TERM DEBT | |
12 Months Ended
Mar. 31, 2010 | |
BANK BORROWINGS AND LONG-TERM DEBT | 4.BANK BORROWINGS AND LONG-TERM DEBT Bank borrowings and long-term debt are as follows: As of March 31, 2010 2009 (In thousands) 0.00% convertible junior subordinated notes due July 2009 $ - $ 189,045 1.00% convertible subordinated notes due August 2010 234,240 218,391 6.50% senior subordinated notes due May 2013 - 399,622 6.25% senior subordinated notes due November 2014 302,172 402,090 Term Loan Agreement, including current portion, due in installments through October 2014 1,691,775 1,709,116 Other 26,643 23,270 2,254,830 2,941,534 Current portion (265,954) (207,991) Non-current portion $ 1,988,876 $ 2,733,543 Maturities for the Company's long-term debt are as follows: Fiscal Year Ending March 31, Amount (In thousands) 2011 $ 265,954 2012 16,752 2013 489,702 2014 11,688 2015 1,458,574 Thereafter 12,160 Total $ 2,254,830 Revolving Credit Facilities and Other Credit Lines On May 10, 2007, the Company entered into a five-year $2.0 billion credit facility that expires in May 2012. As of March 31, 2010 and 2009, there were no borrowings outstanding under the credit facility. Borrowings under the credit facility bear interest, at the Company's option, either at (i) the base rate (the greater of the agent's prime rate or the federal funds rate plus 0.50%); or (ii) LIBOR plus the applicable margin for LIBOR loans ranging between 0.50% and 1.25%, based on the Company's credit ratings. The Company is required to pay a quarterly commitment fee ranging from 0.10% to 0.20% per annum on the unutilized portion of the credit facility based on the Company's credit ratings and, if the utilized portion of the credit facility exceeds 50% of the total commitments, a quarterly utilization fee of 0.125% on such utilized portion. The Company is also required to pay letter of credit usage fees ranging between 0.50% and 1.25% per annum (based on the Company's credit ratings) on the amount of the daily average outstanding letters of credit and a fronting fee of (i) in the case of commercial letters of credit, 0.125% of the amount available to be drawn under such letters of credit, and (ii) in the case of standby letters of credit, 0.125% per annum on the daily average undrawn amount of such letters of credit. The credit facility is unsecured, and contains customary restrictions on the Company's and its subsidiaries' ability to (i) incur certain debt, (ii) make certain investments, (iii) make certain acquisitions of other entities, (iv) incur liens, (v) dispose of assets, (vi) make non-cash distributions to shareholders, and (vii) engage in transactions with affiliates. These covenants are subject to a number of significant exceptions and limitations. The facility also requires that the Company maintain a maximum ratio of total indebtedness to EBITDA (earnings before interest expense, taxes, depreciation and amortization), and a minimum fixed charge coverage ratio, as defined, during the term of the credit facility. Borrowings under the credit facility are guaranteed by the Compan |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | |
12 Months Ended
Mar. 31, 2010 | |
FINANCIAL INSTRUMENTS | 5.FINANCIAL INSTRUMENTS Due to their short-term nature, the carrying amount of the Company's cash and cash equivalents, accounts receivable and accounts payable approximates fair value. The Company's cash equivalents are comprised of cash and bank deposits and money market accounts. The Company's investment policy limits the amount of credit exposure to 20% of the total investment portfolio or $10.0 million in any single issuer. Foreign Currency Contracts The Company transacts business in various foreign countries and is therefore, exposed to foreign currency exchange rate risk inherent in forecasted sales, cost of sales, and monetary assets and liabilities denominated in non-functional currencies. The Company has established risk management programs to protect against volatility in the value of non-functional currency denominated monetary assets and liabilities, and of future cash flows caused by changes in foreign currency exchange rates. The Company tries to maintain a fully hedged position for certain transaction exposures, which are primarily, but not limited to, revenues, customer and vendor payments and inter-company balances in currencies other than the functional currency unit of the operating entity. The Company enters into short-term foreign currency forward and swap contracts to hedge only those currency exposures associated with certain assets and liabilities, primarily accounts receivable and accounts payable, and cash flows denominated in non-functional currencies. Gains and losses on the Company's forward and swap contracts are designed to offset losses and gains on the assets, liabilities and transactions hedged, and accordingly, generally do not subject the Company to risk of significant accounting losses. The Company hedges committed exposures and does not engage in speculative transactions. The credit risk of these forward and swap contracts is minimized since the contracts are with large financial institutions and accordingly, fair value adjustments related to the credit risk of the counter-party financial institution was not material. As of March 31, 2010, the aggregate notional amount of the Company's outstanding foreign currency forward and swap contracts was $2.1 billion as summarized below: Currency Buy/Sell Foreign Currency Amount Notional Contract Value in USD (In thousands) Cash Flow Hedges CNY Buy 1,214,718 $ 177,960 EUR Buy 21,329 28,745 EUR Sell 9,127 13,500 HUF Buy 10,166,200 51,519 MXN Buy 1,513,000 121,769 Other Buy N/A 51,792 445,285 Other Forward/Swap Contracts BRL Buy 72,200 40,245 BRL Sell 142,100 79,208 CAD Buy 49,384 48,321 CAD Sell 105,773 103,311 CNY Buy 569,937 83,500 EUR Buy 51,549 69,596 EUR Sell 266,673 359,934 GBP Buy 68,444 103,327 GBP Sell 92,117 138,941 JPY Buy 3,978,221 43,087 MXN Buy 652,000 52,474 MYR Buy 210,944 64,487 SEK |
TRADE RECEIVABLES SECURITIZATIO
TRADE RECEIVABLES SECURITIZATION | |
12 Months Ended
Mar. 31, 2010 | |
TRADE RECEIVABLES SECURITIZATION | 6.TRADE RECEIVABLES SECURITIZATION The Company continuously sells designated pools of trade receivables under two asset backed securitization programs and an accounts receivable factoring program. Global Asset-Backed Securitization Agreement The Company continuously sells a designated pool of trade receivables to a third-party qualified special purpose entity, which in turn sells an undivided ownership interest to two commercial paper conduits, administered by an unaffiliated financial institution. In addition to these commercial paper conduits, 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 services, administers and collects the receivables on behalf of the entity and receives a servicing fee of 1.00% of serviced receivables per annum. Servicing fees recognized during the fiscal years ended March 31, 2010, 2009 and 2008 were not material and are included in Interest and other expense, net within the 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 or liabilities are recognized. During October 2009, the securitization agreement was amended such that the maximum investment limit of these commercial paper conduits was $500.0 million. Additionally, the Company pays annual facility and commitment fees totaling 1.5% per annum under the facility to the extent funded through the issuance of commercial paper. The third-party special purpose entity was a qualifying special purpose entity, and accordingly, the Company did not consolidate this entity. As of March 31, 2010 and 2009, approximately $352.5 million and $422.0 million of the Company's accounts receivable, respectively, had been sold to this third-party qualified special purpose entity. The amounts represent the face amount of the total outstanding trade receivables on all designated customer accounts on those dates. For the years ended March 31, 2010 and 2009, the Company sold approximately $5.7 billion and $6.0 billion, respectively, to the third party special purpose entity. The accounts receivable balances that were sold under this agreement were removed from the Consolidated Balance Sheets and the amounts received are included as cash provided by operating activities in the 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 and $123.8 million as of March 31, 2010 and 2009, respectively, and each was recorded in Other current assets in the Consolidated Balance Sheets as of March 31, 2010 and 2009. The amount of the Company's own investment participation varied depending on certain criteria, mainly the collection performance on the sold receivables and the Company' |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | |
12 Months Ended
Mar. 31, 2010 | |
COMMITMENTS AND CONTINGENCIES | 7.COMMITMENTS AND CONTINGENCIES As of March 31, 2010 and 2009, the gross carrying amount and associated accumulated depreciation of the Company's property and equipment financed under capital leases, and the related obligations was not material. The Company also leases certain of its facilities under non-cancelable operating leases. These operating leases expire in various years through 2024 and require the following minimum lease payments: Operating Fiscal Year Ending March 31, Lease (In thousands) 2011 $ 123,646 2012 93,228 2013 75,167 2014 56,867 2015 38,763 Thereafter 86,959 Total minimum lease payments $ 474,630 Total rent expense amounted to $143.2 million, $139.2 million and $94.2 million in fiscal years 2010, 2009 and 2008, respectively. 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 consolidated financial position, results of operations, or cash flows. |
INCOME TAXES
INCOME TAXES | |
12 Months Ended
Mar. 31, 2010 | |
INCOME TAXES | 8.INCOME TAXES The domestic ("Singapore") and foreign components of income before income taxes were comprised of the following: Fiscal Year Ended March 31, 2010 2009 2008 (In thousands) Domestic $ 86,411 $ (1,090,863) $ 268,294 Foreign (103,186) (4,990,075) (202,627) Total $ (16,775) $ (6,080,938) $ 65,667 The provision for (benefit from) income taxes consisted of the following: Fiscal Year Ended March 31, 2010 2009 2008 (In thousands) Current: Domestic $ 50 $ 3,461 $ 547 Foreign (18,529) 68,581 65,469 (18,479) 72,042 66,016 Deferred: Domestic 1,077 895 (252) Foreign (17,967) (67,728) 639,273 (16,890) (66,833) 639,021 Provision for (benefit from) income taxes $ (35,369) $ 5,209 $ 705,037 The domestic statutory income tax rate was approximately 17.0% in fiscal years 2010 and 2009, and approximately 18.0% in fiscal year 2008. The reconciliation of the income tax expense (benefit) expected based on domestic statutory income tax rates to the expense (benefit) for income taxes included in the consolidated statements of operations is as follows: Fiscal Year Ended March 31, 2010 2009 2008 (In thousands) Income taxes based on domestic statutory rates $ (2,852) $ (1,033,760) $ 11,821 Effect of tax rate differential (40,728) 38,440 (314,108) Intangible amortization 15,279 23,098 12,924 Change in liability for uncertain tax positions (80,175) 8,339 6,367 Goodwill impairment 1,011,496 Change in valuation allowance 69,076 (50,225) 986,338 Other 4,031 7,821 1,695 Provision for income taxes $ (35,369) $ 5,209 $ 705,037 The $986.3 million change in valuation allowance during fiscal year 2008 includes non-cash tax expense of $661.3 million, principally resulting from management's re-evaluation of previously recorded deferred tax assets in the United States, which are primarily comprised of tax loss carry forwards. Management believes that the realizability of certain deferred tax assets was no longer more likely than not because it expected future projected taxable income in the United States will be lower as a result of increased interest expense resulting from the term loan entered into as part of the acquisition of Solectron. The remaining change in the valuation allowance during the 2008 fiscal year was primarily for that year's operating losses and restructuring charges, on which the tax benefit was not more likely than not to be realized. A number of countries in which the Company is located allow for tax holidays or provide other tax incentives to attract and retain business. In general, these holidays were secured based on the nature, size and location of the Company's operations. The aggregate dollar effect on the Company's income resulting from tax holidays and tax incentives to attract and retain business for the fiscal years ended March 31, 2010, 2009 and 2008 were $65.4 million, $85.3 million and $118.0 million, respectively. The effect on basic and dil |
RESTRUCTURING CHARGES
RESTRUCTURING CHARGES | |
12 Months Ended
Mar. 31, 2010 | |
RESTRUCTURING CHARGES | 9.RESTRUCTURING CHARGES Historically, the Company has initiated a series of restructuring activities intended to realign the Company's global capacity and infrastructure with demand by its customers so as to optimize the operational efficiency, which included reducing excess workforce and capacity, and consolidating and relocating certain manufacturing, design and administrative facilities to lower-cost regions. The restructuring costs include employee severance, costs related to leased facilities, owned facilities that are no longer in use and are to be disposed of, leased equipment that is no longer in use and will be disposed of, and other costs associated with the exit of certain contractual agreements due to facility closures. The overall intent of these activities is that the Company shifts its manufacturing capacity to locations with higher efficiencies and, in most instances, lower costs, and better utilize its overall existing manufacturing capacity. This would enhance the Company's ability to provide cost-effective manufacturing service offerings, which in turn may enhance its ability to retain and expand the Company's existing relationships with customers and attract new business. Fiscal Year 2010 The Company recognized restructuring charges of approximately $107.5 million during fiscal year 2010 primarily to rationalize the Company's global manufacturing capacity and infrastructure due to the recent macroeconomic crisis which significantly impacted our customers' businesses. The Company's restructuring activities are intended to improve its operational efficiencies by reducing excess workforce and capacity. In addition to the cost reductions, these activities will result in a further shift of manufacturing capacity to locations with higher efficiencies and, in most instances, lower costs. The costs 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 other costs associated with the exit of certain contractual arrangements due to facility closures. The Company classified approximately $92.4 million of these charges as cost of sales and approximately $15.1 million of these charges as selling, general and administrative expenses during fiscal year 2010. The components of the restructuring charges during fiscal year 2010 were as follows: First Second Third Fourth Quarter Quarter Quarter Quarter Total (In thousands) Americas: Severance $ 7,234 $ 1,765 $ 2,223 $ 5,214 $ 16,436 Long-lived asset impairment 1,004 2,154 1,326 4,484 Other exit costs 1,742 2,687 (240) 4,189 Total restructuring charges 9,980 6,606 3,309 5,214 25,109 Asia: Severance 7,579 801 1,659 1,964 12,003 Long-lived asset impairment 21,482 1,558 1,589 4,694 29,323 Other exit costs 5,519 (947) 426 (1,191) 3,807 Total restructur |
OTHER CHARGES, NET
OTHER CHARGES, NET | |
12 Months Ended
Mar. 31, 2010 | |
OTHER CHARGES, NET | 10.OTHER CHARGES, NET During fiscal year 2010, the Company recognized impairment charges totaling approximately $199.4 million related to our equity investments and notes receivable. Refer to Note 2, "Summary of Accounting Policies" for further discussion. During fiscal year 2009, the Company recognized approximately $74.1 million in charges to write-down certain notes receivable from an affiliate to the expected recoverable amount, and $37.5 million in charges for the other-than-temporary impairment of certain of the Company's investments in companies that were experiencing significant financial and liquidity difficulties. Refer to Note 2, "Summary of Accounting Policies" for further discussion. These charges were partially offset by a gain of approximately $22.3 million associated with the partial extinguishment of the Company's 1% Convertible Subordinated Notes due August 1, 2010. Refer to Note 4, "Bank Borrowings and Long-Term Debt" for additional information. During fiscal year 2008, the Company recognized approximately $61.1million in other charges related to other-than-temporary impairment and related charges on certain of the Company's investments. Of this amount, approximately $57.6million was for the impairment loss and other related charges attributable to the Company's divestiture of an equity method investment, which was liquidated in January 2008. The Company received approximately $57.4million of cash proceeds in connection with the divestiture of this investment. Refer to Note2, "Summary of Accounting Policies" for further discussion of this investment. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | |
12 Months Ended
Mar. 31, 2010 | |
RELATED PARTY TRANSACTIONS | 11.RELATED PARTY TRANSACTIONS From July 2000 through December 2001, in connection with an investment partnership, one of the Company's subsidiaries made loans to several of its executive officers to fund their contributions to the investment partnership. Each loan was evidenced by a full-recourse promissory note in favor of the Company. Interest rates on the notes ranged from 5.05% to 6.40%. The balance of these loans as of March 31, 2008, was $1.4 million and were paid off in full during fiscal year 2009. There were no other loans outstanding from the Company's executive officers as of March31, 2010 or 2009. |
BUSINESS AND ASSET ACQUISITIONS
BUSINESS AND ASSET ACQUISITIONS AND DIVESTITURES | |
12 Months Ended
Mar. 31, 2010 | |
BUSINESS AND ASSET ACQUISITIONS AND DIVESTITURES | 12.BUSINESS AND ASSET ACQUISITIONS AND DIVESTITURES Business and Asset Acquisitions The business and asset acquisitions described below were accounted for using the purchase method of accounting, and accordingly, the fair value of the net assets acquired and the results of the acquired businesses were included in the Company's consolidated financial statements from the acquisition dates forward. The Company has not finalized the allocation of the consideration for certain of its recently completed acquisitions and expects to complete these allocations within one year of the respective acquisition dates. Solectron Corporation On October 1, 2007, the Company completed its acquisition of 100% of the outstanding common stock of Solectron, a provider of value-added electronics manufacturing and supply chain services to OEMs. The acquisition of Solectron broadened the Company's service offering, strengthened its capabilities in the high-end computing, communications and networking infrastructure market segments, increased the scale of its existing operations and diversified the Company's customer and product mix. The results of Solectron's operations were included in the Company's consolidated financial results beginning on October 1, 2007, the acquisition date. The Company issued approximately 221.8 million of its ordinary shares and paid approximately $1.1 billion in cash in connection with the acquisition. The Company also assumed the Solectron Corporation 2002 Stock Plan, including all options to purchase Solectron common stock with an exercise price equal to or less than $5.00 per share of Solectron common stock outstanding under such plan. Each option assumed was converted into an option to acquire the Company's ordinary shares, and the Company assumed approximately 7.4 million fully vested and unvested options to acquire the Company's ordinary shares with exercise prices ranging between $5.45 and $14.41 per Flextronics ordinary share. Pursuant to the purchase method of accounting, the fair value of each Flextronics ordinary share issued was $11.36, which was based on an average of the Company's closing share prices for the five trading days beginning two trading days before and ending two trading days after September 27, 2007, the date on which the number of the Company's ordinary shares to be issued was known. The fair value of options assumed was estimated using the Black-Scholes option-pricing formula. As previously discussed, the Company wrote off all of its goodwill during the quarter ended December 31, 2008, which included goodwill related to the acquisition of Solectron. Subsequent to that write-off the Company reduced valuation allowances attributable to deferred tax assets acquired from Solectron. As a result, the Company reduced acquired customer-related intangibles by approximately $23.6 million. Pro Forma Financial Information (Unaudited) The following table reflects the pro forma consolidated results of operations for the period presented, as though the acquisition of Solectron had occurred as of the beginning of the period being reported on, after giving effect to certain adjustments primarily r |
SHARE REPURCHASE PLAN
SHARE REPURCHASE PLAN | |
12 Months Ended
Mar. 31, 2010 | |
SHARE REPURCHASE PLAN | 13. SHARE REPURCHASE PLAN In accordance with Share Purchase Mandates approved by the Company's shareholders at the annual general meetings of shareholders, the Company generally is authorized to repurchase up to 10% of its outstanding ordinary shares in the open market, subject to limitations under Singapore laws and covenants under the Company's debt facilities. The Company did not repurchase any shares during fiscal year 2010. During fiscal year 2009, the Company repurchased approximately 29.8 million shares under this plan for an aggregate purchase price of $260.1 million. |
SEGMENT REPORTING
SEGMENT REPORTING | |
12 Months Ended
Mar. 31, 2010 | |
SEGMENT REPORTING | 14.SEGMENT REPORTING Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company's chief operating decision maker is its Chief Executive Officer. As of March 31, 2010, the Company operates and internally manages a single operating segment, Electronics Manufacturing Services. Geographic information is as follows: Fiscal Year Ended March 31, 2010 2009 2008 (In thousands) Net sales: Asia $ 11,595,401 $ 15,220,157 $ 15,517,113 Americas 7,831,035 10,315,794 7,688,701 Europe 4,684,297 5,412,624 4,352,321 $ 24,110,733 $ 30,948,575 $ 27,558,135 As of March 31, 2010 2009 (In thousands) Long-lived assets: Asia $ 1,094,222 $ 1,232,978 Americas 633,525 657,125 Europe 390,829 443,678 $ 2,118,576 $ 2,333,781 Revenues are attributable to the country in which the product is manufactured or service is provided. For purposes of the preceding tables, "Asia" includes China, India, Indonesia, Japan, Korea, Labuan, Malaysia, Mauritius, Singapore, and Taiwan; "Americas" includes Brazil, Canada, Cayman Islands, Mexico, and the United States; "Europe" includes Austria, Belgium, the Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Israel, Italy, the Netherlands, Norway, Poland, Romania, Slovakia, Scotland, South Africa, Sweden, Turkey, Ukraine, and the United Kingdom. During fiscal years 2010 and 2009, there were no revenues attributable to Belgium, Cayman Islands, Korea, Scotland and South Africa, respectively. During fiscal years 2010, 2009 and 2008, net sales generated from Singapore, the principal country of domicile, were approximately $428.0 million, $444.2 million and $580.3 million, respectively. As of March 31, 2010 and 2009, long-lived assets held in Singapore were approximately $13.8 million and $36.5 million, respectively. During fiscal year 2010, China, Mexico, United States, and Malaysia accounted for approximately 33%, 15%, 14%, and 11% of consolidated net sales, respectively. No other country accounted for more than 10% of net sales in fiscal year 2010. As of March 31, 2010, China and Mexico accounted for approximately 42% and 17%, respectively, of consolidated long-lived assets. No other country accounted for more than 10% of long-lived assets as of March 31, 2010. During fiscal year 2009, China, United States, Malaysia and Mexico accounted for approximately 32%, 16%, 13% and 11% of consolidated net sales, respectively. No other country accounted for more than 10% of net sales in fiscal year 2009. As of March 31, 2009, China and Mexico accounted for approximately 43% and 15%, respectively, of consolidated long-lived assets. No other country accounted for more than 10% of long-lived assets as of March 31, 2009. During fiscal year 2008, China, Malaysia and the United States accounted for approximately 3 |
QUARTERLY FINANCIAL DATA
QUARTERLY FINANCIAL DATA | |
12 Months Ended
Mar. 31, 2010 | |
QUARTERLY FINANCIAL DATA | 15.QUARTERLY FINANCIAL DATA (UNAUDITED) The following table contains unaudited quarterly financial data for fiscal years 2010 and 2009. Earnings per share are computed independently for each quarter presented. Therefore, the sum of the quarterly earnings per share may not equal the total earnings per share amounts for the fiscal year. Fiscal Year Ended March 31, 2010 Fiscal Year Ended March 31, 2009 First Second Third Fourth First Second Third Fourth (In thousands, except per share amounts) Net sales $ 5,782,679 $ 5,831,761 $ 6,556,137 $ 5,940,156 $ 8,350,246 $ 8,862,516 $ 8,153,289 $ 5,582,524 Gross profit 223,995 299,580 373,052 320,915 456,767 417,461 297,339 108,863 Income (loss) before income taxes (158,046) (29,653) 105,281 65,643 129,270 37,130 (6,029,602) (267,107) Provision for (benefit from) income taxes (4,003) (49,312) 12,411 5,535 10,061 10,059 2,947 (17,858) Net income (loss) (154,043) 19,659 92,870 60,108 119,209 27,071 (6,032,549) (249,249) Earnings (loss) per share: Basic $ (0.19) $ 0.02 $ 0.11 $ 0.07 $ 0.14 $ 0.03 $ (7.45) $ (0.31) Diluted $ (0.19) $ 0.02 $ 0.11 $ 0.07 $ 0.14 $ 0.03 $ (7.45) $ (0.31) Fiscal year 2009 amounts have been restated to reflect the adoption of a new accounting standard related to accounting for convertible debt instruments that may be settled for cash upon conversion. The adoption of the new standard affected the accounting for the Company's 1% Convertible Subordinated Notes and Zero Coupon Convertible Junior Subordinated Notes. Refer to Note 2, "Summary of Accounting Policy Recent Accounting Pronouncements," of the Notes to Consolidated Financial Statements for further discussion. The Company recognized a non-cash goodwill impairment charge of approximately $5.9 billion during the third quarter of fiscal year 2009. Refer to Note 2, "Summary of Accounting Policies Goodwill and Other Intangibles" for further discussion. The Company incurred restructuring charges during all quarters of fiscal year 2010 and the first and fourth quarters of fiscal year 2009. Refer to Note9, "Restructuring Charges" for further discussion. |