Quick10K

Flex

Price	10.52		EPS	-0
Shares	513		P/E	-30
MCap	5,401		P/FCF	-2
Net Debt	1,188		EBIT	-89
TEV	6,590		TEV/EBIT	-74
TTM 2019-09-27, in MM, except price, ratios

10-Q	2020-06-26	Filed 2020-08-05 Print
10-K	2020-03-31	Filed 2020-05-28 Print
10-Q	2019-12-31	Filed 2020-01-31 Print
10-Q	2019-09-27	Filed 2019-10-30 Print
10-Q	2019-06-28	Filed 2019-07-26 Print
10-K	2019-03-31	Filed 2019-05-21 Print
10-Q	2018-12-31	Filed 2019-02-06 Print
10-Q	2018-09-28	Filed 2018-11-02 Print
10-Q	2018-06-29	Filed 2018-08-02 Print
10-K	2018-03-31	Filed 2018-06-14 Print
10-Q	2017-12-31	Filed 2018-01-29 Print
10-Q	2017-09-29	Filed 2017-10-30 Print
10-Q	2017-06-30	Filed 2017-08-01 Print
10-K	2017-03-31	Filed 2017-05-16 Print
10-Q	2016-12-31	Filed 2017-01-27 Print
10-Q	2016-09-30	Filed 2016-10-31 Print
10-Q	2016-07-01	Filed 2016-07-27 Print
10-K	2016-03-31	Filed 2016-05-20 Print
10-Q	2015-12-31	Filed 2016-02-01 Print
10-Q	2015-09-25	Filed 2015-10-26 Print
10-Q	2015-06-26	Filed 2015-07-27 Print
10-K	2015-03-31	Filed 2015-05-21 Print
10-Q	2014-12-31	Filed 2015-01-29 Print
10-Q	2014-09-26	Filed 2014-10-30 Print
10-Q	2014-06-27	Filed 2014-07-28 Print
10-K	2014-03-31	Filed 2014-05-20 Print
10-Q	2013-12-31	Filed 2014-01-31 Print
10-Q	2013-06-28	Filed 2013-08-02 Print
10-K	2013-03-31	Filed 2013-05-28 Print
10-Q	2012-12-31	Filed 2013-02-04 Print
10-Q	2012-10-27	Filed 2013-11-01 Print
10-Q	2012-09-28	Filed 2012-10-26 Print
10-Q	2012-06-29	Filed 2012-07-30 Print
10-K	2012-03-31	Filed 2012-05-29 Print
10-Q	2011-12-31	Filed 2012-02-02 Print
10-Q	2011-09-30	Filed 2011-11-04 Print
10-Q	2011-07-01	Filed 2011-08-09 Print
10-K	2011-03-31	Filed 2011-05-23 Print
10-Q	2010-12-31	Filed 2011-02-02 Print
10-Q	2010-10-01	Filed 2010-11-03 Print
10-Q	2010-07-02	Filed 2010-08-05 Print
10-K	2010-03-31	Filed 2010-05-24 Print
10-Q	2009-12-31	Filed 2010-02-02 Print

8-K	2020-08-17	Enter Agreement, Other Events, Exhibits
8-K	2020-08-07	Officers, Shareholder Vote, Exhibits
8-K	2020-08-05	Officers, Regulation FD, Exhibits
8-K	2020-07-30	Earnings, Exhibits
8-K	2020-06-03
8-K	2020-06-03
8-K	2020-05-12
8-K	2020-05-07
8-K	2020-04-02
8-K	2020-03-29
8-K	2020-03-09
8-K	2020-01-30
8-K	2019-11-07
8-K	2019-10-24
8-K	2019-08-20
8-K	2019-08-08
8-K	2019-07-25
8-K	2019-06-06
8-K	2019-06-04
8-K	2019-05-30
8-K	2019-05-30
8-K	2019-05-30
8-K	2019-04-30
8-K	2019-03-05
8-K	2019-02-11
8-K	2019-02-05
8-K	2019-01-30
8-K	2019-01-17
8-K	2018-12-24
8-K	2018-12-07
8-K	2018-11-14
8-K	2018-10-25
8-K	2018-10-22
8-K	2018-08-16
8-K	2018-07-26
8-K	2018-07-02
8-K	2018-06-25
8-K	2018-04-26
8-K	2018-03-31
8-K	2018-03-26
8-K	2018-01-25
8-K	2018-01-08

top bs is cf

Balance Sheet	Income Statement	Cash Flow
CopyHistoryView Assets, Equity	CopyHistoryView Rev, G Profit, Net Income	CopyHistoryView Ops, Inv, Fin

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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Organization of the Company

Flex Ltd. ("Flex" or the "Company") was incorporated in the Republic of Singapore in May 1990. The Company's operations have expanded over the years through a combination of organic growth and acquisitions. The Company is the manufacturing partner of choice that helps a diverse customer base design and build products that improve the world. Through the collective strength of a global workforce across approximately 30 countries and responsible, sustainable operations, the Company delivers technology innovation, supply chain, and manufacturing solutions to diverse industries and end markets. In the first quarter of fiscal year 2021, the Company made certain changes in its organizational structure as part of its strategy to further drive growth and productivity with two focused delivery models. As a result, beginning in the first quarter of fiscal year 2021, the Company reports its financial performance based on two operating and reportable segments:

•Flex Agility Solutions ("FAS"), which is comprised of the following end markets:

◦Consumer Devices, including mobile and high velocity consumer devices;

◦Lifestyle, including appliances, consumer packaging, floorcare, micro mobility and audio; and

◦Communications, Enterprise and Cloud ("CEC"), including data infrastructure, edge infrastructure and communication infrastructure.

•Flex Reliability Solutions ("FRS"), which is comprised of the following end markets:

◦Automotive, including autonomous, connectivity, electrification, and smart technologies;

◦Health Solutions, including medical devices, medical equipment and drug delivery; and

◦Industrial, including capital equipment, industrial devices, renewable and grid edge, and power systems.

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).

Basis of Presentation

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, 2020 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 presentation have been included. Operating results for the three-month periods ended June 26, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2021. 

The first quarters for fiscal years 2021 and 2020 ended on June 26, 2020, which is comprised of 87 days in the period, and June 28, 2019, which is comprised of 89 days in the period, respectively.

The accompanying unaudited condensed consolidated financial statements include the accounts of Flex and its majority-owned subsidiaries, after elimination of intercompany accounts and transactions. The Company consolidates its majority-owned subsidiaries and investments in entities in which the Company has a controlling interest. For the consolidated majority-owned subsidiaries in which the Company owns less than 100%, the Company recognizes a noncontrolling interest for the ownership of the noncontrolling owners. The associated noncontrolling owners' interest in the income or losses of these companies is not material to the Company's results of operations for all periods presented, and is classified as a component of interest and other, net, in the condensed consolidated statements of operations.

The changes to the Company’s organizational structure noted above had no impact to the condensed consolidated financial statements. For comparability purposes, segment reporting for prior periods have been restated to conform to the current

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presentation. Refer to note 14, “Segments Reporting,” for additional information on the changes in operating and reportable segments.

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, intangible assets and goodwill; valuation of investments in privately held companies; asset impairments; fair values of financial instruments including highly liquid investments, notes receivable and derivative instruments; restructuring charges; contingencies; warranty provisions; incremental borrowing rate 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 COVID-19 pandemic, 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 COVID-19. 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 March 2020, the FASB issued ASU 2020-04 "Facilitation of the Effects of Reference Rate Reform on Financial Reporting", which temporarily simplifies the accounting for contract modifications, including hedging relationships, due to the transition from LIBOR and other interbank offered rates to alternative reference interest rates. For example, entities can elect not to remeasure the contracts at the modification date or reassess a previous accounting determination if certain conditions are met. Additionally, entities can elect to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain conditions are met. The Company adopted the guidance during the first quarter of fiscal year 2021 with an immaterial impact on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, and ASU 2019-11, which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. The Company adopted the guidance during the first quarter of fiscal year 2021 with an immaterial impact on its consolidated financial statements.

Recently Issued Accounting Pronouncements

In January 2020, the FASB issued ASU 2020-01 "Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815 — a consensus of the FASB Emerging Issues Task Force", which makes improvements related to the following two topics: (1) accounting for certain equity securities when the equity method of accounting is applied or discontinued, and (2) scope considerations related to forward contracts and purchased options on certain securities. The guidance is effective for the Company beginning in the first quarter of fiscal year 2022 with early adoption permitted. The Company expects the new guidance will have an immaterial impact on its consolidated financial statements, and intends to adopt the guidance when it becomes effective in the first quarter of fiscal year 2022.

In December 2019, the FASB issued ASU 2019-12 "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes", which removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The guidance is effective for the Company beginning in the first quarter of fiscal year 2022 with early adoption permitted. The Company expects the new guidance will have an immaterial impact on its consolidated financial statements, and intends to adopt the guidance when it becomes effective in the first quarter of fiscal year 2022.

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Inventories 

The components of inventories, net of applicable lower of cost and net realizable value write-downs, were as follows: 

Copy History

			As of June 26, 2020						As of March 31, 2020
			(In thousands)
Raw materials			$	2,626,618					$	2,835,582
Work-in-progress			336,469						373,513
Finished goods			520,388						575,978
			$	3,483,475					$	3,785,073

Goodwill and Other Intangible Assets 

In accordance with accounting guidance on goodwill and other intangible assets, the Company evaluates goodwill for impairment at the reporting unit level annually, and in certain circumstances such as a change in reporting units or whenever there are indications that goodwill might be impaired. As described in note 1, the Company made certain changes in its organizational structure during the first quarter of fiscal year 2021 as part of its strategy to further drive growth and productivity through two separate delivery models that represent reportable segments, FAS and FRS. With these changes, the Company also revised its reporting units. Accordingly, the Company completed an interim test as of April 1, 2020. Recoverability of goodwill is measured at the reporting unit level by comparing the reporting unit's carrying amount, including goodwill, to the fair value of the reporting unit, which typically is measured based upon, among other factors, market multiples for comparable companies as well as a discounted cash flow analysis. These approaches use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy and require management to make various judgmental assumptions about sales, operating margins, growth rates and discount rates which consider the Company's budgets, business plans and economic projections, and are believed to reflect market participant views. Some of the inherent estimates and assumptions used in determining fair value of the reporting units are outside the control of management, including interest rates, cost of capital, tax rates, market EBITDA comparables and credit ratings. While the Company believes it has made reasonable estimates and assumptions to calculate the fair value of the reporting units, it is possible a material change could occur. If the actual results are not consistent with management's estimates and assumptions used to calculate fair value, it could result in material impairments of the Company's goodwill.

Based on the latest assessment of its goodwill as of April 1, 2020, the Company determined that no impairment existed as of the date of the impairment test, because the fair value of each one of its reporting units exceeds its respective carrying value. In addition, goodwill was reallocated among each of the Company's six reporting units based on each reporting unit’s relative fair value as of April 1, 2020. The following table summarizes the goodwill allocation as of April 1, 2020 and the activity during the three-month period ended June 26, 2020: 

Copy History

			FAS																														FRS
			Communications, Enterprise and Cloud						Lifestyle						Consumer Devices						Automotive						Health Solutions						Industrial						Total
			(In thousands)
Balance at April 1, 2020			$	188,179					$	130,705					$	50,328					$	174,123					$	192,498					$	328,720					$	1,064,553
Foreign currency translation adjustments			—						—						—						9,231						820						—						10,051
Balance at June 26, 2020			$	188,179					$	130,705					$	50,328					$	183,354					$	193,318					$	328,720					$	1,074,604

The components of acquired intangible assets are as follows:

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Copy History

			As of June 26, 2020																														As of March 31, 2020
			Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
			(In thousands)
Intangible assets:
Customer-related intangibles			$	276,087					$	(135,299)					$	140,788					$	275,678					$	(128,155)					$	147,523
Licenses and other intangibles			248,966						(139,299)						109,667						244,917						(130,022)						114,895
Total			$	525,053					$	(274,598)					$	250,455					$	520,595					$	(258,177)					$	262,418

The gross carrying amounts of intangible assets are removed when fully amortized. The estimated future annual amortization expense for intangible assets is as follows:

Copy History

Fiscal Year Ending March 31,						Amount
						(In thousands)
2021 (1)						$	45,161
2022						52,100
2023						44,375
2024						42,820
2025						37,836
Thereafter						28,163
Total amortization expense						$	250,455

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(1)Represents estimated amortization for the remaining fiscal nine-month period ending March 31, 2021. 

Other Current Liabilities

Revenue Recognition

The Company provides a comprehensive suite of services for its customers that range from advanced product design to manufacturing and logistics to after-sales services. The first step in its process for revenue recognition is to identify a contract with a customer. A contract is defined as an agreement between two parties that creates enforceable rights and obligations and can be written, verbal, or implied. The Company generally enters into master supply agreements (“MSA”) with its customers that provide the framework under which business will be conducted. This includes matters such as warranty, indemnification, transfer of title and risk of loss, liability for excess and obsolete inventory, pricing formulas, payment terms, etc., and the level of business under those agreements may not be guaranteed. In those instances, the Company bids on a program-by-program basis and typically receives customer purchase orders for specific quantities and timing of products. As a result, the Company considers its contract with a customer to be the combination of the MSA and the purchase order, or any other similar documents such as a statement of work, product addendum, emails or other communications that embody the commitment by the customer.

In determining the appropriate amount of revenue to recognize, the Company applies the following steps: (i) identify the contracts with the customers; (ii) identify performance obligations in the contracts; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations per the contracts; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. Further, the Company assesses whether control of the product or services promised under the contract is transferred to the customer at a point in time (PIT) or over time (OT). The Company is first required to evaluate whether its contracts meet the criteria for OT recognition. The Company has determined that for a portion

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of its contracts the Company is manufacturing products for which there is no alternative use (due to the unique nature of the customer-specific product and IP restrictions) and the Company has an enforceable right to payment including a reasonable profit for work-in-progress inventory with respect to these contracts. As a result, revenue is recognized under these contracts OT based on the cost-to-cost method as it best depicts the transfer of control to the customer measured based on the ratio of costs incurred to date as compared to the total estimated costs at completion of the performance obligation. For all other contracts that do not meet these criteria, the Company recognizes revenue when it has transferred control of the related manufactured products which generally occurs upon delivery and passage of title to the customer.

Customer Contracts and Related Obligations

Certain of the Company’s customer agreements include potential price adjustments which may result in variable consideration. These price adjustments include, but are not limited to, sharing of cost savings, committed price reductions, material margins earned over the period that are contractually required to be paid to the customers, rebates, refunds tied to performance metrics such as on-time delivery, and other periodic pricing resets that may be refundable to customers. The Company estimates the variable consideration related to these price adjustments as part of the total transaction price and recognizes revenue in accordance with the pattern applicable to the performance obligation, subject to a constraint. The Company constrains the amount of revenues recognized for these contractual provisions based on its best estimate of the amount which will not result in a significant reversal of revenue in a future period. The Company determines the amounts to be recognized based on the amount of potential refunds required by the contract, historical experience and other surrounding facts and circumstances. Often these obligations are settled with the customer in a period after shipment through various methods which include reduction of prices for future purchases, issuance of a payment to the customer, or issuance of a credit note applied against the customer’s accounts receivable balance. In many instances, the agreement is silent on the settlement mechanism. Any difference between the amount accrued upon shipment for potential refunds and the actual amount agreed to with the customer is recorded as an increase or decrease in revenue. These potential price adjustments are included as part of other current liabilities on the consolidated balance sheet and disclosed as part of customer-related accruals in note 2.

Performance Obligations

The Company derives its revenues primarily from manufacturing services, and to a lesser extent, from innovative design, engineering, and supply chain services and solutions.

A performance obligation is an implicitly or explicitly promised good or service that is material in the context of the contract and is both capable of being distinct (customer can benefit from the good or service on its own or together with other readily available resources) and distinct within the context of the contract (separately identifiable from other promises). The Company considers all activities typically included in its contracts, and identifies those activities representing a promise to transfer goods or services to a customer. These include, but are not limited to, design and engineering services, prototype products, tooling, etc. Each promised good or service with regards to these identified activities is accounted for as a separate performance obligation only if it is distinct - i.e., the customer can benefit from it on its own or together with other resources that are readily available to the customer. Certain activities on the other hand are determined not to constitute a promise to transfer goods or service, and therefore do not represent separate performance obligations for revenue recognition (e.g., procurement of materials and standard workmanship warranty).

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of the Company's contracts have a single performance obligation as the promise to transfer the individual good or service is not separately identifiable from other promises in the contract and is, therefore, not distinct. Promised goods or services that are immaterial in the context of the contract are not separately assessed as performance obligations. In the event that more than one performance obligation is identified in a contract, the Company is required to allocate the transaction price between the performance obligations. The allocation would generally be performed on the basis of a relative standalone price for each distinct good or service. This standalone price most often represents the price that the Company would sell similar goods or services separately.

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.

A contract liability is recognized when the Company receives payments in advance of the satisfaction of performance and is included in other current liabilities on the condensed consolidated balance sheets. Contract liabilities, identified as deferred revenue, were $362.1 million and $361.5 million as of June 26, 2020 and March 31, 2020, respectively.

Disaggregation of Revenue

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The Company's primary plan used for granting equity compensation awards is the 2017 Equity Incentive Plan (the "2017 Plan").

The following table summarizes the Company’s share-based compensation expense:

Copy History

Three-Month Periods Ended

June 26, 2020

June 28, 2019