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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
Form 10-Q
(Mark One)
 
☒      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 2023
 
Or
 
☐         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                   to                  
 
Commission file number 0-23354
 
FLEX LTD.
(Exact name of registrant as specified in its charter)
Singapore Not Applicable
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2 Changi South Lane,  
Singapore 486123
(Address of registrant’s principal executive offices) (Zip Code)
(65) 6876-9899
 (Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Ordinary Shares, No Par ValueFLEXThe Nasdaq Stock Market LLC

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 ☒ No ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐Non-accelerated filer☐Smaller reporting company☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
 
The number of shares of the registrant’s ordinary shares outstanding as of October 20, 2023 was 434,856,076.

FLEX LTD.
 
INDEX
 
  Page
   
 
 
 
 
 
 
   
   
 

2
PART I. FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Shareholders of Flex Ltd., Singapore

Results of Review of Interim Financial Information
 
We have reviewed the accompanying condensed consolidated balance sheet of Flex Ltd. and its subsidiaries (the “Company”) as of September 29, 2023, the related condensed consolidated statements of operations, comprehensive income, and redeemable noncontrolling interest and shareholders’ equity for the three-month and six-month periods ended September 29, 2023 and September 30, 2022, the condensed consolidated statements of cash flows for the six-month periods ended September 29, 2023 and September 30, 2022, and the related notes (collectively referred to as the “interim financial information”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of Flex Ltd. and its subsidiaries as of March 31, 2023 and the related consolidated statements of operations, comprehensive income, redeemable noncontrolling interest and shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated May 19, 2023, 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, 2023 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

The interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. 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 PCAOB, 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.

/s/ DELOITTE & TOUCHE LLP 
San Jose, California 
October 27, 2023 

3
FLEX LTD.
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
As of September 29, 2023As of March 31, 2023
(In millions, except share amounts)
(Unaudited)
ASSETS
Current assets:  
Cash and cash equivalents$2,900 $3,294 
Accounts receivable, net of allowance of $9 and $8, respectively
3,801 3,739 
Contract assets577 541 
Inventories7,166 7,530 
Other current assets1,019 917 
Total current assets15,463 16,021 
Property and equipment, net2,328 2,349 
Operating lease right-of-use assets, net609 608 
Goodwill1,337 1,343 
Other intangible assets, net275 316 
Other assets956 758 
Total assets$20,968 $21,395 
LIABILITIES, NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY
Current liabilities:  
Bank borrowings and current portion of long-term debt$— $150 
Accounts payable5,728 5,930 
Accrued payroll and benefits500 522 
Deferred revenue and customer working capital advances 2,795 3,143 
Other current liabilities1,083 1,110 
Total current liabilities10,106 10,855 
Long-term debt, net of current portion3,412 3,691 
Operating lease liabilities, non-current497 506 
Other liabilities597 637 
Total liabilities14,612 15,689 
Shareholders’ equity  
Ordinary shares, no par value; 1,500,000,000 authorized, 437,913,956 and 500,362,046 issued, and 437,913,956 and 450,122,691 outstanding, respectively
6,292 6,493 
Treasury stock, at cost; zero and 50,239,355 shares as of September 29, 2023 and March 31, 2023, respectively
— (388)
Accumulated deficit(146)(560)
Accumulated other comprehensive loss(240)(194)
Total Flex Ltd. shareholders’ equity5,906 5,351 
Noncontrolling interest450 355 
Total shareholders’ equity6,356 5,706 
Total liabilities, noncontrolling interest, and shareholders' equity$20,968 $21,395 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4
FLEX LTD.
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 Three-Month Periods EndedSix-Month Periods Ended
 September 29, 2023September 30, 2022September 29, 2023September 30, 2022
(In millions, except per share amounts)
(Unaudited)
Net sales$7,471 $7,766 $14,807 $15,113 
Cost of sales6,803 7,175 13,535 13,987 
Restructuring charges3 — 20 — 
Gross profit665 591 1,252 1,126 
Selling, general and administrative expenses272 245 542 486 
Restructuring charges— — 6 — 
Intangible amortization17 21 37 43 
Operating income376 325 667 597 
Interest, net35 47 76 96 
Other charges (income), net16 6 27 (3)
Income before income taxes325 272 564 504 
Provision for (benefit from) income taxes(81)34 (53)71 
Net income406 238 617 433 
Net income attributable to noncontrolling interest and redeemable noncontrolling interest178 6 203 12 
Net income attributable to Flex Ltd.$228 $232 $414 $421 
Earnings per share attributable to the shareholders of Flex Ltd.:  
Basic$0.51 $0.51 $0.93 $0.92 
Diluted$0.51 $0.50 $0.92 $0.91 
Weighted-average shares used in computing per share amounts:  
Basic443 455 445 457 
Diluted448 460 452 464 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

FLEX LTD.
 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
 Three-Month Periods EndedSix-Month Periods Ended
 September 29, 2023September 30, 2022September 29, 2023September 30, 2022
(In millions)
(Unaudited)
Net income$406 $238 $617 $433 
Other comprehensive income (loss), net of tax:  
Foreign currency translation adjustments(38)(92)(47)(163)
Unrealized gain (loss) on derivative instruments and other(33)(6)1 (7)
Comprehensive income$335 $140 $571 $263 
Comprehensive income attributable to noncontrolling interest and redeemable noncontrolling interest178 6 203 12 
Comprehensive income attributable to Flex Ltd.$157 $134 $368 $251 

The accompanying notes are an integral part of these condensed consolidated financial statements.

6
FLEX LTD.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY
Redeemable
Noncontrolling
Interest		Ordinary SharesAccumulated Other Comprehensive LossTotal
Three Months Ended September 29, 2023AmountShares
Outstanding		AmountAccumulated
Deficit		Unrealized Gain
(Loss) on
Derivative
Instruments
and Other		Foreign
Currency
Translation
Adjustments		Total
Accumulated
Other
Comprehensive
Loss		Total
Flex Ltd.
Shareholders'
Equity		Noncontrolling
Interest		Shareholders'
Equity
(In millions)
Unaudited
BALANCE AT JUNE 30, 2023$— 449 $5,949 $(374)$20 $(189)$(169)$5,406 $380 $5,786 
Repurchase of Flex Ltd. ordinary shares at cost— (11)(309)— — — — (309)— (309)
Nextracker follow on sales and related transactions— — 607 — — — — 607 (108)499 
Net income— — — 228 — — — 228 178 406 
Stock-based compensation— — 45 — — — — 45 — 45 
Total other comprehensive loss— — — — (33)(38)(71)(71)— (71)
BALANCE AT SEPTEMBER 29, 2023$— 438 $6,292 $(146)$(13)$(227)$(240)$5,906 $450 $6,356 
Redeemable
Noncontrolling
Interest		Ordinary SharesAccumulated Other Comprehensive LossTotal
Six Months Ended September 29, 2023AmountShares
Outstanding		AmountAccumulated
Deficit		Unrealized Gain
(Loss) on
Derivative
Instruments
and Other		Foreign
Currency
Translation
Adjustments		Total
Accumulated
Other
Comprehensive
Loss		Total
Flex Ltd.
Shareholders'
Equity		Noncontrolling
Interest		Shareholders'
Equity
(In millions)
Unaudited
BALANCE AT MARCH 31, 2023$— 450 $6,105 $(560)$(14)$(180)$(194)$5,351 $355 $5,706 
Repurchase of Flex Ltd. ordinary shares at cost— (20)(506)— — — — (506)— (506)
Issuance of Flex Ltd. vested shares under restricted share unit awards— 8 — — — — — — — — 
Nextracker follow on sales and related transactions— — 607 — — — — 607 (108)499 
Net income— — — 414 — — — 414 203 617 
Stock-based compensation— — 86 — — — — 86 — 86 
Total other comprehensive gains (loss)— — — — 1 (47)(46)(46)— (46)
BALANCE AT SEPTEMBER 29, 2023$— 438 $6,292 $(146)$(13)$(227)$(240)$5,906 $450 $6,356 
7


Redeemable
Noncontrolling
Interest		Ordinary SharesAccumulated Other Comprehensive LossTotal
Three Months Ended September 30, 2022AmountShares
Outstanding		AmountAccumulated
Deficit		Unrealized
Loss on
Derivative
Instruments
and Other		Foreign
Currency
Translation
Adjustments		Total
Accumulated
Other
Comprehensive
Loss		Total
Flex Ltd.
Shareholders'
Equity		Noncontrolling
Interest		Shareholders'
Equity
(In millions)
Unaudited
BALANCE AT JULY 1, 2022$84 458 $5,509 $(1,164)$(67)$(187)$(254)$4,091 $— $4,091 
Repurchase of Flex Ltd. ordinary shares at cost— (4)(72)— — — — (72)— (72)
Net income6 — — 232 — — — 232 — 232 
Stock-based compensation— — 27 — — — — 27 — 27 
Total other comprehensive loss— — — — (6)(92)(98)(98)— (98)
BALANCE AT SEPTEMBER 30, 2022$90 454 $5,464 $(932)$(73)$(279)$(352)$4,180 $— $4,180 

Redeemable
Noncontrolling
Interest		Ordinary SharesAccumulated Other Comprehensive LossTotal
Six Months Ended September 30, 2022AmountShares
Outstanding		AmountAccumulated
Deficit		Unrealized
Loss on
Derivative
Instruments
and Other		Foreign
Currency
Translation
Adjustments		Total
Accumulated
Other
Comprehensive
Loss		Total
Flex Ltd.
Shareholders'
Equity		Noncontrolling
Interest		Shareholders'
Equity
(In millions)
Unaudited
BALANCE AT MARCH 31, 2022$78 461 $5,664 $(1,353)$(66)$(116)$(182)$4,129 $— $4,129 
Repurchase of Flex Ltd. ordinary shares at cost— (15)(253)— — — — (253)— (253)
Issuance of Flex Ltd. vested shares under restricted share unit awards— 8 — — — — — — — — 
Net income12 — — 421 — — — 421 — 421 
Stock-based compensation— — 53 — — — — 53 — 53 
Total other comprehensive loss— — — — (7)(163)(170)(170)— (170)
BALANCE AT SEPTEMBER 30, 2022$90 454 $5,464 $(932)$(73)$(279)$(352)$4,180 $— $4,180 

The accompanying notes are an integral part of these condensed consolidated financial statements.
8
FLEX LTD.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 Six-Month Periods Ended
 September 29, 2023September 30, 2022
(In millions)
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income$617 $433 
Depreciation, amortization and other impairment charges260 247 
Changes in working capital and other, net(514)(539)
Net cash provided by operating activities363 141 
CASH FLOWS FROM INVESTING ACTIVITIES:  
Purchases of property and equipment(319)(296)
Proceeds from the disposition of property and equipment19 18 
Acquisition of businesses, net of cash acquired— 4 
Other investing activities, net3 3 
Net cash used in investing activities(297)(271)
CASH FLOWS FROM FINANCING ACTIVITIES:  
Proceeds from bank borrowings and long-term debt2 — 
Repayments of bank borrowings and long-term debt(398)(39)
Payments for repurchases of ordinary shares(506)(253)
Proceeds from issuances of Nextracker shares552 — 
Payment for purchase of Nextracker LLC units from TPG(57)— 
Other financing activities, net(53)(4)
Net cash used in financing activities(460)(296)
Effect of exchange rates on cash and cash equivalents— (85)
Net decrease in cash and cash equivalents(394)(511)
Cash and cash equivalents, beginning of period3,294 2,964 
Cash and cash equivalents, end of period$2,900 $2,453 
Non-cash investing activities:  
Unpaid purchases of property and equipment$117 $181 
Right-of-use assets obtained in exchange of operating lease liabilities77 56 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

9
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
1.  ORGANIZATION OF THE COMPANY AND BASIS OF PRESENTATION
Organization of the Company
Flex Ltd. ("Flex" or the "Company") is the diversified manufacturing partner of choice that helps market-leading brands design, build and deliver innovative products that improve the world. Through the collective strength of a global workforce across approximately 30 countries with responsible, sustainable operations, Flex supports the entire product lifecycle with advanced manufacturing solutions and operates one of the most trusted global supply chains. The Company also provides additional value to customers through a broad array of services, including design and engineering, component services, rapid prototyping, fulfillment, and circular economy solutions. Flex supports a diverse set of industries including cloud, communications, enterprise, automotive, industrial, consumer devices, lifestyle, healthcare, and energy. As of September 29, 2023, Flex's three operating and reportable segments were as follows:
•Flex Agility Solutions ("FAS"), which is comprised of the following end markets:
◦Communications, Enterprise and Cloud, including data infrastructure, edge infrastructure and communications infrastructure
◦Lifestyle, including appliances, consumer packaging, floorcare, micro mobility and audio
◦Consumer Devices, including mobile and high velocity consumer devices.
•Flex Reliability Solutions ("FRS"), which is comprised of the following end markets:
◦Automotive, including next generation mobility, autonomous, connectivity, electrification, and smart technologies
◦Health Solutions, including medical devices, medical equipment and drug delivery
◦Industrial, including capital equipment, industrial devices, and renewables and grid edge.
•Nextracker, the leading provider of intelligent, integrated solar tracker and software solutions used in utility-scale and ground-mounted distributed generation solar projects around the world. Nextracker's products enable solar panels to follow the sun’s movement across the sky and optimize plant performance.
The Company's service offerings include a comprehensive range of value-added design and engineering services that are tailored to the various markets and needs of its customers. Other focused service offerings relate to manufacturing (including enclosures, metals, plastic injection molding, precision plastics, machining, and mechanicals), system integration and assembly and test services, materials procurement, inventory management, logistics and after-sales services (including product repair, warranty services, re-manufacturing and maintenance), supply chain management software solutions, and component product offerings (including flexible printed circuit boards and power adapters and chargers). The Company also provides intelligent, integrated solar tracker and software solutions used in utility-scale and ground-mounted distributed generation solar projects around the world.
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 Company’s audited consolidated financial statements as of and for the fiscal year ended March 31, 2023 contained in the Company’s Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. Operating results for the three and six-month periods ended September 29, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2024. Certain prior period amounts in the condensed consolidated financial statements, as well as in the Notes thereto, have been reclassified to conform to the current presentation.
The first quarters for fiscal years 2024 and 2023 ended on June 30, 2023, which is comprised of 91 days in the period, and July 1, 2022, which is comprised of 92 days in the period, respectively. The second quarters for fiscal years 2024 and 2023 ended on September 29, 2023 and September 30, 2022, respectively, which are comprised of 91 days in both periods.
The accompanying unaudited condensed consolidated financial statements include the accounts of Flex and its subsidiaries, after elimination of intercompany accounts and transactions. The Company consolidates subsidiaries and investments in entities in which the Company has a controlling interest. A controlling financial interest may exist in variable interest entities (“VIEs”),
10
through governance provisions and arrangements to provide services to VIEs. The Company is required to consolidate a VIE of which it is the primary beneficiary. To determine if the Company is the primary beneficiary, the Company evaluates whether it has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb the losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company evaluates its relationships with its VIEs on an ongoing basis to determine whether it continues to be the primary beneficiary. The condensed consolidated financial statements reflect the assets and liabilities of VIEs that are consolidated. For the consolidated subsidiaries in which the Company owns less than 100%, the Company recognizes a noncontrolling interest for the ownership of the noncontrolling owners. As of September 29, 2023, we presented noncontrolling interest as permanent equity in the condensed balance sheets, reflecting the equity held by other parties. The amount of consolidated net income attributable to Flex Ltd. and the noncontrolling interest and redeemable noncontrolling interest are presented in the condensed consolidated statements of operations.
Use of Estimates
The preparation of financial statements in conformity with U.S. 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, and intangible assets; valuation of goodwill; valuation of investments in privately-held companies; asset impairments; fair values of financial instruments, notes receivable and derivative instruments; restructuring charges; contingencies; warranty provisions; incremental borrowing rates in determining the present value of lease payments; accruals for potential price adjustments arising from customer contracts; fair values of assets obtained and liabilities assumed in business combinations; and the fair values of stock options and restricted share unit awards granted under the Company's stock-based compensation plans. Due to the geopolitical conflicts (including the Russian invasion of Ukraine and the Israel-Hamas war), there has been and will continue to be uncertainty and disruption in the global economy and financial markets. The Company has made estimates and assumptions taking into consideration certain possible impacts due to the Russian invasion of Ukraine and the Israel-Hamas war. These estimates may change, as new events occur, and additional information is obtained. Actual results may differ from previously estimated amounts, and such differences may be material to the condensed consolidated financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period they occur.
Recently Adopted Accounting Pronouncement
In September 2022, the FASB issued ASU 2022-04 "Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations", which requires a buyer in a supplier finance program to disclose sufficient information about the program to allow a user of financial statements to understand the program's nature, activity during the period, changes from period to period, and potential magnitude. To achieve that objective, the buyer should disclose qualitative and quantitative information about its supplier finance programs. The amendments in this update do not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance program. The guidance is effective for the Company beginning in the first quarter of fiscal year 2024, except for the amendment on rollforward information which is effective in fiscal year 2025, with early adoption permitted. The Company adopted the guidance retrospectively during the first quarter of fiscal year 2024, including a rollforward of changes in those obligations, with immaterial impacts on its condensed consolidated financial statements.
The Company has four supplier finance programs, all of which have substantially similar characteristics, with various financial institutions that act as the paying agent for certain payables of the Company. The Company established these programs through agreements with the financial institutions to enable more efficient payment processing to our suppliers while also providing our suppliers a potential source of liquidity to the extent they choose to sell their receivables to the financial institutions in advance of the due date. Our suppliers’ participation in the programs is voluntary, the Company is not involved in negotiations of the suppliers’ arrangements with the financial institutions to sell their receivables, and our rights and obligations to our suppliers are not impacted by our suppliers’ decisions to sell amounts under these programs. Under these supplier finance programs, the Company pays the financial institutions the stated amount of confirmed invoices from its participating suppliers on the original maturity dates of the invoices. All payment terms are short-term in nature and are not dependent on whether the suppliers participate in the supplier finance programs or if the suppliers elect to receive early payment from the financial institutions. No guarantees are provided by the Company under the supplier finance programs and the Company incurs no costs related to the programs. We have no economic interest in a supplier’s decision to participate in the supplier finance programs.
Obligations under these programs are classified within accounts payable on the condensed consolidated balance sheets, with the associated payments reflected in the operating activities section of the condensed consolidated statement of cash flows. The
11
rollforward of the Company's outstanding obligations confirmed as valid under its supplier finance programs for the six-month period ended September 29, 2023 is as follows.
Six-Month Period Ended
September 29, 2023
(In millions)
Confirmed obligations outstanding at the beginning of the period$275 
Invoices confirmed during the period605 
Confirmed invoices paid during the period(556)
Foreign currency exchange impact— 
Confirmed obligations outstanding at the end of the period $324 
2.  BALANCE SHEET ITEMS 
Inventories 
The components of inventories, net of applicable lower of cost and net realizable value write-downs, were as follows: 
As of September 29, 2023As of March 31, 2023
 (In millions)
Raw materials$5,658 $6,140 
Work-in-progress707 709 
Finished goods801 681 
 $7,166 $7,530 
Goodwill and Other Intangible Assets
During the six-month period ended September 29, 2023, there was no material activity in the Company's goodwill account for each of its reportable segments, other than foreign currency translation adjustments of $6 million, which primarily impacted the FRS segment.
The components of acquired intangible assets are as follows:
 As of September 29, 2023As of March 31, 2023
Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Amount		Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Amount
 (In millions)
Intangible assets:      
Customer-related intangibles$345 $(199)$146 $373 $(204)$169 
Licenses and other intangibles293 (164)129 299 (152)147 
Total$638 $(363)$275 $672 $(356)$316 
The gross carrying amounts of intangible assets are removed when fully amortized.
12
The estimated future annual amortization expense for intangible assets is as follows:
Fiscal Year Ending March 31,Amount
 (In millions)
2024 (1)$33 
202562 
202642 
202735 
202827 
Thereafter76 
Total amortization expense$275 
____________________________________________________________
(1)Represents estimated amortization for the remaining fiscal six-month period ending March 31, 2024. 
Customer Working Capital Advances
Customer working capital advances were $2.0 billion and $2.3 billion, as of September 29, 2023 and March 31, 2023, respectively. The customer working capital advances are not interest-bearing, do not generally have fixed repayment dates and are generally reduced as the underlying working capital is consumed in production or the customer working capital advance agreement is terminated.
Other Current Liabilities
Other current liabilities include customer-related accruals of $242 million and $313 million as of September 29, 2023 and March 31, 2023, respectively.
3.  REVENUE 
Contract Balances
A contract asset is recognized when the Company has recognized revenue, but not issued an invoice for payment. Contract assets are classified separately on the condensed consolidated balance sheets and transferred to receivables when rights to payment become unconditional and invoiced.
A contract liability is recognized when the Company receives payments in advance of the satisfaction of performance. Contract liabilities, identified as deferred revenue, were $904 million and $885 million as of September 29, 2023 and March 31, 2023, respectively, of which $796 million and $795 million, respectively, is included in deferred revenue and customer working capital advances under current liabilities.
Disaggregation of Revenue
The following table presents the Company’s revenue disaggregated based on timing of transfer, point in time or over time, for the three and six-month periods ended September 29, 2023 and September 30, 2022, respectively.
13
Three-Month Periods EndedSix-Month Periods Ended
September 29, 2023September 30, 2022September 29, 2023September 30, 2022
Timing of Transfer(In millions)
FAS
Point in time$3,280 $3,787 $6,716 $7,566 
Over time338 217 503 429 
Total 3,618 4,004 7,219 7,995 
FRS
Point in time3,144 3,110 6,276 5,900 
Over time170 189 329 368 
Total 3,314 3,299 6,605 6,268 
Nextracker
Point in time21 10 27 33 
Over time552 463 1,026 835 
Total573 473 1,053 868 
Intersegment eliminations
Point in time(34)(10)(70)(18)
Over time— — — — 
Total(34)(10)(70)(18)
Flex
Point in time6,411 6,897 12,949 13,481 
Over time1,060 869 1,858 1,632 
Total $7,471 $7,766 $14,807 $15,113 

4.  SHARE-BASED COMPENSATION
Equity Compensation Plans
Flex historically maintains stock-based compensation plans at a corporate level. The Company's primary plan used for granting equity compensation awards is the Company's 2017 Equity Incentive Plan (the "2017 Plan"). During the fiscal year 2023, Nextracker granted equity compensation awards to Nextracker employees under the 2022 Nextracker Inc. Equity Incentive Plan (the "2022 Nextracker Plan"), which is administered by Nextracker, a majority-owned subsidiary of the Company.
Share-Based Compensation Expense
The following table summarizes the Company’s share-based compensation expense for all equity incentive plans:
 Three-Month Periods EndedSix-Month Periods Ended
 September 29, 2023September 30, 2022September 29, 2023September 30, 2022
 (In millions)
Cost of sales$10 $7 $19 $14 
Selling, general and administrative expenses35 20 67 39 
Total share-based compensation expense$45 $27 $86 $53 
Total number of options outstanding and exercisable were immaterial as of September 29, 2023. All options have been fully expensed as of September 29, 2023.
The 2017 Plan
During the six-month period ended September 29, 2023, the Company granted 4.9 million restricted share unit ("RSU") awards. Of this amount, approximately 3 million are plain-vanilla unvested RSU awards that vest over a period of three years, with no performance or market conditions, and with an average grant date price of $26.82 per award. In addition, approximately 0.4 million unvested shares represent the target amount of grants made to certain key employees whereby vesting is contingent on certain performance conditions, and with an average grant date price of $26.72 per award. The number of shares contingent on performance conditions that ultimately will vest will range from zero up to a maximum of approximately 0.8 million based
14
on a measurement of the Company's adjusted earnings per share growth over certain specified periods, and will cliff vest after a period of three years, to the extent such performance conditions have been met. Further, approximately 0.4 million unvested shares represent the target amount of grants made to certain key employees whereby vesting is contingent on certain market conditions. The average grant date fair value of these awards contingent on certain market conditions was estimated to be $35.64 per award and was calculated using a Monte Carlo simulation. The number of shares contingent on market conditions that ultimately will vest will range from zero up to a maximum of approximately 0.8 million based on a measurement of the percentile rank of the Company’s total shareholder return over certain specified periods against the Company's peer companies, and will cliff vest after a period of three years, to the extent such market conditions have been met. Finally, the remaining balance of approximately 1.2 million represents the number of shares issued upon vesting of RSU awards above target levels based on the achievement of certain market conditions for awards granted in the fiscal year 2021. These awards were issued and immediately vested in accordance with the terms and conditions of the underlying awards.
As of September 29, 2023, approximately 12 million unvested RSU awards under the 2017 plan were outstanding, of which vesting for a targeted amount of 1.2 million shares is contingent on meeting certain market conditions, and vesting for a targeted amount of 1.2 million shares is contingent on meeting certain performance conditions. The number of shares tied to market conditions that will ultimately be issued can range from zero to 2.4 million based on the achievement levels. The number of shares tied to performance conditions that will ultimately be issued can range from zero to 2.4 million based on the achievement levels. During the six-month period ended September 29, 2023, 2.3 million shares vested in connection with the awards with market conditions granted in fiscal year 2021.
As of September 29, 2023, total unrecognized compensation expense related to unvested RSU awards under the 2017 Plan, was approximately $203 million, and will be recognized over a weighted-average remaining vesting period of 2.2 years.
The 2022 Nextracker Plan
During the six-month period ended September 29, 2023, Nextracker awarded 2.0 million equity-based compensation awards to its employees under the 2022 Nextracker Plan, which included approximately 0.5 million option awards, 1.1 million RSU ("NRSU") awards and 0.4 million performance-based restricted share unit ("NPSU") awards. Vesting for the awards granted under the 2022 Nextracker Plan is contingent upon continued employee service and also may be subject to certain performance conditions.
As of September 29, 2023, approximately 6.5 million unvested options awards, NRSU awards, and NPSU awards under the 2022 Nextracker Plan were outstanding, of which vesting for a targeted amount of approximately 4.0 million shares is contingent on meeting certain performance conditions. 
Total unrecognized compensation expense related to unvested awards under the 2022 Nextracker Plan was approximately $101 million, which is expected to be recognized over a weighted-average period of approximately 2.5 years. Approximately $25 million of expense was recognized for equity-based compensation awards granted under the 2022 Nextracker Plan for the six-month period ended September 29, 2023.
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5.  EARNINGS PER SHARE 
The following table reflects basic weighted-average ordinary shares outstanding and diluted weighted-average ordinary share equivalents used to calculate basic and diluted earnings per share attributable to the shareholders of Flex: 
 Three-Month Periods EndedSix-Month Periods Ended
 September 29, 2023September 30, 2022September 29, 2023September 30, 2022
 (In millions, except per share amounts)
Basic earnings per share attributable to the shareholders of Flex Ltd.
Net income$406 $238 $617 $433 
Net income attributable to noncontrolling interest and redeemable noncontrolling interest178 6 203 12 
Net income attributable to Flex Ltd.$228 $232 $414 $421 
Shares used in computation:
Weighted-average ordinary shares outstanding443 455 445 457 
Basic earnings per share$0.51 $0.51 $0.93 $0.92 
Diluted earnings per share attributable to the shareholders of Flex Ltd.  
Net income$406 $238 $617 $433 
Net income attributable to noncontrolling interest and redeemable noncontrolling interest178 6 203 12 
Net income attributable to Flex Ltd.$228 $232 $414 $421 
Shares used in computation:  
Weighted-average ordinary shares outstanding443 455 445 457 
Weighted-average ordinary share equivalents from RSU awards (1)5 5 7 7 
Weighted-average ordinary shares and ordinary share equivalents outstanding448 460 452 464 
Diluted earnings per share$0.51 $0.50 $0.92 $0.91 
____________________________________________________________
(1)An immaterial amount of RSU awards and 2.1 million RSU awards for the three and six-month periods ended September 29, 2023, respectively, and an immaterial amount of RSU awards and 3.4 million RSU awards for the three and six-month periods ended September 30, 2022, respectively, were excluded from the computation of diluted earnings per share due to their anti-dilutive impact on the weighted-average ordinary share equivalents.
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6.  BANK BORROWINGS AND LONG-TERM DEBT
Bank borrowings and long-term debt as of September 29, 2023 and March 31, 2023 are as follows:
 Maturity DateAs of September 29, 2023As of March 31, 2023
(In millions)
4.750% Notes (1)
June 2025$591 $599 
3.750% Notes (1)
February 2026684 686 
6.000% Notes (1)
January 2028397 396 
4.875% Notes (1)
June 2029657 658 
4.875% Notes (1)
May 2030683 685 
JPY Term Loan (2)April 2024— 253 
Delayed Draw Term Loan (3)November 2023— 150 
Nextracker Term LoanFebruary 2028150 150 
3.600% HUF Bonds
December 2031268 284 
Other1 1 
Debt issuance costs(19)(21)
3,412 3,841 
Current portion, net of debt issuance costs— (150)
Non-current portion$3,412 $3,691 
(1)The notes are carried at the principal amount of each note, less any unamortized discount or premium and unamortized debt issuance costs. These notes represent the Company’s senior unsecured obligations and hold equal ranking with all other existing and future senior unsecured debt obligations.
(2)During the first quarter of fiscal year 2024, the Company repaid the JPY Term Loan for approximately $241 million. In addition, the Company also settled the associated USD JPY cross currency swap for approximately $60 million.
(3)During the second quarter of fiscal year 2024, the Company repaid the Delayed Draw Term Loan for approximately $150 million.
The weighted-average interest rate for the Company's long-term debt was 4.6% and 4.7% as of September 29, 2023 and March 31, 2023, respectively.
Scheduled repayments of the Company's bank borrowings and long-term debt as of September 29, 2023 are as follows:
Fiscal Year Ending March 31,Amount
(In millions)
2024 (1)$— 
2025— 
20261,276 
2027— 
2028547 
Thereafter1,608 
Total$3,431 
(1)Represents estimated repayments for the remaining fiscal six-month period ending March 31, 2024.
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7.  INTEREST, NET 
Interest, net for the three and six-month periods ended September 29, 2023 and September 30, 2022 are primarily composed of the following:
 Three-Month Periods EndedSix-Month Periods Ended
 September 29, 2023September 30, 2022September 29, 2023September 30, 2022
 (In millions)
Interest expenses on debt obligations$42 $44 $89 $87 
Interest income(18)(5)(36)(9)
AR sale program related expenses11 8 23 13 
8.  FINANCIAL INSTRUMENTS
Foreign Currency Contracts
The Company enters into short-term and long-term foreign currency derivative contracts, including forward, swap, and options contracts, to hedge only those currency exposures associated with certain assets and liabilities, primarily accounts receivable, accounts payable, debt, and cash flows denominated in non-functional currencies. Gains and losses on the Company's derivative 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 derivative contracts is minimized since the contracts are with large financial institutions and, accordingly, fair value adjustments related to the credit risk of the counterparty financial institutions were not material.
As of September 29, 2023, the aggregate notional amount of the Company’s outstanding foreign currency derivative contracts was $11.3 billion as summarized below: 
 Notional Contract Value in USD
CurrencyBuySell
 
Cash Flow Hedges 
HUF$439 $— 
MXN534 — 
Other577 29 
 1,550 29 
Other Foreign Currency Contracts
CNY844 360 
EUR2,237 2,475 
GBP232 346 
MXN643 508 
MYR524 355 
Other586 630 
 5,066 4,674 
Total Notional Contract Value in USD$6,616 $4,703 
As of September 29, 2023, the fair value of the Company’s short-term foreign currency contracts was included in other current assets or other current liabilities, as applicable, in the condensed consolidated balance sheets. Certain of these contracts are designed to economically hedge the Company’s exposure to monetary assets and liabilities denominated in a non-functional currency and are not accounted for as hedges under the accounting standards. Accordingly, changes in the fair value of these instruments are recognized in earnings during the period of change as a component of other charges (income), net in the condensed consolidated statements of operations. As of September 29, 2023 and March 31, 2023, the Company also has included net deferred gains and losses in accumulated other comprehensive loss, a component of shareholders’ equity in the condensed consolidated balance sheets, relating to changes in fair value of its foreign currency contracts that are accounted for as cash flow hedges. Deferred loss was $7 million as of September 29, 2023, and is expected to be recognized primarily as a component of cost of sales in the condensed consolidated statements of operations over the next twelve-month period, except
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for the USD HUF cross currency swaps.
The Company entered into USD HUF cross currency swaps in December 2021 to hedge the foreign currency risk on the HUF bonds due December 2031, and the fair value of the cross currency swaps was included in current and long-term other liabilities as of September 29, 2023 and March 31, 2023. The changes in fair value of the USD HUF cross currency swaps are reported in accumulated other comprehensive loss. In addition, corresponding amounts are reclassified out of accumulated other comprehensive loss to other charges (income), net to offset the remeasurement of the underlying HUF bond principal, which also impacts the same line.
The following table presents the fair value of the Company’s derivative instruments utilized for foreign currency risk management purposes:
 Fair Values of Derivative Instruments
 Asset DerivativesLiability Derivatives
  Fair Value Fair Value
 Balance Sheet
Location		September 29,
2023		March 31,
2023		Balance Sheet
Location		September 29,
2023		March 31,
2023
 (In millions)
Derivatives designated as hedging instruments      
Foreign currency contractsOther current assets$20 $46 Other current liabilities$33 $22 
Foreign currency contractsOther assets$— $— Other liabilities$31 $88 
Derivatives not designated as hedging instruments      
Foreign currency contractsOther current assets$46 $26 Other current liabilities$59 $19 
The Company has financial instruments subject to master netting arrangements, which provide for the net settlement of all contracts with certain counterparties. The Company does not offset fair value amounts for assets and liabilities recognized for derivative instruments under these arrangements, as such, the asset and liability balances presented in the table above reflect the gross amounts of derivatives in the condensed consolidated balance sheets. The impact of netting derivative assets and liabilities is not material to the Company’s financial position for any of the periods presented. 
9.  ACCUMULATED OTHER COMPREHENSIVE LOSS 
The changes in accumulated other comprehensive loss by component, net of tax, are as follows: 
Three-Month Periods Ended
September 29, 2023September 30, 2022
 Unrealized gain
(loss) on derivative
instruments and
other		Foreign currency
translation
adjustments		TotalUnrealized gain
(loss) on derivative
instruments and
other		Foreign currency
translation
adjustments		Total
(In millions)
Beginning balance$20 $(189)$(169)$(67)$(187)$(254)
Other comprehensive loss before reclassifications(38)(38)(76)(70)(92)(162)
Net loss reclassified from accumulated other comprehensive loss5 — 5 64 — 64 
Net current-period other comprehensive loss(33)(38)(71)(6)(92)(98)
Ending balance$(13)$(227)$(240)$(73)$(279)$(352)
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Six-Month Periods Ended
September 29, 2023September 30, 2022
Unrealized gain
(loss) on derivative
instruments and
other		Foreign currency
translation
adjustments		TotalUnrealized gain
(loss) on derivative
instruments and
other		Foreign currency
translation
adjustments		Total
(In millions)
Beginning balance$(14)$(180)$(194)$(66)$(116)$(182)
Other comprehensive gain (loss) before reclassifications63 (47)16 (149)(163)(312)
Net (gains) loss reclassified from accumulated other comprehensive loss(62)— (62)142 — 142 
Net current-period other comprehensive gains (loss)1 (47)(46)(7)(163)(170)
Ending balance$(13)$(227)$(240)$(73)$(279)