Integrating
the power of
manufacturing
2024 ANNUAL REPORT
Dear Shareholders and Colleagues,
We set our Flex Forward strategy five years ago with the goal of creating shareholder value through profitable
growth and margin expansion, leading to greater financial resiliency through the cycles. This result would come
from winning the right kind of growth, expanding our services, and continuing to build upon our operational
excellence. Ultimately, this is about solving complexity, and delivering greater value for our customers.
This strategy has been tested repeatedly over the last several years, and each time we have demonstrated it
is working. I am very proud of our performance in fiscal 2024, particularly as we navigated a highly dynamic
environment, while making progress towards our longer-term goals. We achieved record adjusted margins,
delivered another year of double-digit adjusted earnings-per-share growth over the prior year, and generated
substantial value for our shareholders.
Importantly, these results demonstrate the resiliency we have built into our business as we continue to navigate
the various macrocycles effectively. Through these challenges, we continue to help our customers solve
increased complexity and deliver on our commitments to our stakeholders.
Financial Outcomes*
Fiscal 2024 was another milestone year for Flex. Based on Flex continuing operations (excluding Nextracker), we
achieved record annual adjusted operating margins of 4.8%, up 50 basis points from fiscal 2023. We delivered
11% adjusted earnings-per-share growth, reaching a record $2.15. All of this was accomplished despite a
7% revenue decline due to the increased headwinds in the global economy.
We currently exist in a time where macro uncertainty is more of the norm rather than the exception. We believe
Flex is in a much better position to manage through these times and it is reflected in our results. For example,
over the last three years, as revenue grew at a 5% compounded annual growth rate, adjusted operating margins
expanded by over 100 basis points, and this is the fourth year in a row we’ve generated double-digit adjusted
EPS growth.
Additionally, these global disruptions are also driving business opportunities for Flex, as companies look for help
navigating regionalization trends and structural disruptions to value chains.
This year, we returned a record $1.3 billion to shareholders through stock repurchases. We also completed the
Nextracker separation on January 2nd. Our decision and subsequent actions to separate Nextracker generated
substantial value through multiple phases of the transaction. This included the initial public offering, a follow‑on
Revathi Advaithi
CEO
June 25, 2024
“We will continue to execute on our
strategy to unlock the full potential
of Flex.”
Message from
our CEO
* See Annex A to our proxy statement for a reconciliation of GAAP to non-GAAP financial measures referenced in this letter.
Q
offering, and finally the tax-free spin-off of our remaining interest in Nextracker to our shareholders, which alone
returned value of approximately $3.5 billion.
Flex Forward Strategy
We continue to make progress on our transformative long-term strategy, shifting to higher value business,
expanding our service offerings, and building on our Flex product portfolio in cloud power and automotive.
In the early phases of our strategic shift, we prioritized higher-value end markets with favorable secular drivers
and profitability profiles, such as cloud, automotive, industrial, and healthcare. We have also worked to build
synergies across the Flex platform, including areas of technical expertise, vertical integration, and value-added
services.
In fiscal 2024, our cross-industry expertise strategy continued to bear fruit particularly in the cloud and
automotive end markets. Through focused investment in advanced compute and power systems expertise our
cloud-facing business reached $3 billion. This is a combination of $2 billion from our AI-supportive customized,
fully integrated rack solution, including liquid-cooling capabilities, in our CEC business unit, and $1 billion from
our data center power products portfolio, that falls under our Industrial business unit.
We are differentiated by providing the most comprehensive data center offering in the industry. Our end-to-end
manufacturing services and capabilities across the globe are unmatched, including components, metal
fabrication, vertical integration, logistics, post-sale services, and more.
Furthermore, Flex is the only EMS provider with its own comprehensive set of data center power products, from
embedded power at the board and rack level to critical facilities power, with a portfolio that is truly grid-to-chip.
Our cross-industry expertise in compute and power also extends into the automotive sector. All vehicles,
regardless of the powertrain type, are becoming more like “edge data centers on wheels.” Additionally, the
adoption of EV and hybrid powertrains adds further challenges, requiring more complex power systems.
We are providing more than just hardware manufacturing. Our flexible business model differentiates us in the
market giving us a broad spectrum of collaborative engagements with top automakers, including both joint and
full product design within compute and power. We see our offerings resonating with automakers as fiscal 2024
was another strong year of new wins following back-to-back years of record new program wins.
Data center and automotive are two markets with very strong, long-term secular drivers. Given our positioning
and the strong market growth dynamics, we believe these two businesses combined can reach approximately
40% of Flex total revenue, as we look out towards fiscal 2029.
Manufacturing Services Excellence
Our strong ability to execute comes from our foundation in manufacturing services. We are always focused on
increasing our technical capabilities, driving faster deployment and greater efficiencies through our advanced,
flexible automation strategy, and ensuring we have the optimal global footprint to effectively support our
customers in a regionalizing world.
On this foundation, we continue to expand our services and vertical integration capabilities to serve more of our
customers’ needs and increase our addressable market.
We started our journey to expand these services years ago, where we saw the opportunity to move beyond
simple electronics production. We expanded into high-performance plastics and metals, and created vast
components services, and global logistics and refurbishment capabilities.
Putting this all together, our global network of integrated manufacturing and service locations increases
resiliency and time to market. Our initiatives and investments in automation, capabilities, and systems enable us
to achieve productivity gains to help drive margins and prepare us for the future.
Looking Forward
We expect fiscal 2025 to experience similar economic headwinds in the global economy as we saw in fiscal 2024.
Despite these challenges, fiscal 2025 should be another year of strong strategic and financial progress.
We will navigate the near-term currents, invest in our future opportunities, and continue to execute on our strategy to
unlock the full potential of Flex. We remain very optimistic about our future, and we greatly appreciate the continued
partnership of our customers, colleagues, and our shareholders.
Regards,
Q
To Our Shareholders:
You are cordially invited to attend, and notice is hereby given of,
the annual general meeting of shareholders of Flex Ltd., which
will be held at our offices located at 12455G Research Blvd,
Welcome Center, Austin, TX 78759 U.S.A., at 11:00 a.m., Central
time, on August 8, 2024, for the purposes summarized below and
described in more detail in the accompanying proxy statement.
We urge you to read the entire proxy statement carefully before
voting. Unless the context requires otherwise, references in this
notice and the proxy statement to “Flex,” the “Company,” “we,” “us,”
“our” and similar terms mean Flex Ltd. or, as the case may be, Flex
Ltd. and its subsidiaries. Flex is incorporated in the Republic of
Singapore under the Companies Act 1967, which we refer to as the
“Singapore Companies Act” or the “Companies Act 1967”.
Notice
of Annual General
Meeting of Shareholders
To Be Held on August 8, 2024
Thursday
August 8, 2024
11:00 a.m., Central time
Flex Ltd.
12455G Research Blvd,
Welcome Center
Austin, TX 78759 U.S.A.
Vote via Internet
at www.proxyvote.com
Vote by Mail
Sign and return your proxy card in the
postage-paid envelope
Vote in Person at the Meeting
on August 8, 2024 at 11:00 a.m., Central time
Please refer to our proxy materials or the
information forwarded by your bank or other
holder of record to see which voting methods
are available to you.
FLEX LTD.
(Incorporated in the Republic of Singapore)
(Company Registration Number 199002645H)
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
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Important Notice Regarding Electronic Availability of Proxy Statement
and Annual Report
We are pleased to furnish proxy materials to our shareholders on the Internet, as permitted by Securities and Exchange
Commission (“SEC”) rules. Commencing on or about June 25, 2024, we will make available to our shareholders (including
all of our registered shareholders) a Notice of Availability of Proxy Materials on the Internet (referred to as the Notice)
containing instructions on how to: (i) access the proxy statement and our annual report, (ii) submit their proxies via the
Internet, and (iii) request a printed copy of our proxy materials.
Proxy Voting Matters
You may revoke your proxies at any time before they are voted. Registered shareholders who are present at the meeting
may revoke their proxies and vote in person or, if they prefer, may abstain from voting in person and allow their proxies to be
voted.
Voting Matters at the Annual General Meeting
We are asking shareholders to vote on five proposals at the meeting:
z To re-elect all nine directors of the Company nominated for re-election (Proposal No. 1);
z To approve the re-appointment of Deloitte & Touche LLP as our independent auditors for the 2025 fiscal year and to authorize
the Board of Directors, upon the recommendation of the Audit Committee, to fix their remuneration (Proposal No. 2);
z To approve, on a non-binding, advisory basis, our executive compensation (Proposal No. 3);
z To approve a general authorization for the Board of Directors to allot and issue ordinary shares (Proposal No. 4); and
z To approve a renewal of the Share Purchase Mandate permitting Flex to purchase or otherwise acquire its own issued
ordinary shares (Proposal No. 5).
Resolutions Proposed for Shareholder Approval as Ordinary Business
Each of the resolutions proposed for approval by our shareholders is as follows:
1. To re-elect each of the following Directors, who will retire pursuant to Article 94 of our Constitution, to the Board of
Directors:
(a) Revathi Advaithi;
(b) John D. Harris II;
(c) Michael E. Hurlston;
(d) Erin L. McSweeney;
(e)
Charles K. Stevens, III;
(f)
Maryrose T. Sylvester;
(g) Lay Koon Tan;
(h)
Patrick J. Ward; and
(i)
William D. Watkins.
2. To consider and vote upon a proposal to re-appoint Deloitte & Touche LLP as our independent auditors for the fiscal
year ending March 31, 2025, and to authorize our Board of Directors, upon the recommendation of the Audit Committee
of the Board of Directors, to fix their remuneration.
Resolutions Proposed for Shareholder Approval as Special Business
Each of the resolutions proposed for approval or vote by our shareholders is shown below:
3. To consider and vote on the following non-binding, advisory resolution:
“RESOLVED THAT, the shareholders of Flex approve, on a non-binding, advisory basis, the compensation of the
Company’s named executive officers, as disclosed pursuant to Item 402 of SEC Regulation S-K, including the
Compensation Discussion and Analysis and the compensation tables and related disclosures contained in the section
of the accompanying proxy statement captioned ‘Executive Compensation’.”
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This resolution is being proposed to shareholders as required pursuant to Section 14A of the U.S. Securities Exchange Act
of 1934, as amended. The shareholders’ vote on this resolution is advisory and non-binding in nature, will have no legal
effect and will not be enforceable against Flex or its Board of Directors.
4. To pass the following resolution as an Ordinary Resolution:
“RESOLVED THAT, pursuant to the provisions of Section 161 of the Companies Act 1967, but subject otherwise to the
provisions of the Companies Act 1967 and the Constitution of the Company, authority be and hereby is given to our
Directors to:
(a) (i)
allot and issue ordinary shares in the capital of the Company (“Ordinary Shares”); and/or
(ii) make or grant offers, agreements, options, performance shares, performance units, restricted share units,
or other compensatory equity awards (each, an “Instrument” and, collectively, “Instruments”) that might
or would require Ordinary Shares to be allotted and issued, whether after the expiration of this authority
or otherwise (including but not limited to the creation and issuance of warrants, debentures or other
instruments convertible into Ordinary Shares),
at any time to and/or with such persons and upon such terms and conditions and for such purposes as our
Directors may in their absolute discretion deem fit, and with such rights or restrictions as our Directors may think fit
to impose and as are set forth in the Constitution of the Company; and
(b) (notwithstanding that the authority conferred by this resolution may have ceased to be in force) allot and issue
Ordinary Shares pursuant to any Instrument made or granted by our Directors while this resolution was in force,
provided that:
(i)
the aggregate number of Ordinary Shares to be issued pursuant to this resolution (including Ordinary Shares
to be issued pursuant to Instruments made or granted pursuant to this resolution) does not exceed 20% of
the total number of issued Ordinary Shares as of the date of the passing of this resolution; and
(ii) unless revoked or varied by the Company in a general meeting, that such authority shall continue in
force until the earlier of (1) the conclusion of the next annual general meeting of the Company or (2) the
expiration of the period within which the next annual general meeting of the Company is required by law to
be held.”
5. To pass the following resolution as an Ordinary Resolution:
“RESOLVED THAT:
(a) for the purposes of Sections 76C and 76E of the Companies Act 1967, the exercise by our Directors of all of
our powers to purchase or otherwise acquire issued ordinary shares in the capital of the Company (“Ordinary
Shares”) not exceeding in aggregate the number of issued Ordinary Shares representing 20% of the total number
of issued Ordinary Shares outstanding as of the date of the passing of this resolution (excluding treasury shares
and any Ordinary Shares which are held by our subsidiary(ies) under Sections 21(4B) or 21(6C) of the Companies
Act 1967, as at that date) at such price or prices as may be determined by our Directors from time to time up to
the maximum purchase price described in paragraph (c) below, whether by way of:
(i)
market purchases on the Nasdaq Global Select Market or any other stock exchange on which our Ordinary
Shares may for the time being be listed and quoted; and/or
(ii) off-market purchases (if effected other than on the Nasdaq Global Select Market or, as the case may be,
any other stock exchange on which our Ordinary Shares may for the time being be listed and quoted) in
accordance with any equal access scheme(s) as may be determined or formulated by our Directors as they
consider fit, which scheme(s) shall satisfy all the conditions prescribed by the Companies Act 1967,
and otherwise in accordance with all other laws and regulations and rules of the Nasdaq Global Select Market
or, as the case may be, any other stock exchange on which our Ordinary Shares may for the time being be listed
and quoted as may be applicable, be and hereby is authorized and approved generally and unconditionally;
(b) unless varied or revoked by our shareholders in a general meeting, the authority conferred on our Directors
pursuant to the mandate contained in paragraph (a) above may be exercised by our Directors at any time and
from time to time during the period commencing from the date of the passing of this resolution and expiring on
the earlier of:
(i)
the date on which the next annual general meeting of the Company is held; or
(ii) the date by which the next annual general meeting of the Company is required by law to be held;
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
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(c)
the maximum purchase price (excluding brokerage, commission, applicable goods and services tax, and other
related expenses) that may be paid for an Ordinary Share purchased or acquired by the Company pursuant to
the mandate contained in paragraph (a) above, shall not exceed:
(i)
in the case of a market purchase of an Ordinary Share, the highest independent bid or the last independent
transaction price, whichever is higher, of our Ordinary Shares quoted or reported on the Nasdaq Global
Select Market or, as the case may be, any other stock exchange on which our Ordinary Shares may for the
time being be listed and quoted, or shall not exceed any volume weighted average price, or other price
determined under any pricing mechanism, permitted under SEC Rule 10b-18, at the time the purchase is
effected; and
(ii) in the case of an off-market purchase pursuant to an equal access scheme, at a premium of up to but not
greater than 5% above the average of the closing price per Ordinary Share over the five trading days before
the day on which the purchases are made; and
(d) our Directors, acting independently or individually, be and hereby are authorized to complete and do all such
acts and things (including executing such documents as may be required) as such Director(s) may consider
expedient or necessary to give effect to the transactions contemplated and/or authorized by this resolution.”
Notes
Singapore Financial Statements
At the 2024 annual general meeting, our shareholders will have the opportunity to discuss and ask any questions that they
may have regarding our Singapore audited financial statements for the fiscal year ended March 31, 2024, together with the
directors’ statement and auditors’ report thereon, in compliance with Singapore law. Shareholder approval of our audited
financial statements is not being sought by the accompanying proxy statement and will not be sought at the 2024 annual
general meeting.
Eligibility to Vote at Annual General Meeting
Receipt of Notice. The Board of Directors has fixed the close of business on June 10, 2024 as the record date for determining
those shareholders of the Company who are entitled to receive copies of this notice and accompanying proxy statement.
However, all shareholders of record on August 8, 2024, the date of the 2024 annual general meeting, will be entitled to vote
at the 2024 annual general meeting.
Quorum
Representation in person or by proxy of at least 33-1/3% of all outstanding Ordinary Shares of the Company is required to
constitute a quorum to transact business at a general meeting of our shareholders.
Proxies
A shareholder entitled to attend and vote at the 2024 annual general meeting is entitled to appoint a proxy to attend and
vote on the shareholder’s behalf. A proxy need not also be a shareholder. Even if you plan to attend the meeting, we
encourage you to vote promptly. You may vote your shares through one of the methods described in the enclosed
proxy statement. A proxy card submitted by mail must be received by Vote Processing, c/o Broadridge, 51 Mercedes
Way, Edgewood, NY 11717 not less than 48 hours before the time appointed for holding the 2024 annual general
meeting. Please review the instructions on the proxy card and notice of availability of proxy materials regarding the
submission of proxies via the Internet, which provide, among other things, for the transmission of voting instructions
up until 11:59 p.m. Eastern time on the day before the meeting. You may revoke your proxy at any time before it is voted.
Registered shareholders who are present at the meeting may revoke their proxies and vote in person or, if they prefer, may
abstain from voting in person and allow their proxies to be voted.
Disclosure Regarding Share Purchase Mandate Funds
Only funds legally available for purchasing or acquiring our issued Ordinary Shares in accordance with our Constitution
and the applicable laws of Singapore will be used by us to purchase or acquire our own issued Ordinary Shares pursuant
to the proposed renewal of the Share Purchase Mandate referred to in this notice. We intend to use our internal sources
of funds and/or borrowed funds to finance the purchase or acquisition of our issued Ordinary Shares. The amount of
financing required for us to purchase or acquire our issued Ordinary Shares, and the impact on our financial position,
cannot be ascertained as of the date of this notice, as these will depend on, among other things, the number of Ordinary
Shares purchased or acquired, the price at which such Ordinary Shares are purchased or acquired, and whether
2024 Proxy Statement
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the Ordinary Shares purchased or acquired are held in treasury or cancelled. Our net tangible assets and the consolidated
net tangible assets of the Company and its subsidiaries will be reduced by the purchase price (including any expenses)
of any Ordinary Shares purchased or acquired and cancelled or held as treasury shares. We do not anticipate that the
purchase or acquisition of our Ordinary Shares in accordance with the Share Purchase Mandate would have a material
impact on our financial condition and cash flows.
Personal Data Privacy
By submitting an instrument appointing a proxy or representative to attend, speak and vote at the 2024 annual general
meeting and any adjournment thereof, a shareholder of the Company (i) consents to the collection, use and disclosure of
the shareholder’s personal data by us (or our agents or service providers) so we (or our agents or service providers) can
process, administer and analyze proxies and representatives appointed for the 2024 annual general meeting (including
any adjournment thereof) and prepare and compile the attendance lists, minutes and other documents relating to the
2024 annual general meeting (including any adjournment thereof), and in order for us (or our agents or service providers)
to comply with any applicable laws, listing rules, take-over rules, regulations or guidelines (collectively, the “Purposes”),
(ii) warrants that where the shareholder discloses the personal data of the shareholder’s proxy or representative to us (or
our agents or service providers), the shareholder has obtained the prior consent of such individual for the collection, use
and disclosure by us (or our agents or service providers) of such personal data for the Purposes, and (iii) agrees that the
shareholder will indemnify us in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the
shareholder’s breach of warranty.
By order of the Board of Directors,
Tay Hong Chin Regina
Company Secretary
Singapore
June 25, 2024
You should read the entire proxy statement carefully before you return your proxy card or otherwise
submit your proxy appointment through electronic communications in the manner set out in the
proxy statement.
Important Notice Regarding the Availability of Proxy Materials for the 2024 Annual General
Meeting of Shareholders to Be Held on August 8, 2024. This notice of the annual general meeting,
our proxy statement and our annual report to shareholders are available on our website at
https://investors.flex.com/financials/annual-reports/.
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
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Proxy Summary
1
Sustainability
8
Corporate Governance
15
Board of Directors
15
Board Leadership Structure
15
Meeting Attendance and Executive Sessions
16
Director Independence
16
Director Selection and Board Refreshment
17
Board Diversity
18
Director Commitments
19
Board’s Role in Risk Oversight
19
Board’s Role in Succession Planning
21
Board Evaluation Process
21
Board Committees
23
Director Orientation and Continuous Education
25
Stakeholder Engagement and Outreach
26
Corporate Governance Policies
27
Shareholder Communications with our Board of Directors
28
Fiscal Year 2024 Non-Employee Directors’
Compensation
29
Non-Employee Director Compensation Program
29
Fiscal Year 2024 Annual Cash Compensation
30
Fiscal Year 2024 Equity Compensation
30
Compensation for the Non-Employee Chair of the Board
30
Non-Employee Director Share Ownership Guidelines
31
Director Summary Compensation in Fiscal Year 2024
31
Treatment of Unvested Restricted Share Unit Awards
upon a Change of Control
32
Proposals to be Considered at the 2024 Annual
General Meeting of Shareholders
33
Proposal No. 1: Re-election of Directors
33
Nominees to our Board of Directors
34
Skills, Qualifications and Diversity of Nominees
34
Proposal No. 2: Re-Appointment of Independent
Auditors for Fiscal Year 2025 and Authorization
of our Board to Fix Their Remuneration
42
Principal Accountant Fees and Services
42
Audit Committee Pre-Approval Policy
42
Message from the Audit Committee
43
Audit Committee Report
44
Proposal No. 3: Non-Binding, Advisory Resolution
on Executive Compensation
45
Compensation and People Committee Report
45
Compensation Discussion and Analysis
46
Introduction
46
Executive Summary
46
Compensation Philosophy
49
Compensation-Setting Process and Decisions for Fiscal
Year 2024
51
Fiscal Year 2024 Executive Compensation
53
Benefits
63
Termination and Change of Control Arrangements
65
Executive Share Ownership Guidelines
66
Executive Incentive Compensation Recoupment Policy
66
Prohibition on Hedging and Pledging
of Company Securities
67
Compensation Risk Assessment
68
Executive Compensation
69
Summary Compensation Table
69
Grants of Plan-Based Awards in Fiscal Year 2024
71
Outstanding Equity Awards at 2024 Fiscal Year-End
72
Shares Vested in Fiscal Year 2024
74
Pension Benefits in Fiscal Year 2024
74
Nonqualified Deferred Compensation in Fiscal Year 2024
74
Nonqualified Deferred Compensation Table
75
Potential Payments Upon Termination or
Change of Control
75
Potential Payments Upon Termination or
Change of Control as of March 31, 2024
77
CEO Pay Ratio
79
Pay Versus Performance
80
Proposal No. 4: Ordinary Resolution to Authorize
Ordinary Share Issuances
84
Proposal No. 5: Ordinary Resolution to Renew the
Share Purchase Mandate
85
Limit on Allowed Purchases
85
Duration of Share Purchase Mandate
86
Manner of Purchases or Acquisitions of Ordinary Shares
86
Purchase Price
86
Treasury Shares
86
Sources of Funds
87
Status of Purchased or Acquired Ordinary Shares
87
Financial Effects
87
Rationale for the Share Purchase Mandate
88
Take-Over Implications
88
Information about our Executive Officers
89
Equity Compensation Plan Information
91
Security Ownership of Certain Beneficial
Owners and Management
92
Certain Relationships and Related-Person
Transactions
94
Review of Related-Person Transactions
94
Transactions with Related Persons
94
Shareholder Proposals for the 2025 Annual
General Meeting
95
Incorporation of Certain Documents by Reference
95
Singapore Statutory Financial Statements
96
Other Matters
97
Electronic Delivery of our Shareholder Communications
97
Information About the Meeting
97
Voting Rights and Solicitation of Proxies
97
Cautionary Note Regarding Forward-Looking
Statements
99
Annex A: Flex Ltd. Reconciliation of GAAP
to Non-GAAP Financial Measures
A-1
i
2024 Proxy Statement
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Proxy Summary
This summary highlights selected information in this proxy statement. Please review the entire proxy statement and our
2024 Annual Report on Form 10-K before voting.
Place:
12455G Research Blvd, Welcome
Center, Austin, TX 78759, U.S.A.
Time and Date:
11:00 a.m., Central time
August 8, 2024
Record Date:
June 10, 2024
Voting Matters at the Annual General Meeting
Proposal
Recommendation
Page
Reference
1.
Re-election of directors
FOR each director nominee
33
2.
Re-appointment of Deloitte & Touche LLP
FOR
42
3.
Advisory vote on executive compensation
FOR
45
4.
General authorization to allot and issue ordinary shares
FOR
84
5.
Authorization to repurchase ordinary shares
FOR
85
How to Cast Your Vote
Each Ordinary Share is entitled to one vote for each director nominee and one vote for each of the other proposals.
Your vote is important to us, and we encourage you to vote using one of these methods:
Vote in
Person
at the
Meeting
If you are a beneficial holder and hold your shares through a bank, broker, or other nominee,
you must request a “legal proxy” from the nominee in order to vote at the meeting. You will find
instructions on how to request a “legal proxy” at www.proxyvote.com.
Vote via
Internet
at www.proxyvote.com
Follow the instructions on your Notice. If you are a beneficial holder and hold your shares through a
bank, broker, or other nominee, your nominee may not permit you to vote online.
Vote by
Mail
Sign and return your proxy card. If you do not have a proxy card, you can request one by contacting us at:
Flex Ltd.
12455G Research Blvd
Austin, Texas 78759, U.S.A.
Telephone: (512) 425-4100
1
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
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Business Summary
Who We Are and What We Do
Flex is the advanced, end-to-end manufacturing partner of choice that helps market-leading brands design, build,
deliver and manage innovative products that improve the world. Through the collective strength of a global workforce
across approximately 30 countries with responsible, sustainable operations, Flex supports our customers’ entire product
lifecycle with a broad array of services in every major region. Our full suite of specialized capabilities includes design
and engineering, supply chain, manufacturing, post-production and post-sale services. Flex partners with customers
across a diverse set of industries including cloud, communications, enterprise, automotive, industrial, consumer devices,
lifestyle, healthcare, and energy.
Our purpose is to make great products for our customers that create value and improve people’s lives. Our vision is to
be the most trusted global technology, supply chain and manufacturing solutions partner to improve the world, and
our mission is to achieve our vision and fulfill our purpose. People are at the heart of everything we do. We believe in
creating a work environment that empowers every team member to thrive, while prioritizing employee safety, well-being
and inclusiveness. Flex continues to further a dynamic, ever-evolving culture where employees embody behaviors aligned
with our values. Our values define and drive us and our Ways of Working bring our values to life through actions, provide a
framework for how we make decisions and support ongoing progress on our Flex Forward strategy.
Our values and ways of working
Learn and adapt
Collaborate and
share openly
Honor
commitments
Respect and
value others
Our strategy is to continue investing in areas where we can differentiate and add value, whether through product lifecycle
capabilities, manufacturing and product technologies or developing differentiated processes and business methods. For
example, we have developed a comprehensive set of data center power products, from embedded power at the board
and rack level to critical facilities power solutions, which, combined with our traditional data center contract manufacturing
business, provide integrated end to end solutions for our customers. We are strengthening our capabilities in factory
automation, robotics, artificial intelligence, simulation, digital twins, connectivity and other disruptive technologies. We
select ethical partners and integrate the supply chain so that our customers can operate efficiently and responsibly. We are
committed to investing in our employees and communities, which includes addressing critical environmental issues.
Our two reporting business segments are as follows(1):
FLEX
RELIABILITY
SOLUTIONS
Automotive
power electronics, compute
platforms, and motion and
interfaces across powertrains
Health Solutions
medical devices, medical
equipment, and drug delivery
Industrial
industrial devices, embedded
and critical power, capital
equipment, and renewables
FLEX AGILITY
SOLUTIONS
Communications,
Enterprise and Cloud
data center, edge,
and communications
infrastructure
Lifestyle
appliances, floorcare,
audio, and smart living
Consumer Devices
mobile and high-velocity
consumer devices
(1)
On January 2, 2024, Flex completed the spin-off (the “Spin-off”) of its remaining interests in Nextracker Inc. (“Nextracker”) to Flex shareholders on a
pro-rata basis based on the number ordinary shares of Flex held by each shareholder of Flex (the “Distribution”) as of December 29, 2023, which was the
record date of the Distribution, pursuant to the Agreement and Plan of Merger, dated as of February 7, 2023. As a result of the completion of the Spin-off,
Nextracker became a fully independent public company, we no longer directly or indirectly hold any shares of Nextracker common stock or any securities
convertible into or exchangeable for shares of Nextracker common stock and subsequent to the third quarter ended December 31, 2023 we no longer
consolidate Nextracker into our financial results. We now report our financial performance based on the above two operating and reportable segments.
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2024 Proxy Statement
Proxy Summary
Business Summary
Q
Fiscal Year 2024 Highlights
During fiscal year 2024, we navigated a highly dynamic environment, and delivered solid results. This is reflective of
our execution, resiliency, and dedication to deliver for our customers and all our stakeholders. Our combination of
manufacturing capabilities, cross-industry expertise, products, and services continued to create points of differentiation
and contributed to our success in key markets.
We returned $1.298 billion to investors in fiscal year 2024, through the largest stock repurchases in a single year. We also
completed the final step in unlocking the value of Nextracker’s utility-scale solar tracker business, demonstrating our
willingness to optimize the value of our portfolio of assets. On January 2, 2024, Flex completed the tax-free Spin-off of all
of its approximately $3.5 billion remaining interest in Nextracker to Flex shareholders on a pro rata basis.
Sustainability Highlights (pg. 8)
Our vision is to become the most trusted global technology, supply chain, and manufacturing solutions partner to
improve the world. Sustainability is a cornerstone to making that vision a reality.
Building on over 20 years of sustainability investment, our disciplined practices stand strong to help address broader
environmental and social challenges, cultivate a workplace that empowers every team member to thrive, lead with
integrity, and accelerate a more sustainable value chain.
Our efforts have been widely recognized, garnering awards for our sustainability program and efforts from the
Manufacturing Leadership Council and from the Sustainability Environmental Achievement and Leadership (SEAL)
Award in the Sustainable Service category. In addition, Environment & Energy Leader Awards recognized the Flex
Supplier Greenhouse Gas Emissions Reduction Program as a Top Project of the Year. Below are some highlights of our
sustainability practices.
2030 Sustainability
Goals
Continuing our purpose-driven journey, we made progress toward our 2030 sustainability goals
against a framework centered on our world, our people, and our approach to business practices
spanning several pillars.
Commitment to Net
Zero GHGs by 2040
In 2022, we announced our commitment to reach net zero greenhouse gas (GHG) emissions by 2040.
Diversity, Equity and
Inclusion (DE&I)
Diversity, equity, and inclusion are key priorities and strengths at Flex and are embedded in the
fabric of our culture. We continued efforts in support of our corporate goals to increase the number
of employees and leaders from underrepresented groups and are focused on evolving strategies
and programs to help improve representation and promote diversity across the organization. As of
March 31, 2024, women represented 44% of our global employees, and underrepresented minorities
represented 52% of our U.S. employees.
Flex Foundation
We partner with nonprofit organizations, community leaders and governments to promote inclusive
and sustainable economic growth, employment, and decent work for all. We help protect the
environment, support resource conservation and provide disaster relief. We accomplish this
through grants, corporate and employee donations, and volunteerism. In calendar year 2023, our
Flex Foundation partnered with several organizations, including the American Red Cross, Dress
for Success, United Way of Chennai, and WWF Romania, among others, and donated more than
$1,400,000 in grants to support well-known organizations globally, including Give2Asia and Save
the Children.
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2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Proxy Summary
Sustainability Highlights
Q
Corporate Governance Highlights (pg. 15)
Flex strives for excellence in corporate governance practices, which we recognize is fundamental to maintaining the
trust of our shareholders, customers, and employees. Flex’s management and its Board of Directors (the “Board” or
the ”Board of Directors”) continually evaluate our processes and implement procedures designed to maintain strong
governance and operational standards.
Board Structure and Independence
z Highly qualified Board with a diverse mix of perspectives and tenures, and a highly engaged independent Chair with
clearly delineated duties
z All directors are independent except for our CEO, and all 3 committees are fully independent
z Continuously evaluate Board composition, and perform an annual review and determination of our Board leadership
structure. In May 2024, we announced Board leadership changes consistent with our Board succession plan.
z Purposefully nominate directors with diverse backgrounds and skillsets to best oversee the management of Flex
z Active Board refreshment: Since June 2020, five new directors have joined our diverse and deeply experienced Board;
average tenure of our nominees is 5.9 years. The current slate of directors represents a balance of short-, mid- and
longer-term tenures of service.
z Regular executive sessions of independent directors without management present
Board Oversight
z We regularly assess our corporate governance structure designed to maintain high standards of oversight and
accountability
z Board fully engaged in Flex’s strategic planning process, conducting an in-depth strategy review and overseeing
progress throughout the year
z The Audit Committee oversees the integrity of the Company’s financial statements, as well as management of
enterprise-wide risks and legal, compliance and cybersecurity risks
z The Compensation and People Committee oversees the Company’s executive compensation programs to align
with long-term Company strategy and its human capital management strategy, as well as key talent metrics
z The Nominating, Governance and Public Responsibility Committee oversees the application of the Company’s
corporate governance and sustainability policies, considering such matters as human rights, social issues,
climate change and environmental risks and opportunities, and continuously assesses the capabilities and
independence of the Board to ensure optimal composition
z Directors have significant interaction with senior business leaders and access to other employees
Strong Corporate Governance Practices
z Annual elections for all directors
z Responsive, active and ongoing shareholder engagement
z Prohibit short sales, hedging, and pledging of Flex securities by executive officers and directors
z Annual Board, committee and individual director evaluations, and ongoing attention to Board composition and
refreshment
z Limits on outside public company board service
z Clawback policy for our executive officers
z Robust share ownership requirements for executive officers and directors
z Comprehensive director orientation and continuing education programs
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2024 Proxy Statement
Proxy Summary
Corporate Governance Highlights
Q
Our Board of Directors
As previously announced, Michael D. Capellas, our current independent Chair of the Board, is not standing for re-
election and will be retiring from the Board at the annual general meeting. Mr. Capellas has served on our Board for
10 years, including as Chair since 2017, and the Company is very grateful to him for his valuable contributions during
his many years of dedicated Board service. In furtherance of our Board leadership succession plan, also as previously
announced, William D. Watkins will succeed Mr. Capellas as our independent Chair of the Board following the annual
general meeting, subject to his re-election to the Board.
You are asked to vote on the election of the following nine nominees to serve on our Board, all of whom presently
serve on the Board. The information below reflects the expected membership and leadership of each of the Board’s
committees after the annual general meeting. Our Board believes that its composition appropriately reflects the
knowledge, experience, skills, diversity and other characteristics required to fulfill its duties.
Board Committees
Name and Principal
Occupation
Independent
Director
Since
Audit
NG&PR
Compensation
and People
Other Public
Company Boards
Revathi Advaithi
Chief Executive Officer,
Flex Ltd.
No
2019
Uber Technologies, Inc.
John D. Harris II
Retired Vice President of
Business Development,
Raytheon Company and
Chief Executive Officer,
Raytheon International, Inc.
Yes
2020
●
Cisco Systems, Inc.
ExxonMobil Corporation
Kyndryl Holdings, Inc.
Michael E. Hurlston
President and Chief
Executive Officer,
Synaptics Incorporated
Yes
2020
●
Astera Labs, Inc.
Synaptics Incorporated
Erin L. McSweeney
Executive Vice President
and Chief People Officer,
UnitedHealth Group
Incorporated
Yes
2020
●
None
Charles K. Stevens, III
Retired Executive Vice
President and Chief
Financial Officer, General
Motors Company
Yes
2018
●
Genuine Parts Company
Masco Corporation
Maryrose T. Sylvester
Retired U.S. Managing
Director and U.S. Head of
Electrification, ABB Ltd
Yes
2022
●
Harley-Davidson, Inc.
Vontier Corporation
Waste Management, Inc.
Lay Koon Tan
Retired President, Chief
Executive Officer and
member of the Board of
Directors, STATS ChipPAC Ltd.
Yes
2012
●
None
Patrick J. Ward
Retired Vice President and
Chief Financial Officer,
Cummins Inc.
Yes
2022
●
Corteva, Inc.
William D. Watkins +
Retired Chief Executive
Officer, Imergy Power
Systems, Inc.
Yes
2009
+
Nextracker Inc.
+ Mr. Watkins will be the independent Chair of the Board and Chair of the Nominating, Governance and Public Responsibility Committee
effective upon the conclusion of the annual general meeting, subject to his re-election.
Chair
Audit Committee Financial Expert
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Our Board of Directors
Q
89%
Independent
Board Independence
Independent (8)
Non-Independent (1)
33%
Female
Gender Diversity
Female (3)
Male (6)
33%
Diverse
Ethnic/Racial Diversity
Diverse (3)
Non-Ethnic/Racial minorities (6)
Director Nominee Demographics
5.9
Average
years of tenure
Board Tenure
<3 years (2)
3-6 years (5)
>10 years (2)
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2024 Proxy Statement
Proxy Summary
Our Board of Directors
Q
Executive Compensation Highlights (pg. 46)
Our pay-for-performance compensation philosophy aims to tie actual pay delivery to performance. We believe above-
target performance should be rewarded when achieved, and below-target performance should lead to reduced
compensation, including zero payouts for incentive elements when performance thresholds are not met. We also believe
we should deliver a significant portion of executive pay in the form of equity awards, which are directly aligned with
value delivered to shareholders.
Base salaries
None of our named executive officers’ (or “NEOs’”) base salaries were increased for fiscal year 2024,
including our CEO.
Bonus payouts
Bonus payouts ranged from 75% to 95% of target for the NEOs
Individual performance
and sustainability
modifiers
Individual performance increased some of the NEOs’ incentive bonus payouts by
5 – 10 percentage points based on achievement of individual goals, while the Compensation
and People Committee exercised its discretion to adjust the positive sustainability performance
rating to neutral for the NEOs.
Long-term incentive award
values
Long-term incentive award values were increased for our CEO and our President, Global
Operations and Components. These increases resulted in total target compensation being
competitively positioned versus our compensation peer group.
Performance share
unit (PSU) payouts = 200%
Maximum payout of 200% was earned for the relative total shareholder return (rTSR) PSUs for the
three-year performance cycle ending in fiscal year 2024 (rTSR PSUs that vested in June 2023), as
the maximum performance level was achieved. Maximum payout of 200% was also earned for
the Adjusted EPS PSUs for the three-year performance cycle ending on March 31, 2024.
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Executive Compensation Highlights
Q
Sustainability
Flex’s purpose is to make great products for our customers that create value and improve people’s lives. Sustainability is
at the core of our purpose and is embedded in our culture. We work to have a lasting positive impact in the form of value
for all our stakeholders by taking an ecosystem approach to sustainability. We seek to address material issues, risks, and
opportunities by conforming to internal and external standards and thoughtfully executing our social and environmental
management system, programs, and initiatives.
We strive for social and environmental betterment through our robust management systems. Our sustainability system,
which is modeled largely on the Responsible Business Alliance (RBA) requirements, consolidates several management
systems into one, and incorporates current environmental, labor, human rights, health, safety, and ethics standards. As a
founding member of the RBA, Flex is committed to modeling its requirements. Our sustainability program is aligned with
international frameworks including the Global Reporting Initiative (GRI), Science Based Targets initiative (SBTi), Task Force on
Climate-related Financial Disclosures (TCFD), and CDP (formerly the Carbon Disclosure Project), among others.
Through our sustainability strategy and program, we drive disciplined practices to help address the broader environmental
and social challenges of our world, cultivate a workplace that enhances experiences and opportunities for our people,
lead with integrity, and help accelerate a more sustainable value chain.
Sustainability Governance and Strategy
Given our commitment to sustainability, we recognize the importance of a strong foundation of sustainability
governance. Our Board of Directors engages in a review of Flex’s sustainability program twice annually. Our Nominating,
Governance and Public Responsibility Committee oversees Flex’s sustainability risks and remediation efforts, such as the
Company’s sustainability, including environmental, social and governance, policies and programs. These policies and
programs also address human rights, climate change, and risk mitigation.
At Flex, we remain committed to improving our
performance towards our sustainability objectives,
in line with our vision to become the most trusted
global technology, supply chain, and manufacturing
solutions partner to improve the world.
Our executive management team receives regular sustainability updates, meeting with our global sustainability
program office (PMO). In addition, we have a sustainability leadership committee, a multidisciplinary group composed
of global leaders throughout the Company who represent the key functional areas with responsibility for sustainability
efforts, including operations, human resources, supply chain, legal, finance and facilities/EHS. This committee meets
monthly to share information with team members across various functions within Flex who are directly responsible for
implementing and managing sustainability initiatives in support of our commitments.
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2024 Proxy Statement
Q
Board Oversight
Board of Directors
Nominating, Governance
and Public Responsibility
Committee
Compensation and
People Committee
Audit Committee
Executive Steering
Executive Leadership Team
PMO
Sustainability Team
SMEs
Ops
EH&S
HR
Supply
Chain
Facilities
Legal
BUs
Finance
Operation Level
Site GMs
Sustainability Site
Representatives
Employees
We endeavor to align our efforts with global sustainability organizations and initiatives, including the United Nations
Global Compact, that contribute to broader calls to action and collective progress toward a healthier future. In 2021, we
joined the Science Based Targets initiative, and in connection with joining such initiative, we have adopted greenhouse
gas emissions reduction targets necessary to meet the Paris Agreement goals, including limiting global warming to 1.5°C
above preindustrial levels. In 2022, we announced our commitment to reach net zero greenhouse gas (GHG) emissions
by 2040.
2030 Sustainability Goals
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UN SDGs
United Nations Sustainable Development
Goals (UN SDGs) Alignment
Good Health and Well-being
Responsible Consumption and Production
Climate Action
#3
#8
#12
#13
Decent Work and Economic Growth
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2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Sustainability
2030 Sustainability Goals
Q
In calendar year 2021, continuing our purpose-driven journey, we developed and launched a comprehensive set of
long-term sustainability goals that focus on key areas where we can make a measurable, direct, and positive impact.
We established our 2030 sustainability goals against a framework centered on our world, our people, and our approach
to business practices spanning several pillars.
We are committed to:
z Reducing our environmental impact;
z Investing in our communities;
z Advancing a safe, inclusive, and respectful work environment for all;
z Partnering with our customers and suppliers to help mitigate value chain emissions; and
z Driving sustainability-focused practices with transparency.
Notable 2030 goals include:
z We commit to reduce absolute scope 1 and 2 GHG emissions 50% by 2030 from a 2019 base year(1).
z We commit to reduce total case incident rate (TCIR), a workplace health and safety metric, to below 0.2 by 2025.
z We commit that 50% of our ‘Preferred Suppliers’ will set their own GHG emissions reduction targets by 2025 and 100% of
‘Preferred Suppliers’ by 2030.
(1) The target boundary includes biogenic emissions and removals from bioenergy feedstocks.
Sustainability and Our People
Our global workforce of approximately 148,000 employees including our contractor workforce are some of the industry’s
best makers, problem-solvers, innovators, craftspeople, and leaders and represent a global mosaic of cultures,
experiences, expertise, perspectives, and abilities. We believe that our performance is driven by our workforce, who
move forward through a values-driven, high-performing, and dynamic culture underlined by integrity, collaboration,
resilient ingenuity and sustainability. To maintain competitiveness and world-class capabilities, we regularly review
and refine our human capital management programs, policies, and procedures to ensure that we consistently work
to attract, select, develop, engage and retain strong, diverse talent. Our policies, philosophy, and strategies support
the inclusion of all people in our working environment. Further, we are committed to respecting the human rights of our
employees and improving their quality of life.
Human Capital Management Governance
Because our employees are central to our success as a business, the Board plays an active role in overseeing our
human capital management efforts. The Compensation and People Committee of our Board is responsible for
assisting the Board in discharging this oversight duty and continues to work closely with the executive management
team in helping to shape our culture and focus efforts on developing formal human capital management and talent
development initiatives to better support our workforce as the Company continues to evolve.
The Compensation and People Committee’s oversight activities in this area include, among other aspects, receiving
periodic updates (not less than twice annually) regarding, and overseeing any significant change to, our human capital
management strategy including corporate culture, diversity and inclusion, pay and opportunity equity, social initiatives
and results, and talent attraction, training, development and retention programs. Additionally, the Compensation and
People Committee reviews the performance of and succession planning for our CEO and executive officers.
We are driven by purpose, inclusion, and
empowerment to come together from around the
world and build products that positively impact lives.
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2024 Proxy Statement
Sustainability
Sustainability and Our People
Q
Workplace Culture and Talent Management
Culture underlies our stakeholder experience. Our values are intended to reflect and guide our behaviors and shape
our culture. We endeavor for our values-driven culture to align us as we pursue our purpose, uphold our mission, live our
values, advance toward our vision, and activate our strategy.
In support of cultivating an inclusive, high-performing culture with our workforce, we continued to proliferate our “Ways
of Working,” four specific behaviors that bring our values to life through actions, provide a framework for how we make
decisions, and support ongoing progress on our Flex Forward strategy. The purpose of these behaviors is to enable us
to put our culture into practice and provide an accountability system through training and development as well as
performance management systems to ensure our desired behaviors become a part of our everyday working norms.
In calendar year 2023, we continued to drive awareness of and education on our leadership competencies to provide
a common language and framework for our people leaders throughout the organization as it relates to leadership
expectations, behaviors and skills necessary to lead the business and our people. Building on our vision, mission, values,
and Ways of Working, we use this framework to assess, hire, train, and nurture our talent to develop the skills necessary
for our ongoing success. In calendar year 2023, we continued regular communications and supporting our leaders
globally through quarterly training and team discussions to build an understanding of our Ways of Working, important
leadership expectations and inclusion practices. We also continued to execute programs to embed our culture into
our daily actions including employee engagement through surveys and roundtable discussions with our executive
leadership, development and volunteer programs, and recognition programs.
Diversity, Equity & Inclusion
Diversity, equity, and inclusion are key priorities and strengths at Flex and are embedded in the fabric of our culture. We
recognize the value of our human capital as an asset to our business. We also recognize that the sum of the individual
differences, life experiences, knowledge, inventiveness, innovation, self-expression, unique capabilities, and talent that our
employees invest in their work represents a significant part of our culture, enhances our reputation, contributes to our
success, and serves as a competitive advantage. We embrace and encourage our employees’ differences, and nurture a
sense of collective pride and belonging. We strive to ensure that all Flex employees are empowered to do their best and
are given opportunities to reach their full potential.
In the last year, we continued our efforts in this area through employee programs. Our employee resource groups (“ERGs”)
work to create a community that fosters belonging, builds cultural awareness, and develops a new generation of diverse
leaders at Flex by establishing a sustainable structure with executive support that challenges bias and promotes unity.
With approximately 15,000 members, we maintain ERG chapters globally across seven identities: Asian and Pacific Islander,
Black, LatinX, LGBTQ+, People with Disabilities, Women, and Veterans. Our ERGs help to create a sense of community and
support retention and attraction. Each ERG has an executive sponsor and is supported by senior leaders across the
Company. We also held cultural awareness activities throughout the year to highlight specific groups including People with
DiversAbilities Awareness Weeks, Black History Month, Asian Pacific Heritage Month, PRIDE Month, LatinX Heritage Month,
and Women’s History Month, among others. Our global awareness months create continuous learning opportunities and
strengthen our culture of inclusion across our diverse workforce.
In calendar year 2023, we continued to offer leadership development opportunities for underrepresented communities. In
partnership with McKinsey, we continued to offer leadership development offerings through their Management Accelerator
and Executive Leadership Program. We also continued SheLeads, our global leadership development program for women
employees, offered leadership coaching and peer-mentoring to 35 gender and ethnically diverse leaders, and continued
to implement on-demand inclusion training offerings. Additionally, we provided self-service tools and training on diversity,
equity and inclusion practices to help employees build self-awareness, empathy and cultural competency, embrace
inclusivity and improve diversity in recruiting. Furthermore, we leveraged external community partnerships with organizations
such as Catalyst, the Business Roundtable, the National Society of Black Engineers (NSBE), and Women in Electronics to
amplify our impact in recruiting and retaining diverse talent. Each of these initiatives contributes to our employees’ skills,
confidence, and readiness for career advancement, which improves our ability to promote from within.
As of March 31, 2024, women represented 44% of our global employees, and underrepresented minorities (those who
identify as Black/African American, Hispanic/Latinx, Native American, Asian/Pacific Islander and/or two or more races)
represented 52% of our U.S. employees. Approximately 21% of our executive team and approximately 23% of our leadership
team (director level and above) are female. Approximately 23% of our executive team and approximately 33% of our
U.S. leadership team (director level and above) are comprised of underrepresented minorities.
We continued efforts in support of our corporate goals to increase the number of employees and leaders from
underrepresented groups and are focused on evolving strategies and programs to help improve representation and
promote diversity across the organization. Additionally, we remain committed to parity in pay and opportunity.
11
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
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Sustainability
Sustainability and Our People
Q
Human Rights
We are committed to respecting the human rights of all people throughout our operations and in our value chain.
Accordingly, the Company works to foster a culture that respects and promotes human rights. Our commitment to human
rights is outlined in our Code of Business Conduct and Ethics. We have also adopted a Human Rights Policy to, among
other things, create awareness and establish expectations related to legal requirements, ethical practices, and human
rights. Our Human Rights Policy is aligned with the United Nations Guiding Principles on Business and Human Rights and
is inclusive of rights outlined in the United Nations Universal Declaration of Human Rights to the extent those rights apply
to business operations. It applies to our Company, all employees on a worldwide basis and to our value chain, including
our suppliers and vendors. We have also adopted a Company statement on forced labor and human trafficking which
describes our global practices to address forced labor. Additionally, we provide a Human Rights Policy micro-learning
course, available in 15 languages, with the objective of highlighting this policy for new employees.
In addition to these policies, Flex is an active participant in globally recognized external initiatives, including the UN Guiding
Principles on Business and Human Rights, as well as the Responsible Business Alliance (RBA), the world’s largest industry
coalition dedicated to responsible business conduct in global supply chains. Through the RBA’s efforts, including its
Responsible Labor Initiative, we work with others across industries to ensure that the rights of workers vulnerable to forced
labor in global supply chains are consistently respected and promoted. Flex is also an active member of the Global Business
Initiative on Human Rights. The mission of this organization is to advance human rights in a business context through
cross‑industry peer learning, outreach, and thought-leadership to shape policy and practice.
Talent Attraction, Development, and Retention
Talent attraction, development, and retention are critical to our success and core to our mission as a company. To support
the advancement of our employees, we provide training and development programs and opportunities encouraging
advancement from within while we continue to fill our team with strong and experienced external talent. We leverage both
formal and informal programs, including in-person, virtual, social and self-directed learning, mentoring, coaching, and
external development to identify, foster, and retain top talent. Employees have access to courses through our learning and
development platform, Flex Learn. In calendar year 2023, our employees completed more than six million hours of training
programs.
We are also focused on completing talent and performance reviews. Our in-depth talent reviews serve to identify high
potential talent to advance in roles with greater responsibility, assess learning and development needs, and establish and
refresh succession plans for critical leadership roles across the enterprise. We recently updated our performance ratings
to allow for more differentiation and clear performance feedback, and also integrated our values and Ways of Working
into our performance assessment process. Our performance assessment process promotes transparent communication
of team member performance, which we believe is a key factor in our success. The performance and the talent reviews
enable ongoing assessments, reviews, and mentoring to identify career development and learning opportunities for
our employees.
As a part of our efforts to improve employee experiences at Flex, we conduct the annual enterprise-wide employee
engagement Flex Voice survey. Our leadership uses the results of the survey to continue developing our strengths and
identify and take action on opportunities for improvement. This year, 93% of employees completed the Flex Voice survey and
the results reflected continued engagement.
Compensation and Benefits
Our total rewards are designed to attract, motivate, and retain employees at all levels of the Company. Our
compensation philosophy is driven by the desire to attract and retain top talent, while ensuring that compensation
aligns with our corporate financial objectives and the long-term interests of our shareholders. Our pay structures offer
competitive salaries, bonuses, and equity awards in the countries where we operate.
In each of the countries where we have operations, our comprehensive benefit plans offer a locally competitive mix
of some or all of the following: medical, dental and vision insurance, short and long-term disability, flexible spending
accounts, various types of voluntary coverage, and other benefit programs. We routinely benchmark our salaries and
benefits against market peers to ensure our total rewards package remains competitive.
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Sustainability
Sustainability and Our People
Q
Employee Health, Safety and Wellness
Flex is committed to providing a safe and injury-free workplace. We promote a “zero-injury” culture through health
and safety management systems that implement a data-driven and risk-based approach in monitoring and reporting
performance regularly. In calendar year 2023, we decreased our health and safety incident rate by 19% compared to
2022. Furthermore, as a part of our 2030 Sustainability Goals, we have committed to reducing total case incident rate to
below 0.2 by 2025 and to certifying all manufacturing operations as ‘RBA factory of choice’ by 2025.
We provide programs and tools aimed at improving physical, mental, financial, and social well-being. Our programs
give access to a variety of innovative, flexible, and convenient health and wellness programs for our global employees,
including on-site health centers in some of our major factories and providing all employees with access to emotional
and mental health programs.
2023 Sustainability Impact
During the 2023 calendar year, we continued our focus on sustainability activities as highlighted below.
Our World: Environmental and Community Achievements
z We engaged with local non-governmental organizations (NGOs) and promoted employee volunteerism to help
improve the quality of life in our communities and contribute to broader calls to action.
z From 79 sites around the world, over 53,000 employees participated in our seventh annual Earth Day Challenge by
planting over 17,400 trees and cleaning more than 7 million square meters of land, besides creating awareness to
care for our resources in innovative ways.
z We completed 953 community activities around the globe.
z Approximately 14,000 of our volunteers gave nearly 56,000 hours back to their local communities.(1)
z 100% of our major sites (sites with 1,000 or more employees) partnered with local NGOs in 2023.
(1) Number of volunteers are counted as participants of volunteering activities throughout the year (may include repeated employees).
Our People: Employee Health and Safety and Engagement Achievements
z We remain committed to fostering a safe, ethical, and inclusive work environment for all employees.
z We engaged our employees and received their feedback through coffee talks and town halls, lunch and learn
sessions, management workshops, leadership skills trainings, recognition programs and annual surveys, and continue
to undertake such employee engagement.
z For over a decade, we have supported our employees at certain facilities with access to ongoing education through
our employee scholarship program. Depending on the specifics of a site and the employee’s educational program,
we provide full or partial funding for our employees to receive external education and fulfill credentials including
technical certifications and undergraduate and graduate degrees.
z We ensure all of our sites have a health and safety management system, which we verify through audits, which follow
RBA methodology and are performed by our EHS team. Additionally, all sites are required to convene committees to
address safety issues and concerns and we undertake targeted respect and dignity audits of high-risk sites.
z In calendar year 2023, we decreased our health and safety incident rate by 19% compared to 2022.
z We are active members of different councils including Manufacturing Alliance, GBI on Human Rights, UN Global
Compact, Business for Social Responsibility (BSR) and the Boston College Center for Corporate Citizenship (BCCCC)
Advisory Board on ESG Reporting, among others.
z During our global People with DiversAbilities Awareness Weeks, approximately 40,000 employees participated in over
200 initiatives in several countries.
z We continued SheLeads, our global leadership development program for women employees, offered leadership
coaching and peer-mentoring to 35 gender and ethnically diverse leaders, and continued to implement on-demand
inclusion training offerings.
z We partnered with organizations such as the Business Roundtable, Catalyst, Women in Electronics, Women in
Automotive, and NSBE to amplify our impact in recruiting and retaining diverse talent.
z With approximately 15,000 members, our ERGs held several cultural awareness activities throughout the past year to
highlight specific groups including People with Diversabilities Awareness Weeks, Black History Month, Asian Pacific
Heritage Month, PRIDE Month, LatinX Heritage Month, and Women’s History Month.
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Sustainability
2023 Sustainability Impact
Q
Our Approach: Ethics, Supply Chain, Governance, and Partner Achievements
z Our Code of Business Conduct and Ethics, which we recently updated and refreshed in March 2023, guides the
behaviors and decision making of our employees, Board, contractors and all who do business with us.
z We provide a number of ways for employees and partners to voice concerns and receive assistance, from our
Ethics Hotline and Web Portal to our open door policy, through which we can provide guidance and prioritize the
investigation and remediation of ethics and compliance issues that arise.
z Flex was named one of the 2024 World’s Most Ethical Companies® by the Ethisphere Institute.
z We conduct regular due diligence activities for our suppliers to manage risks and evaluate sustainability performance.
We screened 100% of our new global suppliers using social and environmental criteria in calendar year 2023.
z We made progress on our goal to partner with our customers and suppliers to reduce greenhouse GHG through their
own emissions reduction targets. In 2023, 51% of our preferred suppliers set their own GHG reduction targets.
Sustainability Partnerships and Recognition
In addition to being a founding member of the RBA, we are also a member of the Responsible Minerals Initiative,
Global Business Initiative on Human Rights, GRI Community, the Business for Social Responsibility Network, the Business
Ethics Leadership Alliance by Ethisphere Company, the UN Global Compact Network, the Boston College Center
for Corporate Citizenship, the Ellen MacArthur Foundation, and Manufacturers Alliance. Flex has continued our
commitment to the World Business Council for Sustainable Development Pledge for safe water, sanitation, and hygiene
(WASH) access. Additionally, our CEO is a member of the Business Roundtable (“BRT”) and has signed the BRT Statement
on the Purpose of a Corporation, which declares that corporations have a role beyond meeting investors’ financial
expectations. Finally, our CEO is a member of the World Economic Forum’s Alliance of CEO Climate Leaders and The
Valuable 500, a global business collective comprised of CEOs and their companies committed to disability inclusion.
Our commitment to sustainability has earned us positive feedback from shareholders and recognition from some of the
most prestigious sustainability ratings agencies.
z Flex received strong marks from CDP (formerly known as Carbon Disclosure Project) for supplier
engagement, water security and climate change, receiving an A- in each category
z Flex maintained an AA rating from MSCI for the third consecutive year
z For the eighth consecutive year, Flex is a constituent of Financial Times Stock Exchange-Russell Group’s
FTSE4Good Index, receiving a score of 4.1 out of 5
z Flex was recognized as one of the 2024 World’s Most Ethical Companies® by the Ethisphere Institute
z Flex received a Platinum sustainability rating from Ecovadis in 2023
Flex
Sustainability
Rankings 2023
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2024 Proxy Statement
Sustainability
Sustainability Partnerships and Recognition
Further information regarding our sustainability program and achievements, including demographic data, can be
found in our annual sustainability reports at flex.com/company/sustainability. The information on our website and in the
sustainability reports is not a part of this proxy statement and is not incorporated by reference.
Q
Corporate Governance
We are proud of Flex’s legacy of corporate governance throughout the past 50+ years. We continually build on that legacy
with ethical business oversight, robust risk management, and pay-for-performance compensation programs in order to
ensure accountability to our shareholders, customers, employees, and communities.
Board of Directors
Our Board of Directors oversees and provides policy guidance on our strategic and business planning processes, oversees
the conduct of our business by senior management, and is principally responsible for the succession planning for our
key executives, including our Chief Executive Officer. We strive to maintain optimal board composition to ensure diverse,
insightful and dedicated oversight of our vision, purpose, and mission.
Board Leadership Structure
Our governance policies provide the Board with flexibility to select the appropriate leadership structure for Flex at any given
time, and do not preclude the CEO from also serving as Chair of the Board.
Our Board annually evaluates its leadership structure. In doing so, our Board considers the skills, experiences and
qualifications of our then-serving directors, the evolving needs of our business, and the functioning of our leadership
structure. During the Board’s recent evaluation, which took into account our Board succession plan, upon the
recommendation of the Nominating, Governance and Public Responsibility Committee, the Board concluded that the most
effective leadership structure for Flex at the present time is for the roles of CEO and Chair of the Board to be separated,
and for the Chair of the Board to be an independent director. Currently our Board of Directors believes that having an
independent Chair ensures a greater role for the independent directors in carrying out their oversight duties, and also
provides the continuity of leadership necessary for the Board to fulfill its responsibilities.
Ms. Advaithi has served as our Chief Executive Officer and a member of our Board of Directors since February 11, 2019.
The Board appointed Mr. Capellas, an independent director, as Chair of the Board in 2017. As previously announced,
Mr. Capellas is not standing for re-election at the annual general meeting, and Mr. Watkins, an independent director who
has served on our Board since 2009, will succeed Mr. Capellas as Chair, subject to Mr. Watkins’ re-election to the Board.
The following chart demonstrates how the Company has separated these two leadership roles.
Independent Chair of the Board
Chief Executive Officer
Michael D. Capellas (until annual meeting)
William D. Watkins (after annual meeting)
Revathi Advaithi
z Oversees CEO succession
z Oversees the Board evaluation process
z Calls meetings of the Board and
independent directors and presides at all
Board meetings and executive sessions of
the directors
z Provides management with feedback
regarding the information that is necessary
for the independent directors to effectively
and responsibly perform their duties
z Acts as a liaison between the
independent directors and the CEO on
sensitive/critical issues
z Sets strategic direction for the Company
z Provides day-to-day leadership over
Company operations
z Focuses on execution of business strategy,
growth and development
z Guides senior management through the
implementation of our strategic initiatives
z Sets the tone-at-the-top for company
culture
z Develops and oversees enterprise-wide
initiatives
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Meeting Attendance and Executive Sessions
96%
Overall attendance by directors
at the 7 Board meetings
during fiscal year 2024
98%
Overall attendance by directors
at Board and committee
meetings during fiscal year 2024
100%
Overall attendance
by directors at the
2023 Annual General Meeting
Each of our directors is committed to providing prudent oversight of our business through regularly scheduled meetings,
special meetings, ad hoc conversations, and time spent with management. In fiscal year 2024, our Board of Directors held
a total of 7 meetings, and our Audit Committee, Compensation and People Committee and Nominating, Governance
and Public Responsibility Committee held, collectively, 24 meetings. We have a rigorous attendance tracking program
and recorded an average attendance rate of 97.6% (with every director attending over 75% of the Board and applicable
committee meetings held during their period of service in fiscal year 2024).
All directors are encouraged to attend the annual general meeting, but attendance is not required. Every director who was
standing for re-election at the 2023 annual general meeting was in attendance.
Our independent directors generally meet in executive sessions at each regularly scheduled Board meeting without
management present in order to promote discussion and consideration of such matters as our independent directors
deem appropriate. During fiscal year 2024, our independent directors met in executive session at each regularly scheduled
Board meeting.
Director Independence
As required by the listing standards of The Nasdaq Stock Market LLC (“Nasdaq”), a majority of the members of our
Board must qualify as “independent,” as affirmatively determined by our Board. Flex’s director independence guidelines
incorporate the definition of “independence” adopted by Nasdaq. Using these guidelines, our Board has determined
that each of the Company’s directors, other than Ms. Advaithi, is independent. Mr. Marc A. Onetto was determined to be
independent during the period that he served as a director. This means that the directors designated as “independent” do
not have any business or family relationship that would interfere with the exercise of independent judgment in carrying out
the responsibilities of a director or has any otherwise disqualifying relationship.
In making the independence determinations, the Board and the Nominating, Governance and Public Responsibility
Committee considered certain transactions, relationships, and arrangements involving some of the directors and
concluded that such transactions, relationships, and arrangements did not impair the independence of the director. In
particular, the following relationships were considered:
Mr. Hurlston is the President and Chief Executive Officer and a member of the board of directors of Synaptics Incorporated
(“Synaptics”), with which Flex conducted business on an arms’-length basis in the ordinary course during fiscal year 2024.
In each of the last three fiscal years, payments that Flex made to, or received from, Synaptics for goods or services did not
exceed 1% of the Company’s or Synaptics’ consolidated gross revenues for that year and, therefore, fell significantly below
the 5% threshold in Nasdaq‘s independence standards.
Ms. McSweeney is the Executive Vice President and Chief People Officer of UnitedHealth Group Incorporated (“UHG”),
with which Flex conducted business on an arms’-length basis in the ordinary course during fiscal year 2024. In each of
the last three fiscal years, payments that Flex made to, or received from, UHG for goods or services did not exceed 1% of
the Company’s or UHG’s consolidated gross revenues for that year and, therefore, fell significantly below the 5% threshold
in Nasdaq‘s independence standards.
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Meeting Attendance and Executive Sessions
Q
In addition to the above, Messrs. Capellas, Harris, Hurlston, Stevens, and Watkins served as non-employee directors of other
companies with respect to which Flex purchased or sold goods and services on an arms’-length basis in the ordinary
course of its business during fiscal year 2024, including Avaya Holdings Corp., Astera Labs, Inc., Cisco Systems, Inc., Eastman
Chemical Company, and Nextracker Inc.
Director Selection and Board Refreshment
Our Board, led by the Nominating, Governance and Public Responsibility Committee, regularly considers Board succession
and refreshment, and also considers at least annually the skills needed on our Board as our business evolves, and strives
to achieve a balance and diversity of knowledge, experience, and capabilities on our Board and to ensure that our Board
has the benefit of a variety of skills derived from our directors’ business and professional experiences. To that end, the
Nominating, Governance and Public Responsibility Committee engages in Board succession planning by assessing the
need to adjust the size of the Board or supplement the Board’s expertise in a substantive area, and by determining whether
prospective nominees have relevant skills and experience. For more information on specific qualities and skills we look for in
potential directors, see Proposal 1, which begins on page 33.
Our Board does not have a policy to impose term limits or a mandatory retirement age for directors because such a
policy may deprive the Board of the service of directors who have developed, through valuable experience over time,
an increased insight into the Company and its operations. The Board believes that its regular consideration of Board
succession and refreshment, and its annual evaluation process for deciding whether to re-nominate individuals for election,
are currently more effective means of ensuring board refreshment and renewal, while also allowing for continuity of service.
The Board seeks to balance the deep Company and industry knowledge that comes from longer-serving directors with
fresh ideas and perspectives brought by newer directors. Accordingly, Flex has maintained a deliberate mix of newer-
and longer-tenured directors on the Board. Since June 2020, five new directors have joined our Board, three of whom are
either women or racially or ethnically diverse, and each of whom have different backgrounds and experiences to further
enhance the oversight of Flex’s strategic goals and initiatives and contribute to the expansion of the Board’s knowledge
and capabilities. The average tenure of the director nominees, under six years, reflects an appropriate balance between
different perspectives brought by newer- and longer-serving directors. Additionally, the Nominating, Governance and
Public Responsibility Committee oversaw board succession planning for the Chair of the Board role, and in May 2024 we
announced the succession of the role from Mr. Capellas, our current Chair, to Mr. Watkins following our annual general
meeting.
2020
John D. Harris ll
Michael E. Hurlston
Erin L. McSweeney
3 new directors added
2022
Maryrose T. Sylvester
Patrick J. Ward
2 new directors added
2024
William D. Watkins
to succeed
Michael D. Capellas
Chair of the Board succession
The Nominating, Governance and Public Responsibility Committee generally recruits, evaluates, and recommends
nominees for our Board based upon recommendations from our directors and management. From time to time, we retain
an independent, third-party search firm to help identify potential candidates. The Nominating, Governance and Public
Responsibility Committee will consider recommendations submitted by shareholders and will evaluate such prospective
nominees using the same standards that are applicable for all Board candidates. Shareholders can recommend qualified
candidates for our Board by contacting our company secretary at Flex Ltd., 2 Changi South Lane, Singapore 486123.
Submissions for individuals who meet the criteria outlined above will be forwarded to the Nominating, Governance and
Public Responsibility Committee for review and consideration. Shareholder recommendations for our 2025 annual general
meeting should be made before February 25, 2025 to ensure adequate time for meaningful consideration. We did not
receive any such recommendations from our shareholders for the 2024 annual general meeting.
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Director Selection and Board Refreshment
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Source Candidate
Pool from
� Independent
Search Firm
� Shareholders
� Directors
� Management
Nominate
Director
In-Depth Review by
the Committee
z Consider skills
matrix
z Screen
qualifications
z Consider diversity
z Review
independence
and potential
conflicts
z Meet with
directors
Recommend
Selected
Candidate for
Appointment to
Our Board
Review
by
Full
Board
Board Diversity
Our Board believes that a wide range of viewpoints is critical to effective board deliberations, corporate governance and
oversight. The Nominating, Governance and Public Responsibility Committee assesses board diversity through periodic
board composition evaluations.
The general attributes we expect all directors to have are high professional and personal ethics and values, an
understanding of the Company’s business and industry, advanced education, broad-based business acumen, and the
ability to think strategically. These meaningful skills and experiences are just one aspect of diversity that the Board highly
values. When reviewing potential board nominees, the Nominating, Governance and Public Responsibility Committee
considers the holistic diversity of the Board, including gender, race, ethnicity, age, and cultural background.
While the Company does not specify minimum criteria for candidates or establish specific goals with respect to diversity,
the Board’s overall diversity is a significant consideration in the director nomination process and is assessed annually when
the Board evaluates its overall effectiveness. Our Guidelines with Regard to Certain Governance Matters (“Governance
Guidelines”) and the charter of our Nominating, Governance and Public Responsibility Committee provide that the
Company and the Nominating, Governance and Public Responsibility Committee are committed to actively seeking
highly-qualified candidates that contribute to the diversity of background of our Board (including diversity of gender, age,
race, ethnicity and cultural background) for consideration when the Board undertakes director searches. As part of the
search process for each new director, the Nominating, Governance and Public Responsibility Committee seeks to include
women and racially/ethnically diverse individuals in the pool of candidates. When retaining a recruitment firm to assist with
identifying and evaluating potential director candidates, the Nominating, Governance and Public Responsibility Committee
sets clear expectations that candidate slates should include women and racially/ethnically diverse candidates in addition
to other characteristics, which both supplement and complement the existing Board.
This commitment to diversity is evidenced in the backgrounds, skills, and qualifications of our director nominees, some
of which is highlighted below, as well as the diversity of our executives, starting with our CEO, Revathi Advaithi who was
selected by the Board to lead Flex in 2019, and the diverse senior management team that reports to her.
z All but one of the Company’s director nominees (i.e., Ms. Advaithi) are independent, and all have a broad range of
experience in varying fields and industries
z 33% of the director nominees are women, and 33% are ethnically/racially diverse
z 78% of the director nominees hold or have held directorships at other U.S. public companies
z 67% of the director nominees have served as chief executive officers
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Director Commitments
In identifying candidates to serve on the Board and in its annual evaluation of whether to recommend the re-election of
existing directors, the Nominating, Governance and Public Responsibility Committee considers whether a candidate or
a director demonstrates a willingness to commit sufficient time to serving on our Board. In doing so, our directors’ outside
commitments, including their service on other public company boards and leadership roles on those boards, is considered.
Our Board recognizes “overboarding” concerns, is regularly updated on the public company board service limit policies
of our largest shareholders, and has formalized its policy limiting other board service in the Company’s Governance
Guidelines. Under our policy, absent Board approval, our directors may not serve on more than three other public company
boards in addition to our Board and a director who is the CEO of a public company may not serve on the board of more
than one other public company. Our Board believes that this policy strikes the right balance in being able to attract
exceptional director candidates while ensuring that these candidates have the necessary time to devote to our Board.
Each director is in compliance with the Company’s limits set forth in our other board service policy, other than Mr. Hurlston
for whom the Board has granted a time-bound exception. Since 2022, Mr. Hurlston has been a member of the board
of directors of Astera Labs Inc., which recently completed its initial public offering. He is also a member of the board of
directors and CEO of Synaptics. Considering this and Flex’s overboarding policy, our Board reviewed Mr. Hurlston’s time
commitments and ability to effectively serve on our Board and unanimously approved a policy exception, allowing him to
transition back into compliance within one year to facilitate a smooth transition of his board commitments.
In addition to these limitations, before accepting an invitation to serve on the board of any entity, each director is expected
to notify the Company and permit a reasonable time for review by the Nominating, Governance and Public Responsibility
Committee and the Board following which appropriate action would be taken.
Board’s Role in Risk Oversight
Flex’s enterprise risk management process is designed to identify risks that could affect our ability to achieve business goals
and strategies, to assess the likelihood and potential impact of significant risks to the Company’s business, and to prioritize
risk control and mitigation. Risk management oversight is an essential Board responsibility and our Board provides active
and independent oversight and guidance to management regarding the Company’s risk management. Our Board’s role
in risk oversight involves both the full Board and each of its standing committees.
The Board’s risk oversight governance framework is designed to enable it to understand critical near-, medium- and
long-term risks in the Company’s business and strategy, allocate responsibilities for risk oversight among the full Board
and its committees, evaluate the Company’s risk management processes and whether they are functioning adequately,
and engage in regular communications with management regarding risk developments, mitigation, major issues and
responsive actions.
The Board as a group is regularly updated on specific risks in the course of its review of corporate strategy and business
plans, and as part of regular reports to the Board by its standing committees. The Board believes that Flex’s leadership
structure, with an independent Chair, supports the Board’s risk oversight function by ensuring a strong role for the
independent directors. In addition, the Board has adopted robust governance practices to enhance its effectiveness.
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Board’s Role in Risk Oversight
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Board of Directors
Primary responsibility for risk oversight, and assigns specific oversight duties to the committees of the Board.
Oversees management’s systems for identifying and mitigating risks
Management
The following members of our executive and management teams regularly report on the Company’s risk
management policies and practices to relevant Board committees and to the full Board:
Chief Financial Officer
Chief Accounting Officer
General Counsel
Chief Ethics and Compliance Officer
Chief Human Resources Officer
Chief Information Officer
Chief Information Security Officer
Head of Internal Audit
Head of Sustainability
Audit
Committee
Reviews the Company’s policies
and practices with respect to
risk management, and oversees
the enterprise risk management
program.
Discusses with management the
Company’s major risk exposures
across various time horizons and the
steps taken to monitor and mitigate
such exposures.
Regularly reviews our cybersecurity
programs and policies and oversees
other risks relating to our information
controls and security.
Oversees major financial risk
exposures, as well as major capital
structure, operational, compliance,
reputational, and strategic risks,
including steps to monitor, manage
and mitigate those risks.
Regularly reviews select legal and
regulatory matters and Company
compliance policies and programs.
Nominating, Governance and
Public Responsibility Committee
Oversees corporate governance
policies and procedures and reviews
risks associated with our corporate
governance framework.
Regularly reviews Flex’s sustainability
program including the application
of social and environmental
policies and procedures. Assesses
and oversees ESG risks, including
corporate governance and climate
change risks.
Continuously assesses the
capabilities and independence
of the Board to ensure optimal
composition.
Oversees Board communications
and engagement with shareholders.
Compensation and
People Committee
Oversees executive compensation,
administration of our equity plans,
CEO succession planning and
employee compensation structure.
Monitors and oversees the
Company’s human capital
management strategy, including
corporate culture, diversity and
inclusion, pay and opportunity
equity, social initiatives and results,
and talent attraction, training,
development, and retention
initiatives. Includes periodic updates,
not less than twice annually.
Regularly reviews our compensation
practices with a view to assessing
associated risks. See “Compensation
Risk Assessment.”
Reviews conflicts of interest involving
advisors to the Compensation and
People Committee.
Flex has a resiliency framework that includes crisis management, cybersecurity and information technology, disaster
recovery and business continuity planning. Combined, these programs form a readiness umbrella for crisis situations
designed to meet the needs of our Company. Every crisis is situational, and the framework we have adopted is adaptable.
Our Board of Directors is regularly informed by our resiliency advisory, crisis management, and executive leadership teams
and remains actively engaged in identifying, monitoring, and mitigating the risks to Flex’s stakeholders that arise from
time to time. Outside advisors are consulted and brief our Board from time to time as part of this resiliency framework.
Our Board and each of its Committees are empowered to engage at any time with outside advisors to the extent deemed
appropriate related to risk oversight.
Our Audit Committee regularly reviews and discusses with management significant business, operational and reporting
risks and assesses the steps management is taking to control these risks, including specific critical risks identified by
our enterprise risk management program. Our Audit Committee also receives quarterly updates from our Chief Ethics
and Compliance Officer regarding legal and compliance matters including reports about the receipt and resolution of
employee or other concerns raised regarding financial reporting and other compliance matters.
In addition to the general oversight of the Company’s risks, during fiscal year 2024 the Board in particular continued its
oversight of the risks presented by cybersecurity concerns, as well as sustainability matters, as described further below.
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Sustainability Oversight
As discussed above, we recognize the importance of a strong foundation of sustainability governance. Our Nominating,
Governance and Public Responsibility Committee has primary responsibility for shaping and overseeing the Company’s
corporate governance, including our corporate responsibility and sustainability policies and programs, considering such
matters as human rights, social issues, and environmental risks and opportunities. The Nominating, Governance and Public
Responsibility Committee receives regular reports from Company management who review both recent activity and the
Company’s long-term sustainability strategies. Additionally, the committee reviews the Company’s annual sustainability
report, and regularly reviews and assesses current and emerging sustainability issues, trends, regulatory developments, and
best practices. Our Board engages in a bi-annual review of the Company’s sustainability program, which includes updates
on our sustainability efforts. In addition, our Compensation and People Committee also periodically reviews Flex’s human
capital management strategy, including corporate culture, diversity, equity and inclusion initiatives and high-level talent
attraction, retention and training programs.
Cybersecurity Oversight
We recognize that cyber risks are enterprise-wide issues for the Board to oversee. Our Audit Committee has primary
responsibility for overseeing risks associated with our information technology, including cybersecurity, including our plans
to mitigate cybersecurity risks and to respond to data breaches. The Audit Committee receives regular reports (at least
quarterly) from our Chief Information Security Officer (“CISO”) and our Chief Information Officer (“CIO”) on cybersecurity
matters. These reports include a range of topics, including our cybersecurity risk profile, the current cybersecurity and
emerging threat landscape, the status of ongoing cybersecurity initiatives, incident reports, and the results of internal
and external assessments of our information systems. The Audit Committee also annually reviews the adequacy and
effectiveness of our information and technology security policies and the internal controls regarding information and
technology security and cybersecurity, and periodically receives updates from our internal audit function on the results of
our cybersecurity audits and related mitigation activities. In addition, the full Board also receives briefings from our CISO
and CIO on cybersecurity matters twice annually. Should a material cyber incident rise to the level of a corporate crisis,
consistent with the Company’s crisis response protocols, the Board would be engaged.
Our cybersecurity program is led by our CISO and includes protocols for preventing, detecting, addressing, and responding
to cybersecurity incidents. Our program includes business continuity, disaster recovery planning and testing, and security
vulnerability assessments. As part of our information security training program, we provide annual cybersecurity awareness
training to equip our employees with information they need to understand the dangers of social engineering, detect
potential attacks, and take appropriate actions to protect our business with security best practices. From time to time, we
engage independent security firms to assess, audit, and certify components of our cybersecurity program. Our global
information security management program is ISO 27001:2013 certified.
Board’s Role in Succession Planning
The responsibilities of our Board, with the assistance of the Compensation and People Committee, include periodically
reviewing and assessing succession plans for the Chief Executive Officer position and for other executive officers in order
to ensure that Flex continues to have the talent we need to successfully develop and execute our strategy and conduct
our business. Our Board has a long-term and continuing program for effective senior leadership development and active
succession oversight.
On at least an annual basis, the Board, with the assistance of the Compensation and People Committee, performs
this review and assessment which includes strengths, opportunities, and information regarding diversity. In another
Board meeting, the Board also discusses development and retention of executive talent. Directors become familiar with
potential successors for key executive positions through various means, including regular organization and talent reviews,
presentations to the Board, and formal and informal meetings.
Board Evaluation Process
Our Board continually seeks to improve its performance, and self-evaluations are an annual undertaking at Flex. A
comprehensive self-evaluation framework allows the Board to assess its performance and practices and identify areas for
growth and improvement, and is critical to maintaining optimal Board effectiveness.
Our Nominating, Governance and Public Responsibility Committee oversees the formal annual evaluation process. Each
year, the committee determines the substance and structure of the evaluation for the Board, the Board committees,
and each individual director based on prevailing corporate governance practices. Our Board periodically engages
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Board Evaluation Process
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an independent third-party evaluation firm to augment the Board’s annual evaluation process. We believe that this
continuous feedback cycle, along with our formal annual evaluation process, contributes to the overall functioning and
ongoing effectiveness of our Board.
Our annual Board evaluations cover several areas, including the following:
Board, committee and individual director overall
performance and effectiveness
Quality and clarity of materials presented to directors
Board and committee structure and processes,
including leadership structure
Satisfaction with communication between meetings
Board and committee composition, including in
terms of skills, diversity, experience and other relevant
characteristics for the company
Satisfaction with Board and committee meeting
frequency and length, meeting agendas and meeting
content
Quality of Board and committee discussions and
balance between presentations and discussion
View on new director orientation and director
continuing education, and how they might be
improved
Board member access to the Chair of the Board, CEO
and other members of Company management
View on Board and committee evaluation process itself,
and how it might be improved
Below is a summary of our Board evaluation process:
Plan
Evaluations
The Nominating, Governance and
Public Responsibility Committee
determines the substance and
structure of the evaluation for
the Board, each committee, and
each individual director based
on considerations of recent
corporate governance and best
practices. Evaluation questionnaires
are prepared, reviewed by the
Nominating, Governance and
Public Responsibility Committee,
and finalized. The questionnaires
include open-ended questions
and promote candid commentary.
External corporate governance legal
counsel participated in the review
of the questionnaires and the Board
and committee self-evaluation
discussions for the fiscal year 2024
evaluation.
The questionnaires are distributed.
Additionally, our Board Chair
conducts one-on-one interviews with
committee chairs and individual
directors. The Board and committees
then have self-evaluation discussions
in executive session, with the option
of having internal or external legal
counsel present. Directors have the
option to be interviewed by external
legal counsel or in a private session.
Our Board Chair leads an open
discussion of the Board and
committee evaluation results at
the Board level. Separately, each
committee chair leads a discussion of
the applicable committee evaluation
at each committee meeting and
reports on their discussions to the full
Board. Directors have the option for
external legal counsel to participate
in and/or lead these discussions.
Using the results as a guide, the
discussion includes possible focus
areas and proposed actions, following
which they are communicated to
the Company’s management, as
appropriate.
Conduct
Evaluations
Review and
Implement Feedback
Based on director feedback received over the last several years through this evaluation process and through less formal
channels, including feedback provided by directors at meetings, management has adjusted the content and style of
its written materials and oral presentations for Board and committee meetings, and enhanced Board and committee
oversight topics and the frequency of reviews.
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Board Committees
Our Board has three standing committees: Audit Committee, Compensation and People Committee, and Nominating,
Governance and Public Responsibility Committee. The directors who serve on each of these committees have in-depth
and relevant experience, knowledge and expertise. In addition, all three standing committees are composed entirely
of independent directors, including, for the Audit and Compensation and People Committees, directors who meet the
heightened independence requirements prescribed by the SEC and Nasdaq for members of such committees. Our
Board has adopted, and annually reviews, a charter for each standing committee. All three charters are available on our
website under “Investor Relations—Governance.” All committees regularly meet in executive session without members of
management present. Each committee has the authority to engage outside advisors and counsel to the extent it considers
appropriate to assist the committee in its work. From time to time or as necessary, our Board also forms special committees
to provide oversight and/or review of specific matters.
Audit Committee
COMMITTEE
HIGHLIGHTS
12 meetings in
fiscal 2024
Attendance
98%
Members
z Charles K. Stevens, III (Chair)
z Michael E. Hurlston
z Lay Koon Tan
z Patrick J. Ward
Independence
Each member of
the committee is
independent and
financially literate.
Audit Committee
Financial Expert
Our Board has determined that
Messrs. Stevens, Hurlston, Tan and
Ward qualify as “audit committee
financial experts” as defined in
SEC rules.
Purpose
To assist the Board in overseeing Flex’s financial statements, accounting and financial reporting processes and systems of
internal control, independent auditors, capital structure and financial risk, cybersecurity, and compliance with legal and
regulatory requirements.
Key Responsibilities
z Facilitate Communication: Coordinate and facilitate communication regarding our financial statements and accounting
and financial reporting processes and systems of internal control among our independent auditors, our financial and senior
management and our Board.
z Auditor Appointment & Pre-Approval of Audit Services: Select, appoint and determine the compensation of our independent
auditors.
z Enterprise-Wide Risk Management, Legal, Ethical and Regulatory Compliance: Regularly review and guide management’s
identification, monitoring, and mitigation of enterprise-wide risks. Regularly review select legal and regulatory matters and
Company compliance policies and programs. Annually review the performance of the Chief Ethics and Compliance Officer
(CECO) and the Head of Internal Audit. The committee has authority to appoint or remove the CECO and/or the Head of
Internal Audit.
z Cybersecurity: Regularly review (at least quarterly) our cybersecurity programs and policies and oversee other risks relating to
the Company’s information controls and security. This includes reviewing the Company’s plans to mitigate cybersecurity risks
and to respond to data breaches, and reviewing annually the adequacy and effectiveness of the Company’s information and
technology security policies and the internal controls regarding information and technology security and cybersecurity.
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2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Corporate Governance
Board Committees
Q
Compensation and People Committee
COMMITTEE
HIGHLIGHTS
5 meetings in
fiscal 2024
Attendance
100%
Members
z Erin L. McSweeney (Chair)
z John D. Harris II
z Maryrose T. Sylvester
Independence
Each member of the committee is independent.
Purpose
To assist the Board in overseeing Flex’s compensation and succession of executive officers, administer equity plans, and
direct our global human capital management strategy.
Key Responsibilities
z Executive Compensation: Review and recommend to the Board the compensation of the Company’s CEO and the other
executive officers.
z CEO Succession: Assist the Board of Directors in succession planning for our CEO and other executive officers.
z Equity Compensation: Administer our equity compensation plans, including the granting of our incentive, equity-based
compensation awards.
z Human Capital Management Strategy: Oversee the Company’s global human capital management strategy, including
corporate culture, diversity and inclusion, pay and opportunity equity, social initiatives and results, and talent attraction, training,
development, and retention programs and results. Includes periodic updates, not less than twice annually.
Delegation of Authority
When appropriate, our Compensation and People Committee may form and delegate authority to subcommittees. In addition,
the Compensation and People Committee may delegate to our Chief Executive Officer its authority to grant equity awards to
employees who are not directors, executive officers, or other senior level employees who report directly to the Chief Executive
Officer.
Compensation and People Committee Interlocks and Insider Participation
No member of the Compensation and People Committee has ever served as an officer of Flex. None of our directors has
an interlocking or other relationship with another board or compensation committee that would require disclosure under
Item 407(e)(4) of SEC Regulation S-K.
Nominating, Governance and Public Responsibility Committee
COMMITTEE
HIGHLIGHTS
7 meetings in
fiscal 2024
Attendance
100%
Members
z Michael D. Capellas (Chair)*
z Erin L. McSweeney
z Charles K. Stevens, III
z William D. Watkins*
Independence
Each member of the committee is independent.
Purpose
To assist the Board in overseeing Flex’s board composition, shareholder communications, and environmental, social, and
corporate governance policies and procedures.
Key Responsibilities
z Board Performance, Composition and Compensation: Regularly review the composition and performance of the Board and
its committees and make recommendations to the Board regarding Board and committee membership. Review and make
recommendations to the Board regarding the compensation of non-employee directors for Board and committee service.
z Director Nominations: Identify, recruit, evaluate, and recommend to the Board individuals for appointment or election to serve
as directors consistent with criteria approved by the Board. In doing so, the committee considers the holistic diversity of the
Board, including experience, business acumen, gender, race, ethnicity, age, and cultural background.
z Environmental, Social, and Corporate Governance Policies: Shape and oversee our corporate governance, including the
Company’s corporate responsibility and sustainability policies and programs, considering such matters as human rights,
social issues, climate change, and environmental risks and opportunities. Regularly review and assess current and emerging
environmental, social, and corporate governance issues, trends, regulatory developments, and best practices. Review the
Company’s annual sustainability report.
z Shareholder Communications: Oversee Board communications and engagement with shareholders.
* Mr. Capellas is not standing for re-election to the Board at the 2024 annual general meeting. Mr. Watkins has been appointed by the Board to serve
as the Chair of the Nominating Governance and Public Responsibility Committee effective upon the conclusion of the 2024 annual general meeting,
subject to his re-election to the Board at the meeting.
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2024 Proxy Statement
Corporate Governance
Board Committees
Q
Director Orientation and Continuous Education
Flex is a complex company with a global workforce across approximately 30 countries to support our customers' entire
product lifecycle with a broad array of services in every major region. Our full suite of specialized capabilities include design
and engineering, supply chain, manufacturing, post-production and post-sale services. We partner with our customers across
a diverse set of industries including cloud, communications, enterprise, automotive, industrial, consumer devices, lifestyle,
healthcare, and energy. Essential to each director’s ability to provide robust and effective oversight is an understanding of
our business, our strategy and an ongoing awareness of the significant and emerging risks that we face. To gain such an
understanding and awareness, we offer our directors comprehensive orientation and continuing education programs.
The key objectives of our programs are to:
Allow directors to be well-informed and to expand their knowledge of trends and issues relevant to Flex’s business and
their role
Keep directors current on leading and next-level boardroom practices
Support directors in performing their oversight duties
Promote a deep understanding of emerging issues affecting our business so they can engage management in
knowledge-based discussions about associated opportunities, risks, and challenges
Strengthen any weaknesses of individual board members
Update directors’ knowledge about corporate governance issues, compliance matters and industry trends
New Director Orientation
When a new director joins the Board, we conduct an individualized orientation program to learn the roles and responsibilities
of the Board and the committees on which he or she will serve. The program includes, among other things, a review of the
Company’s purpose, strategy and our businesses and operations, technology and information security, sustainability, financial
condition, legal and regulatory framework, risk management, and other relevant topics. New directors speak or meet directly
with members of the executive team and other key employees to better understand our business and operations.
Director Continuing Education
We support current directors in their ongoing learning by offering continuing education opportunities. Each year, the
Nominating, Governance and Public Responsibility Committee designs the structure and substance of the annual director
continuing education program. The program may include presentations by thought leaders and industry experts, formal
education sessions, meetings with management subject matter experts, participation in industry forums, and site visits which
give directors a first-hand understanding of the operations of the business and an opportunity to interact with employees
and management. As part of our program, our directors regularly attend “deep dives” on current topics of interest.
In fiscal year 2024, director education topics included:
Deep dive sessions on geopolitical matters
Corporate governance best practices, trends and regulatory
developments
Sustainability trends, including investor views on sustainability,
and board and management roles and responsibilities with
regard to sustainability governance and disclosures
Talent management, organizational health, and diversity, equity
and inclusion
Cybersecurity and information systems risks and governance
and key developments
We also encourage our directors to participate in appropriate educational programs offered by organizations outside
of the Company, such as shareholder advisory firms, accounting firms, corporate governance trade organizations, law
firms, and universities, to assist our directors in maintaining their expertise in areas related to the work of the Board and the
directors’ committee assignments. The Company reimburses directors for all reasonable fees and expenses associated with
attending such programs, up to $10,000 per director in any fiscal year.
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2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Corporate Governance
Director Orientation and Continuous Education
Q
Stakeholder Engagement and Outreach
We believe that a robust stakeholder outreach program is an essential component of maintaining our strong corporate
governance practices. Ongoing communication with our stakeholders builds relationships, and helps our Board and
management team gather useful feedback on a wide range of topics and consider our stakeholders’ viewpoints. In our
discussions with investors, we seek their input on a variety of topics, including corporate governance, human capital
management, executive compensation, and sustainability topics, as well as any other topics or trends investors may wish to
discuss. We strive for a collaborative approach with investors to solicit and understand a variety of perspectives.
We engage on a year-round basis with a range of stakeholders, including not only our shareholders, but also our dedicated
workforce, trusted vendors, and global customers. As part of Flex’s dedication to having a positive impact on all of our
stakeholders, the Company has designed an engagement program that offers ongoing opportunities to provide feedback
and influence Flex’s corporate activity and sustainable growth.
Year-Round Shareholder Engagement
The Company’s Board of Directors and management team understand that engagement benefits both our shareholders
and the Company. Because ongoing shareholder engagement is a priority, we maintain a robust engagement program
throughout the year, as shown below.
z Engage with shareholders
on topics such as
sustainability, governance
and executive
compensation in order
to understand their
current perspectives
on our practices and
performance
z Publish annual report
and proxy statement,
discussing Board and
Company activities
z Engage with shareholders
and seek feedback on
matters presented for
their votes at our annual
general meeting
z Attend and participate
in investor and other
events to stay on top
of emerging trends or
concerns and maintain
a connection with our
investors
z Engage with
shareholders on topics
such as sustainability,
governance and
executive compensation
in order to understand
their current perspectives
on our practices and
performance
z Attend and participate
in investor and other
events to stay on top
of emerging trends or
concerns and maintain
a connection with our
investors
z Consider shareholder
feedback regarding
our sustainability,
governance and
executive compensation
practices
z Engage with shareholders
on topics such as
sustainability, governance
and executive
compensation in order
to understand their
current perspectives
on our practices and
performance
z Hold annual general
meeting of shareholders
and engage directly with
any shareholders who
attend the Company’s
annual general meeting
z Assess the results of the
proposals presented
to shareholders at the
annual general meeting
z Attend and participate in
investor and other events
to stay on top of emerging
trends or concerns and
maintain a connection
with our investors
z Following the annual
general meeting, the
Board and management
discuss the results from
the annual general
meeting and any other
feedback received
from shareholders and
determine if any follow-up
steps or actions should
be taken
z Potential shareholder
follow-up
z Review and consider
topics and approach for
shareholder engagement
z Attend and participate in
investor and other events
to stay on top of emerging
trends or concerns and
maintain a connection
with our investors
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Year-Round
Shareholder engagement
26
2024 Proxy Statement
Corporate Governance
Stakeholder Engagement and Outreach
Q
2024 Shareholder Engagement Highlights
Over the past twelve months, we proactively reached out to shareholders to solicit feedback about our business, corporate
governance, executive compensation and sustainability programs in one-on-one sessions. Through our quarterly financial
performance webcasts, analyst conferences and investor meetings we obtain and share shareholder feedback with our
Board and committees.
In September 2023, two of our top investors met with our full Board and executive leadership team at a Board meeting and
shared their perspectives on a variety of topics. In addition, in May 2024, we hosted a virtual “Investor and Analyst Day”
during which members of our executive leadership team discussed our fiscal year 2024 performance, as well as how we
are delivering on our commitments, outlined strategic initiatives to drive profitable growth, and provided an update on the
long-term financial framework.
Our outreach included our
top 20 investors as of
March 31, 2024 representing:
We heard from 9 of our top
20 investors on governance,
sustainability and other
topics representing:
11 of our top 20 investors either
confirmed that they had no
concerns to discuss or did not
respond representing:
66%
of our share
voting power
40%
of our share
voting power
26%
of our share
voting power
Shareholder Outreach Focus Areas
During these meetings, we listened to our shareholders’ feedback on the following topics, as well as additional
considerations.
z Sustainability-related matters, including our sustainability goals and performance and sustainability through the
circular economy
z Executive compensation program and pay-for-performance
z Human capital management efforts and labor practices
z Board composition, including refreshment
Overall, we received positive feedback on our current corporate governance, sustainability and compensation practices.
Corporate Governance Policies
Built upon our dedication to corporate governance, Flex has implemented a comprehensive corporate governance
framework that includes our Code of Business Conduct and Ethics (“CoBCE”), Governance Guidelines, and Board
committee charters. All are available on the Governance page of the Investor Relations section of our website.
Governance Guidelines
Our Governance Guidelines provides guidance and policy regarding director qualifications, committee structure, board
evaluations, director and officer share ownership, director independence, limits on other public company board service,
and related-party transactions.
27
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Corporate Governance
Corporate Governance Policies
Q
Code of Business Conduct and Ethics
Flex is a company built on relationships, and trust is the cornerstone of all relationships. We build on that trust by striving to
do the right thing always. Our values are shaped by a commitment to transparency, accountability, respect and inclusion.
In recognition of that commitment, we were named one of the World’s Most Ethical Companies® by the Ethisphere Institute
in 2024 for a second consecutive year.
Our CoBCE provides the framework of ethics that governs our business. Among other things, our CoBCE provides guidance
and policy regarding ethics, compliance, harassment, conflicts of interests, antitrust and competition, bribery, insider
trading, cyber and information security, and environmental protection. The CoBCE applies to all of our directors, officers, and
employees, and in fiscal year 2024 98.6% of our eligible employees worldwide completed online CoBCE training. In keeping
with SEC rules, we use the Investor Relations section of our website to disclose any substantive amendment to, or material
waiver from, any provision of the CoBCE that applies to our principal executive officer, principal financial officer, principal
accounting officer, controller, or any individual who performs similar functions.
Insider Trading Policy
We have adopted an insider trading policy that governs the purchase, sale, and other dispositions and transactions in our
securities by our directors, officers, and employees, which we believe is reasonably designed to promote compliance with
insider trading laws, rules, and regulations and applicable Nasdaq standards. A copy of our insider trading policy was filed
as Exhibit 19.01 to the Company's Annual Report on Form 10-K for the year ended March 31, 2024.
Shareholder Communications with our Board of Directors
Our shareholders may communicate with our Board of Directors by sending an e-mail to Board@flex.com. Communications
submitted to this e-mail address are regularly reviewed by the Company’s CEO, CFO, or General Counsel, and are
submitted to the Chair of the Board, the entire Board of Directors, or individual directors, as appropriate, depending on the
nature of the communication. Correspondence that is unrelated to the duties and responsibilities of the Board of Directors
will be redirected or excluded, as appropriate.
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2024 Proxy Statement
Corporate Governance
Shareholder Communications with our Board of Directors
Q
Fiscal Year 2024 Non-Employee Directors’
Compensation
Non-Employee Director Compensation Program
Objective of Non-Employee Director Compensation Program
The key objective of our non-employee director compensation program is to attract and retain a diverse group of highly
qualified directors with the necessary skills, experience, and character to serve on the Company’s Board of Directors. By
using a combination of cash and equity-based compensation, the Nominating, Governance and Public Responsibility
Committee intends to recognize the time commitment, expertise, and potential liability relating to active Board service,
while also aligning the interests of our directors with the long-term interests of our shareholders. For a further discussion
of the specific experience, attributes, skills and qualifications our directors bring to the Company, see “Proposal No. 1:
Re‑election of Directors – Skills, Qualifications and Diversity of Nominees” on page 34.
Review of Non-Employee Director Compensation Program
The Nominating, Governance and Public Responsibility Committee annually reviews and makes recommendations to our
Board for the compensation of our non-employee directors. Management, with input and guidance from our independent
compensation consultant, assists the committee in this task by compiling director compensation data from the annual
reports and proxy statements of companies in our peer comparison group. For information regarding our peer group, see
“Compensation Discussion and Analysis – Executive Compensation Peer Group” on page 52.
In fiscal year 2024, the Nominating, Governance and Public Responsibility Committee retained Frederic W. Cook & Co., Inc.
(“FW Cook”), to help the committee determine whether the compensation paid to our non-employee directors, including
the compensation of the Chair of the Board, is competitive when compared to the practices of our peers. The committee
reviewed, among other things, the existing cash compensation of our non-employee directors and the grant date fair
value of restricted share unit awards. With FW Cook’s assistance, the committee also considered compensation trends and
share ownership guidelines for non-employee directors. Based on the review, the committee recommended and the Board
approved the following changes for fiscal year 2024: (i) increasing the annual discretionary restricted share unit award
to an aggregate fair market value of $200,000 on the date of grant (from $185,000) and (ii) increasing the Chair of the
Board’s additional annual restricted share unit award to an aggregate fair market value of $100,000 on the date of grant
(from $50,000).
Components of Non-Employee Director Compensation Program
Our non-employee director compensation program consists of two components:
z Annual cash compensation, in amounts that vary based on committee and chair services; and
z Annual discretionary restricted share unit awards.
Non-employee directors can elect to receive their annual cash compensation, or any portion thereof, in the form of
fully vested, unrestricted shares of the Company. The share election option and structure of our non-employee director
compensation program emphasizes equity compensation, which rewards increases in stock price, over cash fees. The
Board of Directors believes our overall pay mix, which is consistent with peer practice, supports alignment of directors’
interests with those of our shareholders.
In addition to the compensation provided to our non-employee directors, each non-employee director is reimbursed for
any reasonable out-of-pocket expenses incurred in connection with attending in-person meetings of the Board of Directors
and Board committees, as well as for any fees incurred in attending continuing education courses for directors up to
$10,000 per director in any fiscal year.
We do not pay management directors for Board service in addition to their regular employee compensation. The
compensation paid to our management director, Ms. Advaithi, for services provided as our CEO is discussed in the sections
of this proxy statement titled “Compensation Discussion and Analysis” and “Executive Compensation.”
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2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Q
Fiscal Year 2024 Annual Cash Compensation
Under the Singapore Companies Act, we may only provide cash compensation to our non-employee directors for services
rendered in their capacity as directors with the prior approval of our shareholders at a general meeting. Our shareholders
approved the current cash compensation arrangements for our non-employee directors at certain of our previous
annual general meetings, with the most recent modifications approved at our 2017 annual general meeting. The current
arrangements include the following annual cash retainers, all of which are paid quarterly in arrears:
Amount
($)
Who receives
90,000
Each non-employee director
15,000
Each member of the Audit Committee and the Compensation and People Committee, including the chairs
40,000
Chairs of the Audit Committee and the Compensation and People Committee
8,000
Each member of the Nominating, Governance and Public Responsibility Committee, including the chair
15,000
Chair of the Nominating, Governance and Public Responsibility Committee
50,000
Chair of the Board, in addition to applicable retainers listed above
The cash compensation for non-employee directors who serve less than a full quarter is pro-rated for the number of days
actually served. Non-employee directors do not receive any non-equity incentive compensation or participate in any
pension plan or deferred compensation plan.
As discussed above, non-employee directors may receive their annual cash compensation in the form of Company shares,
cash, or a combination thereof, at the director’s election. Accordingly, each non-employee director can elect to receive
the annual retainer(s) described above, in whole or in part, in the form of fully vested, unrestricted Ordinary Shares of the
Company. A non-employee director making such an election will receive shares having an aggregate value equal to
the portion of cash compensation exchanged, with the value based on the closing price of our shares on the date the
compensation would otherwise have been paid in cash.
Fiscal Year 2024 Equity Compensation
Yearly Restricted Share Unit Awards
Each non-employee director is eligible to receive grants of restricted share unit awards at the discretion of our Board of Directors.
In accordance with the compensation program recommended by the Nominating, Governance and Public Responsibility
Committee and approved by the Board, each non-employee director receives, following each annual general meeting, a
restricted share unit award with an aggregate fair market value of $200,000 on the date of grant. These yearly restricted share
unit awards vest in full on the day immediately prior to the next year’s annual general meeting. During fiscal year 2024, each
non-employee director received a restricted share unit award covering 7,418 Ordinary Shares under this program. In connection
with the Spin-off of Nextracker, Inc., and in accordance with the terms of the Second Amended and Restated Employee Matters
Agreement by and among the Company and the other parties thereto (the “Employee Matters Agreement”), the number of
Ordinary Shares underlying each non-employee director’s restricted share unit award was adjusted to preserve their economic
value post-Spin-off. As a result, each non-employee director’s restricted share unit award increased by 2,183 Ordinary Shares, for
an aggregate of 9,601 Ordinary Shares underlying each non-employee director restricted share unit award granted during 2024.
For additional information regarding the restricted share unit award adjustment in connection with the Spin-off, see the section
titled “Compensation Discussion and Analysis—Long-Term Share-Based Incentive Compensation” of this proxy statement.
Initial Awards
Upon initially becoming a director of the Company, each non-employee director receives a pro-rated portion of the annual
restricted share unit award granted to our continuing directors. These awards vest on the date immediately prior to our next
annual general meeting.
Compensation for the Non-Employee Chair of the Board
In keeping with the Company’s philosophy pertaining to non-employee director compensation, the Nominating, Governance
and Public Responsibility Committee seeks to provide competitive compensation to the non-employee Chair of the Board
that recognizes the extensive time commitment and additional responsibilities the Chair role entails, while ensuring the Chair’s
interests remain aligned with the long-term interests of our shareholders. Flex’s current non-employee Chair, Mr. Capellas, brings
deep experience, a dedication to serving the Company, institutional knowledge, and strong leadership to Flex, among other skills
and qualifications (see also “Proposal No. 1: Re-election of Directors – Skills, Qualifications and Diversity of Nominees” on page 34).
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2024 Proxy Statement
Fiscal Year 2024 Non-Employee Directors’ Compensation
Fiscal Year 2024 Annual Cash Compensation
Q
Components of Compensation for the Non-Employee Chair
In addition to the cash and equity grants described above, our non-employee Chair is entitled to receive, following each
annual general meeting, an additional yearly restricted share unit award with an aggregate fair market value of $100,000
on the date of grant. This restricted share unit award will vest on the day immediately prior to the next year’s annual general
meeting. In connection with this portion of our non-employee director compensation program, during fiscal year 2024, the
Chair of the Board received a restricted share unit award covering 3,709 Ordinary Shares. In connection with the Spin-
off of Nextracker, Inc., and in accordance with the terms of the Employee Matters Agreement, the number of Ordinary
Shares underlying this restricted share unit award was adjusted to preserve its economic value post-Spin-off. As a result, this
restricted share unit award increased by 1,092 Ordinary Shares, for an aggregate of 4,801 Ordinary Shares underlying this
restricted share unit award. For additional information regarding the restricted share unit award adjustment in connection
with the Spin-off, see the section titled “Compensation Discussion and Analysis—Long-Term Share-Based Incentive
Compensation” of this proxy statement.
Non-Employee Director Share Ownership Guidelines
We require our non-employee directors to hold a minimum number of our Ordinary Shares equivalent to five (5) times
their annual cash retainer (currently $90,000) for serving as a director. Non-employee directors should reach this goal
within five years of the date they are elected to our Board. All of our non-employee directors have already met the share
ownership requirements or are on target to be in compliance with the requirements before the applicable deadline.
Director Summary Compensation in Fiscal Year 2024
The following table sets forth the fiscal year 2024 compensation for our non-employee directors.
Name
Fees Earned or
Paid in Cash
($)(1)
Share Awards
($)(2)
All Other
Compensation
($)
Total
($)
Michael D. Capellas
163,000
300,000
—
463,000
John D. Harris II
105,000
200,000
—
305,000
Michael E. Hurlston(3)
—
304,969
—
304,969
Erin L. McSweeney
153,000
200,000
—
353,000
Marc A. Onetto(4)
35,666
—
—
35,666
Charles K. Stevens, III
153,000
200,000
—
353,000
Maryrose T. Sylvester
105,000
200,000
—
305,000
Lay Koon Tan(5)
26,250
278,742
55,303
360,295
Patrick J. Ward
105,000
200,000
—
305,000
William D. Watkins(6)
98,000
200,000
292,781
590,781
(1) This column represents the amount of cash compensation earned in fiscal year 2024 for Board and Board committee service.
(2) This column represents the grant date fair value of restricted share unit awards granted in fiscal year 2024 in accordance with Financial
Accounting Standards Board Accounting Standards Codification Topic 718.The grant date fair value of restricted share unit awards is the closing
price of our Ordinary Shares on the date of grant. For additional information regarding the assumptions made in calculating the amounts
reflected in this column, see Note 5 to our audited consolidated financial statements for the fiscal year ended March 31, 2024, “Share-Based
Compensation,” included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024. No option awards were granted in fiscal
year 2024.
(3) In lieu of his cash compensation, Mr. Hurlston elected to receive fully vested Ordinary Shares of the Company under the non-employee director
share election program for his Board and Board committee service. As a result, Mr. Hurlston received restricted share units covering 4,582 Ordinary
Shares which vested immediately upon grant, the value of which is reflected in the table above under “Share Awards.”
(4) Mr. Onetto did not stand for re-election at the Company’s 2023 annual general meeting on August 2, 2023.
(5) In lieu of his cash compensation for the first three quarters of fiscal year 2024, Mr. Tan elected to receive fully vested Ordinary Shares of the
Company under the non-employee director share election program for his Board and Board committee service. As a result, Mr. Tan received
restricted share units covering 3,648 Ordinary Shares which vested immediately upon grant, the value of which is reflected in the table above
under “Share Awards.” Mr. Tan, a Singapore resident, incurred U.S. federal income and California state income taxes in addition to local taxes as
a result of serving on our Board. The Company paid $41,376 in U.S. federal income tax and $11,002 in California state income tax directly to the
relevant taxation authority on behalf of Mr. Tan, which taxes were incurred as a result of Mr. Tan’s meeting attendance at our offices in San Jose,
California and Austin, Texas during fiscal year 2024, and $2,925 for third-party tax return preparation and filing services during fiscal year 2024.
These amounts are reflected in the table above under “All Other Compensation.”
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2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Fiscal Year 2024 Non-Employee Directors’ Compensation
Director Summary Compensation in Fiscal Year 2024
Q
(6) During fiscal year 2024, Mr. Watkins also served as a director of Nextracker, which was a Flex subsidiary during a portion of fiscal year 2024
(from April 1, 2023 through January 2, 2024 when Flex completed the Spin-off of its remaining interests in Nextracker) (the “partial 2024 fiscal
year”). Accordingly, amounts reflected in the table above under “All Other Compensation” also reflect the following amounts of compensation
that Mr. Watkins received from Nextracker during the partial 2024 fiscal year for his service as a non-employee director of Nextracker:
Name
Fees Earned or
Paid in Cash
($)
Share Awards
($)
All Other
Compensation
($)
Total
($)
William D. Watkins
98,214
194,567
—
292,781
As of January 2, 2024, Mr. Watkins held Nextracker restricted stock unit awards covering 4,734 shares of Nextracker’s Class A common stock, par
value $0.0001 per share, which were granted to him on September 21, 2023 and vest on the last business day immediately preceding Nextracker’s
next annual meeting of stockholders, subject to his continued service as a director of Nextracker. The market value of the 4,734 restricted stock
units at the time of grant was $41.10 per share.
The table below shows the aggregate number of Ordinary Shares underlying unvested restricted share units held by
our non-employee directors as of the 2024 fiscal year-end:
Name
Number of Ordinary Shares
Underlying Outstanding
Restricted Share Units
(#)
Michael D. Capellas
14,402
John D. Harris II
9,601
Michael E. Hurlston
9,601
Erin L. McSweeney
9,601
Maryrose T. Sylvester
9,601
Charles K. Stevens, III
9,601
Lay Koon Tan
9,601
Patrick J. Ward
9,601
William D. Watkins
9,601
The non-employee directors do not hold any share options.
Treatment of Unvested Restricted Share Unit Awards upon a Change of Control
All of our non-employee directors have outstanding restricted share unit awards. Information regarding the treatment of
outstanding restricted share units upon a change of control is described in the section titled “Potential Payments Upon
Termination or Change of Control.”
32
2024 Proxy Statement
Fiscal Year 2024 Non-Employee Directors’ Compensation
Treatment of Unvested Restricted Share Unit Awards upon a Change of Control
Q
Proposals to be Considered at the 2024 Annual General
Meeting of Shareholders
Proposal No. 1: Re-election of Directors
Article 94 of our Constitution requires that at each annual general meeting, all of the current directors must retire from
office. Retiring directors are eligible for re-election.
Our Board is currently comprised of 10 members. Michael D. Capellas, a current director and the Chair of the Board, is
not standing for re-election and will be retiring from the Board pursuant to Article 94 of our Constitution, effective as of
the conclusion of the 2024 annual general meeting. Mr. Capellas joined the Board in 2014 and has made significant
contributions to the Company during his tenure. The Board and the Company’s management are very grateful to
Mr. Capellas for his for his valuable contributions during his many years of dedicated Board service. As previously
announced, William D. Watkins will succeed Mr. Capellas as our independent Chair of the Board following the annual
general meeting, subject to his re-election to the Board.
Upon the recommendation of our Nominating, Governance and Public Responsibility Committee, the Board of Directors
has nominated 9 of our incumbent directors who will retire from office at the 2024 annual general meeting as required
by Article 94 of our Constitution, for re-election. If all of the Board’s nominees are elected, the Board will be composed of
9 members immediately following the annual general meeting.
If any nominee under Proposal No. 1 fails to receive the affirmative vote of a majority of the shares present and voting on
the resolution to approve his or her re-election (that is, if the number of shares voted “FOR” the director nominee does not
exceed the number of votes cast “AGAINST” that nominee), he or she will not be re-elected and the size of the Board will be
reduced accordingly. Abstentions, if any, will have no effect.
The Singapore Companies Act provides that we must have at all times at least one director ordinarily resident in Singapore.
As Mr. Tan is the only member of our Board of Directors who is ordinarily resident in Singapore, if Mr. Tan is not re-elected
at the 2024 annual general meeting, he shall be deemed to continue in his role as a director until we appoint another
director to the Board who is ordinarily resident in Singapore.
The proxy holders intend to vote all proxies for the nominees for directors listed below under “Nominees to our Board of
Directors.” If any nominee is unable or declines to serve as a director at the time of the 2024 annual general meeting, the
proxies will be voted for any nominee designated by the present Board of Directors, in accordance with Article 99 of our
Constitution, to fill the vacancy. As of the date of this proxy statement, our Board of Directors is not aware of any nominee
who is unable or will decline to serve as a director.
The Board recommends a vote “FOR” the re-election of each of the Director nominees.
33
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Q
Nominees to our Board of Directors
Flex is committed to having a diverse and predominantly independent Board of Directors representing a range of critical
skills. Our nominees represent a responsible blend of longer-serving directors who have in-depth knowledge of our business
and newer members who bring fresh perspectives and additional skills.
89%
Independent
Board Independence
Independent (8)
Non-Independent (1)
33%
Female
Gender Diversity
Female (3)
Male (6)
33%
Diverse
Ethnic/Racial Diversity
Diverse (3)
Non-Ethnic/Racial minorities (6)
Director Nominee Demographics
5.9
Average
years of tenure
Board Tenure
<3 years (2)
3-6 years (5)
>10 years (2)
Skills, Qualifications and Diversity of Nominees
As discussed above, our Nominating, Governance and Public Responsibility Committee is responsible for assessing the
composition and performance of the Board and its committees, and for recruiting, evaluating, and recommending
candidates to be presented for appointment or election to our Board. As the below summary provides in additional detail,
our director nominees bring a variety of skills and experiences to the Board and reflect an appropriate combination of
qualifications to represent and further the long-term interests of the Company’s shareholders.
For this year’s election, the Board has nominated 9 individuals who bring valuable and diverse skills, experiences, and
characteristics to the Board. Their collective experience covers a wide range of geographies and industries. Three of these
nominees (33%) are women, and three nominees (33%) are racially/ethnically diverse. Further, our Board has a good balance
of experienced and new directors, with five of our incumbent director nominees having tenures of less than five years.
34
2024 Proxy Statement
Proposal No. 1: Re-election of Directors
Nominees to our Board of Directors
Q
The following matrix highlights many of the specific experience, attributes, skills and qualifications that our nominees for
director bring to the Company and that are considered when evaluating and recommending candidates for appointment
or election to our Board. Each director nominee has self-identified the following demographic information.
Charles K.
Stevens, III
Erin L.
McSweeney
Michael E.
Hurlston
John D.
Harris II
Revathi
Advaithi
Maryrose T.
Sylvester
Lay Koon
Tan
Patrick J.
Ward
William D.
Watkins
Strategic Skills
Environmental and
Sustainability
Human Capital Management
Global Operations
Supply Chain
Technology and Innovation
Information Systems
and Cybersecurity
Business Development and
Strategic Planning
Core Competencies
Public Company Board
Governance
Financial, Accounting
and Audit
Risk and Compliance
Industry Leadership
Background
Number of Additional Public
Company Boards
1
3
2
0
2
3
0
1
1
Gender
Female
Male
Male
Female
Male
Female
Male
Male
Male
Race/Ethnicity
Asian
Black /
Native
American
White
White
White
White
Asian
White
White
Independence
Tenure on Flex’s Board (years)
5
3
3
4
5
1
12
2
15
35
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Proposal No. 1: Re-election of Directors
Skills, Qualifications and Diversity of Nominees
Q
Strategic Skills
Environmental
and
Sustainability
Experience in environmental and sustainability topics, which is instrumental to Flex’s foundation of
sustainability governance and our position as a leader in sustainability efforts.
Human
Capital
Management
Experience in human resources, compensation and benefits, recruiting and retaining employees,
succession planning, and developing and maintaining a strong workplace culture. Our Board
recognizes that human capital management is a high priority for the Company as an important
component to maintaining our competitiveness and world-class capabilities and as we focus on
hiring and retaining the world’s best talent.
Global
Operations
Experience operating in a global context by managing international enterprises, residence abroad,
and studying other cultures adds impactful insight and diversity to our Board’s oversight of Flex’s
global footprint, including our workforce and operations in 30 countries across five continents, and
enables our Board to support management in producing solutions across international markets.
Supply Chain
Experience in executive positions overseeing supply chain management and exposure to supply
chain issues, which is invaluable in overseeing and guiding Flex’s supply chain services that involve
a network of over 100 locations across the globe.
Technology
and
Innovation
Experience in the technology sector and driving technological innovation enables our Board
to guide Flex’s strategy regarding the design and manufacturing of enterprise and consumer
products and advanced manufacturing solutions.
Information
Systems and
Cybersecurity
Experience in understanding the impact and increasing importance of information technology
and the cybersecurity threat landscape in our business and that of our customers, including
as a result of public company board service on a committee with cybersecurity risk oversight
responsibilities, is critical to an effective risk management program.
Business
Development
and Strategic
Planning
Executive level experience with business and customer development and long-term strategic
planning and execution, allows our Board to actively support the development and execution of
Flex’s long-term strategy and continued business transformation.
Core Competencies
Public
Company
Board
Governance
Experience on other public company boards provides insight into the dynamics and operations of
a corporate board, the relationship between a public company board to senior management and
stockholders, and the oversight of strategic, operational, and corporate governance-related matters,
and positions our Board to adopt best practices in public company corporate governance.
Financial,
Accounting
and Audit
Experience in accounting and audit functions and the ability to analyze financial statements
and oversee budgets provides critical oversight and support of Flex’s financial reporting and
responsibility to shareholders and other stakeholders.
Risk and
Compliance
Experience identifying, mitigating, and managing enterprise risks allows our Board to effectively fulfill
its risk oversight responsibilities.
Industry
Leadership
Experience in executive positions within the technology sector or within the manufacturing sector
enhances our Board’s ability to oversee management in areas that are fundamental to Flex’s
business, strategic plan, and growth.
36
2024 Proxy Statement
Proposal No. 1: Re-election of Directors
Skills, Qualifications and Diversity of Nominees
Q
The following table provides certain voluntary self-identified information regarding the composition of our Board members
in accordance with Nasdaq Listing Rule 5605(f), including Mr. Capellas, who is not standing for re-election at the annual
general meeting.
Board Diversity Matrix (as of June 25, 2024)
Board Size:
Total Number of Directors
10
Gender Identity:
Female
Male
Directors
3
7
Number of Directors Who Identify in Any
of the Categories Below:
African American or Black
—
1
Alaskan Native or Native American
—
1
Asian (other than South Asian)
—
1
South Asian
1
—
White
2
5
Two or More Races or Ethnicities
—
1
The Nominating, Governance and Public Responsibility Committee considered the specific experience described in the
biographical snapshots below in determining that each individual nominee should serve on our Board of Directors.
Revathi Advaithi
Chief Executive Officer,
Flex Ltd.
Director Since: 2019
Age: 56
Board Committee(s):
z None
Other Public Company Boards:
z Uber Technologies, Inc.
(since 2020)
Career Highlights:
z Chief Executive Officer of Flex since February 2019
z President and Chief Operating Officer, Electrical Sector, of Eaton Corporation plc, a power
management company (September 2015 to February 2019)
z President of Electrical Sector, Americas of Eaton (April 2012 to August 2015)
z Other positions of increasing responsibility at Eaton between 2008 and 2012, including
Vice President and General Manager of the Electrical Components Division
z Several senior roles within the sourcing and supply chain functions at Honeywell between 2002
and 2008, including Vice President and General Manager of Honeywell’s Field Solutions business
z Various positions at Eaton between 1995 and 2002, including leading the Electrical Sector in the
Americas and Asia-Pacific, with a three-year assignment in Shanghai
Skills and Qualifications:
z Current service as Flex’s Chief Executive Officer, as well as a broad and deep understanding
of Flex, the industries in which it participates, and the strategic actions necessary to deliver
long-term profitable growth, contributes indispensable knowledge and expertise to our Board
z Leadership experience in engineering, operations, logistics, and international supply chain
management
z Cybersecurity risk oversight experience as a member of the audit committee of another public
company board tasked with such responsibility
z Globally minded, purpose-driven leader with a deep commitment to our culture and our values
37
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Proposal No. 1: Re-election of Directors
Skills, Qualifications and Diversity of Nominees
Q
John D. Harris II
Retired Vice President of
Business Development,
Raytheon Company and
Chief Executive Officer,
Raytheon International, Inc.
Director Since: 2020
Age: 63
INDEPENDENT
Board Committee(s):
z Compensation and People
Other Public Company Boards:
z Cisco Systems, Inc.
(since 2021)
z ExxonMobil Corporation
(since 2022)
z Kyndryl Holdings, Inc.
(since 2021)
Career Highlights:
z Vice President of Business Development for Raytheon Company and Chief Executive Officer
of Raytheon International, Inc., a wholly-owned subsidiary of Raytheon Company, a global
engineering and technology company focused on aviation, space and defense. In this role,
he was responsible for worldwide sales and marketing, international business and government
relations operations, as well as leading the execution of the company’s global business strategy
(September 2013 to April 2020)
z Joined Raytheon in 1983 and held several leadership positions including Vice President and
General Manager of Raytheon’s Intelligence, Information and Services business (2012 to 2013);
President, Raytheon Technical Services Company (2010 to 2012); Vice President, Contracts and
Supply Chain for Raytheon (2005 to 2010); Vice President, Contracts for Raytheon’s government
and defense businesses; and Vice President of Operations and Contracts for Raytheon’s former
electronic systems business
z Served on the Radio Technical Commission for Aeronautics (RTCA) NextGen Advisory Committee,
the National Advisory Council on Minority Business Enterprise with the U.S. Department of
Commerce, and the Association of the United States Army’s Council of Trustees
Skills and Qualifications:
z Proven track record of success in developing and managing large scale global businesses, with
leadership in sales and marketing, supply chain, and government relations
z Technology, digital and cybersecurity experience as former president of Raytheon Technical
Services Company and as former general manager of Raytheon’s Intelligence, Information and
Services business, and as a board member of a public company global leader in information
security
z Competencies in talent management and culture development based on his CEO and
functional experience including having served as Raytheon’s Executive Diversity Champion,
leading the executive Diversity Leadership Team and providing strategic direction for the
company’s overall diversity and inclusion efforts
z Outside public and non-profit board experience and government service experience
Michael E. Hurlston
President and Chief
Executive Officer,
Synaptics Incorporated
Director Since: 2020
Age: 57
INDEPENDENT
Board Committee(s):
z Audit
Other Public Company Boards:
z Astera Labs Inc.
(since 2024)
z Synaptics Incorporated
(since 2019)
Recent Prior Public Company
Boards:
z Ubiquiti Networks, Inc.
(2016–2021)
Career Highlights:
z President and Chief Executive Officer of Synaptics Incorporated, a global leader in IoT
semiconductor solutions and human interface solutions combining IoT and AI (August 2019 to
present)
z Chief Executive Officer and a member of the board of directors of Finisar Corporation, a leader in
optical communications (January 2018 to August 2019)
z From 2001 to 2017, held various senior leadership positions in sales, marketing and general
management at Broadcom Limited, a leading developer and supplier of a broad range of
semiconductor solutions, and its predecessor corporation, including Senior Vice President
and General Manager of the Mobile Connectivity Products / Wireless Communications and
Connectivity Division
z Held senior marketing and engineering leadership positions at Oren Semiconductor, Inc.,
Integrated Circuit Systems, Inc., MicroPower Systems Inc., Exar Corporation and IC Works Inc.
from 1991 to 2001
z Serves on the Board of Executive Trustees of the UC Davis Foundation
Skills and Qualifications:
z Current public company CEO experience, as well as extensive leadership and operational
experience from his senior executive positions at several technology companies
z Deep experience in the semiconductor industry which provides our Board with valuable
perspectives directly relevant to our business
z Significant technology and global experience, holding advanced degrees in electrical
engineering and business administration, as well as a proven track record of growing large
businesses to achieve consistent profitable growth and market penetration
z Experience serving on public company, private company and non-profit boards
38
2024 Proxy Statement
Proposal No. 1: Re-election of Directors
Skills, Qualifications and Diversity of Nominees
Q
Erin L. McSweeney
Executive Vice President
and Chief People Officer,
UnitedHealth Group
Incorporated
Director Since: 2020
Age: 59
INDEPENDENT
Board Committee(s):
z Compensation and People
(Chair)
z Nominating, Governance
and Public Responsibility
Other Public Company Boards:
z None
Career Highlights:
z Executive Vice President and Chief People Officer of UnitedHealth Group Incorporated,
responsible for developing and implementing the company’s enterprise people and culture
strategy (March 2022 to present)
z Executive Vice President, Chief of Staff for CEO, UnitedHealth Group Incorporated (February 2021
to February 2022)
z Executive Vice President and Chief Human Resources Officer of Optum, Inc., the global health
services platform of UnitedHealth Group Incorporated with 180,000 employees worldwide
(January 2017 to February 2021)
z Several positions of increasing responsibility during her 11-year career at EMC (now Dell EMC),
including Executive Vice President and Chief Human Resources Officer (2015 to 2016); Senior
Vice President, Human Resources, Products and Marketing (2013 to 2015); and Chief Human
Resources Officer and Vice President, Virtual Computing Environment (2009 to 2012)
z Held several other CHRO roles across various industries
Skills and Qualifications:
z Highly experienced strategic change agent with a track record of elevating organizational
performance and strengthening cultural values, having served more than 30 years as a human
capital management professional
z Champion of diversity, equity and inclusion initiatives, in both her executive roles and as a
representative at external DE&I forums
z Expertise in leading all strategic and operational aspects of human resources, including
organizational design, talent acquisition and management, total rewards, employee
development, performance management, and succession planning
z Background and insights position her to oversee best practices in executive compensation and
human capital management
Charles K. Stevens, III
Retired Executive Vice
President and Chief
Financial Officer, General
Motors Company
Director Since: 2018
Age: 64
INDEPENDENT
Board Committee(s):
z Audit (Chair)
z Nominating, Governance
and Public Responsibility
Other Public Company Boards:
z Genuine Parts Company
(since 2024)
z Masco Corporation
(since 2018)
Recent Prior Public Company
Boards:
z Eastman Chemical
Company (2020-2024)
z Tenneco Inc. (2020-2022)
Career Highlights:
z Retired from General Motors Company (GM) in March 2019 after a 40-year career at the global
automotive company that designs, manufactures, markets, and distributes vehicles and vehicle
parts, and sells financial services
z Executive Vice President and Senior Advisor of GM (September 2018 to March 2019)
z Executive Vice President and Chief Financial Officer of GM, responsible for leading GM’s financial
and accounting operations worldwide (January 2014 to September 2018)
z Chief Financial Officer of GM North America (2010 to 2014); Interim Chief Financial Officer of GM
South America (2011 to 2013); led GM’s financial operations for GM Mexico (2008 to 2010) and
GM Canada (2006 to 2008)
z From 1994 to 2005, held several leadership positions in GM’s Asia-Pacific region including China,
Singapore, Indonesia, and Thailand
Skills and Qualifications:
z As the former chief financial officer of GM, brings significant leadership experience in financial
and accounting operations of a large, global publicly held manufacturing company
z Provides a valuable understanding of international financial matters, risk evaluation and
management, mergers and acquisitions, and consumer goods
z Extensive experience in the automotive industry which provides our Board with valuable
perspectives directly relevant to our business
z Outside current and past public company board experience, with particular focus on audit
committee service and leadership, which includes cybersecurity risk oversight experience as a
member of audit committees of public company boards tasked with such responsibility
39
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Proposal No. 1: Re-election of Directors
Skills, Qualifications and Diversity of Nominees
Q
Maryrose T. Sylvester
Retired U.S. Managing
Director and U.S. Head of
Electrification, ABB Ltd
Director Since: 2022
Age: 58
INDEPENDENT
Board Committee(s):
z Compensation and People
Other Public Company Boards:
z Harley-Davidson, Inc.
(since 2016)
z Vontier Corporation
(since 2021)
z Waste Management, Inc.
(since 2021)
Career Highlights:
z U.S. Managing Director and U.S. Head of Electrification of ABB Ltd, a global technology company
operating in the areas of electrification, robotics, power, and automation (June 2019 to August 2020)
z Held a broad range of leadership roles during more than 30 years at GE, including President and
CEO of Current, a digital power service business delivering integrated energy systems (2015 to June
2019); President and CEO of GE Lighting, a leading global lighting provider (2011 to 2015); and
President and CEO of GE Intelligent Platforms, an industrial automation provider (2006 to 2011)
z Global supply chain experience during tenure at GE including as Director of Sourcing for GE Lighting
in Budapest, Hungary, and Global Sourcing Director for GE Lighting
Skills and Qualifications:
z Extensive experience in leading and transforming global industrial businesses, focused on
innovation, operational improvement, and supply chain and logistics management
z Significant knowledge and expertise in product development and delivering
technology-enabled and energy-efficient, sustainable solutions
z Experienced leader of diversity, equity and inclusion initiatives, including as leader of ABB’s
Encompass diversity program and a founding member and cabinet leader of GE’s Women’s
Network
z Experience serving on large public company, private company and non-profit boards, which
includes cybersecurity risk oversight experience as a member of the audit committee of another
public company board tasked with such responsibility
Lay Koon Tan
Retired President, Chief
Executive Officer and
member of the Board
of Directors, STATS
ChipPAC Ltd.
Director Since: 2012
Age: 65
INDEPENDENT
Board Committee(s):
z Audit
Other Public Company Boards:
z None
Career Highlights:
z Founding President and Chief Executive Officer and a member of the board of directors of
STATS ChipPAC Ltd., a leading service provider of semiconductor packaging design, bump,
probe, assembly, test and distribution solutions (2004 to 2015), after leading the formation of
the company, and its predecessor, ST Assembly Test Services Ltd. (2002 to 2004). Mr. Tan joined
ST Assembly Test Services Ltd. in 2000 as its Chief Financial Officer.
z Investment banker with Salomon Smith Barney, the global investment banking unit of
Citigroup Inc.
z Various senior positions in government and financial institutions in Singapore, including the
United Overseas Bank Limited
z Holds a Bachelor of Engineering from the University of Adelaide, Australia where he was
a Colombo Plan Scholar, and a Master of Business Administration from the University of
Pennsylvania’s Wharton School of Business, where he was a Palmer Scholar
Skills and Qualifications:
z Deep financial expertise and experience in investment matters and business development
z Experience in driving innovation and growth through entrepreneurial endeavors in the
technology sector, including in the semiconductor industry
z Executive leadership experience, serving as a chief executive officer and chief financial officer of
leading global technology-based businesses
40
2024 Proxy Statement
Proposal No. 1: Re-election of Directors
Skills, Qualifications and Diversity of Nominees
Q
Patrick J. Ward
Retired Vice President and
Chief Financial Officer,
Cummins Inc.
Director Since: 2022
Age: 61
INDEPENDENT
Board Committee(s):
z Audit
Other Public Company Boards:
z Corteva, Inc. (since 2019)
Recent Prior Public Company
Boards:
z DowDuPont Inc.
(2017-2019)
Career Highlights:
z Vice President and Chief Financial Officer of Cummins Inc., a global power leader that designs,
manufactures, distributes and services engines and related technologies (2008 to March 2019)
z Held a broad range of financial leadership positions after joining Cummins in 1987, including
serving as vice president, engine business controller, and executive director, power generation
business controller
z Prior to joining the Board of Corteva, Inc., Mr. Ward served as a director of E.I. du Pont de Nemours
and Company, Inc. and remained a board member through its merger with DowDuPont Inc.
Skills and Qualifications:
z Broad experience across finance, risk management and strategy from his extensive experience as
a chief financial officer and executive of a global public company
z Significant financial expertise, including in financial reporting, public accounting, capital markets,
investment management and investor relations, through a broad range of global financial
leadership positions including as a public company chief financial officer
z Several years of experience serving on public company boards, with particular focus on audit
committee service and leadership, which includes cybersecurity risk oversight experience as a
member of the audit committee of another public company board tasked with such responsibility
William D. Watkins
Retired Chief Executive
Officer, Imergy Power
Systems, Inc.
Director Since: 2009
Age: 71
INDEPENDENT
Board Committee(s):
z Nominating, Governance
and Public Responsibility
Other Public Company Boards:
z Nextracker Inc. (since 2023)
Recent Prior Public Company
Boards:
z Avaya Holdings Corp.
(2017-2023)
z Maxim Integrated Products,
Inc. (2008-2021)
Career Highlights:
z Chief Executive Officer (September 2013 to August 2016) and Chairman of the Board
(January 2015 to August 2016) of Imergy Power Systems, Inc., a leading innovator in cost-effective
energy storage solutions
z Chairman of the Board (February 2013 to December 2013) and Chief Executive Officer (2010 to
February 2013) of Bridgelux, Inc., a leading light emitting diode (LED) developer
z Chief Executive Officer (2004 to 2009) and President and Chief Operating Officer (2000 to 2004)
of Seagate Technology, a provider of electronic data storage solutions and systems, responsible
for Seagate’s hard disc drive operations, including recording heads, media, and other
components, and related R&D and product development organizations
z Various other positions with Seagate Technology (1996 to 2000)
Skills and Qualifications:
z Extensive operational and management experience, including as CEO and COO, leading
technology manufacturing businesses on a global scale
z Deep understanding of the electronics and semiconductor industries which provides our Board
with valuable perspectives directly relevant to our business
z Technology, digital and cybersecurity experience as an executive serving businesses in
encryption, enterprise, desktop, mobile computing, and electronics industries
z Outside current and past board experience as a director of various public companies
The Board believes that Mr. Watkins’ extensive experience and tenure on our Board makes him very
well suited to serve as the independent Chair of our Board.
41
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Proposal No. 1: Re-election of Directors
Skills, Qualifications and Diversity of Nominees
Q
Proposal No. 2: Re-Appointment of Independent Auditors
for Fiscal Year 2025 and Authorization of
our Board to Fix Their Remuneration
Our Audit Committee has approved, subject to shareholder approval, the re-appointment of Deloitte & Touche LLP as the
Company’s independent registered public accounting firm to audit our financial statements and records for the fiscal
year ending March 31, 2025, and to perform other appropriate services. In addition, pursuant to Section 205(16) of the
Singapore Companies Act, our Board of Directors is requesting that the shareholders authorize the directors, upon the
recommendation of the Audit Committee, to fix the auditors’ remuneration for services rendered through the 2025 annual
general meeting. We expect that a representative from Deloitte & Touche LLP will be present at the 2024 annual general
meeting. This representative will have the opportunity to make a statement and is expected to be available to respond to
appropriate questions.
Deloitte & Touche LLP has been the Company’s independent registered public accounting firm since 2002. The Company
has been advised by Deloitte & Touche LLP that neither it nor any of its associates has any direct or material indirect
financial interest in the Company.
Principal Accountant Fees and Services
Set forth below are the aggregate fees billed by Deloitte & Touche LLP, a member firm of Deloitte Touche Tohmatsu, and its
respective affiliates for services performed during fiscal years 2024 and 2023. All audit and permissible non-audit services
reflected in the fees below were pre-approved by the Audit Committee in accordance with established procedures.
(in millions)
Fiscal year
2024
($)
2023
($)
Audit Fees
14.4
14.1
Audit-Related Fees
0.1
0.1
Tax Fees
1.3
1.3
All Other Fees
—
—
Total
15.8
15.5
Audit Fees consist of fees for professional services rendered by our independent registered public accounting firm for the
audit of our annual consolidated financial statements included in our Annual Report on Form 10-K (including services
related to rendering an opinion under Section 404 of the Sarbanes-Oxley Act of 2002) and the review of our consolidated
financial statements included in our Quarterly Reports on Form 10-Q. These fees include fees for services that are normally
incurred in connection with statutory and regulatory filings or engagements, such as comfort letters, statutory audits, and
consents and the review of documents filed with the SEC. Audit fees in fiscal year 2024 includes $1.7 million in non-recurring
fees related to Nextracker Inc.’s follow-on to its initial public offering and spin-off.
Audit-Related Fees consist of fees for assurance and related services by our independent registered public accounting
firm that are reasonably related to the performance of the audit and not included in Audit Fees.
Tax Fees consist of fees for professional services rendered by our independent registered public accounting firm for tax
compliance, tax advice, and tax planning services, including assistance regarding federal, state and international tax
compliance, return preparation, tax audits and customs and duties.
All Other Fees consist of fees for professional services rendered by our independent registered public accounting firm for
permissible non-audit services.
Audit Committee Pre-Approval Policy
Our Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by our independent
registered public accounting firm. These services may include audit services, audit-related services, tax services and other
services. Pre-approval is generally provided for up to one year, and any pre-approval is detailed as to the particular service
or category of services. The Audit Committee has delegated to its Chair pre-approval authority of up to $500,000, provided
that any such decisions are required to be reported to the Audit Committee at its next regularly scheduled meeting.
The independent registered public accounting firm and management are required to periodically report to the Audit
Committee regarding the extent of services provided by the independent registered public accounting firm in accordance
with this pre-approval, and the fees for the services performed to date. The Audit Committee also may pre-approve
particular services on a case-by-case basis.
42
2024 Proxy Statement
Q
Our Audit Committee has determined that the provision of non-audit services under appropriate circumstances may be
compatible with maintaining the independence of Deloitte & Touche LLP, and that all such services provided by Deloitte
& Touche LLP to us in the past were compatible with maintaining such independence. The Audit Committee is sensitive to
the concern that some non-audit services, and related fees, could impair independence. However, the Audit Committee
also recognizes that in some areas, services that are identified by the relevant regulations as “tax fees” or “other fees” are
sufficiently related to the audit work performed by Deloitte & Touche LLP that it would be highly inefficient and unnecessarily
expensive to use a separate firm to perform those non-audit services. The Audit Committee intends to evaluate each such
circumstance on its own merits, and to approve the performance of non-audit services where it believes efficiency can be
obtained without meaningfully compromising independence.
The Board recommends a vote “FOR” the re-appointment of Deloitte & Touche LLP as our independent auditors
for fiscal year 2025 and authorization of the Board, upon the recommendation of the Audit Committee, to fix their
remuneration.
Message from the Audit Committee
We, the members of Flex’s Audit Committee, assist our Board of Directors in overseeing financial accounting and reporting
processes; systems of internal controls; the appointment, compensation and oversight of our external auditor; and our
compliance with legal and regulatory requirements. We are committed to the values of independence and transparency
in the discharge of our duties.
In furtherance of independent oversight, our Audit Committee is composed entirely of independent and financially literate
directors, including four audit committee financial experts. Further, we annually assess the independence of our external
auditors considering any non-audit fees or services and the tenure of our lead audit partner.
We also take measures to ensure transparency between ourselves, members of management, and our external auditors
including holding regular private sessions with external auditors, maintaining open lines of communication with members
of management, and performing annual assessments of the qualifications and work quality of our external auditors.
We typically hold at least 8 meetings each fiscal year, in connection with regularly scheduled Board meetings and the
filing of quarterly and year-end financial results. Additionally, we meet as needed to address emerging concerns including
financial and accounting practices and ethics and compliance concerns. Specifically, in discharging our oversight duties
at each regularly scheduled Audit Committee meeting, we:
z review and discuss with management and Deloitte & Touche LLP our quarterly earnings press releases, related periodic
reports filed with the SEC, and our audited financial statements for the fiscal year, as well as the overall quality of our
financial reporting process;
z receive updates from Flex’s Chief Ethics and Compliance Officer (“CECO”) regarding legal and compliance matters
including reports about the receipt and resolution of employee or other concerns raised regarding financial reporting
and other compliance matters, and annually review the performance of the CECO;
z receive updates from Flex’s Vice President of Internal Audit regarding internal audit and risk management matters
including the Audit and Risk Management Services reports, and annually review the performance of the Vice President of
Internal Audit;
z review and discuss accounting and tax regulatory, procedural, and program updates;
z review and discuss with management, internal audit and Deloitte & Touche LLP the evaluation, execution, and
effectiveness of the Company’s internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley
Act of 2002;
z review and discuss topics regarding information security and cybersecurity risks, which includes receiving regular
updates from Flex’s Chief Information Officer and Chief Information Security Officer, and the Company’s strategy to
mitigate these risks; and
z review and discuss with management significant business, operational and reporting risks and assess the steps
management is taking to control these risks, including specific critical risks identified by our enterprise risk management
program.
For an exhaustive discussion of our responsibilities, we invite you to review our Audit Committee charter which we assess on
an annual basis and revise, if necessary.
43
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Proposal No. 2: Re-Appointment of Independent Auditors for Fiscal Year 2025 and Authorization of our Board to Fix Their Remuneration
Message from the Audit Committee
Q
Audit Committee Report
The Audit Committee has reviewed and discussed with management and with our independent auditors, Deloitte & Touche
LLP, our audited consolidated financial statements for the fiscal year ended March 31, 2024, as well as management’s
assessment and our independent auditors’ evaluation of the effectiveness of our internal control over financial reporting
as of March 31, 2024. Flex management represented to the Audit Committee that our audited consolidated financial
statements were prepared in accordance with accounting principles generally accepted in the United States of America.
The Audit Committee also discussed with our independent auditors the matters required to be discussed by the applicable
rules of the Public Company Accounting Oversight Board and the SEC. The Audit Committee also has discussed with
our independent auditors the firm’s independence from Company management and the Company and reviewed the
written disclosures and letter from the independent registered public accounting firm required by applicable requirements
of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s
communications with the Audit Committee concerning independence. The Audit Committee also has considered whether
the provision of non-audit services by our independent auditors is compatible with maintaining the independence of
the auditors. The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by our
independent auditors. All audit and permissible non-audit services performed by our independent auditors during fiscal
years 2024 and 2023 were pre-approved by the Audit Committee in accordance with established procedures.
Our independent auditors perform an independent audit of our consolidated financial statements in accordance with
generally accepted auditing standards and express an opinion on these consolidated financial statements. In addition,
our independent auditors express their own opinion on the effectiveness of our internal control over financial reporting.
The Audit Committee monitors these processes.
Based on the Audit Committee’s discussions with management and our independent auditors and based on the Audit
Committee’s review of our audited consolidated financial statements, together with the reports of our independent auditors
on the consolidated financial statements and the representations of our management with regard to these consolidated
financial statements, the Audit Committee recommended to the Company’s Board of Directors that the audited
consolidated financial statements be included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024,
which was filed with the SEC on May 17, 2024.
Submitted by the Audit Committee of the Board of Directors:
Charles K. Stevens, III
Michael E. Hurlston
Lay Koon Tan
Patrick J. Ward
44
2024 Proxy Statement
Proposal No. 2: Re-Appointment of Independent Auditors for Fiscal Year 2025 and Authorization of our Board to Fix Their Remuneration
Audit Committee Report
Q
Proposal No. 3: Non-Binding, Advisory Resolution on
Executive Compensation
We are asking our shareholders to approve, in a non-binding, advisory vote, the compensation of our named executive
officers (NEOs) as reported in this proxy statement in the “Compensation Discussion and Analysis” and the compensation
tables and accompanying narrative disclosure under “Executive Compensation.”
Flex’s compensation philosophy is that pay should be meaningfully aligned with performance. Our pay programs are
designed to tie actual pay delivery for our executives to performance against the Company’s short-term and long-term
performance goals and the creation of shareholder value. A key objective of our compensation programs is to attract,
retain and motivate superior executive talent by providing competitive pay opportunities and then paying for the
achievement of rigorous Company objectives, while balancing the need to avoid excessive or inappropriate risk-taking
and maintaining an appropriate cost structure.
We urge shareholders to carefully read the Compensation Discussion and Analysis section of this proxy statement. The
Compensation Discussion and Analysis describes how our executive compensation policies and procedures operate and
are designed to achieve our compensation objectives and shows the link between our performance and our executives’
incentive compensation. We also encourage shareholders to review the Summary Compensation Table and the other
related compensation tables and narrative, which provide detailed information on the compensation of our NEOs.
While the vote on this resolution is advisory and not binding on the Company, each member of the Compensation and
People Committee and the Board values the opinions of our shareholders and will consider the outcome of the vote on
this resolution when making decisions regarding future executive compensation arrangements. We have held a say-on-pay
advisory vote on an annual basis since 2011; the next say-on-pay vote is anticipated to occur at our 2025 annual general
meeting.
The Board recommends a vote “FOR” the approval of the non-binding, advisory resolution on executive
compensation.
Compensation and People Committee Report
The Compensation and People Committee of the Board of Directors has reviewed and discussed with management the
Compensation Discussion and Analysis that follows this report. Based on this review and discussion, the Compensation and
People Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included
in the Company’s proxy statement for the 2024 annual general meeting of shareholders.
Submitted by the Compensation and People Committee of the Board of Directors:
Erin L. McSweeney
John D. Harris II
Maryrose T. Sylvester
45
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Q
Compensation Discussion and Analysis
This CD&A is organized into the following key sections:
Executive Summary
46
Compensation Philosophy
49
Compensation-Setting Process and Decisions for Fiscal Year 2024
51
Fiscal Year 2024 Executive Compensation
53
Introduction
In this Compensation Discussion and Analysis (CD&A) section, we discuss the material elements of our compensation
programs and policies, including our overall compensation philosophy and program objectives, and how and why the
Compensation and People Committee arrived at specific compensation policies and decisions involving our NEOs.
Our NEOs for fiscal year 2024 were:
Name
Position
Revathi Advaithi
Chief Executive Officer
Paul R. Lundstrom
Chief Financial Officer
Kwanghooi (Hooi) Tan
President, Global Operations and Components
Michael P. Hartung
President, Flex Agility Solutions
Scott Offer
Executive Vice President, General Counsel
Executive Summary
Our pay programs are designed to align executives’ compensation with performance against the Company’s short-term
and long-term objectives and the creation of shareholder value. We use a mix of performance metrics that are intended to
reward different aspects of Company achievement.
Performance and Company Highlights for Fiscal Year 2024
During fiscal year 2024, we navigated a highly dynamic environment, and delivered solid results. This is reflective of
our execution, resiliency, and dedication to deliver for our customers and all our stakeholders.(A)
z One-year and three-year Flex TSR of 64.95% and 107.29%, respectively.
z Adjusted operating profit (OP) from continuing operations (excluding Nextracker) grew by 2.8% year-over-year, following
growth in fiscal year 2023 over 2022 of 15.1% from continuing operations. Fiscal year 2024 adjusted OP performance was
still very strong in light of significant revenue declines.
z Closed the year at a cash position of
z Returned $1.298 billion to our shareholders through the largest stock repurchases in a single year.
z In addition to the above performance, in FY24 the Company achieved adjusted gross margin of 7.8% and GAAP gross
margin of 7.1%, adjusted operating margin of 4.8% and GAAP operating margin of 3.2%, and adjusted earnings per share
(EPS) of $2.15 and GAAP EPS of $1.98, all from continuing operations (excluding Nextracker).
z Successful completion of the Spin-off of Nextracker (NXT) where Flex shareholders received approximately 0.17 shares of
Nextracker Class A common stock for each Flex ordinary share held as of the record date of the Distribution.
(A) Adjusted OP, adjusted gross margin, adjusted operating margin and adjusted EPS are non-GAAP financial measures. See Annex A to this proxy
statement for a reconciliation of GAAP to non-GAAP financial measures.
46
2024 Proxy Statement
$2.474 billion.
Q
The short-term incentive program for the NEOs in fiscal year 2024 used the following financial metrics: revenue, adjusted
OP, and adjusted FCF. For fiscal year 2024, we continued our adjusted EPS growth performance stock unit (PSU) program as
a long-term incentive (LTI) vehicle. These were the same metrics we focused on in our quarterly performance updates to
shareholders. Our recent history of performance on these four metrics is shown below.
Revenue
Adjusted
Operating Profit
7.3%
Decrease
$26.4B
$28.5B
FY23
FY24
2.8%
Increase
$1,232M
FY23
FY24
$1,267M
Adjusted
FCF
145%
Increase
$821M
$335M
FY23
FY24
Adjusted
EPS
11.4%
Increase
$2.15
$1.93
FY23
FY24
Note: See Annex A to this proxy statement for a reconciliation of non-GAAP and GAAP financial measures.
Values shown for Revenue, Adjusted OP and Adjusted EPS represent Core Flex performance excluding Nextracker.
Our adjusted FCF performance and improved profitability supported our return of capital to shareholders through our share
repurchase program, as shown below. The pace of repurchases exceeded that of the prior three fiscal years combined.
$1,298M
$686M
$183M
FY23
FY22
FY21
FY24
$337M
of shares repurchased in
fiscal 2024, delivering on our
commitment to return substantial
free cash flow to shareholders. This
FY24 repurchase amount significantly
exceeded the total of the prior three
fiscal years.
$1,298M
Share Repurchases
47
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Compensation Discussion and Analysis
Executive Summary
Q
Compensation Highlights for Fiscal Year 2024
Our pay-for-performance compensation philosophy aims to tie actual pay delivery to performance. We believe above-target
performance should be rewarded when achieved, and below-target performance should lead to reduced compensation,
including zero payouts for incentive elements when performance thresholds are not met. We also believe we should deliver a
significant portion of executive pay in the form of equity awards, which are directly aligned with value delivered to shareholders.
No base salary increases for any of our NEOs for FY24.
Bonus payouts ranged from 75% to 95% of target for the NEOs.
Individual performance increased some of the NEOs’ bonus payouts by 5 – 10 percentage points based on achievement
of individual goals.
On the sustainability bonus modifier, the Compensation and People Committee exercised its discretion to adjust the
positive sustainability performance rating to neutral for the NEOs.
Long-term incentive award values were increased for our Chief Executive Officer and our President, Global Operations
and Components. These increases resulted in target total compensation being competitively positioned versus our
compensation peer group.
Performance share unit (PSU) payouts = 200%: Earned for the relative total shareholder return (rTSR) PSUs for the
three-year performance cycle ending in fiscal year 2024 (rTSR PSUs that vested in June 2023), as the maximum
performance level was achieved. Maximum payout of 200% was also earned for the Adjusted EPS PSUs for the three-year
performance cycle ending on March 31, 2024.
Summary of Compensation Program Changes for Fiscal Year 2024
For fiscal year 2024, the Company made two refinements to the design of its annual incentive plan, as described below.
Program Element
Fiscal Year 2024 Design Changes
Rationale for Change
Bonus Metrics
Added a feature that capped bonus funding at target
if threshold performance is not achieved for all metrics.
Puts greater focus on balanced achievement of all
performance metrics
Increased weighting (from 50% to 60%) on Corporate
results for segment presidents
To have greater emphasis on overall Corporate
performance
Fiscal Year 2024 Executive Compensation Summary
Our executive compensation program is structured to be competitive and allow us to attract and retain a high caliber
leadership team. Further, it is intended to provide direct alignment between pay and performance. The illustrations below show
the key elements of direct compensation for our NEOs in fiscal year 2024 and how those elements were allocated. A majority of
target pay is performance-based and 90% is at risk for our CEO, and 79% is at-risk for our other NEOs (on average).
Fiscal Year 2024 Target Total Direct Compensation(1)
10%
37%
16%
37%
Ms. Advaithi (CEO)
Other NEOs
At-Risk
90%
At-Risk
79%
53%
Performance-Based
50%
Performance-Based
Base Salary
PSUs
RSUs
Annual Cash Incentive
21%
29%
21%
29%
(1) PSUs are shown at face value (the target number of shares awarded multiplied by the closing stock price on the grant date).
48
2024 Proxy Statement
Compensation Discussion and Analysis
Executive Summary
Q
Variable Compensation Element
Description
25%
Revenue
40%
Adjusted OP
35%
Adjusted FCF
Segment NEOs
20%
Segment Revenue
20%
Segment OP
60%
Corporate Results
Corporate Results
Corporate
Short-Term Incentive
Vehicles & Weights
Corporate executives are measured entirely on Flex financial objectives.
Segment NEO metrics are evenly split between corporate and segment
results (segment revenue and segment OP).
(+/-10%)
Sustainability
performance
bonus modifier
(+/-10%)
Individual
performance
bonus modifier
All NEOs are measured against a group scorecard consisting of five
sustainability metrics that can modify bonus payouts.
All NEOs are measured against achievement of individual goals that can
modify bonus payouts.
Long-Term Incentive
50%
Service-Based RSUs
25%
Relative TSR
PSUs
25%
Adjusted EPS
Growth PSUs
Vehicles & Weights
25% are PSUs that may be earned based on Flex’s TSR versus that of the TSR
peer group over 12-, 24- and 36-month periods within a three-year vesting
cycle, with earned shares vested and delivered at the end of the 36-month
performance period.
25% are PSUs that may be earned based on Flex’s adjusted EPS growth over
three annual periods within a three-year vesting cycle.
50% are RSUs that vest equally over a three-year period.
Deferred Compensation
Long-term cash incentives under our Deferred Compensation Plan have a
target value equal to 30% of salary for each NEO, with 50% of funding fixed
and 50% of funding linked to corporate bonus funding.
Compensation Philosophy
Flex’s compensation philosophy is that pay should be meaningfully aligned with performance. Our pay programs are
designed to tie actual pay delivery for our executives to performance against the Company’s short-term and long-term
objectives and the creation of shareholder value. A key purpose of our compensation programs is to attract, retain and
motivate superior executive talent by providing competitive pay opportunities and then paying for the achievement of
rigorous performance goals, while balancing the need to avoid excessive or inappropriate risk-taking and maintaining an
appropriate cost structure. We actively manage our pay-for-performance philosophy as described below.
Program Feature
Overview
Competitive
pay
z We regularly benchmark pay against a set of industry peers.
z Base salaries and target cash compensation are competitively positioned for our NEOs to manage fixed
costs and emphasize paying for performance.
Substantial
emphasis
on at-risk
compensation
z Programs are designed to link pay delivery to the achievement of pre-determined performance goals that
directly correlate with enhanced shareholder value.
z 90% of Ms. Advaithi’s fiscal year 2024 target total direct compensation was at-risk and 79% of target total direct
compensation for our other NEOs, on average, was at-risk.
z 100% of at-risk compensation is based on achievement of core financial metrics and/or is subject to market risk
based on stock price or relative TSR performance. Incentive outcomes are based on a formulaic calculation of
results against pre-determined financial or TSR-based performance targets.
z Formulaic funding results under the annual incentive plan are modified based on achievement of sustainability
metrics (+/-10 percentage points) and individual performance (+/-10 percentage points).
z The Board, or the Compensation and People Committee if so delegated by the Board, maintains the authority to
adjust annual incentive bonus payouts if such payouts do not align with the Company’s overall performance.
Focus on
long-term
performance
z While measurement of short-term results maintains day-to-day focus, we believe that shareholder value is
built over the long term.
z For Ms. Advaithi’s fiscal year 2024 target total direct compensation, 74% was in the form of long-term
incentives, half of which are linked to the achievement of relative TSR performance or adjusted EPS growth
goals. On average, 58% of target total direct compensation for our other NEOs was in the form of long-term
incentives, tied to achievement of the same objectives as Ms. Advaithi.
z We emphasize the NEOs’ alignment with our shareholders’ long-term interests by enforcing rigorous share
ownership guidelines.
49
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Compensation Discussion and Analysis
Compensation Philosophy
Q
Our compensation program is highly responsive to changes in our operating and stock price performance, as illustrated
below with respect to our CEO’s total direct compensation.
$0
$3,000
$6,000
$9,000
$12,000
$15,000
$18,000
$21,000
$27,000
$24,000
Fiscal Year 2024 CEO Compensation Performance Scenario Comparisons (Illustrative)
Low Performance Scenario
$1,325
$1,093
$6,356
$2,625
$1,313
Salary
Bonus
Grant Date Target Pay
$1,325
$14,011
$5,250
$5,250
$2,186
High Performance Scenario
$1,325
$24,292
$7,875
$11,813
$3,279
- 55%
100%
+73%
RSU
PSU*
Grant date value of PSUs based on the closing stock price on date of grant (face value).
*
Illustrative Assumptions
Bonus & PSU Payouts
Stock Price
Low Performance Scenario
50% of Target
$13.32 (Grant Price – 50%)
High Performance Scenario
150% of Target
$39.96 (Grant Price + 50%)
50
2024 Proxy Statement
Compensation Discussion and Analysis
Compensation Philosophy
Q
Compensation-Setting Process and Decisions for Fiscal Year 2024
Alignment with Compensation and Corporate Governance Best Practices
The Compensation and People Committee regularly reviews our compensation programs, peer company data, and best
practices in executive compensation. We have adopted corporate governance and compensation practices and policies
that our Compensation and People Committee, along with our Board, believes help to advance our compensation goals
and philosophy.
What We Do
Our Compensation and People Committee is
composed entirely of independent members with
a robust review process.
We use a pay-for-performance executive
compensation model that focuses primarily
on corporate performance, with the majority of
executive compensation at-risk and long-term.
We maintain a clawback policy so we could
recoup compensation paid to an executive
officer in the event of a material restatement of
financial results, which we recently updated to
comply with the latest SEC rules and NASDAQ
listing requirements.
Our Compensation and People Committee
retains an independent compensation advisor.
We conduct regular shareholder outreach and
consider shareholder advisory votes and views in
determining executive compensation strategies.
We maintain robust share ownership guidelines
for NEOs and Directors.
What We Do Not Do
We do not enter into NEO employment
agreements.
We do not pay severance in the event of an
executive’s voluntary resignation or retirement.
We do not allow hedging or short sales of
Company equity, and we do not permit using
our shares as collateral for margin accounts or
pledging of Company equity as collateral for loans.
We do not provide excise tax gross-ups with
respect to compensation awarded following
change-of-control events.
We do not have single trigger accelerated vesting
of equity awards upon a change in control.
We do not provide excessive or non-customary
executive perquisites.
We do not pay dividends or dividend equivalents
on our unvested equity awards.
We do not permit options/SAR repricing
(including cash buyouts) under our equity
incentive plan without shareholder approval.
Compensation and People Committee
The Compensation and People Committee is responsible for recommending to our Board the compensation of our
Chief Executive Officer, all other NEOs, and our other executive officers. The Compensation and People Committee also
administers our equity compensation plans, evaluates the effectiveness of our overall executive compensation programs,
monitors our say-on-pay results, and reviews the Company’s talent assessment and succession planning.
The Compensation and People Committee regularly assesses our compensation programs to ensure they are
appropriately aligned with our business and human capital strategies and achieving their objectives. The Compensation
and People Committee also reviews market trends and changes in competitive pay practices. Based on its review and
assessment, the Compensation and People Committee regularly approves changes in our compensation programs or
recommends such changes to our Board.
Say-on-Pay Vote
The Compensation and People Committee believes that our executive compensation program is consistent with our
pay-for-performance philosophy and provides proper alignment of incentives for our executives while driving long-term
value creation for our shareholders. Each year, we evaluate our program in light of the strategic direction of the Company,
market conditions, shareholder views (including the results of our annual say-on-pay resolution), and governance
considerations, and make changes deemed appropriate for our business.
At our 2023 annual general meeting, we had strong support for the compensation of our NEOs, with over 97.9% of the votes
cast in favor of our say-on-pay resolution. We continue to evaluate our compensation program by taking into account the
voting results, shareholder feedback, and other factors used in assessing the program as discussed in this CD&A.
51
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Compensation Discussion and Analysis
Compensation-Setting Process and Decisions for Fiscal Year 2024
Q
Independent Consultants and Advisors
The Compensation and People Committee has the authority to retain and terminate any independent, third-party
compensation consultants and to obtain advice and assistance from internal and external legal, accounting, and
other advisors. During fiscal year 2024, the Compensation and People Committee retained FW Cook as its independent
compensation consultant.
FW Cook furnished the Compensation and People Committee reports on the following topics: peer group composition,
compensation data and analysis relating to the compensation of our NEOs, short- and long-term compensation program
design, compensation program risk assessment, annual share utilization and shareholder dilution levels resulting from
equity plans and executive share ownership and retention values.
The Compensation and People Committee confirmed that there are no personal or business relationships between
any FW Cook employee and any member of the Compensation and People Committee or any NEO beyond the Flex
relationship. Based on this information and other factors, including the factors set forth under Rule 10C-1 under the
Exchange Act, the Compensation and People Committee assessed the independence of FW Cook and concluded that
no conflict of interest exists that would prevent FW Cook from independently advising the Compensation and People
Committee. Outside of engaging on executive and Board member compensation and related matters, FW Cook does not
provide any other services to the Company.
Role of Executive Officers in Compensation Decisions
The Compensation and People Committee meets with our CEO and other executives to obtain recommendations with
respect to the structure of our compensation programs. The CEO and certain other executives also assess the performance
of other individual executives and make recommendations regarding their compensation. Decisions related to the
compensation of the CEO (including recommendations to the Board regarding the same) are made independently by
the Compensation and People Committee, without input from management. In addition, our CEO and other executives
develop recommendations for performance measures and target performance goals under our incentive plans based on
management’s business forecast—both at the Company and segment levels. These recommendations are approved by
the Compensation and People Committee as well as by our Board when appropriate.
Executive Compensation Peer Group
Relying upon data provided by our independent compensation consultant, the Compensation and People Committee
undertakes a review, on an annual basis, of the compensation peers that we use to provide insight into market-competitive
executive pay programs, levels and practices. The criteria used to develop the peer group were unchanged from fiscal
year 2023, continuing with revenue and market cap as the financial measures, as well as similar industry focus and publicly
listed companies with headquarters in the U.S. as the other selection criteria. Applying these criteria, carried over from
fiscal year 2023, did not result in any peer group changes – Flex continued with the same 14 peer companies as in fiscal
year 2023.
Peer Group Criteria & Rationale
Manufacturing
with a Technology
Focus(1)
Ensures alignment
with industry
practice.
Revenue
Ensures alignment
with business size
and complexity.
United States
Headquarters
Ensures labor
market overlap.
Market Cap
Ensures alignment
between LTI awards
and the value of the
Company’s stock.
Public
Company
Ensures market
data availability.
(1) Initial industry selection criteria focused on companies assigned to the following GICS codes: Hardware and Equipment (4520) and Capital
Goods (2010). Additional selection criteria were:
z Emphasis on technology and electronics or other specialty manufacturers (rather than pure distributors); and
z Business-to-business technology, machinery, or electronic peripheral providers.
52
2024 Proxy Statement
Compensation Discussion and Analysis
Compensation-Setting Process and Decisions for Fiscal Year 2024
Q
Our peer group for fiscal year 2024 compensation decisions consisted of the following companies:
Arrow Electronics, Inc.
Jabil Inc.
TD SYNNEX Corporation
Avnet, Inc.
PACCAR Inc.
Textron Inc.
Corning Incorporated
Parker Hannifin Corporation
Western Digital Corporation
Cummins Inc.
Sanmina Corporation
Xerox Holdings Corporation
Hewlett Packard Enterprise Company
Seagate Technology Holdings plc
The peer group revenue and market cap summary statistics, as of the time of the analysis, are shown below.
Annual Revenue - Flex vs. Peer Group
$0
$10,000
$20,000
$40,000
$30,000
$M
Flex's revenues
were at the
73rd %ile
75th %ile
50th %ile
25th %ile
Flex
$12,062
$21,477
$29,742
$28,583
Annual Market Cap - Flex vs. Peer Group
$0
$10,000
$20,000
$40,000
$30,000
$M
Flex's
market cap
was at the
41st %ile
$6,059
$11,305
$30,505
$9,952
75th %ile
50th %ile
25th %ile
Flex
In addition to our peer group companies, the Compensation and People Committee reviews standardized surveys of large
technology and manufacturing firms to evaluate the competitiveness of Flex’s compensation programs in the context of
broader market practices.
Fiscal Year 2024 Executive Compensation
Base Salary
The Compensation and People Committee typically reviews base salaries every year and makes recommendations to the
Board of Directors about adjusting or maintaining salary levels to reflect competitive market data, individual performance,
internal equity and promotions or changes in responsibilities. None of our NEOs’ base salaries were increased in fiscal year
2024 from fiscal year 2023.
53
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Compensation Discussion and Analysis
Fiscal Year 2024 Executive Compensation
Q
The following table sets forth the base salaries of our NEOs for fiscal year 2024.
Name and Title
Annualized
Base Salary
for Fiscal Year
2023
($)
Annualized
Base Salary
for Fiscal Year
2024
($)
Percentage
Change
Revathi Advaithi
Chief Executive Officer
1,325,000
1,325,000
0.0%
Paul R. Lundstrom
Chief Financial Officer
735,000
735,000
0.0%
Hooi Tan
President, Global Operations and Components
700,000
700,000
0.0%
Michael P. Hartung
President, Agility Solutions
735,000
735,000
0.0%
Scott Offer
Executive Vice President, General Counsel
663,000
663,000
0.0%
Incentive Bonus Plan
In designing the incentive bonus plan, our Chief Executive Officer and management team develop and recommend
performance metrics, weightings and targets, which are reviewed and are subject to final approval by the Compensation
and People Committee. Fiscal year 2024 corporate level performance metrics and weightings, which were unchanged
from fiscal year 2023, were as follows:
Metrics
Fiscal Year 2024 Weightings
Adjusted OP
40%
Adjusted FCF
35%
Revenue
25%
Sustainability / Individual Performance
Used as an additive modifier
(+/– 10% each)
The adjusted OP, adjusted FCF, and revenue metrics and weightings remained the same from fiscal year 2023 to fiscal year
2024 and focus on profitability, conversion of profit into free cash flow through working capital and inventory management,
and top line growth.
Adjusted OP acts as both a metric within the plan, and the overall funding metric of our global bonus program, as
illustrated below on page 57. Adjusted OP achievement generates an enterprise-wide funding pool based on the same
adjusted OP targets as used for the Corporate NEO bonus plan, which acts to ensure affordability and alignment to
shareholder returns. The Company uses a range around OP, where aggregate bonus payouts must be within +/-20% of
Corporate adjusted OP achievement. This maintains the connection between enterprise-wide bonus plan results and
payouts as well as pay for performance alignment.
Performance for segment Presidents is measured at both the Corporate and segment levels, with a 60%/40% weighting,
respectively, a change from a 50/50 weighting in fiscal year 2023. This 60/40 weighting split emphasizes the importance of
enterprise-wide performance and encourages a balanced approach between accountability for segment performance
and cooperation across the enterprise. The Corporate performance metrics are as defined above. The metrics for segment
performance are segment OP and revenue, which are weighted equally.
The Company continued with a sustainability performance modifier and an individual performance modifier to the
incentive bonus plan for fiscal year 2024. Each can adjust the final bonus payout +/- 10 percentage points for a combined
total of +/-20 percentage points. Final bonus payouts are subject to the bonus plan cap of 200% of target.
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Compensation Discussion and Analysis
Fiscal Year 2024 Executive Compensation
Q
The following table summarizes the key features of our fiscal year 2024 incentive bonus plan.
Feature
Component
Objectives
Performance
targets
z Based on key short-term Corporate and segment
financial metrics
z Aligns executive incentives with performance
z Rewards achievement of short-term objectives
Performance
measures
z Revenue and adjusted OP at the Company and
segment level, and adjusted FCF at the Company
level
z Weightings for these metrics are fixed, and measured
at the corporate level for all executives and at the
segment level for segment executives
z Adjusted OP measured at the Company level is also
used as the funding metric for aggregate bonus
payouts across the Company
z Emphasizes pay-for-performance by linking individual
compensation to performance on metrics that are
key drivers of shareholder value
z Promotes accountability by tying payouts to
achievement of minimum performance thresholds
z Ties aggregate payouts to Company’s overall
profitability, helping to ensure affordability
Bonus modifiers
z Five metrics across four sustainability pillars of
environment, labor, health & safety, and inclusion &
diversity
z Individual performance
z Emphasizes Company’s Sustainability Plan goals
z Underscores the importance of sustainability and
aligns to evolving market trends and investor
expectations
z Enables the Committee to differentiate pay based on
individual NEO’s performance
Bonus
payments
z Based on achievement of financial performance
objectives, sustainability performance and individual
performance
z Target bonus opportunities set at percentage
of base salary, based on executive’s level of
responsibility
z Additive sustainability and individual performance
modifiers can adjust bonus payouts by up to
+/-10 percentage points each
z Annual incentive bonuses range from 0% of target to
a maximum of 200% of target
z No payout awarded for any measure where
threshold performance is not achieved
z Introduced in fiscal year 2024, if threshold
performance is not achieved for all metrics, l bonus
payout will be capped at 100%
z The Board, or the Compensation and People
Committee if so delegated by the Board, has the
authority to adjust bonus payouts if appropriate in
the context of the Company’s overall performance
z Reflects the Company’s emphasis on pay-for-
performance by linking individual compensation to
financial performance
z Encourages accountability for all financial
performance goals by conditioning bonus payments
on the achievement of at least the minimum
thresholds on all measures
Non-GAAP Adjustments
We used adjusted non-GAAP performance measures (adjusted OP and adjusted FCF) for our incentive bonus plan in
fiscal year 2024, and adjusted EPS in our fiscal 2024 adjusted EPS growth PSU grants. Using adjusted measures eliminates
the distorting effect of certain unusual income or expense items. The adjusted performance measures are consistent with
those used in our quarterly earnings releases. The adjustments are intended to align award payout opportunities with the
underlying growth of our business and avoid misalignment in outcomes based on unusual items.
In calculating non-GAAP financial measures, we excluded certain items to make it easier to compare the Company’s
operating performance on a period-to-period basis because such items are not, in the Compensation and People
Committee’s view, related to the Company’s ongoing operational performance. The non-GAAP measures are used to
evaluate more accurately the Company’s operating performance, to calculate return on investment, and to benchmark
performance against competitors. For fiscal year 2024, non-GAAP adjustments consisted of excluding amortization of
intangible, customer-related assets impairments (recoveries); restructuring charges; after-tax stock-based compensation
expense; and legal and other. All adjustments are subject to approval by the Compensation and People Committee to
ensure that payout levels are consistent with performance. See Annex A to this proxy statement for a reconciliation of GAAP
to non-GAAP financial measures.
For purposes of calculating performance under our incentive bonus plan in fiscal year 2024, we have excluded the impact
from extraordinary items or events that would have had an unanticipated impact, corporate transactions (including
acquisitions or dispositions), and other unusual or nonrecurring items.
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2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Compensation Discussion and Analysis
Fiscal Year 2024 Executive Compensation
Q
Target Incentive Awards
Fiscal year 2024 bonus targets for the NEOs as a percent of base salary are shown below. They were not increased from
fiscal year 2023.
Name and Title
Fiscal year 2024
Target Bonus
(% of Salary)
Fiscal year
2024 Target ($)
Revathi Advaithi
Chief Executive Officer
165%
2,186,250
Paul R. Lundstrom
Chief Financial Officer
110%
808,500
Hooi Tan
President, Global Operations and Components
110%
770,000
Michael P. Hartung
President, Agility Solutions
100%
735,000
Scott Offer
Executive Vice President, General Counsel
100%
663,000
Incentive Payouts for CEO, CFO, General Counsel, and President, Global Operations and Components
The table below sets forth the payout opportunities that were available to Ms. Advaithi, and Messrs. Lundstrom, Tan and
Offer based on different levels of corporate performance. These targets are considered rigorous and were validated within
the context of analyst expectations. The bonus for Mr. Hartung was also in part based on the results of his segment.
Performance targets are determined based on Board-approved financial plans—both at Company and segment levels.
Maximum payout levels were tied to “stretch” levels of performance.
Fiscal Year 2024 Short-Term Incentive Plan(1)
Payout (% of Target)
Actual
Performance ($)
Actual Payout
(% of Target)
Weight
Threshold%(2)
100%
200%
Revenue ($M)
25%
$28,370
$30,506
$31,726
28,079
0%
Adjusted OP ($M)
40%
$1,294
$1,523
$1,675
1,626
168%
Adjusted FCF ($M)
35%
$383
$638
$894
821
172%
Bonus Achievement
85%(3)
Actual Payout Based on Performance
(1) Targets and actual performance include Flex’s economic interest in Nextracker through January 2, 2024, the date of the Spin-off.
(2) Threshold payout on Revenue and Adjusted OP metrics was 30% of target. For the Adjusted FCF metric, threshold payout was 50% of target.
(3) Bonus plan threshold requirement was not achieved across all metrics, therefore bonus achievement was capped at 100%.
While the formulaic payout of the financial performance in the corporate bonus plan was capped at target, upon
management’s recommendation, the Compensation and People Committee exercised its discretion to adjust the
corporate payout to 85% to reflect Core Flex performance (excluding Nextracker) for fiscal year 2024.
OP Funding Factor
The fiscal year 2024 adjusted OP funding factor was 100%. Formulaic funding of all Flex bonus plans was lower in aggregate
than what funding would have been if based on Corporate OP. Per the mechanics of the Corporate and segment bonus
plans, funding of the bonus plans were not adjusted based on positive OP performance and the formulaic bonus payouts
were used.
Sustainability Modifier
Sustainability modifier was incorporated into the incentive bonus plan for NEOs in fiscal year 2003. The modifier is based on
five quantitative sustainability metrics tied to four sustainability pillars as set forth below that can collectively modify bonus
payouts by up to +/-10 percentage points.
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2024 Proxy Statement
Compensation Discussion and Analysis
Fiscal Year 2024 Executive Compensation
Q
Sustainability Pillar
Metric
Environment
Achieve absolute scope 1 and 2 greenhouse gas (GHG) emissions reduction target
Achieve zero waste manufacturing site certification target
Labor
Complete targeted manufacturing site audits for Responsible Business Alliance (RBA) factory of
choice certification
Health and Safety
Achieve total case incident rate (TCIR) target
Inclusion & Diversity
Increase female (globally) and underrepresented minority (U.S. only) managerial representation
Management successfully achieved performance for the sustainability goals within the positive range. However, based
on our ongoing efficiency efforts and upon management’s recommendation, the Compensation and People Committee
exercised its discretion to adjust the positive performance rating to neutral for the NEOs.
Individual Performance Modifier
An additive individual performance bonus modifier was included in the bonus plan for NEOs in fiscal year 2024. The
modifier can adjust bonus payouts by up to +/-10 percentage points. Based on the year-end assessment of individual
performance, bonuses were positively adjusted for Mr. Lundstrom by 5 percentage points, Mr. Tan by 10 percentage points,
and Mr. Hartung by 5 percentage points. Ms. Advaithi and Mr. Offer achieved their individual performance goals and
received no bonus adjustments in fiscal year 2024.
NEO
Fiscal Year 2024 Individual Performance Highlights
Individual Performance
Modifier Adjustment
Mr. Lundstrom
z Oversaw the successful completion of the Nextracker Spin-off that delivered
significant shareholder value
+5%
Mr. Tan
z Aligned global operations and segment strategy to quickly and effectively
drive customer service on a regional and global scale
z Focused customer and operational capabilities to enable growth across the
organization
+10%
Mr. Hartung
z Led the Agility business to outperform the market in the face of challenging
end market conditions
z Created a strong pipeline for growth
+5%
For fiscal year 2024, the Company’s performance resulted in payouts as shown below:
Formulaic
Bonus
Payout
Final
Bonus
Payout
Plan Funding
Based on
Adj OP
Achievement
Individual
Performance
Modifier
Payout
on
Weighted
Metrics
Sustainability
Modifier
X
+
+
=
=
Incentive Payout for Segment President
We treat the segment performance measures as confidential. As described above, 40% of the annual bonus for Mr. Hartung
was based on the results of his segment, evenly split between revenue and adjusted OP. The remaining 60% of the annual
bonus was the same as for corporate executives outlined above. The combination of these inputs and the adjustment
based on individual performance resulted in a payout of 74.59% of target for Mr. Hartung.
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Notice & Proxy Statement
Annual Report
Shareholder Info
Compensation Discussion and Analysis
Fiscal Year 2024 Executive Compensation
Q
Final Incentive Awards for the NEOs
The bonus payout levels for our NEOs were as follows:
Name
Fiscal Year 2024 Annual
Incentive Bonus Target
(Potential Bonus as a
percentage of Base Salary)
Fiscal Year 2024
Annual Incentive
Actual Bonus
($)
Fiscal Year 2024 Actual
Annual Incentive Bonus
as a Percentage of Full
Year Target Bonus
Revathi Advaithi
165%
1,858,313
85.00%
Paul R. Lundstrom
110%
727,650
90.00%
Hooi Tan
110%
731,500
95.00%
Michael P. Hartung
100%
548,237
74.59%
Scott Offer
100%
563,550
85.00%
Long-Term Share-Based Incentive Compensation
In fiscal year 2024, the Board, upon the recommendation of the Compensation and People Committee, granted share-based
long-term incentives to our senior executives as an incentive to maximize the Company’s long-term performance and drive
shareholder value creation. These long-term incentives are designed to align the interests of the NEOs with those of our
shareholders and to give each NEO a significant incentive to manage the Company from the perspective of an owner
with a direct stake in the business. Long-term equity awards are also intended to promote retention, as unvested shares are
forfeited if an executive voluntarily leaves the Company.
Half of the long-term incentive value was delivered in the form of service-based RSUs. rTSR-based PSUs represent 25% of
our NEOs’ share-based long-term incentive awards (based on face value of the awards) in fiscal year 2024 and the
remaining 25% was delivered in the form of adjusted EPS growth PSUs. (The actual grant value mix disclosed in the tables
of this proxy statement may deviate from this 50/25/25 RSU/rTSR PSU/EPS PSU split due to the Monte Carlo accounting
valuation required by SEC rules to be used for the tabular disclosure of rTSR-based PSUs.) The Compensation and
People Committee believes this targeted 50/50 allocation between RSUs and PSUs links long-term compensation to the
Company’s long-term performance and shareholder outcomes, and promotes retention.
Restricted Share Unit Awards (RSUs)
Fifty percent of each NEO’s share-based long-term incentive award is in the form of RSUs. These service-based RSUs vest in
three equal installments on the first three anniversaries of the grant date, subject to continued employment. Payouts are
made in shares, so the value of an RSU award increases or decreases based on share price performance from the grant
date, further aligning the interests of the executive with long-term shareholder value creation. Before an RSU vests, the
holder has no ownership rights in the shares and is not entitled to dividends or dividend equivalents.
rTSR PSUs
Twenty-five percent of each NEO’s share-based long-term incentive award is in the form of rTSR PSUs. The rTSR PSU awards
granted in fiscal year 2024 will be earned (or not), at up to a maximum of 200% of target, based upon Flex’s percentile rank
of TSR over a three-year period compared to the rTSR peer group companies (described below). Performance is measured
over three discrete measurement periods—of 12-, 24-, and 36- months—within each three-year cycle, as illustrated below.
The rTSR PSU final payout will be based on the average payouts of these three performance periods and does not occur
until after the conclusion of the full 36-month performance period.
PSU Performance Measurement Approach
Performance Period (# of Months)
1/3 PSU
1/3 PSU
1/3 PSU
0
24
12
36
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2024 Proxy Statement
Compensation Discussion and Analysis
Fiscal Year 2024 Executive Compensation
Q
The use of discrete measurement periods aims to minimize the potential impact of short-term share price volatility at the
end of the performance period, while having vesting occur following conclusion of the final performance period aligns
value delivery with longer-term absolute TSR performance. The Compensation and People Committee believes that this
approach focuses NEOs on the achievement of sustainable long-term shareholder returns and provides a payout that
is more reflective of the shareholder experience over the entire three-year cycle. Except in the event of an employee’s
death, disability, or retirement, no portion of a PSU award is earned or distributed until the conclusion of the full three-year
performance period.
The number of shares earned is dependent on the percentile rank achieved, within each of the 12-, 24- and 36-month
periods, as shown below.
200%
100%
25%
0%
Flex TSR vs TSR Peer Group (FY 2024 PSU Grant)
30th
50th
100th
75th
Shares Earned
(% of Target)
TSR Peer Group Percentile Rank
Note: Straight-line interpolation is used to determine shares earned when results are between targets.
The TSR peer group is reviewed and updated annually based on the filtering criteria below.
1. Reflect likely competitors for investor funds
2. Focus on the same or similar industries to Flex and subject to similar macroeconomic forces
3. Approximate the margin range for electronic manufacturing industry
These considerations resulted in the following selection methodology:
Fourteen compensation peer group companies, plus companies meeting all of the following criteria:
1. Industry membership in Technology Hardware & Equipment (GICS code 4520) and Capital Goods (2010)
2. Annual revenue is between $5 billion and $125 billion
3. Market cap is between $1 billion and $40 billion
4. Annual operating margin is 10% or less
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2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Compensation Discussion and Analysis
Fiscal Year 2024 Executive Compensation
Q
Based on the selection methodology listed above, our FY24 TSR peer group is comprised of the following:
Acer Inc.
Johnson Controls International
AECOM
MasTec, Inc.
AGCO Corporation
MDU Resource Group, Inc.
APi Group
Oshkosh Corporation
Arrow Electronics, Inc.*
PACCAR Inc.*
ASUSTeK Computer Inc.
Parker Hannifin Corporation*
AUO Corporation
Pegatron Corporation
Avnet, Inc.*
Qisda Corporation
Beacon Roofing Supply, Inc.
Quanta Computer Incorporated
Bombardier Inc.
Quanta Services
Brookfield Business Partners
Resideo Technologies, Inc.
CDW Corporation
Rush Enterprises
CommScope Holding Company, Inc.
Sanmina Corporation*
Compal Electronics
Seagate Technology Holdings plc*
Core & Main
Super Micro Computer, Inc.
Corning Incorporated*
Synnex Technology International Corp.
Cummins Inc.*
TD SYNNEX Corporation*
Dell Technologies
Textron Inc.*
EMCOR Group, Inc.
UFP Industries, Inc.
Far Eastern New Century
Univar Solutions Inc.
Finning International Inc.
Veritiv Corporation
Fluor Corporation
Watsco, Inc.
Hewlett Packard Enterprise Company*
WESCO International
HP Inc.
Western Digital Corporation*
Huntington Ingalls Industries
Wistron Corporation
Icahn Enterprises L.P.
Wiwynn International Corporation
Innolux Corporation
WPG Holdings
Insight Enterprises Inc.
WSP Global Inc.
Inventec Corporation
WT Microelectronics Co., Ltd.
Jabil Inc.*
Xerox Holdings Corporation*
*
Denotes an existing compensation peer group company
The TSR peer group contains companies headquartered and listed in the U.S., Canada and Taiwan as a reflection of the
global nature of the industry in which Flex operates.
Adjusted EPS Growth PSUs
We added adjusted EPS growth PSUs to the LTI program in fiscal year 2022 in order to improve participant line-of-sight to
achievement of our long-term financial strategy. These PSUs represent 25% of our NEOs’ share-based long-term incentive
awards (based on the target value of the awards as described below and will be earned (or not), at up to a maximum of
200% of target, based upon Flex’s achievement of adjusted EPS growth targets.
In setting the adjusted EPS growth targets, the Compensation and People Committee considered the following inputs:
z Flex’s historical EPS growth performance;
z Peer company (both compensation and US-based TSR peers) historical non-GAAP EPS growth performance;
z Company’s long-term financial strategy; and
z Company’s investor guidance for fiscal year 2024.
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2024 Proxy Statement
Compensation Discussion and Analysis
Fiscal Year 2024 Executive Compensation
Q
Performance will be measured over a three-year period in three discrete annual measurements within each three-year
cycle, as illustrated below. Performance during each of the three years is averaged in the end, determining the final
percentage of shares vesting (as a percent of target). Except in the event of an employee’s death, disability, or retirement,
none of the shares are earned or distributed until the end of the three-year cycle.
3RD PERF CYCLE
2ND PERF CYCLE
1ST PERF CYCLE
FY’24 Adjusted EPS Growth PSUs
Performance Period (# of Months)
0
12
24
36
Calculate Year 3
Performance & Payout
Calculate Year 2
Performance & Payout
Calculate Year 1
Performance & Payout
Set targeted performance
End of year value becomes starting point for next year’s measurement
Final Payout = Year 1 + Year 2 + Year 3 Payouts
3
Adjusted EPS growth rates will be calculated using non-GAAP adjustments summarized on page 55 of this proxy statement.
Adjusted EPS used for purposes of adjusted EPS growth PSU performance calculations will also exclude the impact of
extraordinary items or events that have an unanticipated impact, corporate transactions (including acquisitions or
dispositions), and other unusual or nonrecurring items. For purposes of EPS, the impact of unplanned share repurchases
attributable to corporate transactions (including acquisitions or dispositions) will also be excluded. The rationale for
excluding the impact of significant items or events that have an unanticipated impact is to focus participants on factors
within their control, and preserve the incentive orientation of the plan in the face of significant, unforeseen business
disruptions or other events. The objective of excluding the impact of M&A is to measure performance on the same basis
and business composition as in place at the start of the performance period.
Actual fiscal year 2024 adjusted EPS growth performance for the two in-flight performance cycles (awards granted in FY23
and FY24) was above the maximum performance adjusted EPS growth goal of 12%, resulting in 200% of target shares
earned for years 1 and 2 of the FY23 award, and year 1 of the FY24 award. Each award’s final payout is determined based
on the average of each annual performance over a three-year performance period. No shares vest until the end of the
performance period.
See also Annex A to this proxy statement for a reconciliation of GAAP to non-GAAP financial measures.
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2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Compensation Discussion and Analysis
Fiscal Year 2024 Executive Compensation
Q
Effect of Nextracker Spin-Off on Outstanding Equity Awards
As noted above, on January 2, 2024, we completed the Spin-off of Nextracker. For additional information regarding the
Spin-Off and the Distribution, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
section of our Annual Report on Form 10-K for the fiscal year ended March 31, 2024.
In connection with the Spin-off, we entered into the Employee Matters Agreement with Nextracker, which governs
Nextracker’s and Flex’s compensation and employee benefits obligations with respect to their respective service providers,
including employees, consultants and non-employee directors. Pursuant to the Employee Matters Agreement, awards
that were outstanding under our 2017 Equity Incentive Plan (as amended and restated as of August 2, 2023) (the “2017
Plan”) at the time of the Spin-off were adjusted under an approach referred to as the “concentration method.” Under the
concentration method, outstanding awards under the 2017 Plan were (i) converted into new awards under the Second
Amended and Restated 2022 Nextracker Inc. Equity Incentive Plan for Nextracker service providers, and (ii) adjusted for Flex
service providers as described below. The adjustments made with respect to the outstanding awards under the 2017 Plan
for Flex service providers (“Covered Awards”) involved increasing the number of ordinary shares subject to such Covered
Awards, in each case subject to rounding, as follows (none of the Covered Awards consisted of stock option awards):
z RSU Awards. The number of shares that remained subject to each Covered Award consisting of an RSU award at the time
of the Spin-off was multiplied by the adjustment ratio and rounded up to the nearest whole share.
z PSU Awards. The number of shares that remained subject to each Covered Award consisting of a PSU award at the time
of the Spin-off was multiplied by the adjustment ratio and rounded up to the nearest whole share (no adjustments were
made to the performance goals that relate to such PSUs).
These adjustments to the Covered Awards were made in accordance with the terms of the 2017 Plan and for the purposes
of preserving their economic value after the Spin-off transaction relative to their value prior to the transaction. No other
adjustments were made to the terms (e.g., vesting or performance conditions) of the Covered Awards.
The adjustment ratio for these purposes was established by the Compensation and People Committee with (i) the
numerator of the ratio being equal to the average closing price of a Flex ordinary share during the ten (10) trading-day
period ending immediately prior to the completion of the Distribution (i.e., the ten (10) trading-day period ending on
January 2, 2024), and (ii) the denominator of the ratio being equal to the average closing price of a Flex ordinary share
during the ten (10) trading-day period beginning immediately after the completion of the Distribution (i.e., the ten (10)
trading-day period beginning on January 3, 2024). The final conversion ratio was 1.294254.
Grants During Fiscal Year 2024
The Compensation and People Committee and the Board considered the following factors when determining the value of
the fiscal year 2024 NEO equity awards:
z Peer group compensation data for similarly situated executives;
z Future potential to contribute to the Company’s growth and potential to grow in current role and expand scope of
responsibility and contribution over time;
z Individual performance and internal equity; and
z Peer group data on annual share usage and overall shareholder dilution.
Long-Term Incentive Awards
The table below summarizes the approved PSU and service-based RSU awards granted to our NEOs in fiscal year 2024, and
also reflect the impact of the Nextracker spinoff on the awards, as described above.
Executive Officer
Target rTSR-Based
PSUs (Shares)(1)
Target Adjusted
EPS Growth-
Based
PSUs (Shares)
Service-Based
RSUs (Shares)
Target Total
Equity Award
Value ($)
Revathi Advaithi
127,531
127,531
255,062
10,498,352
Paul R. Lundstrom
30,061
30,061
60,121
2,474,601
Hooi Tan
24,291
24,291
48,583
1,999,656
Michael P. Hartung
21,862
21,862
43,724
1,799,680
Scott Offer
21,862
21,862
43,724
1,799,680
(1) For purposes of Flex’s TSR calculation, the Nextracker Spin-off will be treated as a dividend in the calculation during the performance period.
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Fiscal Year 2024 Executive Compensation
Q
The target award values shown above vary from the values shown in the Summary Compensation Table and Grants of
Plan-Based Awards Table because the accounting cost of our rTSR-based PSUs is based on a Monte Carlo valuation. The
intended award value above was calculated as the target number of shares multiplied by the share price on the date of
the grant. The actual value to be earned will depend on Flex’s multi-year TSR performance versus the TSR peer group, its
adjusted EPS growth performance, as well as its stock price performance.
Payouts of Prior PSUs
The performance period for the rTSR PSUs granted in fiscal year 2021 ended in fiscal year 2024. The fiscal year 2021 TSR PSU
grants measured our TSR versus the constituents of the S&P 500 from June 3, 2020 (the grant date) through June 5, 2023
(the performance period end), using a trailing 20-day average trading price for both the beginning and the end of the
performance period. Our three-year TSR achievement of 147.9% over the performance period was above the 75th percentile
maximum level, resulting in a maximum 200% of target payout for this award.
The performance period for the adjusted EPS growth-based PSUs granted in fiscal year 2022 ended in fiscal year 2024.
Vesting was based on the Company’s adjusted EPS growth, measured over three fiscal years (measurement periods from
April 1, 2021 through March 31, 2024) and averaged with respect to all three adjusted EPS measurement periods. Our three
fiscal year adjusted EPS growth average was 19.3% over the performance period, resulting in a maximum 200% of target
payout for this award.
Timing of Equity Award Grants
The Compensation and People Committee approves all equity awards granted to our NEOs on or before the grant date.
Annual equity awards are typically granted to our NEOs in June following the completion and release of financial results for
the preceding fiscal year. The Compensation and People Committee may also grant equity awards at other times during
the year due to special circumstances, including to new executive officers upon hire or promotion or a change in an
executive officer’s role.
As a matter of good corporate governance, we do not grant equity awards in anticipation of the release of material
nonpublic information and, in any event, we do not time the release of material nonpublic information in coordination with
grants of equity awards in a manner that intentionally benefits our NEOs.
Benefits
Non-qualified Deferred Compensation Awards
Each of the NEOs participates in the 2010 Deferred Compensation Plan (the “NQDC Plan”), intended to promote retention
by providing a long-term savings opportunity on a tax-efficient basis. In addition to voluntary contributions, Flex makes
annual awards to the NEOs under the NQDC Plan, the key terms of which are summarized below.
NQDC Plan Design Element
Description
Annual Targeted Amount
z Target amount is 30% of each participant’s base salary (for ongoing contributions).
z Maximum amount is 37.5% of each participant’s base salary, if the performance-based
portion is funded at maximum.
z Subject to approval of Compensation and People Committee
z Subject to offsets for non-U.S. executives’ pension and other benefits
Targeted Contributions
z 50% of the targeted contributions (15% of salary at target) is based on the corporate
funding level of the annual corporate bonus plan.
z 50% of the targeted contributions (15% of salary) is not tied to performance.
Vesting Schedule
z Flex’s contributions, together with earnings on those contributions, will vest in full after four
years, provided the participant remains employed by the Company.
Investment of Balances
z Deferred balances in a participant’s account are deemed to be invested in hypothetical
investments designated by the participant.
z Investment options generally mirror those available under the Company’s tax-qualified
401(k) plan.
z The appreciation, if any, in the account balances is due solely to the performance of these
underlying investments.
Distribution Options
z Vested balances may be distributed upon termination of employment either through a
lump sum payment or in installments over a period of up to ten years, as elected by the
participants.
z Participants also may elect in-service distributions through a lump sum payment or in
installments over a period of up to ten years.
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Benefits
Q
The deferred account balances are unfunded and unsecured obligations of the Company, receive no preferential
standing, and are subject to the same risks as any of the Company’s other general obligations.
The Company may make an additional discretionary matching contribution in connection with voluntary deferrals to
reflect limitations on our matching contributions under our 401(k) plan.
Company Deferred Compensation Awards for Fiscal Year 2024
During fiscal year 2024, all of the NEOs each received deferred compensation awards with a value that was 33.7% of their
respective fiscal year 2023 base salaries. The award values are reflected as Company contributions to the NEOs’ deferral
accounts, with half of the contributions being based on the performance of the FY23 Corporate annual incentive plan.
Voluntary Contributions
Under the NQDC Plan, participants may defer up to 70% of their base salary and bonus, net of certain statutory and benefit
deductions. Participants are 100% vested in their own deferrals at all times.
Additional Information
For additional information about the NEOs’ contributions to their respective deferral accounts, Company contributions to
the NEOs’ deferral accounts, earnings on the NEOs’ deferral accounts, withdrawals from the NEOs’ deferral accounts, and
deferral account balances as of the end of fiscal year 2024, see the section titled “Executive Compensation—Nonqualified
Deferred Compensation in Fiscal Year 2024.”
Executive Perquisites
Perquisites represent a small part of the overall compensation program for the NEOs. In fiscal year 2024, the Company paid
premiums on long-term disability insurance for all of our NEOs.
While corporate aircraft are generally used for Company business only, under our Corporate Aircraft Use Policy, which was
approved by our Compensation and People Committee during fiscal year 2024, we permit our CEO Ms. Advaithi, but do not
permit any of the other NEOs, subject to availability to fly on a Company-provided aircraft for personal travel, subject to an
annual cap, above which reimbursement to the Company is required. We provide this benefit to Ms. Advaithi for efficiency,
so she can use her travel time more productively for the Company and for additional security. Our CEO is taxed on the
value of this personal usage according to applicable tax rules. There is no tax gross-up paid on the income attributable to
this value. During fiscal year 2024, the aggregate incremental cost to the Company for Ms. Advaithi’s personal aircraft use
was $16,960, which is detailed in the Summary Compensation Table.
401(k) Plan
Under our 401(k) plan, all of our employees, including our NEOs, are eligible to receive matching contributions. We also offer
annual discretionary matching contributions based on Company performance and other economic factors as determined
at the end of the fiscal year. For fiscal year 2024, we elected not to make discretionary contributions on behalf of any NEO.
Other Benefits
NEOs are eligible to participate in all of the Company’s employee benefit plans, such as medical, dental, vision, group life,
disability, and accidental death and dismemberment insurance, in each case on the same basis as other U.S. employees,
subject to applicable law.
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Benefits
Q
Termination and Change of Control Arrangements
The NEOs are entitled to certain termination and change of control benefits. These benefits are described and quantified
under the section titled “Executive Compensation—Potential Payments Upon Termination or Change of Control.”
The Compensation and People Committee has adopted the Flex Ltd. Executive Severance Plan (the “Severance Plan”), which
covers senior level employees of the Company, including all of the NEOs except the Chief Executive Officer, whose severance
benefits were defined under a letter agreement entered into in connection with her hiring. Under the Severance Plan, in the
event of a termination of employment by the Company without “cause” or by a participant for “good reason” (as each such
term is defined in the Severance Plan), the participant will receive the following benefits, subject to the participant entering
into and complying with a transition and release agreement in a form provided by the Company (“Transition Agreement”):
Severance Plan Termination Benefit
Description
Salary and Benefits Continuation
z Salary and benefits coverage continuation for duration of transition period
provided in the Transition Agreement
Bonus Treatment
z Pro-rated portion of annual bonus, based on actual performance through the
end of the performance period
Equity Vesting
z Time-based RSUs, PSUs, and deferred compensation awards continue vesting
during the transition period
z Following the transition period, accelerated vesting of RSUs and deferred
compensation awards that would have vested during the one-year period
following the transition period
z Continued vesting is subject to the participant’s release of claims and
compliance with post-termination covenants under a Transition Agreement
z All other unvested awards are forfeited
During the period when an NEO is transitioning out of his or her role, he or she is required to discharge his or her
transition duties and comply with other terms and conditions set forth in the Transition Agreement, including customary
non-competition, non-solicitation, non-disclosure, non-disparagement, and cooperation provisions. Any violation of
such obligations may result in cessation of benefits and trigger clawback rights of the Company.
Ms. Advaithi’s employment may be terminated by Ms. Advaithi or the Company at any time, with or without “cause.”
Pursuant to the letter agreement entered into with Ms. Advaithi at her hiring, in the event that Ms. Advaithi terminates
her employment for “good reason” or is terminated without cause, Ms. Advaithi would be entitled to receive, subject to
execution and non-revocation of a standard release of claims, the benefits summarized below:
Termination Benefit
Description
Cash Compensation Continuation
z Two years’ continued payment of base salary and two years of her target annual
bonus amount
Equity and Deferred Compensation
Vesting
z Two years’ continued vesting of outstanding equity awards and deferred
compensation
Benefits Coverage
z Two years’ continued benefits coverage
“Good Reason” Definition
z Material diminution in position, authority, duties or responsibilities
z Assignment of any duties materially inconsistent with status as an officer
z Failure by the Company to obtain the written assumption of the Executive
Severance Plan by a successor to the Company
z Material reduction in target base salary and target bonus opportunity
z Mandatory relocation of 50 miles or more
The following are the termination benefits applicable for all NEOs in the event of a change of control:
Termination Benefit
Description
Deferred Compensation Vesting
z Under our NQDC Plan, vesting of initial and annual awards will accelerate
z Acceleration triggered only if employment is terminated without cause or by the
executive for good reason within two years of the change of control (i.e., “double
trigger” accelerated vesting)
Equity Vesting
z Under the terms of our equity incentive plans, unvested awards will automatically
accelerate if not assumed or replaced by the acquirer on an economically
equivalent basis (double trigger)
z Under the terms of our equity plans, the Compensation and People Committee
also has the ability to provide that certain awards may automatically accelerate
upon an involuntary termination of service within a designated time period
following a change of control
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Compensation Discussion and Analysis
Termination and Change of Control Arrangements
Q
The following are death, disability and retirement benefits applicable for all NEOs with respect to RSU, PSU and NQDC awards.
Termination Scenario
Description of RSU, PSU and NQDC Treatment
Death or Disability
z RSU and NQDC vesting will accelerate upon the occurrence of these events
z PSU vesting will accelerate based upon actual performance for completed
periods during the measurement period and target performance for unfinished
periods during the measurement period, and pro-rated for length of time
employed during the performance period
Retirement
z Retirement is defined as:
z Sum of age and service credits is equal to at least 65
z Minimum length of service is 5 years
z Minimum age is 55
z Unvested RSUs and NQDC would continue to vest, with PSUs vesting based on
actual performance at the end of the performance cycle
z Unvested PSUs would be pro-rated for length of time employed during the
performance period
Executive Share Ownership Guidelines
We maintain robust share ownership guidelines in order to closely align the interests of senior management with those of
our shareholders. The ownership guidelines for our NEOs are summarized below.
Ownership Guideline Design Element
Description
Targeted Ownership Value
z CEO – 6x salary
z CFO – 3.5x salary
z Other NEOs – 2.5x salary
Forms of Ownership Counted
Toward Guideline
z All Ordinary Shares held outright by our executives
z Unvested service-based RSUs
Compliance Period
z 5 years for new hires or newly promoted executives
z If an executive’s stock ownership requirement is increased, a three-year
compliance transition period will be provided to acquire the incremental shares
Unearned performance-based restricted stock units, and shares underlying unexercised stock options (whether vested
or unvested, whether time- or performance-based and whether in-the-money or not) do not count as stock owned for
purposes of the guidelines.
Our Compensation and People Committee and our Nominating, Governance and Public Responsibility Committee both
monitor the share ownership of management. The Company has determined that the NEOs are in compliance with the
applicable ownership requirements.
Executive Incentive Compensation Recoupment Policy
Effective October 2, 2023, our Board, upon the recommendation of the Compensation and People Committee, adopted
an amended and restated Executive Incentive Compensation Recoupment Policy (the “Recoupment Policy”), as required
by the Dodd-Frank Wall Street Reform & Consumer Protection Act and corresponding listing standards recently adopted by
Nasdaq regarding compensation recovery.
Our Recoupment Policy applies in the event we are required to prepare an accounting restatement due to material
noncompliance with any financial reporting requirement under the federal securities laws, including any required
accounting restatement to correct an error in previously issued financial statements that is material to the previously issued
financial statements, or that would result in a material misstatement if the error were corrected in the current period or left
uncorrected in the current period (a “Financial Restatement”). Pursuant to our Recoupment Policy, we will promptly recover
any erroneously awarded incentive-based compensation, on a no-fault basis, received by any current or former executive
officer of the Company, including our NEOs, during the three completed fiscal years immediately preceding the date on
which we are required to prepare a Financial Restatement.
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Executive Share Ownership Guidelines
Q
In addition to erroneously awarded incentive-based compensation, under our Recoupment Policy, the Compensation and
People Committee, as administrator of our Recoupment Policy, may, to the extent it deems appropriate, cancel outstanding
equity awards, including time- or performance-based awards, where the Board or the Compensation and People
Committee took into account the financial performance of the Company in granting such awards and the financial
results were subsequently reduced due to a Financial Restatement. The Recoupment Policy also provides that incentive
compensation may be recovered from certain other direct reports of our CEO under certain specified circumstances if
deemed appropriate by the Compensation and People Committee.
A copy of the Recoupment Policy is included as Exhibit 97.01 to our Annual Report on Form 10-K for the fiscal year ended
March 31, 2024.
Prohibition on Hedging and Pledging of Company Securities
Our insider trading policy prohibits short-selling, trading in options or other derivatives on our shares, and engaging in
hedging transactions by all employees (including executive officers) and directors. Our insider trading policy also prohibits
our employees (including executive officers) and directors from using our shares as collateral for margin accounts or
pledging our shares as collateral for loans.
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Compensation Discussion and Analysis
Prohibition on Hedging and Pledging of Company Securities
Q
Compensation Risk Assessment
With the assistance of FW Cook, the Compensation and People Committee reviewed our compensation policies and
practices and determined that our compensation programs do not encourage excessive or inappropriate risk-taking. The
Compensation and People Committee believes that the design and mix of our compensation programs appropriately
encourage our executive and senior officers to focus on the creation of long-term shareholder value. In its review, the
Compensation and People Committee noted the following features:
z The Company’s pay levels are generally aligned with market.
z The Company’s compensation programs utilize best practices designed to mitigate risk, including:
z Balanced mix of short-term cash and long-term equity pay;
z Incentive programs that pay out based on a mix of performance metrics over varying time frames;
z Long-term incentive program that includes both service-based RSUs and performance-based PSUs;
z Incentive programs that have payout caps and reasonable leverage;
z Share ownership guidelines and anti-hedging/pledging policies that encourage long-term equity ownership;
z Compensation and People Committee having the ability to exercise discretion over formulaic incentive plan outcomes;
and
z Board-adopted incentive compensation recoupment policy.
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2024 Proxy Statement
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Executive Compensation
The following table sets forth the fiscal years 2022, 2023 and 2024 compensation for:
z Revathi Advaithi, our Chief Executive Officer;
z Paul R. Lundstrom, our Chief Financial Officer; and
z Hooi Tan, Michael P. Hartung and Scott Offer.
The executive officers included in the Summary Compensation Table are referred to in this proxy statement as our NEOs.
A detailed description of the plans and programs under which our NEOs received the following compensation can be found
in the section titled “Compensation Discussion and Analysis” of this proxy statement. Additional information about these
plans and programs is included in the additional tables and discussions that follow the Summary Compensation Table.
Summary Compensation Table
Name and
Principal Position
Year
Salary
($)(2)
Bonus
($)
Share
Awards
($)(3)
Non-Equity
Incentive Plan
Compensation
($)(4)
Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(5)
All Other
Compensation
($)(6)
Total
($)(7)
Revathi Advaithi
Chief Executive Officer
2024
1,325,000
—
11,382,142
1,858,313
66,392
479,251
15,111,097
2023
1,325,000
—
11,020,718
2,815,671
26,607
409,914
15,597,911
2022
1,281,250
—
10,484,149
2,163,076
—
447,149
14,375,624
Paul R. Lundstrom
Chief Financial Officer
2024
735,000
—
2,682,924
727,650
221,324
263,308
4,630,206
2023
731,250
—
2,727,636
1,041,267
—
229,482
4,729,635
2022
715,000
—
2,427,904
783,605
13,098
167,867
4,107,474
Hooi Tan
President, Global Operations
and Components(1)
2024
700,000
—
2,167,992
731,500
56,846
270,977
3,927,315
2023
700,000
—
1,983,721
991,683
37
169,244
3,844,685
Michael P. Hartung
President, Agility Solutions
2024
735,000
—
1,951,184
548,237
34,182
262,672
3,531,274
2023
731,250
—
1,983,721
1,152,627
14,675
228,846
4,111,119
2022
715,000
—
1,931,285
661,896
133
276,532
3,584,846
Scott Offer
Executive Vice President,
General Counsel
2024
663,000
—
1,951,184
563,550
79,490
239,141
3,496,366
2023
659,000
—
1,983,721
853,878
—
207,288
3,703,887
2022
642,550
350,000
2,096,828
640,142
1,349
250,714
3,981,583
(1) Mr. Tan was appointed as President, Global Operations and Components effective April 1, 2022. Mr. Tan was based in Singapore for a portion
of 2024 and was paid in Singapore dollars. We converted such amounts to United States dollars using a conversion rate of 1.34, which is the
average of the monthly translation rates for fiscal year 2024.
(2) Includes amounts contributed by executive to deferred compensation plan and 401(k) savings plan accounts. For Mr. Tan, the amount includes
the amount executive contributed to the Singapore Provident fund. The reported salary amounts in any year may differ from the annual base
salary amount reported due to the timing of payroll periods and/or the effective date in a change in base salary.
(3) Share awards consist of service-based RSUs, adjusted EPS growth PSUs and rTSR PSUs. The amounts in this column do not reflect compensation
actually received by the NEOs, nor do they reflect the actual value that will be realized by the NEOs. Instead, the amounts reflect the grant
date fair value for grants made by us in fiscal years 2022, 2023 and 2024, calculated in accordance with FASB ASC Topic 718. The adjusted
EPS growth and rTSR PSUs included in this column are at the target number of shares as follows for fiscal year 2024: 255,062 PSUs or $6,132,966
for Ms. Advaithi; 60,122 PSUs or $1,445,633 for Mr. Lundstrom; 48,582 PSUs or $1,168,154 for Mr. Tan; 43,724 PSUs or $1,051,344 for Mr. Hartung;
and 43,724 PSUs or $1,051,344 for Mr. Offer. The maximum number of shares for the adjusted EPS growth PSUs are as follows for fiscal year 2024:
255,062 PSUs or $5,249,176 for Ms. Advaithi; 60,122 PSUs or $1,237,311 for Mr. Lundstrom; 48,582 PSUs or $999,818 for Mr. Tan; 43,724 PSUs or
$899,840 for Mr. Hartung; and 43,724 PSUs or $899,840 for Mr. Offer.
For additional information regarding the assumptions made in calculating the amounts reflected in this column, see Note 5 to our audited
consolidated financial statements, “Share-Based Compensation,” included in our Annual Report on Form 10-K for the fiscal year ended
March 31, 2024.
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Q
(4) The amounts in this column represent incentive cash bonuses earned in fiscal year 2024. For additional information, see the section titled
“Compensation Discussion and Analysis—Fiscal Year 2024 Executive Compensation—Incentive Bonus Plan” of this proxy statement.
(5) The amounts in this column represent the above-market earnings on the vested portions of the nonqualified deferred compensation accounts
of our NEOs. None of our NEOs participated in any defined benefit or actuarial pension plans in any period presented. For additional
information, see the table below entitled “Nonqualified Deferred Compensation in Fiscal Year 2024.”
(6) The following table provides a breakdown of compensation included in the “All Other Compensation” column for fiscal year 2024. In addition to
the items noted below, Ms. Advaithi’s spouse accompanied her on business-related travel on the corporate aircraft during fiscal year 2024, for
which there was no aggregate incremental cost to the Company and no amount is included with respect to such travel in the “2024 All Other
Compensation Table” for Ms. Advaithi.
Name
Pension/
Savings Plan
Company
Match
Expenses/
Social Security
($)(1)
Medical/
Enhanced
Long-Term
Disability
($)(2)
Tax
Preparation
Expenses
($)(3)
Personal
Aircraft
Usage
($)(4)
Other
($)(5)
Total
($)
Revathi Advaithi
459,970
2,321
16,960
—
479,251
Paul R. Lundstrom
261,031
2,277
—
263,308
Hooi Tan
249,378
—
18,749
2,850
270,977
Michael P. Hartung
261,031
1,641
—
262,672
Scott Offer
236,820
2,321
—
239,141
(1) The amounts in this column represent the Company’s regular employer matching contributions to the 401(k) saving plan accounts and
employer contributions to the deferral accounts (i.e. deferred compensation awards) under the deferred compensation plan.
z 401(k) contributions for Ms. Advaithi and Messrs. Lundstrom, Hartung, and Offer were $13,200, $13,200, $13,200 and $13,266, respectively.
The amount of $13,348 for Mr. Tan represents the contribution to the Singapore Provident fund.
z Deferred compensation plan awards for Ms. Advaithi and Messrs. Lundstrom, Tan, Hartung and Offer were $446,770, $247,831 $236,030,
$247,831 and $223,554, respectively.
(2) The amounts in this column represent the Company’s contributions to the executive long-term disability program, which provides additional
benefits beyond the basic employee long-term disability program.
(3) The amount in this column represents Mr. Tan’s expenses related to tax preparation assistance in regards to his relocation.
(4) Represents the aggregate incremental cost to the Company for the personal use of corporate aircraft by Ms. Advaithi, who may be
accompanied by her spouse and other family members and guests. This is calculated using an hourly rate for each flight hour based
on the variable operating costs to the Company, including fuel, maintenance, crew travel expenses, catering, landing fees, and other
miscellaneous variable costs. Since corporate aircraft are primarily used for business travel, we do not include costs that the Company
would have incurred regardless of whether there was any personal aircraft usage, such as depreciation, hanger rental, and insurance costs.
(5) This amount in this column represents Mr. Tan’s expenses related to visa/immigration services.
(7) Total amounts may not add up due to rounding.
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Executive Compensation
Summary Compensation Table
Q
Grants of Plan-Based Awards in Fiscal Year 2024
The following table presents information about non-equity incentive plan awards and RSU and PSU awards that we granted
in our 2024 fiscal year to our NEOs. We did not grant any stock options to our NEOs during our 2024 fiscal year.
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1)
Estimated Future Payouts Under
Equity Incentive Plan Awards(2)
All Other Share
Awards: Number
of Shares of
Stock or Units
(#)(3)
Grant Date
Fair Value
of Share
Awards
($)(4)
Name
Grant Date
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
Revathi Advaithi
6/14/2023(5)
63,765
127,531
255,062
2,624,588
6/14/2023(6)
31,882
127,531
255,062
3,508,378
6/14/2023
255,062
5,249,176
808,913
2,186,250
4,372,500
Paul R. Lundstrom
6/14/2023(5)
15,030
30,061
60,122
618,656
6/14/2023(6)
7,515
30,061
60,122
826,978
6/14/2023
60,121
1,237,290
299,145
808,500
1,617,000
Hooi Tan
6/14/2023(5)
12,145
24,291
48,582
499,909
6/14/2023(6)
6,072
24,291
48,582
668,245
6/14/2023
48,583
999,838
284,900
770,000
1,540,000
Michael P. Hartung
6/14/2023(5)
10,931
21,862
43,724
449,920
6/14/2023(6)
5,465
21,862
43,724
601,424
6/14/2023
43,724
899,840
251,370
735,000
1,470,000
Scott Offer
6/14/2023(5)
10,931
21,862
43,724
449,920
6/14/2023(6)
5,465
21,862
43,724
601,424
6/14/2023
43,724
899,840
245,310
663,000
1,326,000
(1) These amounts show the range of possible payouts under our cash incentive programs for fiscal year 2024. The amounts correspond to the
range of possible payouts under the incentive bonus plan. The maximum payment represents 200% of the target payment. The threshold
payment represents 37% of target payout levels for all NEO’s other than Mr. Hartung, for whom the threshold payment represents 34.2%. For the
annual incentive bonus plan, the amounts actually earned for fiscal year 2024 are reported as Non-Equity Incentive Plan Compensation in
the Summary Compensation Table. For additional information, see the section titled “Compensation Discussion and Analysis—Fiscal Year 2024
Executive Compensation—Incentive Bonus Plan” of this proxy statement.
(2) Shows the range of estimated future vesting of the adjusted EPS growth and rTSR PSUs granted in fiscal year 2024 under the 2017 Plan. The
adjusted EPS growth PSUs cliff vest after three years, with the vesting based upon a yearly EPS measurement period and averaged over the
performance period. The maximum payout for each executive officer represents 200% of the target payout levels. The threshold payout for the
adjusted EPS growth PSUs for each NEO represents 50% of the target payout. The rTSR PSUs cliff vest after three years, with vesting based on the
percentile rank of the Company’s TSR relative to the return of the Company’s TSR peer group. The maximum payout for each executive officer
represents 200% of the target payout. The threshold payout for the rTSR PSUs for each NEO represents 25% of target payout. For additional
information, see the section titled “Compensation Discussion and Analysis—Fiscal Year 2024 Executive Compensation—Long-Term Share-Based
Incentive Compensation” of this proxy statement.
(3) Shows the number of service-based RSUs granted in fiscal year 2024 under the 2017 Plan. For each NEO, the RSUs vest in three annual
installments at a rate of 33% per year, provided that the executive continues to remain employed on the vesting dates. For additional information,
see the section titled “Compensation Discussion and Analysis—Long-Term Share-Based Incentive Compensation” of this proxy statement.
(4) This column shows the grant date fair value of service-based RSUs, adjusted EPS growth PSUs and rTSR PSUs, at the target level, under FASB ASC
Topic 718 granted to our NEOs in fiscal year 2024. The grant date fair value is the amount that we will expense in our financial statements over
the awards’ vesting schedule. For service-based RSUs and adjusted EPS growth PSUs, the grant date fair value is the closing price of our Ordinary
Shares on the grant date. For rTSR PSUs where vesting is contingent on meeting a market condition, the grant date fair value was calculated
using a Monte Carlo simulation. Additional information on the valuation assumptions is included in Note 5 of our audited consolidated financial
statements, “Share-Based Compensation,” included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024.
(5) This row shows the adjusted EPS growth PSUs.
(6) This row shows the rTSR PSUs.
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Executive Compensation
Grants of Plan-Based Awards in Fiscal Year 2024
Q
Outstanding Equity Awards at 2024 Fiscal Year-End
The following table presents information about outstanding share awards held by our NEOs as of March 31, 2024. The table
shows information about: (i) service-based RSUs and (ii) PSUs.
The market value of the share awards is based on the closing price of our Ordinary Shares as of March 31, 2024, which was
$28.61. For PSUs, the number of unearned shares and the market values shown assume all performance criteria are met
at threshold, target or maximum depending on performance through March 31, 2024. For additional information on our
equity incentive programs, see the section titled “Compensation Discussion and Analysis—Long-Term Share-Based Incentive
Compensation” of this proxy statement.
Name
Share Awards
Number of Shares
or Units of Stock
That Have Not
Vested
(#)
Market Value of
Shares or Units of
Stock That Have Not
Vested
($)
Equity Incentive Plan
Awards: Number of
Unearned Shares,
Units or Other Rights
That Have Not Vested
(#)(1)
Equity Incentive Plan
Awards: Market or Payout
Value of Unearned Shares,
Units or Other Rights That
Have Not Vested
($)(2)
Revathi Advaithi
112,472(3)
3,217,824
112,472(13)
3,217,824
256,035(3)
7,325,161
256,033(14)
7,325,114
255,062(3)
7,297,324
255,062(15)
7,297,324
337,416(4)
9,653,472
64,008(16)
1,831,278
103,469(5)
2,960,237
85,021(17)
2,432,441
256,033(6)
7,325,114
128,017(7)
3,662,557
85,021(8)
2,432,441
Paul R. Lundstrom
26,046(9)
745,176
26,047(13)
745,195
63,369(9)
1,812,987
63,369(14)
1,812,987
60,121(9)
1,720,062
60,122(15)
1,720,090
78,139(4)
2,235,528
15,842(16)
453,249
23,962(5)
685,542
20,041(17)
573,363
63,369(6)
1,812,997
31,685(7)
906,498
20,041(8)
573,363
Hooi Tan
8,855(10)
253,342
8,855(13)
253,342
46,086(10)
1,318,520
46,087(14)
1,318,540
48,583(10)
1,389,960
48,582(16)
1,389,931
26,564(4)
759,996
11,522(17)
329,635
8,146(5)
233,053
16,194(18)
463,310
46,087(6)
1,318,540
23,043(7)
659,270
16,194(8)
463,310
Michael P. Hartung
20,719(11)
592,771
20,719(13)
592,771
46,086(11)
1,318,520
46,087(14)
1,318,540
43,724(11)
1,250,944
43,724(15)
1,250,944
62,156(4)
1,778,283
11,522(16)
329,635
19,060(5)
545,311
14,575(17)
416,981
46,087(6)
1,318,540
23,043(7)
659,270
14,575(8)
416,981
72
2024 Proxy Statement
Executive Compensation
Outstanding Equity Awards at 2024 Fiscal Year-End
Q
Name
Share Awards
Number of Shares
or Units of Stock
That Have Not
Vested
(#)
Market Value of
Shares or Units of
Stock That Have Not
Vested
($)
Equity Incentive Plan
Awards: Number of
Unearned Shares,
Units or Other Rights
That Have Not Vested
(#)(1)
Equity Incentive Plan
Awards: Market or Payout
Value of Unearned Shares,
Units or Other Rights That
Have Not Vested
($)(2)
Scott Offer
22,495(12)
643,582
22,495(13)
643,582
46,086(12)
1,318,520
46,087(14)
1,318,540
43,724(12)
1,250,944
43,724(15)
1,250,944
67,484(4)
1,930,717
11,522(16)
329,635
20,694(5)
592,054
14,575(17)
416,981
46,087(6)
1,318,540
23,043(7)
659,270
14,575(8)
416,981
(1) This column includes rTSR PSUs granted in fiscal years 2022, 2023 and 2024 under the 2017 Plan, and the adjusted growth EPS PSUs granted in
fiscal years 2023 and 2024 under the 2017 Plan. Vesting of the rTSR PSUs granted in fiscal years 2022, 2023 and 2024 is based on the Company’s
TSR relative to the return of the Company’s TSR peer group over the 3-year performance period. Vesting of the adjusted EPS growth PSUs granted
in fiscal years 2022, 2023 and 2024 is based upon the Company’s adjusted EPS growth over the yearly measurement period and averaged over
the 3-year performance period.
(2) The projected payouts of the rTSR PSUs for the 2021-2024, 2022-2025 and 2023-2026 cycles are shown at maximum. The projected payout of the
adjusted EPS growth PSUs for the 2022-2025 and 2023-2026 cycles are shown at target.
(3) 112,472 shares vest on June 9, 2024; 256,035 shares vest at a rate of 128,018 shares per year for two years, with the first vesting date on June 1,
2024; and 255,062 shares vest at a rate of 85,020 shares per year for three years, with the first vesting date on June 14, 2024.
(4) Actual payout for Year 1, Year 2 and Year 3 adjusted growth EPS PSUs to pay out on May 8, 2024.
(5) Actual payout for Year 1 and Year 2 rTSR PSUs to vest on June 9, 2024.
(6) Actual payout for Year 1 and Year 2 adjusted EPS growth PSUs to pay out in May 2025.
(7) Actual payout for Year 1 rTSR PSUs to vest on June 1, 2025.
(8) Actual payout for Year 1 adjusted EPS growth PSUs to pay out in May 2026.
(9) 26,046 shares vest on June 9, 2024; 63,369 shares vest at a rate of 31,685 shares per year for two years, with the first vesting date on June 1, 2024;
and 60,121 shares vest at a rate of 20,041 shares per year for three years, with the first vesting date on June 14, 2024.
(10) 8,855 shares vest on June 14, 2024; 46,086 shares vest at a rate of 23,043 shares per year for two years, with the first vesting date on June 1, 2024;
and 48,583 shares vest at a rate of 16,194 shares per year for three years, with the first vesting date on June 14, 2024.
(11) 20,719 shares vest on June 9, 2024; 46,086 shares vest at a rate of 23,043 shares per year for two years, with the first vesting date on June 1, 2024;
and 43,724 shares vest at a rate of 14,575 shares per year for three years, with the first vesting date on June 14, 2024.
(12) 22,495 shares vest on June 9, 2024; 46,086 shares vest at a rate of 23,043 shares per year for two years, with the first vesting date on June 1, 2024;
and 43,724 shares vest at a rate of 14,575 shares per year for three years, with the first vesting date on June 14, 2024.
(13) Remaining rTSR PSUs vest on June 9, 2024 assuming a maximum payout.
(14) Remaining rTSR PSUs vest on June 1, 2025 assuming a maximum payout.
(15) Remaining rTSR PSUs vest on June 14, 2026 assuming a maximum payout.
(16) Remaining adjusted EPS growth PSUs vest in May 2025 assuming a target payout.
(17) Remaining adjusted EPS growth PSUs vest in May 2026 assuming a target payout.
73
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Executive Compensation
Outstanding Equity Awards at 2024 Fiscal Year-End
Q
Shares Vested in Fiscal Year 2024
The following table presents information for each of our NEOs regarding the number of shares acquired upon the vesting of
share awards in the form of RSUs and PSUs during fiscal year 2024 and the value realized, in each case before payment of
any applicable withholding tax and broker commissions. There were no option exercises by our NEOs in 2024 and the NEOs
do not hold any unexercised options.
Share Awards
Name
Number of Shares
Acquired on Vesting
(#)
Value Realized
on Vesting
($)(1)
Revathi Advaithi
1,089,177
28,513,040
Paul R. Lundstrom
421,334
10,979,750
Hooi Tan
97,785
2,567,149
Michael P. Hartung
169,985
4,444,369
Scott Offer
245,968
6,442,007
(1) The amounts in this column reflect the aggregate dollar amount realized upon the vesting of RSUs determined by multiplying the number of
Ordinary Shares underlying such awards by the market value of the underlying shares on the vesting date.
Pension Benefits in Fiscal Year 2024
Our NEOs do not receive any compensation in the form of pension benefits.
Nonqualified Deferred Compensation in Fiscal Year 2024
Each of our NEOs participates in our 2010 Deferred Compensation Plan. Our deferred compensation program is intended
to promote retention by providing a long-term savings opportunity on a tax-efficient basis. Beginning in fiscal year 2011,
we replaced our existing deferred compensation plans with the 2010 Deferred Compensation Plan. Under the 2010 plan,
participating officers may defer up to 70% of their base salary and bonus, net of certain statutory and benefit deductions.
The Company may make a discretionary matching contribution for these deferrals to reflect limitations on our matching
contribution under our 401(k) plan. Under this plan, we may also make annual contributions, in amounts up to 37.5% of
each participant’s base salary (subject to offsets for non-U.S. executives’ pension and other benefits), which will cliff vest
after four years. For these annual contributions, 50% of the funding is paid as a percent of base salary and the remaining
50% is performance-based, up to a maximum of 150%. Amounts credited to the deferral accounts are deemed to be
invested in hypothetical investments selected by a participant or an investment manager on behalf of each participant.
Participants in the 2010 Deferred Compensation Plan may receive their vested deferred compensation balances upon
termination of employment at such time as is specified in their deferral agreements, which may include a lump sum
payment or installment payments made over a period of years. Participants also may elect in-service distributions through
a lump sum payment or in installments over a period of up to ten years.
Under our deferred compensation plan, we entered into trust agreements providing for the establishment of irrevocable
trusts into which we are required to deposit cash or other assets as specified in the applicable deferral agreement, equal
to the aggregate amount required to be credited to the participant’s deferral account, less any applicable taxes to be
withheld. The deferred account balances of the participants in our deferred compensation plan are unfunded and
unsecured obligations of the Company, receive no preferential standing, and are subject to the same risks as any of our
other general obligations.
For a discussion of the contributions granted to each of the NEOs and their vesting terms, including vesting upon the
executive’s termination or a change of control of the Company, see the sections titled “Compensation Discussion and
Analysis—Fiscal Year 2024 Executive Compensation—Deferred Compensation Awards” of this proxy statement and
“Executive Compensation—Potential Payments Upon Termination or Change of Control ” below.
The following table presents information for fiscal year 2024 about: (i) contributions to the NEOs’ deferred compensation
plan accounts by the executive; (ii) contributions to the NEOs’ deferred compensation plan accounts by the Company;
(iii) aggregate earnings (or losses) on the deferred compensation plan accounts; (iv) aggregate withdrawals and
distributions from the deferred compensation plan accounts; and (v) the deferred compensation plan account balances
as of the end of the fiscal year. For fiscal year 2024, Ms. Advaithi and Messrs. Hartung, Tan, Lundstrom and Offer each received
deferred cash awards with a value that averaged approximately 33.7% of their respective fiscal year 2023 base salaries.
74
2024 Proxy Statement
Executive Compensation
Shares Vested in Fiscal Year 2024
Q
Nonqualified Deferred Compensation Table
Name
Executive
Contributions in
Last Fiscal Year
($)(1)
Registrant
Contributions in
Last Fiscal Year
($)(2)
Aggregate
Earnings (Losses)
in Last Fiscal Year
($)(3)
Aggregate
Withdrawals/
Distributions
($)
Aggregate
Balance at Fiscal
Year-End
($)(4)
Revathi Advaithi
—
446,770
66,392
1,623,542
Paul R. Lundstrom
—
247,831
221,324
1,180,160
Hooi Tan
—
236,030
56,846
(64,250)
509,146
Michael P. Hartung
—
247,831
34,182
(64,571)
824,943
Scott Offer
96,261
223,554
79,490
(183,812)
858,962
(1) Reflects the salary payments deferred by our NEOs during the fiscal year. These amounts are included in the Summary Compensation Table
under the “Salary”” column, as applicable.
(2) These amounts represent contributions under the 2010 Deferred Compensation Plan. These awards cliff vest after four years. These amounts,
including any earnings or losses thereon, will be reported under the “All Other Compensation” column of the Summary Compensation Table.
For additional information on these contributions and their vesting terms, including vesting upon the executive’s termination or change of
control of the Company, see the sections titled “Compensation Discussion and Analysis—Fiscal Year 2024 Executive Compensation—Deferred
Compensation Awards” and “Executive Compensation—Potential Payments Upon Termination or Change of Control” of this proxy statement.
(3) Reflects earnings (or losses) for each NEO on both the vested and unvested portions of the executive’s deferred compensation account(s).
The above-market portion of the earnings on the vested portion of the executive’s deferred compensation account(s) is included under the
“Change in Pension Value and Nonqualified Deferred Compensation Earnings” column in the Summary Compensation Table.
(4) The amount in this column with respect to Mr. Offer includes the sum of the amounts that Mr. Offer deferred in prior years and previously reported as
compensation in the Summary Compensation Table in respect of the applicable year (i.e., $ 335,998). No other NEOs are voluntarily contributing
to the 2010 Deferred Compensation Plan. The aggregate balance at fiscal year-end reported through 2023 is in the amounts of $1,110,380 for
Ms. Advaithi, $711,005 for Mr. Lundstrom, $280,520 for Mr. Tan, $607,501 for Mr. Hartung, and $739,730 for Mr. Offer.
Potential Payments Upon Termination or Change of Control
As described in the section titled “Compensation Discussion and Analysis” of this proxy statement, our NEOs do not have
employment agreements with us. Our NEOs are eligible for certain termination and change of control benefits under
our Executive Severance Plan, the 2010 Deferred Compensation Plan and under our equity incentive plan. Additionally,
severance benefits for Ms. Advaithi were included in her employment offer letter.
Acceleration of Vesting of Deferred Compensation
If the employment of any participant in the 2010 Deferred Compensation Plan is involuntarily terminated by the Company
without cause or is terminated by the executive with good reason within two years following a change of control (as
defined in the 2010 Deferred Compensation Plan), the entire unvested portion of the deferred compensation account of
the NEO will vest.
Acceleration of Vesting of Equity Awards
The number of unvested equity awards held by each NEO as of March 31, 2024 is listed above in the Outstanding Equity
Awards at 2024 Fiscal Year-End table. All unvested outstanding equity awards held by our NEOs at the end of fiscal year
2024 were granted under the 2017 Plan, which provides certain benefits to plan participants in the event of the termination
of such participant’s employment or a change of control of the Company. The terms of these benefits are described below.
Treatment of Certain Awards Upon Retirement
Subject to any waiver by the Compensation and People Committee, all unvested RSU awards and unvested stock options held
by a plan participant will be forfeited if the participant ceases to provide services to the Company for any reason. However,
certain award agreements for RSUs, rTSR PSUs, and adjusted EPS growth PSUs granted under our 2017 Plan starting in June 2020
provide that if a plan participant ceases to provide services to the Company due to a qualifying retirement (meaning a voluntary
termination of service after the participant has attained the age of fifty-five (55) years; completed at least five (5) years of service
as an employee of the Company; and the sum of age and service is equal to at least 65), then the award will not terminate. RSUs
would continue to vest, and a pro-rata number for the length of time employed during the performance period shall be issued
to the participant at the end of the performance cycle for rTSR PSUs and adjusted EPS growth PSUs. Among our NEOs, Messrs.
Hartung and Offer meet the retirement criteria.
75
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Executive Compensation
Potential Payments Upon Termination or Change of Control
Q
Treatment of Certain Awards Upon Death or Disability
Certain award agreements for RSUs, rTSR PSUs, and adjusted EPS growth PSUs granted under our 2017 Plan starting in
June 2020 provide that if a plan participant ceases to provide services to the Company due to death or disability, then the
awards will accelerate after the qualifying termination. RSUs will immediately vest. rTSR PSUs and adjusted EPS growth PSUs
will be prorated and immediately vest as follows: completed cycles will vest based on actual performance and unfinished
cycles will vest at target.
Double-Trigger Vesting Upon a Change of Control
Our equity incentive plans are “double trigger” plans, meaning that unvested RSU awards vest immediately only if (i) there
is a change of control of the Company and (ii)(x) such awards are not converted, assumed or replaced by the successor
or survivor corporation or (y) if provided by the Compensation and People Committee as described below, the service of
the award recipient is involuntarily terminated within a designated period following the effective date of such change of
control.
Under the terms of the 2017 Plan, unless otherwise provided in the applicable award agreement or other agreement
between the Company and the participant, in the event of a change of control of the Company (as defined in the Plan) in
which the participant’s awards are not converted, assumed, or replaced by a successor or survivor corporation, or a parent
or subsidiary thereof, then all forfeiture restrictions on such awards will lapse immediately prior to the change of control and,
following the consummation of such a change of control, all such awards will terminate and cease to be outstanding.
Where awards under the Plan are assumed or continued after a change of control, the Compensation and People
Committee may provide that one or more awards will automatically accelerate upon an involuntary termination of service
within a designated period following the effective date of such change of control. If the Compensation and People
Committee so determines, immediately upon an involuntary termination of service following a change of control all
forfeiture restrictions on such award will lapse.
2019 Executive Severance Plan
On January 17, 2019, the Compensation and People Committee adopted the Flex Ltd. Executive Severance Plan (the
“Severance Plan”). The Severance Plan covers senior level employees of the Company, including the Company’s Chief
Financial Officer and other NEOs, but not including the Company’s Chief Executive Officer. Under the Plan, in the event
of a termination of employment by the Company without “cause” or by a participant for “good reason” (each such term
as defined in the Plan), the participant will receive the following benefits, subject to the participant entering into and
complying with a transition and release agreement in a form provided by the Company (“Transition Agreement”):
z continuation of base salary and benefits coverage during the transition period provided in the Transition Agreement and
pro rata payment of annual bonus;
z continued vesting of RSUs, PSUs and deferred compensation awards during the transition period; and
z following the transition period, accelerated vesting of RSUs and deferred compensation awards that would have vested
during the one-year period following the transition period.
During the transition period, the participant will be required to discharge his or her transition duties and comply with other
terms and conditions to be set forth in the Transition Agreement, including customary non-competition, non-solicitation,
non-disclosure, non-disparagement and cooperation provisions. Any violation of such obligations may result in cessation of
benefits and clawback rights of the Company.
There are no tax gross-ups in the severance plan.
CEO Severance Benefits
Pursuant to the terms of the CEO offer letter, dated February 11, 2019, in the event of a termination of employment by the
Company without “cause” or by the CEO for “good reason” (each such term as defined in the Severance Plan), the CEO will
receive the following benefits:
z continuation of base salary, target bonus and benefits coverage for 24 months; and
z 2 years continued vesting of outstanding RSUs, PSUs, and deferred compensation awards.
76
2024 Proxy Statement
Executive Compensation
Potential Payments Upon Termination or Change of Control
Q
Potential Payments Upon Termination or Change of Control as of March 31, 2024
The following table and accompanying notes show the estimated payments and benefits that would have been provided
to each NEO as a result of (i) the accelerated vesting of deferred compensation in the case of a change of control with a
termination of employment, (ii) the accelerated vesting of restricted and performance share unit awards in the event of a
change of control if such awards are not assumed by the successor company in connection with the change of control,
(iii) involuntary termination without cause or voluntary termination for good reason under the Company’s Severance Plan,
(iv) retirement, or (v) death or disability.
Calculations for this table assume that the triggering event took place on March 31, 2024, the last business day of fiscal
year 2024, and are based on the price per share of our Ordinary Shares on such date, which was $28.61. The following
table does not include potential payouts under our NEOs’ nonqualified deferred compensation plans relating to vested
benefits.
Name
Change in Control
with Termination
($)
Change in
Control and No
Assumption of
Award
($)(1)
Involuntary Termination
without Cause or
Voluntary Termination for
Good Reason
($)(2)
Retirement
($)(3)
Death or
Disability
($)(4)
Revathi Advaithi
Base Salary Continuation(5)
2,650,000
—
2,650,000
—
—
Benefits Continuation(5)
49,638
—
49,638
—
—
Bonus Payments(5)
4,044,563
—
4,044,563
—
1,858,313
Vesting of Deferred Compensation(5)(6)
1,163,629
—
276,299
—
1,623,542
Vesting of Service-based RSUs(5)
15,407,858
17,840,309
15,407,858
—
17,840,309
Vesting of Performance-based RSUs(5)
20,641,142
27,938,466
20,641,142
—
25,906,651
Total(11)
43,956,830
45,778,775
43,069,500
—
47,228,815
Paul R. Lundstrom
Base Salary Payment Continuation(7)
735,000
—
735,000
—
—
Benefits Continuation(7)
23,924
—
23,924
—
—
Bonus Payments(8)
727,650
—
727,650
—
727,650
Vesting of Deferred Compensation(6)
923,910
—
461,679
—
1,180,160
Vesting of Service-based RSUs(9)
3,704,909
4,278,225
3,704,909
—
4,278,225
Vesting of Performance-based RSUs(9)
2,235,557
6,675,142
2,235,557
—
6,168,903
Total(11)
8,350,951
10,953,367
7,888,719
—
12,354,937
Hooi Tan
Base Salary Payment Continuation(7)
700,000
—
700,000
—
Benefits Continuation(7)
4,531
—
4,531
—
Bonus Payments(8)
731,500
—
731,500
731,500
Vesting of Deferred Compensation(6)
241,725
—
58,192
509,146
Vesting of Service-based RSUs(9)
2,498,483
2,961,822
2,498,483
—
2,961,822
Vesting of Performance-based RSUs(9)
759,996
4,127,736
759,996
—
3,310,674
Total(11)
4,936,234
7,089,558
4,752,702
—
7,513,142
77
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Executive Compensation
Potential Payments Upon Termination or Change of Control as of March 31, 2024
Q
Name
Change in Control
with Termination
($)
Change in
Control and No
Assumption of
Award
($)(1)
Involuntary Termination
without Cause or
Voluntary Termination for
Good Reason
($)(2)
Retirement
($)(3)
Death or
Disability
($)(4)
Michael P. Hartung
Base Salary Payment Continuation(7)
735,000
—
735,000
—
Benefits Continuation(7)
23,437
—
23,437
—
Bonus Payments(8)
548,237
—
548,237
—
548,237
Vesting of Deferred Compensation(6)
569,821
—
57,369
824,943
824,943
Vesting of Service-based RSUs(9)
2,745,273
3,162,235
2,745,273
3,162,235
3,162,235
Vesting of Performance-based RSUs(9)
1,778,283
5,007,036
1,778,283
3,204,034(10)
4,700,997
Total(11)
6,400,050
8,169,271
5,887,598
7,191,211
9,236,411
Scott Offer
Base Salary Payment Continuation(7)
663,000
—
663,000
—
—
Benefits Continuation(7)
16,882
—
16,882
—
—
Bonus Payments(8)
563,550
—
563,550
—
563,550
Vesting of Deferred Compensation(6)
613,167
—
151,172
858,962
858,962
Vesting of Service-based RSUs(9)
2,796,084
3,213,046
2,796,084
3,213,046
3,213,046
Vesting of Performance-based RSUs(9)
1,930,717
5,159,470
1,930,717
3,346,683 (10)
4,915,456
Total(11)
6,583,400
8,372,516
6,121,404
7,418,692
9,551,015
(1)
The amounts shown represent the estimated value of the accelerated vesting of RSUs and PSUs (at target) following a change of control under
the terms of our equity incentive plan, which assumes that such RSUs are not assumed or replaced by the successor corporation or its parent.
If such awards are assumed or replaced in a change of control transaction, the vesting of such awards will not accelerate; provided, that the
Compensation and People Committee may determine that awards under the 2017 Plan may be accelerated if the executive is involuntarily
terminated within a certain period (not to exceed 18 months) following a change of control. PSUs may be accelerated on a pro-rata basis
following a change of control. All amounts shown in this column represent the intrinsic value of the awards based on the closing price of our
Ordinary Shares on March 31, 2024, the assumed date of the triggering event.
(2)
The amounts shown represent the estimated value of amounts payable under the Severance Plan subject to the participant entering into and
complying with a Transition Agreement, except for Ms. Advaithi whose severance benefits are described in the “CEO Severance Benefits” section
on page 76.
(3)
For termination of service due to retirement, (i) RSUs will continue to vest; (ii) the PSUs will not terminate; and (iii) a pro-rata number of vested
shares shall be issued to the executive upon the vesting of the award pursuant to achieving the performance criteria at the end of the original
performance period. The amounts reported assume vesting at 100% of target shares. As of the fiscal year ended March 31, 2024, among our
NEOs, Mr. Hartung and Mr. Offer were retirement eligible.
(4)
For termination of service due to death or disability, (i) unvested RSUs will immediately vest in full, and (ii) PSUs will be pro-rated and immediately
vest as follows: completed cycles will vest based on actual performance and unfinished cycles will vest at target.
(5)
Represents two years’ continued payment of base salary and two years of target annual bonus amount, two years’ continued vesting of
outstanding equity awards and deferred compensation, two years’ continued benefits coverage, and deferred compensation awards.
(6)
The amount shown represents the portion of the unvested balance of the executive’s deferred compensation account that would vest
in the event the executive is terminated by the Company without cause or resigns with good reason following a change of control of the
Company (as defined in the 2010 Deferred Compensation Plan) or the amount that would continue vesting upon an executive’s retirement. No
executive’s deferred compensation account will vest upon a change of control (without any termination following such change of control).
(7)
Assumes a 12-month transition period for illustrative purposes (actual transition period length may differ), during which the Company would
continue base salary payments and maintain benefits.
(8)
Represents payment of a pro-rated portion of the participant’s annual bonus.
(9)
Includes RSUs and PSUs that vest between April 1, 2024 to March 31, 2025. For death and disability, PSUs will be pro-rated and immediately vest
as follows: completed cycles will vest based on actual performance and unfinished cycles will vest at target.
(10) The amount shown is prorated for retirement and represent rTSR-based and adjusted EPS growth-based performance shares at target through
March 31, 2024.
(11) Total amounts may not add up due to rounding.
78
2024 Proxy Statement
Executive Compensation
Potential Payments Upon Termination or Change of Control as of March 31, 2024
Q
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of SEC
Regulation S-K, we are providing the following disclosure about the median annual total compensation of our employees in
relation to the annual total compensation of our Chief Executive Officer.
For the fiscal year ended March 31, 2024, we had revenues of $26.4 billion. Flex’s physical infrastructure includes
approximately 100 facilities in approximately 30 countries, staffed by approximately 148,000 employees, providing customers
with truly global scale and strategic geographic distribution capabilities to meet their market needs. To better understand
the following pay ratio disclosure, it is important to recognize that our compensation programs are designed to reflect local
market practices across our global operations. We offer market-based competitive wages and benefits in all geographies in
which we operate. Our CEO’s compensation is structured to align pay with performance, with pay levels set in line with our
peers that are companies of similar size and scale complexity.
Fiscal Year 2024 Pay Ratio
z The annual total compensation of our median employee among all non-contractor employees (excluding the CEO) was
$11,819.
z Our CEO’s annual total compensation, as reported in the Summary Compensation Table, was $15,111,097.
Based on this information, the ratio of the annual total compensation of our CEO relative to the annual total compensation
of our median employee was 1279 to 1.
The pay ratio disclosed above is a reasonable estimate, calculated in a manner consistent with the SEC rules based on
our payroll and employment records and the methodologies described below. The SEC rules for identifying the median
compensated employee and calculating the pay ratio allow companies to use different methodologies, to apply certain
exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay
ratio disclosed by other companies may not be comparable to the pay ratio disclosed above, as other companies may
have different employment and compensation practices and may utilize different methodologies, exclusions, estimates,
and assumptions in calculating their own pay ratios. Moreover, there are a number of factors that make a meaningful
comparison of pay ratios difficult, such as industry-specific pay differentials, the geographic location of employee
populations, and the size and nature of a company’s manufacturing operations.
Identification of the Median Employee
For purposes of identifying our median employee, we used target total annual cash compensation multiplied by the FTE %
factor as reflected in our global human resources information system as of March 31,2024, such that those that only work
part-time were included at the part-time pay rate and not converted to a full-time equivalent pay level. We excluded
contractors and agency workers from the selection of median employee. We selected this compensation approach
because it captures both base salary as well as bonuses and other cash payments that may be provided to employees in
our varying work geographies. We measured actual compensation for the median employee using the 12-month period
ended March 31, 2024. No cost-of-living adjustments were made.
Our median employee is a full-time, salaried employee working in Mexico. The employee’s annual total compensation in
2024 was $11,819. For purposes of this disclosure, we converted the employee’s total compensation from Mexican Pesos to
U.S. dollars using the exchange rate 17.088 MXN to 1 USD as of March 31, 2024.
Calculation of Median Employee’s Compensation and CEO’s Annualized Compensation
In determining the annual total compensation in 2024 of approximately $11,819 for our median employee, as required by
SEC rules, we calculated the employee’s compensation in accordance with Item 402(c)(2)(x) of Regulation S-K, consistent
with how we determine our CEO’s total compensation for fiscal year 2024 in the Summary Compensation Table.
79
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Executive Compensation
CEO Pay Ratio
Q
Pay Versus Performance
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of SEC
Regulation S-K, we are providing the following information regarding the relationship between executive compensation
actually paid and certain financial performance measures of the Company for the fiscal years shown.
Value of Initial Fixed $100
Investment Based on:
Fiscal
Year
(a)
Summary
Compensation
Table Total
($)
(b)
Compensation
Actually Paid
to CEO
($)
(c)
Average
Summary
Compensation
Table Total for
Non-CEO NEOs
($)
(d)
Average
Compensation
Actually Paid
to Non-CEO
NEOs
($)
(e)
Flex TSR
($)
(f)
Peer Group
TSR
($)
(g)
GAAP Net
Income
($ Millions)
(h)
Adjusted
EPS ($)
(i)
2024
15,111,097
48,297,494
3,896,290
10,135,211
470
477
872
2.15
2023
15,597,911
30,258,936
4,097,332
7,197,637
275
301
793
2.36
2022
14,375,624
16,510,494
4,015,753
4,098,165
221
218
936
1.96
2021
11,897,879
31,441,187
4,577,458
8,040,590
219
193
613
1.57
Column (b). Reflects compensation amounts reported in the “Summary Compensation Table” for Revathi Advaithi, the CEO
for the respective years shown.
Column (c).“Compensation actually paid” to the CEO in each of FY24, FY23, FY22 and FY21 reflects the respective
amounts set forth in column (b) of the table above, adjusted as set forth in the table below, as determined in accordance
with SEC rules. The dollar amounts reflected in column (b) of the table above do not reflect the actual amount of
compensation earned by or paid to our CEO during the applicable year. For information regarding the decisions made
by the Compensation and People Committee in regards to the CEO’s compensation for each fiscal year, please see the
“Compensation Discussion & Analysis” sections of the proxy statements reporting pay for the fiscal years covered in the
table above.
Fiscal Year CEO
2021
2022
2023
2024
SCT Total Compensation ($)
$ 11,897,879
$ 14,375,624
$ 15,597,911
$ 15,111,097
Less: Stock Award Values Reported in SCT for the Covered Year ($)
$
8,970,983
$ 10,484,149
$ 11,020,718
$ 11,382,142
Plus: Fair Value for Stock Awards Granted in the Covered Year ($)
$ 16,629,811
$ 11,372,194
$ 16,892,976
$ 17,276,728
Change in Fair Value of Outstanding Unvested Stock Awards
from Prior Years ($)
$ 11,080,893
$
1,275,446
$ 10,802,925
$ 23,895,484
Change in Fair Value of Stock Awards from Prior Years that
Vested in the Covered Year ($)
$
874,347
$
(28,621)
$ (1,987,549)
$
3,462,720
Less: Fair Value of Stock Awards Forfeited during the Covered
Year ($)
$
0
$
0
$
0
$
0
Less: Aggregate Change in Actuarial Present Value of
Accumulated Benefit Under Pension Plans ($)
$
70,759
$
0
$
26,607
$
66,392
Plus: Aggregate Service Cost and Prior Service Cost for Pension
Plans ($)
$
0
$
0
$
0
$
0
Compensation Actually Paid ($)
$ 31,441,187
$ 16,510,494
$ 30,258,936
$ 48,297,494
Equity Valuations:
z EPS-based PSU grant date fair values are calculated using the stock price as of the date of grant and are assumed
at target performance, while TSR-based PSU grant date fair values are calculated using the Monte Carlo fair value,
developed in accordance with FASB ASC 718, and are also assumed at target performance.
z The EPS-based PSUs are valued after the grant date assuming estimated performance results as of the end of
each measurement date and Flex’s stock price on that date, while the value of TSR-based PSUs assume target-level
performance and are multiplied by the corresponding Monte Carlo value.
z Time-based RSUs are valued after grant based on Flex’s stock price on each measurement date, in accordance with
FASB ACS 718.
z For all time-based RSUs, the vest date fair value is equal to the number of units that actually vest and Flex’s stock price
on that date.
80
2024 Proxy Statement
Executive Compensation
Pay Versus Performance
Q
Fiscal Year
2021
2022
2023
2024
Non-CEO NEOs
See Column
(d)
Note
See Column
(d)
Note
See Column
(d)
Note
See Column
(d)
Note
SCT Total Compensation ($)
$ 4,577,458
$
4,015,753
$
4,097,332
3,896,290
Less: Stock Award Values Reported in SCT for the Covered Year ($) $ 2,945,442
$
2,262,366
$
2,169,700
2,188,321
Plus: Fair Value for Stock Awards Granted in the Covered Year ($) $ 3,982,037
$
2,453,994
$
3,325,800
3,321,609
Change in Fair Value of Outstanding Unvested Stock Awards
from Prior Years ($)
$ 1,587,667
$
165,239
$
2,187,616
4,471,749
Change in Fair Value of Stock Awards from Prior Years that
Vested in the Covered Year ($)
$ 2,003,436
$
(270,811)
$
(239,733)
731,844
Less: Fair Value of Stock Awards Forfeited during the Covered
Year ($)
$
(870,216)
$
0
$
0
0
Less: Aggregate Change in Actuarial Present Value of
Accumulated Benefit Under Pension Plans ($)
$
294,349
$
3,645
$
3,678
97,960
Plus: Aggregate Service Cost and Prior Service Cost for Pension
Plans ($)
$
0
$
0
$
0
0
Compensation Actually Paid ($)
$ 8,040,590
$
4,098,165
$
7,197,637
$ 10,135,211
Equity Valuations: equity valuation assumptions are the same as those stated above under the CEO table
Column (d). The following non-CEO NEOs (collectively, the “Non-CEO NEOs”) are included in the average figures shown:
z FY21: Francois P. Barbier, Christopher Collier, Michael P. Hartung, Paul Humphries, Paul R. Lundstrom, and Scott Offer
z FY22: Francois P. Barbier, Michael P. Hartung, Paul R. Lundstrom, and Scott Offer
z FY23: Michael P. Hartung, Paul R. Lundstrom, Scott Offer, and Hooi Tan
z FY24: Michael P. Hartung, Paul R. Lundstrom, Scott Offer, and Hooi Tan
Column (e). Average “compensation actually paid” for our non-CEO NEOs in each of FY24, FY23, FY22 and FY21 reflects the
respective amounts set forth in column (d) of the table above, adjusted as set forth in the table below, as determined in
accordance with SEC rules. The dollar amounts reflected in column (d) of the table above do not reflect the actual amount
of compensation earned by or paid to our non-CEO NEOs during the applicable year. For information regarding the
decisions made by our Compensation and People Committee in regards to the non-CEO NEOs’ compensation for each
fiscal year, please see the “Compensation Discussion and Analysis” sections of the proxy statements reporting pay for the
fiscal years covered in the table above.
Column (f). For the relevant fiscal year, represents the cumulative total shareholder return (TSR) of Flex for the measurement
periods ending on March 31 of each of 2024, 2023, 2022 and 2021, respectively.
Column (g). For the relevant fiscal year, represents the cumulative TSR of the peer group consisting of Benchmark
Electronics, Celestica Inc., Jabil Inc., and Sanmina Corporation (“Peer Group TSR”) for the measurement periods ending on
March 31 of each of 2024, 2023, 2022 and 2021, respectively.
Column (h). Reflects “Net Income” in the Company’s Consolidated Income Statements included in the Company’s Annual
Reports on Form 10-K for each of the years ended March 31, 2024, 2023, 2022 and 2021, respectively.
Column (i). Company-selected Measure is Adjusted Earnings Per Share (EPS) which is described below. Adjusted EPS is a
non-GAAP financial measure. Fiscal years 2021 to 2023 includes Nextracker, and fiscal year 2024 excludes Nextracker. See
Annex A to this proxy statement for a reconciliation of GAAP to non-GAAP financial measures.
81
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Executive Compensation
Pay Versus Performance
Q
Flex’s Pay for Performance Alignment
Below are graphs showing the relationship of “compensation actually paid” to our Chief Executive Officer and other NEOs
in FY21, FY22, FY23 and FY24 to (1) TSR of both Flex and the Peer Group TSR, (2) Flex’s net income, and (3) Flex’s Adjusted
EPS.
CAP vs GAAP Net Income
Compensation Actually Paid ($ millions)
GAAP Net Income ($ millions)
$1,050
$900
$750
$600
$450
$300
$150
$0
$65
$60
$55
$50
$45
$40
$35
$5
$10
$15
$20
$30
$25
$70
$0
FY21
FY24
FY23
FY22
CEO CAP
Avg. Other NEOs CAP
GAAP Net Income
$613
$936
$872
$793
$8.0
$16.5
$4.1
$30.3
$7.2
$10.1
$48.3
$31.4
CAP vs Adj. EPS
Compensation Actually Paid ($ millions)
Adjusted EPS
$3
$2
$1
$0
$55
$50
$45
$40
$35
$30
$5
$10
$15
$20
$25
$70
$65
$60
$0
FY21
FY22
FY24
FY23
CEO CAP
Avg. Other NEOs CAP
Adj. EPS
$1.57
$1.96
$2.15
$2.36
$8.0
$16.5
$4.1
$30.3
$7.2
$10.1
$48.3
$31.4
82
2024 Proxy Statement
Executive Compensation
Pay Versus Performance
Q
CAP vs Total Shareholder Return
Compensation Actually Paid ($ millions)
Total Shareholder Return (TSR)
$550
$500
$450
$400
$350
$300
$250
$200
$150
$100
$0
$50
$55
$50
$45
$40
$35
$30
$5
$10
$15
$20
$25
$70
$65
$60
$0
FY21
FY24
FY22
FY23
CEO CAP
Avg. Other NEOs CAP
Flex TSR
Peer Composite
$219
$221
$218
$193
$477
$470
$301
$275
$8.0
$16.5
$4.1
$30.3
$7.2
$10.1
$48.3
$31.4
Listed below are the performance measures which in our assessment represent the most important financial performance
measures we use to link compensation actually paid to our NEOs, for FY24, to Company performance.
Measure
Nature
Stock Price
Financial
Relative TSR
Financial
Adjusted EPS Growth
Financial
“Compensation actually paid” (also referred to as “CAP”), as required under SEC rules, reflects adjusted values to unvested
and vested equity awards during the years shown in the tables based on year-end stock prices, various accounting
valuation assumptions, and projected performance modifiers but does not reflect actual amounts paid out for those
awards. For a discussion of how our Compensation and People Committee assessed Flex’s performance and our NEOs’
pay each year, see the “Compensation Discussion and Analysis” section in this proxy statement and in the proxy statements
for FY21 - FY23.
83
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Executive Compensation
Pay Versus Performance
Q
Proposal No. 4: Ordinary Resolution to Authorize Ordinary
Share Issuances
We are incorporated in the Republic of Singapore. Under Singapore law, our directors may only issue Ordinary Shares
and make or grant offers, agreements, options, performance shares, performance units, restricted share units, or other
compensatory equity awards that might or would require the issuance of Ordinary Shares, with the prior approval of our
shareholders. We are submitting this proposal because we are required to do so under the laws of Singapore before we
can issue any Ordinary Shares in connection with our equity compensation plans, possible future strategic transactions,
or public and private offerings (other than shares issuable on exercise or settlement of outstanding options, performance
shares, performance units, restricted share units and other instruments convertible into or exercisable for Ordinary Shares
that were granted under previously-approved share issue mandates). Our current authorization, approved by shareholders
at our 2023 annual general meeting, will expire at the conclusion of the 2024 annual general meeting. As a result, we are
presenting this proposal to renew the Board’s authority to issue Ordinary Shares on the terms set forth below.
We are seeking approval to authorize our Board to issue up to a maximum of 20% of the total number of issued Ordinary
Shares of the Company as of the date of the passing of such resolution (equal to a total of 79,760,747 Ordinary Shares as
of June 10, 2024 on the basis that no additional Ordinary Shares are issued or repurchased before the 2024 annual general
meeting). If this proposal is approved, and unless revoked or varied by the Company in a general meeting, the authorization
would be effective from the date of the 2024 annual general meeting until the earlier of (i) the conclusion of the 2025
annual general meeting or (ii) the expiration of the period within which the 2025 annual general meeting is required by law
to be held. Under the Singapore Companies Act, the 2025 annual general meeting is required to be held within six months
after the date of our 2025 fiscal year end (except that Singapore law allows for a one-time application for an extension of up
to a maximum of 60 days to be made with the Singapore Accounting and Corporate Regulatory Authority).
Our Board believes it is advisable and in the best interests of the Company for our shareholders to authorize our directors to
issue Ordinary Shares and to make or grant offers, agreements, options, performance shares, performance units, restricted share
units, or other compensatory equity awards that might or would require the issuance of Ordinary Shares. In the past, the Board
has issued shares or made agreements that would require the issuance of new Ordinary Shares in the following situations:
z in connection with strategic transactions and acquisitions;
z pursuant to public and private offerings of our Ordinary Shares or instruments convertible into our Ordinary Shares; and
z in connection with our equity compensation plans and arrangements.
If this proposal is not approved, we would not be permitted to issue any new Ordinary Shares, including shares issuable
pursuant to compensatory equity awards (other than shares issuable on exercise or settlement of outstanding options,
performance shares, performance units, restricted share units and other instruments convertible into or exercisable for
Ordinary Shares, which were previously granted when the previous shareholder approved share issue mandates were in
force). If we are unable to rely upon equity as a component of compensation, we would have to review our compensation
practices, and would likely have to substantially increase cash compensation to retain key personnel.
In line with stakeholder expectations, we are seeking approval to authorize our Board to issue up to a maximum of 20% of
the total number of issued Ordinary Shares of the Company. We note that, because we are a Nasdaq-listed company, our
shareholders continue to benefit from the protections afforded to them under the rules of Nasdaq, including those rules
that limit our ability to issue shares in specified circumstances without obtaining shareholder approval.
Our Board expects that we will continue to issue Ordinary Shares and grant options, performance shares, performance unit
awards, and restricted share unit awards in the future under circumstances similar to those in the past. As of the date of this
proxy statement, other than issuances of Ordinary Shares or agreements that would require the issuance of new Ordinary
Shares in connection with our equity compensation plans and arrangements, we have no specific plans, agreements or
commitments to issue any Ordinary Shares for which approval of this proposal is required. Nevertheless, our Board believes it
is advisable and in the best interests of the Company for our shareholders to provide this general authorization, subject to the
aggregate cap described above, because then we can avoid the delay and expense of obtaining shareholder approval at
a later date and will have greater flexibility to pursue strategic transactions and acquisitions and to raise additional capital
through public and private offerings of our Ordinary Shares and instruments convertible into our Ordinary Shares.
If this proposal is approved, our directors would be authorized to, during the period described above and subject to the
aggregate cap described above, issue Ordinary Shares and make or grant offers, agreements, options, performance shares,
performance units, restricted share units, or other compensatory equity awards that might or would require the issuance
of Ordinary Shares, subject only to applicable Singapore laws and the rules of Nasdaq. The issuance of a large number of
Ordinary Shares could be dilutive to existing shareholders or reduce the trading price of our Ordinary Shares on Nasdaq.
We are not submitting this proposal in response to a threatened takeover. However, in the event of a hostile attempt to
acquire control of the Company, we could seek to impede the attempt by issuing Ordinary Shares, which may dilute the
voting power of our existing shareholders. This could also have the effect of impeding the efforts of our shareholders to
replace an incumbent director with a new director of their choice. These potential effects could limit the opportunity for our
shareholders to dispose of their Ordinary Shares at the premium that may be available in takeover attempts.
The Board recommends a vote “FOR” the resolution to authorize Ordinary Share issuances.
84
2024 Proxy Statement
Q
Proposal No. 5: Ordinary Resolution to Renew the Share
Purchase Mandate
Our purchases or acquisitions of our Ordinary Shares must be made in accordance with, and in the manner prescribed by,
the Singapore Companies Act, the applicable listing rules of Nasdaq and such other laws and regulations as may apply
from time to time.
Singapore law requires that we obtain shareholder approval of a “general and unconditional share purchase mandate”
given to our directors if we wish to purchase or otherwise acquire our Ordinary Shares. This general and unconditional
mandate is referred to in this proxy statement as the Share Purchase Mandate, and it allows our directors to exercise all
of the Company’s powers to purchase or otherwise acquire our issued Ordinary Shares on prescribed terms of the Share
Purchase Mandate.
Our shareholders approved a renewal of the Share Purchase Mandate at the annual general meeting of shareholders
held in 2023, which will expire on the date of the 2024 annual general meeting. Accordingly, we are seeking approval from
our shareholders at the 2024 annual general meeting for another renewal of the Share Purchase Mandate. Pursuant to
the Singapore Companies Act, share repurchases under our share repurchase plans were subject to an aggregate limit of
20% of our issued Ordinary Shares outstanding as of the date of the annual general meeting held on August 2, 2023. On
August 2, 2023, the Board authorized the repurchase of up to an aggregate of $2 billion of Ordinary Shares of the Company
to be conducted in tranches. Until the 2024 annual general meeting, any repurchases would be made under the Share
Purchase Mandate renewed at the 2023 annual general meeting. As of the date of the 2024 annual general meeting,
any repurchases may only be made if the shareholders approve the proposed renewal of the Share Purchase Mandate.
The share purchase program does not obligate the Company to repurchase any specific number of shares and may be
suspended or terminated at any time without prior notice.
If renewed by shareholders at the 2024 annual general meeting, the authority conferred by the Share Purchase Mandate
will, unless varied or revoked by our shareholders at a general meeting, continue in force until the earlier of the date of the
2025 annual general meeting or the date by which the 2025 annual general meeting is required by law to be held. Under
the Singapore Companies Act, the 2025 annual general meeting is required to be held within six months after the date of
our 2025 fiscal year-end (except that Singapore law allows for a one-time application for an extension of up to a maximum
of 60 days to be made with the Singapore Accounting and Corporate Regulatory Authority).
The authority and limitations placed on our share purchases or acquisitions under the proposed Share Purchase Mandate,
if renewed at the 2024 annual general meeting, are summarized below.
Limit on Allowed Purchases
We may only purchase or acquire Ordinary Shares that are issued and fully paid up. The prevailing limitation under the
Singapore Companies Act that is currently in force does not permit us to purchase or acquire more than 20% of the total
number of our issued Ordinary Shares outstanding at the date of the annual general meeting. Any of our Ordinary Shares
that are held as treasury shares will be disregarded for purposes of computing this 20% limitation. For this purpose, a
reference herein to treasury shares in computing the 20% limitation includes a reference to any Ordinary Shares held by our
subsidiaries under the limited exceptions in Sections 21(4B) and 21(6C) of the Singapore Companies Act, if applicable.
We are seeking approval for our Board of Directors to authorize the purchase or acquisition of our issued Ordinary Shares
not exceeding 20% of our total number of issued Ordinary Shares outstanding as of the date this proposal is approved
(excluding any Ordinary Shares that are held as treasury shares as at that date).
Purely for illustrative purposes, on the basis of 398,803,737 issued Ordinary Shares outstanding as of June 10, 2024, and
assuming no additional Ordinary Shares are issued or repurchased on or prior to the date of the 2024 annual general
meeting, based on the prevailing 20% limit, we would be able to purchase not more than 79,760,747 issued Ordinary
Shares pursuant to the proposed renewal of the Share Purchase Mandate.
During fiscal year 2024, we repurchased approximately 50.6 million shares for an aggregate purchase price of
approximately $1.3 billion under the Share Purchase Mandate and cancelled all of these shares.
85
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Q
Duration of Share Purchase Mandate
Purchases or acquisitions of Ordinary Shares may be made, at any time and from time to time, on and from the date the
Share Purchase Mandate is approved until the earlier of:
z the date on which our next annual general meeting is held or required by law to be held; or
z the date on which the authority conferred by the Share Purchase Mandate is revoked or varied by our shareholders at a
general meeting.
Manner of Purchases or Acquisitions of Ordinary Shares
Purchases or acquisitions of Ordinary Shares may be made by way of:
z market purchases on Nasdaq or any other stock exchange on which our Ordinary Shares may at the time be listed and
quoted, through one or more duly licensed dealers appointed by us for that purpose; and/or
z off-market purchases (if effected other than on Nasdaq or, as the case may be, any other stock exchange on which
our Ordinary Shares are then listed and quoted), in accordance with an equal access scheme as prescribed by the
Singapore Companies Act.
If we decide to purchase or acquire our Ordinary Shares in accordance with an equal access scheme, our directors
may impose any terms and conditions as they see fit and as are in our interests, so long as the terms are consistent with
the Share Purchase Mandate, the applicable rules of Nasdaq, the provisions of the Singapore Companies Act and other
applicable laws. In addition, an equal access scheme must satisfy all of the following conditions:
z offers for the purchase or acquisition of Ordinary Shares must be made to every person who holds Ordinary Shares to
purchase or acquire the same percentage of their Ordinary Shares;
z all holders of our Ordinary Shares must be given a reasonable opportunity to accept the offers made; and
z the terms of all of the offers must be the same (except differences in consideration that result from offers relating to
Ordinary Shares with different accrued dividend entitlements and differences in the offers solely to ensure that each
person is left with a whole number of Ordinary Shares).
Purchase Price
The maximum purchase price (excluding brokerage, commission, applicable goods and services tax and other related
expenses of the purchase or acquisition) to be paid for each Ordinary Share will be determined by our directors. That price
must not exceed:
z in the case of a market purchase, the highest independent bid or the last independent transaction price, whichever
is higher, of our Ordinary Shares quoted or reported on Nasdaq or, as the case may be, any other stock exchange on
which our Ordinary Shares may at that time be listed and quoted, or shall not exceed any volume weighted average
price, or other price determined under any pricing mechanism, permitted under SEC Rule 10b-18, at the time the
purchase is effected; and
z in the case of an off-market purchase pursuant to an equal access scheme, 105% of the average of the closing price per
Ordinary Share over the five consecutive trading days on which our Ordinary Shares are traded on the Nasdaq Global
Select Market, or, as the case may be, any other stock exchange on which our Ordinary Shares are at the time listed and
quoted, immediately preceding the date on which we effect the off-market purchase.
Treasury Shares
Under the Singapore Companies Act, Ordinary Shares purchased or acquired by us may be held as treasury shares. Some
of the provisions on treasury shares under the Singapore Companies Act are summarized below.
Maximum Holdings
The number of Ordinary Shares held as treasury shares may not at any time exceed 10% of the total number of issued
Ordinary Shares. For this purpose, the reference to treasury shares includes a reference to any Ordinary Shares held by our
subsidiaries under the limited exceptions in Sections 21(4B) and 21(6C) of the Singapore Companies Act, if applicable.
86
2024 Proxy Statement
Proposal No. 5: Ordinary Resolution to Renew the Share Purchase Mandate
Duration of Share Purchase Mandate
Proposal No. 5: Ordinary Resolution to Renew the Share Purchase Mandate
Q
Voting and Other Rights
We may not exercise any right in respect of treasury shares, including any right to attend or vote at meetings. For the
purposes of the Singapore Companies Act, we shall be treated as having no right to vote and the treasury shares shall be
treated as having no voting rights. In addition, no dividend may be paid, and no other distribution of our assets may be
made, to the Company in respect of treasury shares, other than the allotment of Ordinary Shares as fully paid bonus shares.
A subdivision or consolidation of any treasury share into treasury shares of a greater or smaller amount is also allowed so
long as the total value of the treasury shares after the subdivision or consolidation is the same as before the respective
subdivision or consolidation.
Disposal and Cancellation
Where Ordinary Shares are held as treasury shares, we may at any time:
z sell the treasury shares for cash;
z transfer the treasury shares for the purposes of or pursuant to any share scheme, whether for employees, directors or
other persons;
z transfer the treasury shares as consideration for the acquisition of shares in or assets of another company or assets of a
person;
z cancel the treasury shares; or
z sell, transfer or otherwise use the treasury shares for such other purposes as may be prescribed by the Minister for Finance
of Singapore.
Sources of Funds
Only funds legally available for purchasing or acquiring Ordinary Shares in accordance with our Constitution and the
applicable laws of Singapore shall be used. We intend to use our internal sources of funds and/or borrowed funds to
finance any purchase or acquisition of our Ordinary Shares. Our directors do not propose to exercise the Share Purchase
Mandate in a manner and to an extent that would materially affect our working capital requirements.
The Singapore Companies Act permits us to purchase or acquire our Ordinary Shares out of our capital and/or profits.
Acquisitions or purchases made out of capital are permissible only so long as we are solvent for the purposes of Section
76F(4) of the Singapore Companies Act. A company is solvent if, at the date of the payment made in consideration of
the purchase or acquisition (including any expenses, such as brokerage or commission) the following conditions are
satisfied: (a) there is no ground on which the company could be found unable to pay its debts; (b) if it is not intended to
commence winding up of the company, the company will be able to pay its debts as they fall due during the period of
12 months immediately after the date of the payment; and (c) the value of the company’s assets is not less than the value
of its liabilities (including contingent liabilities) and will not, after the proposed purchase or acquisition, become less than
the value of its liabilities (including contingent liabilities).
Status of Purchased or Acquired Ordinary Shares
Any Ordinary Share that we purchase or acquire will be deemed cancelled immediately on purchase or acquisition, and
all rights and privileges attached to such Ordinary Share will expire on cancellation (unless such Ordinary Share is held by
us as a treasury share). The total number of issued shares will be diminished by the number of Ordinary Shares purchased
or acquired by us and which are not held by us as treasury shares.
We will cancel and destroy certificates in respect of purchased or acquired Ordinary Shares as soon as reasonably
practicable following settlement of any such purchase or acquisition. Where Ordinary Shares are purchased or acquired
and held by us as treasury shares, we will cancel and issue new certificates in respect thereof.
Financial Effects
Our net tangible assets and the consolidated net tangible assets of our group (including our subsidiaries) will be reduced
by the purchase price (including any expenses) of any Ordinary Shares purchased or acquired and cancelled or held as
treasury shares. We do not anticipate that the purchase or acquisition of our Ordinary Shares in accordance with the Share
Purchase Mandate would have a material impact on our consolidated financial condition and cash flows.
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Proposal No. 5: Ordinary Resolution to Renew the Share Purchase Mandate
Financial Effects
Q
The financial effects on us and our group (including our subsidiaries) arising from purchases or acquisitions of Ordinary
Shares that may be made pursuant to the Share Purchase Mandate will depend on, among other things, whether the
Ordinary Shares are purchased or acquired out of our profits and/or capital, the number of Ordinary Shares purchased
or acquired, the price paid for the Ordinary Shares, and whether the Ordinary Shares purchased or acquired are held in
treasury or cancelled.
Under the Singapore Companies Act, we may purchase or acquire Ordinary Shares using profits and/or our capital so long
as the Company is solvent.
Where the consideration (including any expenses) paid by us to purchase or acquire Ordinary Shares comes out of our
profits, such consideration (including any expenses such as brokerage or commission) will correspondingly reduce the
amount available for the distribution of cash dividends by us. Where the consideration we pay to purchase or acquire
Ordinary Shares comes out of our capital, the amount available for the distribution of cash dividends by us will not be
reduced. To date, we have not declared any cash dividends on our Ordinary Shares.
Rationale for the Share Purchase Mandate
We believe a renewal of the Share Purchase Mandate at the 2024 annual general meeting will benefit our shareholders by
providing our directors with appropriate flexibility to repurchase Ordinary Shares if the directors believe such repurchases
would be in the best interests of our shareholders. Our decision to repurchase our Ordinary Shares from time to time will
depend on our continuing assessment of then-current market conditions, our need to use available cash to finance
acquisitions and other strategic transactions, the level of our debt and the terms and availability of financing.
As noted above, the approval of the Share Purchase Mandate does not obligate the Company to repurchase any specific
number of shares and may be suspended or terminated at any time without prior notice.
Take-Over Implications
If, as a result of our purchase or acquisition of our issued Ordinary Shares, a shareholder’s proportionate interest in the
Company’s voting capital increases, such increase will be treated as an acquisition for the purposes of The Singapore
Code on Take-overs and Mergers. If such increase results in a change of effective control, or, as a result of such increase, a
shareholder or a group of shareholders acting in concert obtains or consolidates effective control of the Company, such
shareholder or group of shareholders acting in concert with a director could become obliged to make a take-over offer for
the Company under Rule 14 of The Singapore Code on Take-overs and Mergers.
The circumstances under which shareholders (including directors and persons acting in concert with them) will incur an
obligation to make a take-over offer are set forth in Rule 14 of The Singapore Code on Take-overs and Mergers, Appendix 2.
The effect of Appendix 2 is that, unless exempted, shareholders will incur an obligation to make a take-over offer if, as a
result of the Company purchasing or acquiring our issued Ordinary Shares, the voting rights of such shareholders would
increase to 30% or more, or, if such shareholders hold between 30% and 50% of our voting rights, the voting rights of such
shareholders would increase by more than 1% in any period of six months. Shareholders that are in doubt as to their
obligations, if any, to make a mandatory take-over offer under The Singapore Code on Take-overs and Mergers as a result of
any share purchase by us should consult the Securities Industry Council of Singapore and/or their professional advisers at
the earliest opportunity.
The Board recommends a vote “FOR” the resolution to approve the proposed renewal of the Share
Purchase Mandate.
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Rationale for the Share Purchase Mandate
Q
Information about our Executive Officers
The names, ages and positions of our executive officers as of June 25, 2024 are as follows:
Name
Age
Position
Revathi Advaithi
56
Chief Executive Officer
Paul R. Lundstrom
49
Chief Financial Officer
Michael P. Hartung
56
President, Agility Solutions
Scott Offer
59
Executive Vice President and General Counsel
Rebecca S. Sidelinger
59
President, Reliability Solutions
Hooi Tan
47
President, Global Operations and Components
Daniel J. Wendler
57
Chief Accounting Officer
Revathi Advaithi
Ms. Advaithi has served as our Chief Executive Officer since February 11, 2019. Prior to joining the Company, Ms. Advaithi
was President and Chief Operating Officer, Electrical Sector, of Eaton Corporation plc, a power management company, a
position she had held since September 1, 2015. Prior to that, she served as President of Electrical Sector, Americas of Eaton
from April 1, 2012 through August 31, 2015. She joined Eaton in 1995 and led the Electrical Sector in the Americas and
Asia-Pacific, with a three-year assignment in Shanghai. Between 2002 and 2008, Ms. Advaithi worked at Honeywell, where
she held several senior roles within the sourcing and supply chain functions of the aerospace sector before being named
Vice President and General Manager of Honeywell’s Field Solutions business in 2006. Ms. Advaithi returned to Eaton in 2008
as Vice President and General Manager of the Electrical Components Division. She has a bachelor’s degree in mechanical
engineering from the Birla Institute of Technology and Science in Pilani, India, and an MBA in international business
from Thunderbird-Garvin School of International Business in Glendale, Arizona. Ms. Advaithi serves on the Board of Uber
Technologies, Inc.
Paul R. Lundstrom
Mr. Lundstrom has served as Chief Financial Officer since September 2020. Prior to that, Mr. Lundstrom was Vice President
and Chief Financial Officer of Aerojet Rocketdyne Holdings, Inc., a rocket, missile and energetics propulsion manufacturer,
a position he had held since November 2016. Between 1997 and 2016, Mr. Lundstrom worked at United Technologies
Corporation (now Raytheon Technologies Corporation), where he held several senior roles including Vice President of
Investor Relations; Vice President and Chief Financial Officer, Building & Industrial Systems – North Asia; Vice President and
Chief Financial Officer, Climate, Control & Security – Asia; and Vice President and Chief Financial Officer, Carrier Building
Systems and Services. He holds a Bachelor of Science in Finance from Truman State University and an MBA from Columbia
University. He is a registered Certified Public Accountant in the State of Illinois.
Michael P. Hartung
Mr. Hartung has served as our President, Agility Solutions since April 2020. Prior to holding this position, Mr. Hartung served
as our Senior Vice President of Lifestyle since July 2013 and Vice President of our Capital Equipment market segment from
October 2007 to July 2013. Prior to joining Flex in 2007, Mr. Hartung held positions of increasing responsibility at Solectron
Corporation, culminating his career there as Vice President of the Computing & Storage business unit where he was directly
responsible for sales, marketing, and account management functions. He holds a bachelor’s degree in economics from
the University of California, Los Angeles and has attended a variety of executive education programs, most notably at
Stanford University.
Scott Offer
Mr. Offer has served as our Executive Vice President and General Counsel since September 2016. Previously, he served
as Senior Vice President and General Counsel at Lenovo from January 2016 until August 2016 and had served as Chief
Counsel for the Lenovo Mobile Business Group since October 2014. Prior to that, he served as Senior Vice President and
General Counsel, Motorola Mobility, a Google company, from August 2010 and Senior Vice President and General Counsel,
Motorola Mobility, Inc. from July 2010. Prior to that, he held several senior positions at Motorola. Prior to joining Motorola, he
worked for the law firm of Boodle Hatfield. He received his law degree from the London School of Economics and Political
Science and is qualified as a lawyer in the United Kingdom and the United States.
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Rebecca S. Sidelinger
Ms. Sidelinger has served as our President, Reliability Solutions since February 2022. Previously, Ms. Sidelinger was with
Honeywell Aerospace, a division of Honeywell International Inc. from 2011 until joining the Company in 2022, where she
was most recently President, Mechanical Systems & Components, a $3 billion business unit, a position she held from
October 2019 until 2022. Prior to that, she served as Vice President/General Manager, Safety Systems from 2017 to 2019
and previously held several senior roles within Honeywell Aerospace. Prior to Honeywell, Ms. Sidelinger spent 25 years
in leadership positions with GE Transportation Systems and GE Motors. During her time with GE, she ran locomotive
modernization, passenger locomotive, marine propulsion and drill motor businesses. Ms. Sidelinger holds a bachelor’s
degree in electrical engineering from Gannon University and a master of business administration from Penn State University.
Hooi Tan
Mr. Tan has served as our President, Global Operations and Components since April 2022. Mr. Tan has been with the
Company for more than twenty years, serving as Senior Vice President, Global Operations from May 2016 until he was
appointed to his current position, managing more than 100 facilities across 30 countries. He previously led operations
for the Company’s Asia region, where he oversaw productivity and efficiency programs and P&L improvements in the
region. Prior to Flex, Mr. Tan worked at Solectron, an electronics manufacturing company for OEMs, where he held a
variety of leadership roles in operations, program management, business development and government affairs. Mr. Tan
holds a Bachelor of Science degree in electrical engineering from Purdue University.
Daniel J. Wendler
Mr. Wendler has served as our Chief Accounting Officer since February 28, 2022. Previously, Mr. Wendler served as
Chief Accounting Officer of Keter Group SA (“Keter”), a global manufacturer and distributor of consumer goods, since
November 2021. Prior to Keter, Mr. Wendler worked at Carrier Global Corporation where he held various roles of increasing
responsibility from February 2000 to March 2021. Most recently, Mr. Wendler served as the Vice President and Assistant
Controller of Carrier from 2020 until 2021 and, prior to that, was the Vice President and Controller of Carrier from 2015 until
2020, while it was a segment of United Technologies Corporation. Previously, Mr. Wendler was an Audit Manager at Price
Waterhouse LLP. Mr. Wendler is a certified public accountant in the State of New York and holds a bachelor’s degree in
accounting from the State University of New York, College of Oswego and a master of business administration from the
University of Rochester – Simon School.
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Information about our Executive Officers
Q
Equity Compensation Plan Information
As of March 31, 2024, we maintained the Flex Ltd. 2017 Equity Incentive Plan (as amended and restated in 2023) (the
“2017 Plan”). The following table provides information about equity awards outstanding under this plan as of March 31,
2024. The below does not reflect the effect of our fiscal year 2025 grants under the 2017 Plan or the vesting of awards in
fiscal year 2025.
Plan Category
Number of Ordinary Shares
to be Issued Upon Exercise
of Outstanding Options and
Vesting of Restricted Share Unit
Awards
(a)
Weighted-Average Exercise
Price of Outstanding Options(1)
(b)
Number of Ordinary Shares
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Ordinary Shares
Reflected in Column (a))
(c)
Equity compensation plans
approved by shareholders
15,367,056
$
—
22,964,032(2)
Equity compensation plans not
approved by shareholders
—
$
—
—
Total
15,367,056(3)
$
—
22,964,032(2)
(1) The weighted-average exercise price does not take into account Ordinary Shares issuable upon the vesting of outstanding restricted share unit
and performance share unit awards, which have no exercise price.
(2) Consists of Ordinary Shares available for grant under the 2017 Plan. The 2017 Plan provides for grants of up to 24.4 million Ordinary Shares.
(3) Includes 15,367,056 Ordinary Shares issuable upon the vesting of restricted share unit and performance share unit awards. For awards subject
to rTSR and adjusted EPS growth performance criteria, the amount reported reflects the number of shares to be issued if the target levels are
achieved. An additional 3,015,955 shares would be issued if the maximum rTSR and adjusted EPS growth performance levels are achieved,
which would reduce the number of Ordinary Shares available for grant reported in column (c).
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Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth information as of June 1, 2024 except as otherwise indicated, regarding the beneficial
ownership of our Ordinary Shares by:
z each shareholder known to us to be the beneficial owner of more than 5% of our outstanding Ordinary Shares;
z each of our named executive officers;
z each director; and
z all executive officers and directors as a group.
Unless otherwise indicated, the address of each of the individuals named below is c/o Flex Ltd., 2 Changi South Lane,
Singapore 486123.
Information in this table as to our directors, named executive officers and all directors and executive officers as a group is
based upon information supplied by these individuals and Forms 3, 4, and 5 filed with the SEC. Information in this table as to
our greater than 5% shareholders is based solely upon the Schedules 13G filed by these shareholders with the SEC. Where
information regarding shareholders is based on Schedules 13G, the number of shares owned is as of the date for which
information was provided in such schedules.
Beneficial ownership is determined in accordance with the rules of the SEC that deem shares to be beneficially owned by
any person who has or shares voting or investment power with respect to such shares. Ordinary Shares subject to options
that are currently exercisable or are exercisable within 60 days of June 1, 2024 and Ordinary Shares subject to restricted
share unit awards that vest within 60 days of June 1, 2024 are deemed to be outstanding and to be beneficially owned
by the person holding such awards for the purpose of computing the percentage ownership of such person, but are not
treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise
indicated below, the persons and entities named in the table have sole voting and sole investment power with respect to
all the shares beneficially owned, subject to community property laws where applicable.
For each individual and group included in the table below, percentage ownership is calculated by dividing the number
of shares beneficially owned by such person or group by the sum of the 398,262,725 Ordinary Shares outstanding on
June 1, 2024 plus the number of Ordinary Shares that such person or group had the right to acquire on or within 60 days
after June 1, 2024.
Name and Address of Beneficial Owner
Shares Beneficially Owned
Number of
Shares
Percent
5% Shareholders:
PRIMECAP Management Company(1)
177 E. Colorado Blvd., 11th Floor, Pasadena, CA 91105
45,139,254
11.33%
FMR LLC(2)
245 Summer Street, Boston, MA 02210
42,120,745
10.58%
Wellington Management Group LLP(3)
280 Congress Street, Boston, Massachusetts 02210
40,713,421
10.22%
Janus Henderson Group plc(4)
201 Bishopsgate, EC2m 3AE, United Kingdom
28,096,966
7.05%
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Name of Beneficial Owner
Shares Beneficially Owned
Number of
Shares
Percent
Named Executive Officers and Directors:
Revathi Advaithi(5)
1,605,345
*
Michael P. Hartung(6)
133,367
*
Paul R. Lundstrom(7)
435,988
*
Scott Offer(8)(9)
180,594
*
Hooi Tan(10)
108,224
*
Michael D. Capellas
204,635
*
John D. Harris II
33,188
*
Michael E. Hurlston
53,548
*
Erin L. McSweeney
19,809
*
Charles K. Stevens, III
52,380
*
Maryrose T. Sylvester
5,011
*
Lay Koon Tan
236,360
*
Patrick J. Ward(11)
16,778
*
William D. Watkins(12)
101,421
*
All executive officers and directors as a group (16 persons)(13)
3,279,108
0.82%
*
Less than 1%.
(1) Based on information supplied by PRIMECAP Management Company in a Schedule 16G/A filed with the SEC on February 12, 2024. PRIMECAP
Management Company has sole voting power over 43,045,051 shares and sole dispositive power over 45,139,254 shares.
(2) Based on information supplied by FMR LLC in a Schedule 13G/A filed with the SEC on March 11, 2024. FMR LLC has sole power to dispose or to
direct the disposition of 42,120,745 of these shares.
(3) Based on information supplied by Wellington Management Group LLP in a Schedule 16G/A filed with the SEC on June 6, 2024. Wellington
Management Group LLP has shared voting power over 32,097,979 shares and shared dispositive power over 40,713,421 shares.
(4) Based on information supplied by Janus Henderson Group plc in a Schedule 13G/A filed with the SEC on February 13, 2024. Janus Henderson
Group plc has shared voting power over 28,096,966 shares and shared dispositive power over 28,096,966 shares.
(5) Includes 325,510 shares issuable upon settlement of restricted share unit awards that vest within 60 days of June 1, 2024.
(6) Includes 58,337 shares issuable upon settlement of restricted share unit awards that vest within 60 days of June 1, 2024.
(7) Includes 77,772 shares issuable upon settlement of restricted share unit awards that vest within 60 days of June 1, 2024.
(8) Includes 60,113 shares issuable upon settlement of restricted share unit awards that vest within 60 days of June 1, 2024.
(9) Includes 87,094 shares held indirectly by a family trust, in which Mr. Offer is a trustee.
(10) Includes 48,092 shares issuable upon settlement of restricted share unit awards that vest within 60 days of June 1, 2024.
(11) Includes 16,778 shares held indirectly by revocable trusts, in which Mr. Ward is a trustee.
(12) Includes 101,421 shares held indirectly by a family trust, in which Mr. Watkins is a trustee.
(13) Includes 613,561 shares issuable upon settlement of restricted share unit awards that vest within 60 days of June 1, 2024.
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Certain Relationships and Related-Person Transactions
Review of Related-Person Transactions
Our Code of Business Conduct and Ethics provides guidance for addressing actual or potential conflicts of interests,
including those that may arise from transactions and relationships between us and our executive officers or directors.
In addition, in order to formalize our policies and procedures for the review, approval or ratification, and disclosure
of related-person transactions, our Board of Directors adopted a Statement of Policy with Respect to Related-Person
Transactions. The policy generally provides that the Nominating, Governance and Public Responsibility Committee
(or another committee comprised solely of independent directors) will review, approve in advance or ratify all related-person
transactions between us and any director, any nominee for director, any executive officer, any beneficial owner of more
than 5% of our Ordinary Shares, or any immediate family member of any of the foregoing individuals. Any Board committee
members who are involved in a transaction under review do not participate in the committee’s deliberations or approval.
Under the policy, some ordinary course transactions or relationships are not required to be reviewed, approved or ratified by
the applicable Board committee, including, among other things, the following transactions:
z transactions or arrangements involving less than $25,000 for any individual related person;
z compensation arrangements with directors or executive officers resulting solely from their service on the Board or as
executive officers, so long as such arrangements are disclosed in our filings with the SEC or, if not required to be disclosed,
are approved by our Compensation and People Committee; and
z indirect interests arising solely from a related person’s service as a director or ownership, together with all other related
persons, directly or indirectly, of less than a 10% beneficial ownership interest in a third party (other than a partnership)
that has entered into or proposes to enter into a transaction with us.
We have various procedures to identify potential related-person transactions, and the Nominating, Governance and Public
Responsibility Committee works with our management and our Office of General Counsel in reviewing and considering
whether any identified transactions or relationships are covered by the policy. Our Statement of Policy with Respect to
Related-Person Transactions is included in our Governance Guidelines, a copy of which is available along with a copy of
the Company’s Code of Business Conduct and Ethics on the Governance page of the Investor Relations section of our
website at www.flex.com.
Transactions with Related Persons
Other than the compensation agreements and other arrangements described under the sections titled “Executive
Compensation” and “Fiscal Year 2024 Non-Employee Directors’ Compensation” in this proxy statement, during fiscal year
2024, there was not, nor is there currently proposed, any transaction or series of similar transactions to which we are or will
be a party:
z in which the amount involved exceeded or will exceed $120,000; and
z in which any director, nominee, executive officer, holder of more than 5% of our Ordinary Shares or any immediate family
member of any of the foregoing persons had or will have a direct or indirect material interest.
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Shareholder Proposals for the 2025 Annual General
Meeting
We must receive shareholder proposals submitted under SEC Rule 14a-8 and intended for inclusion in the proxy statement
for our 2025 annual general meeting of shareholders no later than February 25, 2025. Any such shareholder proposals
should be mailed to 12455G Research Blvd, Austin, Texas 78759, U.S.A., Attention: EVP, General Counsel. Any such
shareholder proposals that are submitted on a timely basis may be included in our proxy statement for the 2025 annual
general meeting so long as they satisfy conditions set forth in applicable rules and regulations promulgated by the SEC.
Shareholders intending to include a proposal on the agenda for the 2025 annual general meeting of shareholders must
comply with the requirements of the Singapore Companies Act, as described in the following paragraph, the Company’s
Constitution (under which the deadline for proposing director nominees will be 45 days (exclusive of the date on which
the notice is given) prior to the first anniversary of this year’s proxy statement mailing date), and applicable rules and
regulations promulgated by the SEC.
Under Section 183 of the Singapore Companies Act, registered shareholders representing (i) at least 5% of the total voting
rights of all registered shareholders having at the date of the requisition the right to vote at the meeting to which the
requisition relates, or (ii) not fewer than 100 registered shareholders holding shares in the Company on which there has
been paid up an average sum of at least S$500 per shareholder may, at their expense (unless the Company resolves
otherwise), requisition that we include and give notice of their proposal for the 2025 annual general meeting. Any such
requisition must satisfy the requirements of Section 183 of the Singapore Companies Act and the Company’s Constitution,
must be signed by all the parties making the requisition, and must be deposited at our registered office in Singapore,
2 Changi South Lane, Singapore 486123, at least six weeks before the 2025 annual general meeting in the case of a
requisition requiring notice of a resolution, or at least one week before the 2025 annual general meeting in the case of any
other requisition.
In addition to satisfying the foregoing requirements, to comply with the universal proxy rules, shareholders who intend to
solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the
information required by Rule 14a-19 under the Exchange Act no later than June 9, 2025.
Incorporation of Certain Documents by Reference
Flex incorporates by reference the following sections of our Annual Report on Form 10-K for the fiscal year ended March 31, 2024:
z Item 7,“Management’s Discussion and Analysis of Financial Condition and Results of Operations;”
z Item 7A,“Quantitative and Qualitative Disclosures About Market Risk;” and
z Item 8,“Financial Statements and Supplementary Data.”
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Singapore Statutory Financial Statements
Our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, which was filed with the SEC on May 17, 2024,
includes our audited consolidated financial statements, prepared in conformity with accounting principles generally
accepted in the United States of America, or U.S. GAAP, together with the Independent Registered Public Accounting Firm’s
Report of Deloitte & Touche LLP, our independent auditors for the fiscal year ended March 31, 2024.We publish our U.S. GAAP
financial statements in U.S. dollars, which is the principal currency in which we conduct our business. Except as otherwise
stated herein, all monetary amounts in this proxy statement have been presented in U.S. dollars.
Our Singapore statutory financial statements, prepared in conformity with the provisions of the Singapore Companies Act,
will be made available to our shareholders on our website at https://investors.flex.com/financials/annual-reports/ prior to
the date of the 2024 annual general meeting, as required under Singapore law.
Our Singapore statutory financial statements include:
z our consolidated financial statements (which are identical to those included in the Annual Report on Form 10-K,
described above);
z supplementary financial statements (which reflect solely the Company’s standalone financial results, with our subsidiaries
accounted for under the equity method rather than consolidated);
z a Directors’ Statement; and
z the Independent Auditors’ Report of Deloitte & Touche LLP, our Singapore statutory auditors for the fiscal year ended
March 31, 2024.
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Other Matters
Electronic Delivery of our Shareholder Communications
We have elected to provide access to our proxy materials to our shareholders of record as of June 10, 2024 by notifying
them of the availability of our proxy materials on the Internet. The Notice of Availability of Proxy Materials on the Internet
(referred to as the Notice), which contains instructions to shareholders on how to access this proxy statement and our
annual report and how to submit their proxies via the Internet, is first being made available and electronically distributed
to our shareholders (including all of our registered shareholders) on or about June 25, 2024 and will be mailed to
shareholders commencing on June 25, 2024. If you hold your shares through a broker, bank or other nominee, rather than
directly in your own name, your intermediary will either forward to you printed copies of the proxy materials or will provide
you with instructions on how you can access the proxy materials electronically. The Notice will include instructions on how a
shareholder may request a printed copy of our proxy materials.
Information About the Meeting
We are furnishing this proxy statement in connection with the solicitation by our Board of Directors of proxies to be voted at
the 2024 annual general meeting of our shareholders, or at any adjournments thereof, for the purposes set forth herein.
Costs of Solicitation
The entire cost of soliciting proxies will be borne by us. Following the original mailing of the proxies and other soliciting
materials, our directors, officers and employees may also solicit proxies by mail, telephone, e-mail, fax or in person. These
individuals will not receive additional compensation for those activities, but they may be reimbursed for any reasonable
out-of-pocket expenses. Following the original mailing of the proxies and other soliciting materials, we will request that
brokers, custodians, nominees and other record holders of our Ordinary Shares forward copies of the proxies and other
soliciting materials to persons for whom they hold Ordinary Shares and request authority for the exercise of proxies. In
these cases, we will reimburse such holders for their reasonable expenses if they ask that we do so. We have retained
D.F. King & Co., an independent proxy solicitation firm, to assist in soliciting proxies at an estimated fee of $11,500, plus
reimbursement of reasonable expenses.
Registered Office
The mailing address of our registered office is 2 Changi South Lane, Singapore 486123.
Voting Rights and Solicitation of Proxies
The close of business on June 10, 2024 is the record date for shareholders entitled to notice of the 2024 annual general
meeting. All of the Ordinary Shares issued and outstanding on August 8, 2024, the date of the annual general meeting,
are entitled to be voted at the annual general meeting. Shareholders entitled to vote at the annual general meeting will,
on a poll, have one vote for each Ordinary Share they hold on each matter to be voted upon. As of June 10, 2024, we had
398,803,737 Ordinary Shares issued and outstanding.
Proxies
Ordinary Shares represented by proxies in the forms made available in connection with this proxy statement that are
properly executed and returned to us will be voted at the 2024 annual general meeting, as applicable, in accordance with
the executing shareholder’s instructions. If your Ordinary Shares are held through a broker, a bank, or other nominee, which
is sometimes referred to as holding shares in “street name,” you have the right to instruct your broker, bank or other nominee
on how to vote the shares in your account. Your broker, bank or other nominee will send you a voting instruction form to use
for this purpose.
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Quorum and Required Vote
Representation at the 2024 annual general meeting of at least 33-1/3% of all of our issued and outstanding Ordinary
Shares is required to constitute a quorum to transact business at the 2024 annual general meeting.
z Consistent with the Company’s historical practice, the chair of the 2024 annual general meeting will demand a poll in
order to enable the Ordinary Shares represented in person or by proxy to be counted for voting purposes.
z The affirmative vote by a simple majority of the votes cast is required at the 2024 annual general meeting to re-elect the
directors nominated pursuant to Proposal 1(a) to 1(i), to re-appoint Deloitte & Touche LLP as our independent auditors
pursuant to Proposal 2, to approve the non-binding, advisory resolution regarding executive compensation contained in
Proposal 3, to approve the ordinary resolution to allot and issue Ordinary Shares contained in Proposal 4, and to approve
the ordinary resolution to renew the Share Purchase Mandate contained in Proposal 5.
Under the Singapore Companies Act and our Constitution, the shareholders may, by passing an ordinary resolution
requiring the simple majority of affirmative votes of shareholders present and voting at an annual general meeting, remove
an incumbent director and appoint another person as director to replace the removed director provided that such
shareholders have satisfied the procedural requirements and deadlines set forth in the Singapore Companies Act and our
Constitution.
Abstentions and Broker Non-Votes
Abstentions and “broker non-votes” are considered present and entitled to vote at the 2024 annual general meeting for
purposes of determining a quorum. A “broker non-vote” occurs when a broker, a bank or other nominee who holds shares
for a beneficial owner does not vote on a particular proposal because the broker, bank or other nominee has not received
directions from the beneficial owner and does not have discretionary power to vote on that particular proposal. If a broker,
bank or other nominee indicates on the proxy card that it does not have discretionary authority to vote as to a particular
matter, those shares, along with any abstentions, will not be counted in the tabulation of the votes cast on the proposal
being presented to shareholders.
If you are a beneficial owner, your broker, bank or other nominee has authority to vote your shares for or against Proposal 2
regarding the re-appointment of our independent auditors, even if the broker does not receive voting instructions from
you. Your broker, bank or other nominee, however, does not have the discretion to vote your shares on any other proposals
included in this proxy statement without receiving voting instructions from you. It is very important that you instruct your
broker, bank or other nominee how to vote on these proposals. If you do not complete the voting instructions, your
shares will not be considered in the election of directors or any other proposal included in this proxy statement other than
Proposal 2 regarding the re-appointment of our independent auditors.
If you are a registered shareholder and you vote by proxy card without giving specific instructions, your shares
represented by proxies will be voted at the 2024 annual general meeting as follows: “FOR” each of the Board
nominees in Proposal 1(a) to 1(i) and “FOR” Proposals 2 through 5.
Our management does not know of any matters to be presented at the 2024 annual general meeting other than those set
forth in this proxy statement and in the notices accompanying this proxy statement. If other matters should properly be put
before the meeting, the proxy holders will vote on such matters in accordance with their best judgment.
Any shareholder of record has the right to change his or her voting instructions to the proxy by revoking his or her proxy at
any time prior to voting at the 2024 annual general meeting by:
z submitting a subsequently dated proxy; or
z by attending the meeting and voting in person.
If you are a beneficial holder who holds your Ordinary Shares through a broker, a bank or other nominee and you wish to
change or revoke your voting instructions, you will need to contact the broker, the bank or other nominee who holds your
shares and follow their instructions. If you are a beneficial holder and not the shareholder of record, you may not vote your
shares in person at the 2024 annual general meeting unless you obtain a legal proxy from the record holder giving you the
right to vote the shares.
As noted above, our management does not know of any matters to be presented at the 2024 annual general meeting
other than those set forth herein and in the Notice accompanying this proxy statement. If any other matters are properly
presented for a vote at the 2024 annual general meeting, the enclosed proxies confer discretionary authority to the
individuals named as proxies to vote the shares represented by such proxy, as to those matters.
It is important that your shares be represented at the 2024 annual general meeting, regardless of the number of shares
you hold. We urge you to promptly execute and return the accompanying proxy card in the envelope that has been
enclosed for your convenience, or to vote or give voting instructions in accordance with the proxy card or Notice.
98
2024 Proxy Statement
Other Matters
Voting Rights and Solicitation of Proxies
Q
Registered shareholders who are present at the 2024 annual general meeting may revoke their proxies and vote in person
or, if they prefer, may abstain from voting in person and allow their proxies to be voted.
Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy
statements and annual reports for our beneficial shareholders. This means that only one copy of our proxy materials and
our Annual Report on Form 10-K may have been sent to multiple shareholders in your household, unless your bank, broker
or nominee received contrary instructions from one or more shareholders in your household. If you want to receive separate
copies of our proxy materials or annual reports in the future, or if you are receiving multiple copies and would like to receive
only one copy for your household, you should contact your bank, broker or other nominee record holder. We will promptly
deliver a separate copy of either document to you if you request one by writing or calling us at the contact information
listed below.
We incorporate by reference information from Note 5 to our audited consolidated financial statements for the fiscal year
ended March 31, 2024, “Share-Based Compensation,” included in our Annual Report on Form 10-K and the sections titled
“Financial Statements and Supplementary Data,” “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and “Quantitative and Qualitative Disclosures About Market Risk.” Upon request, we will furnish
without charge by first class mail or other equally prompt means within one business day of receipt of such request,
to each person to whom a proxy statement is delivered a copy of our Annual Report on Form 10-K (and any exhibit
thereto).You may request a copy of such information, at no cost, by writing or telephoning us at:
Flex Ltd.
12455G Research Blvd
Austin, Texas 78759, U.S.A
Telephone: (512) 425-4100
Web links throughout this proxy statement are provided for convenience only, and the content on the referenced websites
does not constitute part of, and is not incorporated into, this proxy statement.
Cautionary Note Regarding Forward-Looking Statements
This proxy statement contains forward-looking statements within the meaning of Section 21E of the Securities Exchange
Act of 1934 and Section 27A of the Securities Act of 1933.All statements other than statements of historical or current
facts, including statements regarding our future business expectations and our environmental and other sustainability
plans and goals and related timeframes, made in this document are forward-looking. The words “will,” “may,” “designed to,”
“believe,” “should,” “would,” “could,” “anticipate,” “plan,” “expect,” “intend,” “estimate,” “goals,” “opportunity,” “future,” “to be,”
“achieve,” “grow,” “committed,” “seeks,” “targets,” “continues,” “likely,” “possible,” “might,” “potentially,” “will,” “on track,” “working
to,” “encourage,” “continue,” “strive,” “endeavor,” “looking forward,” “efforts,” “aim,” and variations of such words and similar
expressions identify forward-looking statements, which speak only as of the date of this proxy statement. Because these
forward-looking statements are subject to risks and uncertainties, actual results could differ materially from the expectations
expressed in the forward-looking statements. Important factors that could cause actual results to differ materially from
the expectations reflected in the forward-looking statements include those described in Item 1A “Risk Factors” and Item 7
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on
Form 10-K for the fiscal year ended March 31, 2024, and in our Quarterly Reports on 10-Q and Current Reports on Form 8-K
that we file with the U.S. Securities and Exchange Commission. In addition, new risks emerge from time to time and it is
not possible for management to predict all such risk factors or to assess the impact of such risk factors on our business.
Given these risks and uncertainties, the reader should not place undue reliance on these forward-looking statements. We
undertake no obligation to update or revise these forward-looking statements to reflect subsequent events or circumstances.
99
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Cautionary Note Regarding Forward-Looking Statements
Voting Rights and Solicitation of Proxies
Q
Annex A: Flex Ltd. Reconciliation of GAAP to Non-GAAP
Financial Measures
To supplement Flex’s unaudited selected financial data presented consistent with Generally Accepted Accounting
Principles (“GAAP”), the Company discloses certain non-GAAP financial measures that exclude certain charges and
gains, including non-GAAP operating income, non-GAAP net income and non-GAAP net income per diluted share.
These supplemental measures exclude certain legal and other charges, restructuring charges, customer-related asset
impairments (recoveries), stock-based compensation expense, intangible amortization, other discrete events as applicable
and the related tax effects. These non-GAAP measures are not in accordance with or an alternative for GAAP and may be
different from non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations
in that they do not reflect all of the amounts associated with Flex’s results of operations as determined in accordance
with GAAP and that these measures should only be used to evaluate Flex’s results of operations in conjunction with the
corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or
as a substitute for the most directly comparable GAAP measures. We compensate for the limitations of non-GAAP financial
measures by relying upon GAAP results to gain a complete picture of the Company’s performance.
In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of the
Company’s operating performance on a period-to-period basis because such items are not, in our view, related to the
Company’s ongoing operational performance. We use non-GAAP measures to evaluate the operating performance
of our business, for comparison with forecasts and strategic plans, for calculating return on investment, and for
benchmarking performance externally against competitors. In addition, management’s incentive compensation is
determined using certain non-GAAP measures. Also, when evaluating potential acquisitions, we exclude certain of the
items described below from consideration of the target’s performance and valuation. Since we find these measures to
be useful, we believe that investors benefit from seeing results “through the eyes” of management in addition to seeing
GAAP results. We believe that these non-GAAP measures, when read in conjunction with the Company’s GAAP financials,
provide useful information to investors by offering:
z the ability to make more meaningful period-to-period comparisons of the Company’s on-going operating results;
z the ability to better identify trends in the Company’s underlying business and perform related trend analyses;
z a better understanding of how management plans and measures the Company’s underlying business; and
z an easier way to compare the Company’s operating results against analyst financial models and operating results of
competitors that supplement their GAAP results with non-GAAP financial measures.
A-1
2024 Proxy Statement
(1)
Q
Twelve-Month Periods Ended
(In millions, except per share amounts)
March 31, 2024
March 31, 2023
March 31, 2022
GAAP gross profit from continuing operations
$
1,865
7.1%
$
1,976
6.9%
$
1,780
7.2%
Stock-based compensation expense
28
24
23
Restructuring charges(2)
152
23
15
Customer related asset impairment(4)
14
—
Legal and other(3)
1
5
(15)
Non-GAAP gross profit from continuing operations
$
2,060
7.8%
$
2,028
7.1%
$
1,803
7.3%
GAAP operating income from continuing operations
$
853
3.2%
$
1,017
3.6%
$
890
3.6%
Intangible amortization
70
81
60
Stock-based compensation expense
113
101
88
Restructuring charges(2)
172
27
15
Customer related asset impairment(4)
14
—
—
Legal and other(3)
45
6
17
Non-GAAP operating income from continuing operations
$
1,267
4.8%
$
1,232
4.3%
$
1,070
4.3%
GAAP provision for (benefit from) income taxes
$
(206)
$
124
$
92
Intangible amortization benefit
11
12
10
Tax benefit on release of U.S. valuation allowance(5)
461
—
—
Tax expense on foreign subsidiaries indefinite reinvestment
assertion change(5)
(135)
—
—
Other tax related adjustment(5)
7
(1)
28
Non-GAAP provision for income taxes from continuing
operations
$
138
$
135
$
130
GAAP net income continuing operations
$
872
$
683
$
872
Intangible amortization
70
81
60
Stock-based compensation expense
113
101
88
Restructuring charges(2)
172
27
15
Customer related asset impairment(4)
14
—
—
Legal and other(3)
45
6
17
Interest and other, net(6)
11
4
(135)
Equity in earnings (losses) of unconsolidated affiliates(7)
(6)
(1)
(32)
Adjustments for taxes(5)
(344)
(11)
(38)
Non-GAAP net income continuing operations
$
947
$
890
$
847
Diluted earnings per share from continuing operations
GAAP
$
1.98
$
1.48
$
1.81
Non-GAAP
$
2.15
$
1.93
$
1.75
Diluted shares used in computing per share amounts
441
462
483
Net cash used in operating activities
$
1,326
$
950
$
1,024
Less: Net capital expenditures
(505)
(615)
(431)
Adjusted Free Cash Flow
$
821
$
335
$
593
Growth (Decline) percentage over prior year
145%
(44%)
A-2
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Annex A: Flex Ltd. Reconciliation of GAAP to Non-GAAP Financial Measures
Q
Twelve-Month Periods Ended
(In millions, except per share amounts)
March 31, 2024
March 31, 2023
March 31, 2022 March 31, 2021*
GAAP operating income from continuing operations
$
853
$
1,017
$
890
$
636
Growth (Decline) percentage over prior year
(16.1%)
14.3%
39.9%
Non-GAAP operating income from continuing operations
$
1,267
$
1,232
$
1,070
$
853
Growth percentage over prior year
2.8%
15.1%
25.4%
GAAP diluted earnings per share from continuing
operations
$
1.98
$
1.48
$
1.81
$
0.90
Growth (Decline) percentage over prior year
33.8%
(18.2%)
101.1%
Non-GAAP diluted earnings per share from continuing
operations
$
2.15
$
1.93
$
1.75
$
1.22
Growth percentage over prior year
11.4%
10.3%
43.4%
GAAP operating margins from continuing operations
3.2%
3.6%
3.6%
2.8%
Growth (Decline) percentage over prior year
(0.4%)
—
0.8%
Non-GAAP operating margins from continuing operations
4.8%
4.3%
4.3%
3.7%
Growth percentage over prior year
0.5%
—
0.6%
Revenue from continuing operations
$
26,415
$
28,502
$
24,633
$
22,928
Growth (Decline) percentage over prior year
(7.3%)
15.7%
7.4%
*
Fiscal year 2021 total Flex GAAP operating income and GAAP earnings per share have been adjusted to exclude $159 million of Nextracker
income and adjusted operating income and adjusted earnings per share have been adjusted to exclude $178 million of Nextracker income. See
Flex fiscal year 2021 web financials for reconciliation of fiscal year 2021 total Flex adjusted operating income and adjusted earnings per share
located at https://s202.q4cdn.com/732614612/files/doc_financials/2021/q4/Web-Financials-Q4FY21-v1.pdf. Fiscal year 2021 adjusted operating
margin is calculated by dividing adjusted operating income by fiscal year 2021 revenue which is equal to fiscal year 2021 total Flex revenue
minus $1.2 billion in revenue from Nextracker.
Twelve-Month Period Ended
(In millions)
March 31, 2024*
GAAP operating income
$
1,174
Intangible amortization
70
Stock-based compensation expense
152
Restructuring charges
172
Customer related asset impairment
14
Legal and other
44
Non-GAAP operating income
$
1,626
*
Actual performance includes Flex’s economic interest in Nextracker through January 2, 2024, the date of the Spin-off.
Twelve-Month Periods Ended
(In millions, except per share amounts)
March 31, 2023
March 31, 2022
March 31, 2021
Diluted earnings per share attributable to Flex Ltd.
GAAP
$
1.72
$
1.94
$
1.21
Non-GAAP
$
2.36
$
1.96
$
1.57
Diluted shares used in computing per share amounts
462
483
506
A-3
2024 Proxy Statement
Annex A: Flex Ltd. Reconciliation of GAAP to Non-GAAP Financial Measures
Q
(1) Starting the fourth quarter of fiscal year 2023, Equity in earnings (losses) of unconsolidated affiliates previously presented as part of other charges
(income), net is now separately presented on the consolidated statement of operations. For comparability purposes, the prior periods have been
recast to conform to the current presentation. The reclassifications had no effect on the previously reported results of operations.
Starting the second quarter of fiscal year 2022, the Company elected to include operating income as a subtotal in the condensed consolidated
statement of operations. As such, non-GAAP operating income is now reconciled to the nearest GAAP measure which is GAAP operating income.
Historical periods are recast to conform to the current period presentation.
(2) Restructuring charges include severance charges at existing sites and corporate SG&A functions as well as asset impairment, and other charges
related to the closures and consolidations of certain operating sites and targeted activities to restructure the business. These costs may vary in
size based on the Company’s initiatives, are not directly related to ongoing or core business results, and do not reflect expected future operating
expenses. These costs are excluded by the Company’s management in assessing current operating performance and forecasting its earnings
trends and are therefore excluded by the Company from its non-GAAP measures.
During the three and twelve-month periods ended March 31, 2024, the Company recognized approximately $75 million and $172 million of
restructuring charges respectively, most of which related to employee severance.
During the three and twelve-month periods ended March 31, 2023, the Company recognized approximately $22 million and $27 million of
restructuring charges respectively, most of which related to employee severance.
During the twelve-month period ended March 31, 2022, the Company recognized approximately $15 million of restructuring charges, most of
which related to employee severance.
(3) Legal and other consist primarily of costs not directly related to core business results and may include matters relating to commercial disputes,
government regulatory and compliance, intellectual property, antitrust, tax, employment or shareholder issues, product liability claims and other
issues on a global basis as well as acquisition related costs.
During the fourth quarter and for the fiscal years ended March 31, 2024, 2023, and 2022, the Company accrued for certain loss contingencies
where losses were considered probable and estimable.
During the fourth quarter of fiscal year 2024, the Company accrued $50 million related to a commercial dispute related to a construction matter
with related production objectives.
In the fiscal year ended March 31, 2022, the Company recognized a net $17 million loss accrual related to settled litigation claims partially offset
by the successful settlement of certain supplier claims.
These costs are excluded by the Company’s management in assessing current operating performance and forecasting its earnings trends and
are therefore excluded by the Company from its non-GAAP measures.
(4) Customer related asset impairments may consist of non-cash impairments of property and equipment to estimated fair value for customers
from whom we have disengaged or are in the process of disengaging as well as additional provisions for doubtful accounts receivable for
customers that are experiencing financial difficulties and inventory that is considered non-recoverable that is written down to net realizable
value. In subsequent periods, the Company may recover a portion of the costs previously incurred related to assets impaired or reduced to net
realizable value.
During the three and twelve-month periods ended March 31, 2024, the Company recognized approximately $14 million of customer related
asset impairments.
These costs are excluded by the Company’s management in assessing current operating performance and forecasting its earnings trends and
are therefore excluded by the Company from its non-GAAP measures.
(5) Adjustment for taxes relates to the tax effects of the various adjustments that we incorporate into non-GAAP measures in order to provide a
more meaningful measure on non-GAAP net income and certain adjustments related to non-recurring settlements of tax contingencies or other
non-recurring tax charges, when applicable.
During the three and twelve-month periods ended March 31, 2024, the Company recorded $319 million and $344 million net benefits, respectively,
of which the majority relates to a $461 million benefit from a release of a valuation allowance previously applied to the Company’s U.S. deferred
tax assets, partially offset by an expense of $135 million reflecting a change in the Company’s assertion to indefinitely reinvest its earnings in
China.
During fiscal year 2022, the Company recorded a $19 million benefit for the release of valuation allowances on certain of its deferred tax assets
due to its acquisition of the Anord Mardix business. No such significant events occurred in fiscal year 2023.
(6) Interest and other, net consist of various other types of items that are not directly related to ongoing or core business results, such as the gain
or losses related to certain divestitures, currency translation reserve write-offs upon liquidation of certain legal entities, and debt extinguishment
costs. The Company excludes these items because they are not related to the Company’s ongoing operating performance or do not affect
core operations. Excluding these amounts provides investors with a basis to compare Company performance against the performance of other
companies without this variability.
In fiscal year 2022, the Company received approval from the relevant tax authorities in Brazil of the Credit Habilitation request related to certain
federal operational tax credits and the Company recorded a total gain of 809.6 million Brazilian reals (approximately USD $149.3 million based on
the exchange rate as of October 1, 2021) under other charges (income), net in the condensed statements of operations. The total gain recorded
included credits from February 2003 to September 2021, net of additional taxes, as the Credit Habilitation received covering the period from
February 2003 to December 2019 resolved any uncertainty regarding the Company’s ability to claim such credits. This gain is non-cash and has
been used to offset tax obligations.
(7) Equity in earnings (losses) of unconsolidated affiliates consists of various other types of items that are not directly related to ongoing or core
business results, such as gains (losses) associated with certain non-core investments. The Company excludes these items because they are not
related to the Company’s ongoing operating performance or do not affect core operations. Excluding these amounts provides investors with a
basis to compare Company performance against the performance of other companies without this variability.
In fiscal years 2022 and 2024, the Company recognized approximately $32 million and $6 million, respectively, equity in earnings from the value
increases in certain non-core investment funds. No such significant events occurred in fiscal year 2023.
A-4
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Annex A: Flex Ltd. Reconciliation of GAAP to Non-GAAP Financial Measures
Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2024
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 000-23354
FLEX LTD.
(Exact name of registrant as specified in its charter)
Singapore
Not Applicable
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
2 Changi South Lane,
Singapore
486123
(Address of 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 class
Trading Symbol(s)
Name of each exchange on which registered
Ordinary Shares, No Par Value
FLEX
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by
any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
1
Q
As of September 29, 2023, the aggregate market value of the Company's ordinary shares held by non-affiliates of the registrant was approximately
$11.8 billion based upon the closing sale price as reported on the Nasdaq Global Select Market.
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
Class
Outstanding at May 10, 2024
Ordinary Shares, No Par Value
401,640,807
DOCUMENTS INCORPORATED BY REFERENCE
Document
Parts into Which Incorporated
Proxy Statement to be delivered to shareholders in connection with the
Registrant's 2024 Annual General Meeting of Shareholders
Part III
2
Q
TABLE OF CONTENTS
Page
PART I
Forward-Looking Statements
4
Item 1.
Business
4
Item 1A.
Risk Factors
13
Item 1B.
Unresolved Staff Comments
33
Item 1C.
Cybersecurity
33
Item 2.
Properties
34
Item 3.
Legal Proceedings
35
Item 4.
Mine Safety Disclosures
35
PART II
Item 5.
Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of
Equity Securities
36
Item 6.
[Reserved]
39
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
39
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
54
Item 8.
Financial Statements and Supplementary Data
55
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
101
Item 9A.
Controls and Procedures
101
Item 9B.
Other Information
103
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
103
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
103
Item 11.
Executive Compensation
103
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters
103
Item 13.
Certain Relationships and Related Transactions, and Director Independence
103
Item 14.
Principal Accountant Fees and Services
103
PART IV
Item 15.
Exhibits and Financial Statement Schedules
104
Item 16.
Form 10-K Summary
104
Exhibit Index
104
Signatures
108
3
Q
PART I
FORWARD-LOOKING STATEMENTS
Except for historical information contained herein, certain matters included in this annual report on Form 10-K are, or
may be deemed to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934
and Section 27A of the Securities Act of 1933. The words "will," "may," "designed to," "believe," "should," "anticipate,"
"plan," "expect," "intend," "estimate" and similar expressions identify forward-looking statements, which speak only as of the
date of this annual report. These forward-looking statements are contained principally under Item 1, "Business," and under
Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations." Because these forward-
looking statements are subject to risks and uncertainties, actual results could differ materially from the expectations expressed
in the forward-looking statements. Important factors that could cause actual results to differ materially from the expectations
reflected in the forward-looking statements include those described in Item 1A, "Risk Factors" and Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations." In addition, new risks emerge from time to time
and it is not possible for management to predict all such risk factors or to assess the impact of such risk factors on our business.
Given these risks and uncertainties, the reader should not place undue reliance on these forward-looking statements. We
undertake no obligation to update or revise these forward-looking statements to reflect subsequent events or circumstances.
Unless otherwise specifically stated, references in this report to "Flex," the "Company," "we," "us," "our" and similar
terms mean Flex Ltd. and its subsidiaries.
ITEM 1. BUSINESS
OVERVIEW
Flex is the advanced, end-to-end manufacturing partner of choice that helps market-leading brands design, build, deliver
and manage innovative products that improve the world. Through the collective strength of a global workforce across
approximately 30 countries with responsible, sustainable operations, Flex supports our customers' entire product lifecycle with
a broad array of services in every major region. The Company's full suite of specialized capabilities includes design and
engineering, supply chain, manufacturing, post-production and post-sale services. Flex partners with customers across a diverse
set of industries including cloud, communications, enterprise, automotive, industrial, consumer devices, lifestyle, healthcare,
and energy. As of March 31, 2024, as a result of the Spin-off (defined below) of Nextracker Inc. ("Nextracker"), formerly our
subsidiary and Nextracker segment, in the fourth quarter of fiscal year 2024, Flex now reports its financial performance based
on two operating and reportable segments as follows:
•
Flex Agility Solutions ("FAS"), which is comprised of the following end markets:
◦
Communications, Enterprise and Cloud ("CEC"), 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, embedded and critical power offerings,
and renewables and grid edge.
On January 2, 2024, the Company completed its previously announced spin-off of its remaining interests in Nextracker
(the "Spin-off") to Flex shareholders on a pro-rata basis based on the number ordinary shares of Flex held by each shareholder
of Flex (the “Distribution”) as of December 29, 2023, which was the record date of the Distribution, pursuant to the Agreement
and Plan of Merger, dated as of February 7, 2023. The historical financial results and financial position of our former
Nextracker business, which was previously reported as a separate operating and reportable segment, are presented as
discontinued operations in the consolidated statements of operations and balance sheets for all periods presented. The historical
statements of comprehensive income and cash flows and the balances related to stockholders’ equity have not been revised to
reflect the effect of the Spin-off. See note 7 "Discontinued Operations" to the consolidated financial statements in Item 8,
“Financial Statements and Supplementary Data” for further information.
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The FAS segment is optimized for speed to market, based on a highly flexible supply and manufacturing system. The FRS
segment is optimized for longer product lifecycles requiring complex ramps with specialized production models and critical
environments.
Our customers include many of the world's leading technology, healthcare, automotive, and industrial companies. We are
focused on establishing long-term relationships with our customers and have been successful in expanding relationships to
incorporate additional product lines and services.
In fiscal year 2024, our ten largest customers accounted for approximately 37% of net sales. No customer accounted for
greater than 10% of the Company's net sales in fiscal year 2024.
Flex believes that growth in the contract manufacturing services industry will continue to be driven by increased
complexities in products, markets, and sustainability requirements. The “Digitization of Everything” is the mega-trend that is
driving products—and even whole industries—to be smarter, more data-driven, and more connected. To make these next
generation products, companies must integrate increasingly advanced technologies and build them at scale.
Additionally, rising global uncertainty over the past few years including trade and tariff issues, increasing geopolitical
unrest, and severe labor shortages are creating further complexity. Companies are rethinking their entire production strategies.
We are seeing a global rebalancing in sourcing and production locations to maximize resiliency and decrease time to market.
Sustainability is no longer an afterthought. Businesses are being held to a much higher standard for how and where their
products are sourced and produced, and, increasingly, how they are serviced and disposed.
These complexities are making it harder for companies to manage their own supply chains, manufacturing operations and
products. They are looking for trusted partners to help them navigate this complex environment. We believe that only a few
outsourcing providers have the right capabilities and scale to meet these challenges effectively and profitably. Flex is one of
these partners.
STRATEGY
Flex helps its customers responsibly design, build, deliver and manage products that create value and improve people’s
lives. We do this by providing our customers with full product lifecycle services, from design, engineering, supply chain,
component services and manufacturing to forward logistics, value-added fulfillment, reverse logistics and circular economy
offerings. Flex’s strategy is to continue investing in areas where we can differentiate and add value, whether through product
lifecycle capabilities, manufacturing and product technologies or developing differentiated processes and business methods. For
example, Flex has developed unique offerings for hyperscalers and co-locators for embedded and critical power solutions
which, combined with our traditional data center contract manufacturing business, provide integrated end to end solutions for
our customers. We are strengthening our capabilities in factory automation, robotics, artificial intelligence, simulation, digital
twins, connectivity and other disruptive technologies. We select ethical partners and integrate the supply chain so that our
customers can operate efficiently and responsibly. We are committed to investing in our employees and communities, which
includes addressing critical environmental issues.
People. To maintain competitiveness and world-class capabilities, we focus on hiring and retaining the world's best talent.
We have focused on attracting the best engineering, functional and operational leaders and are focused on developing the future
leaders of the Company.
Customer Focus. We believe that building strong partnerships with our customers and delivering on our commitments
strengthens trust and customer retention. We focus on delivering distinctive products and services in a cost-effective manner
with fast time to market. We are highly collaborative and leverage our global system and processes to operate with speed and
responsiveness to provide customers reliable and responsible solutions throughout the product lifecycle.
Markets. We focus on companies that are leaders in their industry and value our superior capabilities in design and
engineering, supply chain, manufacturing, post-production and post-sale services. Flex focuses on high-growth industries and
markets where we have distinctive competence and a compelling value proposition. Examples include investments in specific
technologies and industries such as automotive, cloud, healthcare, industrial, and energy. Our market-focused approach to
managing our business increases customers' competitiveness by leveraging our deep vertical and cross-industry expertise, as
well as global scale, regional presence, and agility to respond to changes in market dynamics.
Operations. We continue to invest in maintaining a leadership position in our world-class manufacturing services and
capabilities including automation, simulation tools, digitizing our factories, and implementing leading edge advanced
manufacturing methodologies. We leverage our broad set of capabilities globally to provide a competitive advantage by
minimizing logistics costs, manufacturing costs, and cycle times while increasing flexibility and responsiveness.
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SERVICE OFFERINGS
Flex provides design and engineering, supply chain, manufacturing, post-production and post-sale services through a
network of approximately 100 locations in approximately 30 countries across four continents. We have established global scale
through an extensive network of manufacturing operations and services sites in the world's major consumer and enterprise
products markets (Asia, the Americas, and Europe) to serve the supply chain needs of both multinational and regional
companies.
We believe we have the broadest product lifecycle capabilities within every major region in the industry, from concept
design to sourcing to manufacturing to delivery and servicing through end-of-life. We believe our key competitive advantages
are our people, processes, and capabilities for making products, systems, and solutions for customers:
•
Time to market advantage: Our deep vertical and cross-industry expertise, unique set of full product lifecycle
capabilities, and global and regional presence accelerate the production of complex products for increasingly
interconnected markets and provide customers with a time to market advantage.
•
End-to-end specialized services: Our full range of services help customers optimize and streamline the product
lifecycle and seamlessly design, build, deliver, and manage products at scale with increased quality, productivity and
speed.
•
Global and regional scale: Flex’s physical infrastructure includes approximately 100 facilities in approximately 30
countries, staffed by approximately 148,000 employees, providing customers with truly global scale and strategic
geographic distribution capabilities to meet their market needs.
We offer global economies of scale in advanced materials and technology sourcing, manufacturing and post-sale services,
as well as market-focused expertise and capabilities in design and engineering. As a result of extensive experience in specific
markets, we have developed a deep understanding of complex market dynamics, giving us the ability to anticipate trends that
impact customers' businesses. Our expertise can help improve customers' market positioning by effectively adjusting product
plans and roadmaps to efficiently and cost-effectively deliver high quality products that meet their geographic and time to
market requirements.
Our end-to-end services include all processes necessary to design, build, deliver, and manage a wide range of products for
customers. These services include:
Design and Engineering Services. Across all of the key industries and markets in which Flex does business, we offer
industry-leading global design and engineering services, with extensive product design and engineering resources that provide
design services, product development, systems integration services, and solutions to satisfy a wide array of customer
requirements, including:
•
System architecture;
•
User interface and industrial design;
•
Cross-industry technologies;
•
Hardware design;
•
Software integration; and
•
Design for excellence.
Flex provides differentiated offerings and specialized capabilities in emerging technologies from edge AI and connectivity
to sensors integration for specific industries and markets. The Company’s design and engineering services help customers de-
risk technology adoption, develop products from concept to volume production and go to market in a rapid, cost effective and
low risk manner.
Flex is exposed to different and, in some cases greater, potential liabilities from the various design and engineering
services we provide than those we typically face in our core assembly and manufacturing services. See "Risk Factors—The
success of certain of our activities depends on our ability to protect our intellectual property rights; claims of infringement or
misuse of intellectual property and/or breach of license agreement provisions against our customers or us could harm our
business."
Supply Chain Services. We offer one of the most trusted and resilient global supply chain services through a combination
of digital supply chain capabilities, deep expertise, real time visibility and analytics, and collaborative supplier relationships to
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help customers navigate complex, global supply chains. Through our component services, we provide manufacturing,
customization, procurement, global logistics services and innovative supply chain solutions on a wide range of electronic
components by utilizing the Flex global procurement and supply chain ecosystem to increase resiliency.
Manufacturing Services. Our manufacturing operations and systems assembly generate the majority of our revenues and
include printed circuit board assembly and assembly of systems and subsystems that incorporate printed circuit boards and
complex electromechanical components. We assemble electronic products with custom electronic enclosures on either a build-
to-order or configure-to-order basis. As customers seek to provide greater functionality in physically smaller products, they
increasingly require more sophisticated manufacturing technologies and processes. Our investment in advanced manufacturing
equipment and our expertise in innovative miniaturization, packaging and interconnective technologies enable us to offer a
variety of leading-edge manufacturing solutions. We support a wide range of product demand profiles, from low-volume, high-
complexity programs, to high-volume production. Our manufacturing capabilities and systems assembly include enclosures,
testing services, and materials procurement and inventory management.
Post-production Services. Through forward logistics and value-added fulfillment, including warehousing and vendor
managed inventory, omni-channel fulfillment, kitting, configuration and postponement, Flex empowers customers to find the
optimal route to market and deliver a seamless customer experience. Our customers are enabled to maximize operational
resiliency thanks to the breadth of our global scale, strategic insights and extensive visibility. Our post-production services are
tailored to customers from a wide range of industries that serve business-to-business and business-to-consumer markets.
Post-sale Services. We provide a suite of integrated reverse logistics and circular economy services that use globally
consistent processes, which help increase our customers' brand loyalty by improving turnaround times and raising end-customer
satisfaction levels while significantly reducing the carbon footprint for our customers. Our post-sale services include returns
management, spare parts logistics, asset recovery, repair, refurbishment, warranty services, recycling and e-waste management.
We service multiple product lines such as consumer and midrange products, printers, smart phones, audio devices, consumer
medical devices, notebook personal computers, floorcare products, and highly complex infrastructure products.
Portfolio of Power Products. We offer an industry-leading, differentiated product portfolio of embedded and critical
power solutions to help data center customers meet increasing power demands given the proliferation of Generative AI. Our
embedded power capabilities span power shelves, battery back-up units, capacitive energy storage systems featuring battery
management systems using lithium-ion batteries, and DC/DC converters, helping customers address board and rack power
density requirements. At data center facilities, Anord Mardix, a Flex company, offers a broad array of critical power capabilities
including building information modelling and pre-fabricated construction and turnkey installation of switchgear, busway, power
distribution and modular power systems, along with monitoring solutions and services. Our embedded and critical power
offerings enable greater efficiency, reduced latency, space and risk, and faster time to market. Our power portfolio combined
with our server and storage products, racks and enclosures and full systems assembly capability provides the opportunity for
growth in the data center market.
COMPETITION
The contract manufacturing services market is extremely competitive. Flex competes against numerous domestic and
foreign manufacturing service providers, as well as current and prospective customers, who evaluate our capabilities in light of
their own capabilities and cost structures.
In recent years, we have seen an increased level of diversification by many companies in the technology, automotive and
healthcare industries along with the convergence of many industries being transformed by technology advances. Digitization
and increasingly complex products require highly customized solutions, in turn resulting in significant changes to the overall
manufacturing and supply chain landscape.
We believe the principal competitive factors in the contract manufacturing services market are quality and range of
services; design and technological capabilities; cost; location of sites; sustainability; and responsiveness and flexibility. We
believe we are extremely competitive with regard to all of these factors.
COMPETITIVE STRENGTHS
We continuously enhance our business through the development and expansion of our product and service offerings. We
strive to maintain the efficiency and flexibility of the organization, with repeatable execution that adapts to macro-economic
changes to provide clear value to customers, while increasing their competitiveness. We have a focused strategy on delivering
value to customers through a comprehensive suite of product lifecycle capabilities, global and regional footprint, and vertical
and cross-industry expertise.
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Global Scale and Regional Strength. We believe our global scale and regional capabilities are a significant competitive
advantage, as customers increasingly require a broad range of product lifecycle services globally. Increasingly, customers are
evaluating regional-based supply chains to enhance resiliency and to take advantage of time to market and specific
customization required to win in those markets. Our global expertise, footprint and diverse supply chain network provide
customers with the ability to quickly adjust to changing regional, trade and manufacturing dynamics. We have a very balanced
global manufacturing footprint with 40% of net sales in North America, 19% in China, 21% in Europe, the Middle East and
Africa ("EMEA"), and 20% in other areas in our fiscal year ended March 31, 2024 (with net sales attributable to the country in
which the product is manufactured, or service is provided).
Long-Standing, Diverse Customer Relationships. We believe our long-term relationships with key customers are the result
of our track record of meeting commitments and delivering value that increases customers' competitiveness. We serve a wide
range of customers across six reporting units within the FAS and FRS segments. No customer accounts for more than 10% of
our annual revenue and the ten largest accounted for 37% of our net sales in fiscal year 2024.
Cross-Industry Synergies. One of our competitive strengths is our ability to leverage technology from one industry and
apply it to a different application within another industry. Examples include our expertise in power and compute technology.
For example, we leverage our experience in data center servers to support next-generation mobility applications in automotive.
Our expertise in power applications is helping customers across applications in our Industrial, Automotive, and CEC customers.
These cross-industry synergies give our customers access to technology they would not otherwise have.
Industrial Parks; Cost-Efficient Manufacturing Services. We have developed self-contained industrial parks that co-locate
manufacturing and logistics operations with our suppliers in various cost-efficient locations. We offer a range of manufacturing
services and capabilities in close proximity to vertically integrate the manufacturing process and offer additional value to our
customers. These sites enhance supply chain management efficiency, while providing multi-technology solution value for
customers.
HUMAN CAPITAL MANAGEMENT
Culture underlies our stakeholder experience. Our values are intended to reflect and guide our behaviors and shape our
culture. We endeavor for our values-driven culture to align us as we pursue our purpose, uphold our mission, live our values,
advance toward our vision, and activate our strategy.
In support of cultivating an inclusive, high-performing culture with our workforce, we continue to proliferate our Ways of
Working, four specific behaviors that bring our values to life through actions, provide a framework for how we make decisions,
and support ongoing progress on our Flex Forward strategy. The purpose of these behaviors is to enable us to put our culture
into practice and provide an accountability system through training and development as well as performance management
systems to ensure our desired behaviors become a part of our everyday working norms. In 2023, we continued to drive
awareness and education of our leadership competencies to provide a common language and framework for our people leaders
throughout the organization as it relates to leadership expectations, behaviors and skills necessary to lead the business and our
people. Building on our vision, mission, values, and Ways of Working, we use this framework to assess, hire, train, and nurture
our talent to develop the skills necessary for our ongoing success.
How we live our values defines our culture:
•
We support each other as we strive to find a better way.
•
We move fast with discipline and purpose.
•
We do the right thing always.
We bring our values to life through four behaviors:
1.
Respect and value others.
2.
Collaborate and share openly.
3.
Learn and adapt.
4.
Honor commitments.
Our leadership competency framework includes three key elements of leadership to help leaders guide and develop our
teams and execute on our strategy:
•
People: Building and developing our people.
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•
Strategy: Defining and driving our strategy.
•
Results: Executing and delivering results.
We believe that the performance of our Company is impacted by our human capital management, and as a result we
consistently work to attract, select, develop, engage and retain strong, diverse talent. Our policies, philosophy and strategies
support the inclusion of all people in our working environment. Further, we are committed to respecting the human rights of our
employees and improving their quality of life.
The Company's purpose, vision, mission and value statements aim to cultivate an inclusive, high-performing culture
where employees are empowered and given opportunities to reach their full potential. We are committed to providing a positive
and safe workplace for Flex employees, respecting their dignity, creating an inclusive environment, and ensuring access to
opportunity. We recognize that we have an opportunity to promote and support a culture of inclusion and diversity, wellness,
and health and safety among our employees. This year, we continued our culture initiative to create common language,
expectations and behaviors through rollouts of training on our Ways of Working to all sites globally. We continued regular
communications and supporting our leaders globally through quarterly training and team discussions to build an understanding
of our Ways of Working, important leadership expectations and inclusion practices.
Employees. As of March 31, 2024, our global workforce totaled approximately 148,000 employees including our
contractor workforce. In certain international locations, our employees are represented by labor unions and by work councils.
Region:
Number of Employees
Americas
58,251
Asia
60,091
Europe
29,773
Total
148,115
Well-being, Health, and Safety. Flex is committed to providing a safe and injury-free workplace. We provide programs
and tools to improve physical, mental, financial, and social well-being. Our programs give access to a variety of innovative,
flexible, and convenient health and wellness programs for our global employees, including on-site health centers in some of our
major factories and providing 100% of employees access to emotional and mental health programs.
We promote a “zero-injury” culture through health and safety management systems, some of which are certified ISO
45001:2018, that implement a data-driven and risk-based approach in monitoring and reporting performance regularly. Some of
the specific goals for which we measure our performance include increasing employee development, social and environmental
management system audits, human rights policy training completion, Responsible Business Alliance ("RBA") compliance for
rest day requirements and decreasing safety incident rates.
In response to the remaining effects of the COVID-19 pandemic, we maintained our resiliency framework and calibrated
plans as outbreak risk diminished to assure the health and safety of our workforce. We continuously monitored site incidents
and local trends and adjusted protocols to address real-time local conditions. This regional and local risk-based approach
enabled us to continue to conduct operations throughout the pandemic and has been recognized by several governments as a
role model for employee safety.
Diversity, Equity and Inclusion. Diversity, equity and inclusion are key priorities and strengths at Flex and are embedded
in the fabric of our culture. Our commitment to diversity is exemplified by the composition of our Board of which three of ten
directors are female and three of ten directors are ethnically diverse.
In 2023, we continued our progress on improving diversity, equity and inclusion through employee programs. Our
employee resources groups ("ERGs") work to create a community that fosters belonging, build cultural awareness, and develop
a new generation of diverse leaders at Flex by establishing a sustainable structure with executive support that challenges bias
and promotes unity. With approximately 15,000 members, the Company maintains ERG chapters globally across seven
identities: Asian and Pacific Islander, Black, LatinX, LGBTQ+, People with Disabilities, Women and Veterans. Our ERGs help
to create a sense of community and support retention and attraction. Each ERG has an executive sponsor and is supported by
senior leaders across the Company. The Company also held cultural awareness activities throughout the year to highlight
specific groups including People with DiversAbilities Awareness Weeks, Black History Month, Asian Pacific Heritage Month,
PRIDE Month, LatinX Heritage Month, and Women’s History Month among others.
In partnership with McKinsey, we continued to offer leadership development opportunities through their Management
Accelerator and Executive Leadership Program to 24 Asian, 17 Black and 16 LatinX employees. We also continued SheLeads,
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our global leadership development program for women employees, offered leadership coaching and peer-mentoring to 35
gender and ethnically diverse leaders, and continued to implement on-demand inclusion training offerings. We also provided
self-service tools and training on diversity, equity and inclusion practices to help employees build self-awareness, empathy and
cultural competency, embrace inclusivity and improve diversity in recruiting. Furthermore, we leveraged external community
partnerships with organizations such as Catalyst, the Business Roundtable, the National Society of Black Engineers (“NSBE”)
and Women in Electronics to amplify our impact in recruiting and retaining diverse talent.
As of March 31, 2024, women represent 44% of our global employees, and underrepresented minorities (those who
identify as Black/African American, Hispanic/Latinx, Native American, Asian and Pacific Islander and/or two or more races)
represent 52% of our U.S. employees. Approximately 21% of our executive team and approximately 23% of our leadership
team (director level and above) are female. Approximately 23% of our executive team and approximately 33% of our U.S.
leadership team (director level and above) are comprised of underrepresented minorities.
We continued efforts in support of our corporate goals to increase the number of employees and leaders from
underrepresented groups and are focused on evolving strategies and programs to help improve representation and better hire,
retain and promote diversity across the organization. Additionally, we remain committed to parity in pay and opportunity.
Talent Attraction, Development, and Retention. Talent attraction, development, and retention are critical to our success
and core to our mission as a company. To support the advancement of our employees, we provide training and development
programs and opportunities encouraging advancement from within as well as continue to fill our team with strong and
experienced external talent. We leverage both formal and informal programs, including in-person, virtual, social and self-
directed learning, mentoring, coaching, and external development to identify, foster, and retain top talent. Employees have
access to courses through our learning and development platform, Flex Learn. In 2023, our employees completed more than six
million hours of training programs.
We are also focused on completing talent and performance reviews. Our in-depth talent reviews serve to identify high
potential talent to advance in roles with greater responsibility, assess learning and development needs, and establish and refresh
succession plans for critical leadership roles across the enterprise. In calendar year 2022, we updated our performance ratings to
allow for more differentiation and clear performance feedback and also integrated our values and Ways of Working into our
performance assessment process. Our performance review process promotes transparent communication of team member
performance, which we believe is a key factor in our success. The performance and the talent reviews enable ongoing
assessments, reviews, and mentoring to identify career development and learning opportunities for our employees.
As a part of our efforts to improve employee experiences at Flex, we conduct the annual enterprise-wide employee
engagement Flex Voice survey. Our leadership uses the results of the survey to continue developing our strengths and identify
and take action on opportunities for improvement. This year 93% of employees completed the Flex Voice survey and the results
reflected continued engagement.
Compensation and Benefits. Our total rewards are designed to attract, motivate and retain employees. Our compensation
philosophy is driven by the desire to attract and retain top talent, while ensuring that compensation aligns with our corporate
financial objectives and the long-term interests of our shareholders. Our pay structures offer competitive salaries, bonuses, and
equity awards in the countries where we operate.
In each of the countries where we have operations, our comprehensive benefit plans offer a locally competitive mix of
some or all of the following: medical, dental and vision insurance, short and long-term disability, flexible spending accounts,
various types of voluntary coverage, and other benefit programs. We routinely benchmark our salaries and benefits against
market peers to ensure our total rewards package remains competitive.
Board Oversight of Human Capital Management. The Compensation and People Committee of our Board of Directors is
responsible for assisting the Board in oversight of our human capital management, including among other aspects, receiving
periodic updates (not less than twice annually) regarding, and overseeing any significant change to our human capital
management strategy including, corporate culture, diversity and inclusion, pay and opportunity equity, social initiatives and
results, talent attraction training, development and retention programs.
Additional Human Capital Management Information. Additional information regarding human capital management will
be included in our proxy statement filed in connection with our 2024 Annual General Meeting and our upcoming sustainability
report. The information in the sustainability report is not a part of this Annual Report on Form 10-K and is not incorporated by
reference.
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SUSTAINABILITY
At Flex, our sustainability journey began in 2002 with the creation of the Flex Foundation. For more than 20 years,
sustainability has been integrated into the fabric of our company, a key area of differentiation for Flex. In 2021, we refreshed
our sustainability strategy with a new framework and joined the Science Based Targets initiative, a global movement comprised
of leading companies working to reach the Paris Agreement’s goal of limiting global temperature rise to 1.5°C above
preindustrial levels. Our sustainability framework is centered on the world, our people and our approach to business practices.
Through our 2030 goals, we are committed to reducing our environmental impact, advancing a safe, inclusive and respectful
work environment for our employees, investing in our communities, partnering with our customers and suppliers to help
mitigate value chain emissions, and driving sustainability-focused practices with transparency. In 2022, we announced our
commitment to reach net zero greenhouse gas (GHG) emissions by 2040, strengthening our climate action efforts.
Our strategy and global efforts, through our sustainability programs and multi-year objectives, are aligned with the
principles set forth in the 2030 Sustainable Development Goals ("SDGs"). For the last four years, we were named an Advanced
member of the United Nations Global Compact ("UNGC"), the world's largest corporate sustainability initiative, showcasing
our commitment to integrate sustainability throughout our company and across our entire supply chain. Our 2030 sustainability
strategy includes our most ambitious goals to date and spans several environmental, social, and governance pillars. Several
goals of note include cutting operational emissions in half, collaborating with customers and suppliers to reduce value chain
emissions, increasing gender representation at the director-level and above, providing access to mental health and well-being
services to all employees, and maintaining top quartile performance for governance and transparency. The Flex Social and
Environmental framework is based upon the principles, policies and standards prescribed by the RBA, a worldwide association
of electronics companies committed to promoting an industry code of conduct to improve working and environmental, health
and safety conditions, as well as other relevant international standards (e.g., ISO 14001, United Nations Guiding Principles on
Business and Human Rights).
During calendar year 2023, we received several awards and accolades for our sustainability program and efforts from the
Manufacturing Leadership Council and from the Sustainability Environmental Achievement and Leadership (SEAL) Award in
the Sustainable Service category. In addition, Environment & Energy Leader Awards recognized the Flex Supplier Greenhouse
Gas Emissions Reduction Program as a Top Project of the Year.
Through the Flex Foundation, we work with nonprofits, community leaders and governments to promote inclusive and
sustainable economic growth, employment, and decent work for all. We help protect the environment, support resource
conservation and provide disaster relief. We accomplish this through grants, corporate and employee donations, and
volunteerism. In calendar year 2023, the Flex Foundation partnered with several organizations, including the American Red
Cross, Dress for Success, United Way of Chennai, WWF Romania, Silicon Valley Education Foundation, among others, and
provided more than $1.4 million in grant support to 57 local projects in 14 countries, 10 disaster relief projects to support well-
known organizations, including Give2Asia and Save the Children, and several NGOs that support minorities and the
environment, globally.
Flex is committed to transparency in sustainability reporting. Since 2013, the Company has adhered to the Global
Reporting Initiative framework and has published an annual sustainability report. In 2023, we maintained our AA rating from
Morgan Stanley Capital International ("MSCI"), and strong marks from CDP (formally known as Carbon Disclosure Project)
for supplier engagement, water security and climate change, receiving an A- in each category. The Company also aligned its
sustainability report to the Sustainability Accounting Standards Board framework. In addition, the Company produced its first
Task force on Climate-related Financial Disclosures (TCFD) report in 2022.
More detailed information can be found in the Flex annual sustainability report located at https //flex com/company/our-
sustainability. The information in the sustainability report and on our sustainability webpage is not a part of this Annual Report
on Form 10-K and is not incorporated by reference.
ENVIRONMENTAL RISKS AND CLIMATE CHANGE
Our operations, including past and present business operations as well as past and present ownership of real property, are
subject to extensive and changing federal, state, local and international environmental, health and safety laws and regulations,
concerning, among other things, the health and safety of our employees, the generation, use, storage, transportation, discharge
and disposal of certain materials (including chemicals and hazardous materials) used in or derived from our operations,
emissions or discharge of substances including pollutants into the air and water, and the investigation and remediation of
contaminated sites. We have implemented processes and procedures aimed to ensure that our operations comply with all
applicable environmental regulations.
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We also comply with an increasing number of regulations concerning product safety and stewardship, packaging and
labeling as well as product environmental compliance regulations focused on the restriction of certain hazardous substances,
including:
•
Restrictions on Hazardous Substances (“RoHS”) 2011/65/EU
•
Waste Electrical and Electronic Equipment (“WEEE”) 2012/19/EU directives
•
The regulation EC 1907/2006 EU Directive REACH (“Registration, Evaluation, Authorization, and Restriction of
Chemicals”)
•
China's RoHS entitled, Management Methods Caused by Controlling Pollution for Electronic Information Products
(“EIPs”)
Moreover, climate change and other sustainability-related laws, regulations, treaties, and similar initiatives and programs
are being adopted and implemented throughout the world, many of which we will be required to comply with. As described
above, we are committed to maintaining compliance with sustainability-related laws applicable to our operations, products, and
services.
We do not believe that costs of compliance with these environmental laws and regulations will have a material adverse
effect on our capital expenditures, operating results, or competitive position. In addition, we are responsible for cleanup of
contamination at some of our current and former manufacturing facilities and at some third-party sites. We engage
environmental consulting firms to assist us in the evaluation of environmental liabilities associated with our ongoing operations,
historical disposal activities, and closed sites in order to establish appropriate accruals in our financial statements. We determine
the amount of our accruals for environmental matters by analyzing and estimating the probability of occurrence and the
reasonable possibility of incurring costs in light of information currently available.
Compliance with environmental laws and regulations, including those concerning climate change and other sustainability-
related matters, requires continuing management efforts by the Company. The imposition of more stringent standards or
requirements under these laws or regulations, the results of future testing and analysis undertaken by us at our operating
facilities, or a determination that we are potentially responsible for the release of hazardous substances at other sites could result
in expenditures in excess of amounts currently estimated to be required for such matters. Additionally, we could be required to
alter our operations in order to comply with any new standards or requirements under environmental laws or regulations. There
can be no assurance that additional environmental matters will not arise in the future or that costs will not be incurred with
respect to sites as to which no issue is currently known.
Our business requires close collaboration with our customers and suppliers to mitigate risks of non-compliance with these
laws and regulations. We have developed rigorous compliance programs designed to meet the needs and specifications of our
customers as well as applicable regulations. These programs vary from collecting compliance or material data from our Flex
controlled or managed suppliers to full laboratory testing. We include compliance requirements in our standard supplier
contracts. Non-compliance could result in significant costs and/or penalties.
RoHS and other similar legislation ban or restrict the use of lead, mercury and certain other specified substances in
electronics products and WEEE requires European Union ("EU") importers and/or producers to assume responsibility for the
collection, recycling and management of waste electronic products and components. In the case of WEEE, although the
compliance responsibility rests primarily with the EU importers and/or producers rather than with electronic manufacturing
services ("EMS") companies, original equipment manufacturers ("OEM") may turn to EMS companies for assistance in
meeting their WEEE obligations. Flex continues to monitor developments related to product environmental compliance and is
working with our customers and other technical organizations to anticipate and minimize impacts to our operations.
Refer to the discussion in "Risk Factors" for further details of the legal and regulatory initiatives related to environmental
matters including climate change that could adversely affect our business, results of operations and financial condition.
INTELLECTUAL PROPERTY
We own or license various United States and foreign patents relating to a variety of technologies. For certain of our
proprietary processes, inventions, and works of authorship, we rely on trade secret or copyright protection. We also maintain
trademark rights (including registrations) for our corporate name and several other trademarks and service marks that we use in
our business in the United States and other countries throughout the world. We have implemented appropriate policies and
procedures (including both technological means and training programs for our employees) to identify and protect our
intellectual property, as well as that of our customers and suppliers. As of March 31, 2024, and 2023, the carrying value of our
intellectual property was not material.
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Although we believe that our intellectual property assets and licenses are sufficient for the operation of our business as we
currently conduct it, from time to time third parties assert patent infringement claims against us or our customers. In addition,
we provide design and engineering services to our customers and also design and make our own products. As a consequence of
these activities, our customers are sometimes requiring us to take responsibility for intellectual property to a greater extent than
in our manufacturing and assembly businesses. If and when third parties make assertions regarding the ownership or right to use
intellectual property, we could be required to either enter into licensing arrangements or to resolve the issue through litigation.
Such license rights might not be available to us on commercially acceptable terms, if at all, and any such litigation might not be
resolved in our favor. Additionally, litigation could be lengthy and costly and could materially harm our financial condition
regardless of the outcome. We also could be required to incur substantial costs to redesign a product or re-perform design and
engineering services. See "Risk Factors - The success of certain of our activities depends on our ability to protect our
intellectual property rights; claims of infringement or misuse of intellectual property and/or breach of license agreement
provisions against our customers or us could harm our business."
ADDITIONAL INFORMATION
Our Internet address is https://www.flex.com. We make available, free of charge, through our Internet website the
Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to
those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended, as soon as
reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission
(“SEC”). Information contained on or connected to our website is not incorporated by reference into, and does not form a part
of, this Annual Report on Form 10-K or any of our other filings with the SEC.
We were incorporated in the Republic of Singapore in May 1990. Our registered office is located at 2 Changi South Lane,
Singapore 486123. Our headquarters and principle executive offices are located at 12455 Research Boulevard, Austin, TX
78759.
ITEM 1A. RISK FACTORS
Our business, financial condition, results of operations and prospects are subject to various risks and uncertainties,
including those described below. You should carefully consider the following risks and all of the other information contained in
this report, including our consolidated financial statements and related notes, before investing in any of our securities. The
risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware
of, or that we currently believe are not material, may also become important factors that adversely affect our business. If any of
the following risks, or other risks and uncertainties that are not yet identified or that we currently think are immaterial, actually
occur, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that
event, the market price of our ordinary shares could decline. We may amend, supplement or add to the risk factors described
below from time to time in future reports filed with the SEC.
Summary of Risk Factors
The following is a summary of the principal risks and uncertainties that could materially adversely affect our business,
financial condition, results of operations and prospects. You should read this summary together with the more detailed
description of each risk factor contained below.
•
Global economic conditions, including inflationary pressures, currency volatility, slower growth or recession, higher
interest rates, geopolitical uncertainty (including arising from the ongoing conflict between Russia and Ukraine and the
Israel-Hamas war) and instability in financial markets may adversely affect our business, results of operations,
financial condition, and access to capital markets.
•
We depend on industries that continually produce technologically advanced products with short product lifecycles and
our business would be adversely affected if our customers' products are not successful or if our customers lose market
share.
•
Our customers have in the past and may in the future cancel their orders, change production quantities or locations, or
delay production, any of which could harm our business; the short-term nature of our customers’ commitments and
rapid changes in demand have in the past caused, and may in the future cause, supply chain and other issues which
could adversely affect our operating results.
•
A significant percentage of our sales comes from a small number of customers and a decline in sales to any of these
customers has in the past adversely affected, and may in the future adversely affect, our business.
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•
Supply chain disruptions, manufacturing interruptions or delays, or the failure to accurately forecast customer demand,
have in the past affected, and may in the future affect, our ability to meet customer demand, lead to higher costs, or
result in excess or obsolete inventory.
•
Our business has in the past been, and may in the future be, adversely affected by delays and increased costs resulting
from issues that our common carriers deal with in transporting our materials, our products, or both.
•
Our industry is extremely competitive; if we are not able to continue to provide competitive products and services, we
may lose business. In addition, our customers may decide to manufacture their products internally, which could harm
our business.
•
We conduct operations in a number of countries and are subject to the risks inherent in international operations.
•
Our components business is dependent on our ability to quickly launch world-class component products, and our
investment in the development of our component capabilities, together with start-up and integration costs, has in the
past adversely affected, and may in the future adversely affect, our margins and profitability.
•
Our exposure to financially troubled customers or suppliers has in the past adversely affected, and may in the future
adversely affect, our financial results.
•
Our margins and profitability have in the past been, and may in the future be, adversely affected due to substantial
investments, start-up and production ramp costs in our design and engineering services.
•
If we do not effectively manage changes in our operations, our business may be harmed; we have taken substantial
restructuring charges in the past and we may need to take material restructuring charges in the future.
•
A breach of our IT or physical security systems, or violation of data privacy laws, may cause us to incur significant
legal and financial exposure and adversely affect our operations.
•
We may not achieve some or all of the intended or anticipated benefits of the separation of Nextracker, which could
negatively impact our business, financial condition and results of operations.
•
If the Nextracker Spin-off fails to qualify for tax-free treatment, we, our subsidiaries and our former shareholders
could incur significant tax liabilities.
•
In connection with the separation of Nextracker, Nextracker has agreed to retain and indemnify us for certain
liabilities. However, there can be no assurance that the indemnity will be sufficient to insure us against the full amount
of such liabilities, or that Nextracker’s ability to satisfy its indemnification obligation will not be impaired in the
future. We or Nextracker may fail to perform under various transaction agreements that have been executed in
connection with or as part of the separation of Nextracker.
•
We are subject to risks relating to our dependence on our executive officers and skilled personnel.
•
We are subject to the risk of increased income taxes.
•
We are subject to risks relating to litigation and regulatory investigations and proceedings, which may have a material
adverse effect on our business.
•
Exports and imports of certain of our products are subject to various export control, sanctions, and import regulations
and may require authorization from regulatory agencies of the U.S. or other countries.
•
Catastrophic events could have a material adverse effect on our operations and financial results.
•
Union disputes or other labor disruptions could adversely affect our operations and financial results.
•
Our operating results may fluctuate significantly due to seasonal demand.
•
Our strategic relationships with major customers create risks.
•
We may encounter difficulties with acquisitions and divestitures, which could harm our business.
•
The success of certain of our activities depends on our ability to protect our intellectual property rights; claims of
infringement or misuse of intellectual property and/or breach of license agreement provisions against our customers or
us could harm our business.
•
If our compliance policies are breached, we may incur significant legal and financial exposure.
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•
If our products or components contain defects, demand for our services may decline, our reputation may be damaged,
and we may be exposed to product liability and product warranty liability.
•
We may not meet regulatory quality standards applicable to our manufacturing and quality processes for medical
devices, which could have an adverse effect on our business, financial condition or results of operations.
•
Changes in our credit rating may make it more expensive for us to raise additional capital or to borrow additional
funds. We are also exposed to interest rate fluctuations on our borrowings and investments.
•
Fluctuations in foreign currency exchange rates could increase our operating costs.
•
Failure to comply with domestic or international employment and related laws could result in the payment of
significant damages, which would reduce our net income.
•
Failure to meet sustainability, including environmental, social and governance (ESG) expectations or standards, or to
achieve our sustainability goals, may have an adverse impact on our business, impose additional costs on us, and
expose us to additional risks.
•
Climate change, and the legal and regulatory initiatives related to climate change, could adversely affect our business,
results of operations and financial condition.
•
Our failure to comply with environmental, health and safety, product stewardship and producer responsibility laws or
regulations could adversely affect our business.
Business and Operational Risks
Our customers have in the past and may in the future cancel their orders, change production quantities or locations, or
delay production, any of which could harm our business; the short-term nature of our customers’ commitments and rapid
changes in demand have in the past caused, and may in the future cause, supply chain and other issues which could
adversely affect our operating results.
Cancellations, reductions, or delays by a significant customer or by a group of customers have harmed, and may in the
future harm, our results of operations by reducing the volumes of products we manufacture and deliver for those customers, by
causing a delay in the repayment of our expenditures for inventory in preparation for customer orders and/or our possession of
excess or obsolete inventory that we may not be able to sell to customers or third parties which may result in an impairment loss
for inventory, and by lowering our asset utilization and overhead absorption resulting in lower gross margins and earnings.
As a provider of design and manufacturing services and components for electronics, we must provide increasingly rapid
product turnaround times for our customers. We generally do not obtain firm, long-term purchase commitments from our
customers, and we often experience reduced lead times in customer orders which may be less than the lead time we require to
procure necessary components and materials.
Many factors outside of our control impact our customers and their ordering behavior, including recession in end markets,
changing technology and industry standards, commercial acceptance for products, product obsolescence, and loss of business.
The short-term nature of our customers' commitments and the rapid changes in demand for their products reduces our ability to
accurately estimate the future requirements of our customers. This makes it difficult to schedule production and maximize
utilization of our manufacturing capacity. In that regard, we must make significant decisions, including determining the levels
of business that we will seek and accept, setting production schedules and locations, making component procurement
commitments, and allocating personnel and other resources based on our estimates of our customers' requirements. We cannot
assure you that present or future customers will not significantly change, reduce, cancel or delay their orders.
On occasion, customers require rapid increases in production or require that manufacturing of their products be
transitioned from one facility to another to reduce costs or achieve other objectives. These demands may stress our resources,
cause supply chain management issues, and reduce our margins. We may not have sufficient capacity at any given time to meet
our customers' demands, and transfers from one facility to another can result in inefficiencies and costs due to excess capacity
in one facility and corresponding capacity constraints at another. Many of our costs and operating expenses are relatively fixed,
and thus customer order fluctuations, deferrals, and transfers of demand from one facility to another, as described above, have
had a material adverse effect on our operating results in the past and we may experience such effects in the future.
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A significant percentage of our sales come from a small number of customers and a decline in sales to any of these
customers has in the past adversely affected, and may in the future adversely affect, our business.
Sales to our ten largest customers represent a significant percentage of our net sales. Our ten largest customers accounted
for approximately 37%, 37% and 36% of net sales in fiscal years 2024, 2023 and 2022, respectively. No customer accounted for
more than 10% of net sales in fiscal year 2024, 2023 or 2022. Our principal customers have varied from year to year. These
customers have in the past experienced, and may in the future experience, dramatic declines in their market shares or
competitive position, due to economic or other forces, that may cause them to reduce their purchases from us or, in some cases,
result in the termination of their relationship with us. Significant reductions in sales to any of our largest customers, or the loss
of major customers, have in the past harmed, and could in the future materially harm, our business. If we are not able to replace
expired, canceled or reduced contracts with new business in a timely manner, our revenues and profitability could be harmed.
Additionally, mergers, acquisitions, consolidations or other significant transactions involving our key customers generally entail
risks to our business. If a significant transaction involving any of our key customers results in the loss of or reduction in
purchases by any of our largest customers, it could have a material adverse effect on our business, results of operations,
financial condition and prospects.
Supply chain disruptions, manufacturing interruptions or delays, or the failure to accurately forecast customer demand,
have in the past affected, and may in the future affect, our ability to meet customer demand, lead to higher costs, or result in
excess or obsolete inventory.
From time to time, we have experienced shortages of some of the components, including electronic components, that we
use. These shortages can result from strong demand for those components or from problems experienced by suppliers, such as
shortages of raw materials. In the past there have been industry wide conditions, pandemics, natural disasters and global events
that have caused material and component shortages. Most recently, we have experienced shortages of semiconductor
components which have impacted our business, including curtailed production or delays in production, and delays in making
scheduled shipments to customers. Inflationary pressures have increased and may continue to increase pricing of components.
Our failure or inability to accurately forecast demand and volatility in the availability of materials, equipment, components, and
services, including rising prices due to inflation or scarcity of availability, have in the past adversely impacted, and may in the
future, adversely impact our business and results of operations.
Our inability to make scheduled shipments has in the past caused, and may in the future cause us to experience a reduction
in sales, increase in inventory levels and costs, and could adversely affect relationships with existing and prospective customers.
Component shortages have in the past and may in the future also increase our cost of goods sold because we may be required to
pay higher prices for components in short supply and redesign or reconfigure products to accommodate substitute components.
As a result, component shortages have in the past affected, and may in the future adversely affect, our operating results. Our
customers also may experience component shortages which may adversely affect customer demand for our products and
services. Our end markets have in the past been, and may in the future be, impacted by logistical constraints and increased
freight and logistics costs around the world.
In addition, if a component shortage is threatened or anticipated, we may purchase such components early to avoid a delay
or interruption in our operations. Purchasing components early has in the past caused, and may in the future, cause us to incur
additional inventory carrying costs and cause us to experience inventory obsolescence, both of which may not be recoverable
from our customers and adversely affect our gross profit margins and results of operations.
Our supply chain has in the past been, and may in the future be, impacted by other events outside our control, including
macro-economic events, trade restrictions, political crises, social unrest, terrorism, and conflicts (including the Russian invasion
of Ukraine, the Israel-Hamas war, the attacks on shipping vessels in the Red Sea and other geopolitical conflicts), public health
emergencies, or natural or environmental occurrences in locations where we or our customers and suppliers have
manufacturing, research, engineering and other operations.
Our business has in the past been, and may in the future be, adversely affected by delays and increased costs resulting from
issues that our common carriers deal with in transporting our materials, our products, or both.
Given the complexity of our supply chain and our geographically dispersed operations, we depend on a variety of
common carriers to transport our materials from our suppliers to us, and to transport our products from us to our customers.
Problems suffered by any of these common carriers, whether due to geopolitical issues due to the Russian invasion of Ukraine
and the Israel-Hamas war, disruptions as a result of attacks on shipping vessels in the Red Sea, a natural disaster, labor
problems, increased energy prices, criminal activity or some other issue, have in the past resulted, and may in the future result
in shipping delays, increased costs, or other supply chain disruptions, and therefore have in the past had, and may in the future
have, a material adverse effect on our operations. The effects of climate change, including extreme weather events, long-term
changes in temperature levels and water availability may exacerbate these risks.
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Our components business is dependent on our ability to quickly launch world-class component products, and our investment
in the development of our component capabilities, together with start-up and integration costs, has in the past adversely
affected, and may in the future adversely affect, our margins and profitability.
Our components business, which includes power supply manufacturing, is part of our strategy to improve our competitive
position and to grow our future margins, profitability and shareholder returns by expanding our capabilities. The success of our
components business is dependent on our ability to design and introduce world-class components that have performance
characteristics which are suitable for a broad market and that offer significant price and/or performance advantages over
competitive products.
To create these world class components offerings, we must continue to make substantial investments in the development
of our components capabilities, in resources such as research and development, technology licensing, test and tooling
equipment, facility expansions, and personnel requirements. We may not be able to achieve or maintain market acceptance for
any of our components offerings in any of our current or target markets. The success of our components business will also
depend upon the level of market acceptance of our customers' end products, which incorporate our components, and over which
we have no control.
Our margins and profitability have in the past been, and may in the future be, adversely affected due to substantial
investments, start-up and production ramp costs in our design and engineering services.
As part of our strategy to enhance our end-to-end service offerings, we continue to expand our design and engineering
capabilities. Providing these services can expose us to different or greater potential risks than those we face when providing our
manufacturing services.
Although we enter into contracts with our design and engineering services customers, we often design and develop
products for these customers prior to receiving a purchase order or other firm commitment from them. We are required to make
substantial investments in the resources necessary to design and develop these products, and no revenue may be generated from
these efforts if our customers do not approve the designs in a timely manner or at all. In addition, we may make investments in
designing products and not be able to design viable manufacturable products, in which cases we may not be able to recover our
investments. Even if we are successful in designing manufacturable products and our customers accept our designs, if our
customers do not then purchase anticipated levels of products, we may not realize any profits. Our design and engineering
activities often require that we purchase inventory for initial production runs before we have a purchase commitment from a
customer. Even after we have a contract with a customer with respect to a product, these contracts sometimes allow the
customer to delay or cancel deliveries and may not obligate the customer to any particular volume of purchases. These contracts
can generally be terminated on short notice. In addition, some of the products we design and develop, including in the
automotive and health solutions industries, must satisfy safety and regulatory standards and some must receive government
certifications. If we fail to obtain these approvals or certifications on a timely basis, we would be unable to sell these products,
which would harm our sales, profitability and reputation.
Our design and engineering services offerings require significant investments in research and development, technology
licensing, test and tooling equipment, patent applications, facility building and expansion, and recruitment. We may not be able
to achieve a high enough level of sales for this business to be profitable. The costs of investing in the resources necessary to
expand our design and engineering capabilities, and in particular to support our design and engineering services offerings, have
historically adversely affected our profitability, and may continue to do so as we continue to make investments to grow these
capabilities.
In addition, we often agree to certain product price limitations and cost reduction targets in connection with these services.
Inflationary and other increases in the costs of the raw materials and labor required to produce the products have occurred and
may recur from time to time. Also, the production ramps for these programs are typically significant and negatively impact our
margin in early stages as the manufacturing volumes are lower and result in inefficiencies and unabsorbed manufacturing
overhead costs. We may not be able to reduce costs, incorporate changes in costs into the selling prices of our products, or
increase operating efficiencies as we ramp production of our products, which would adversely affect our margins and our
results of operations.
If we do not effectively manage changes in our operations, our business may be harmed; we have taken substantial
restructuring charges in the past and we may need to take material restructuring charges in the future.
The expansion of our business, as well as business contractions and other changes in our customers' requirements, have in
the past, and may in the future, require that we adjust our business and cost structures by incurring restructuring charges.
Restructuring activities involve reductions in our workforce at some locations and closure of certain facilities. All of these
changes have in the past placed, and may in the future place, considerable strain on our financial and management control
systems and resources, including decision support, accounting management, information systems and facilities. If we do not
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properly manage or maintain adequate financial and management controls, including internal controls over financial reporting,
reporting systems and procedures to manage our employees, our business could be harmed.
In recent years, including fiscal years 2024, 2023, and 2022, we initiated targeted restructuring activities focused on
improving operational efficiencies by reducing excess workforce capacity, optimizing our portfolio (in particular, customers
and products in our consumer devices business), and optimizing our cost structure in lower growth areas. Restructuring charges
are recorded based upon employee termination dates, site closure and consolidation plans generally in conjunction with an
overall corporate initiative to drive cost reduction and realign the Company's global footprint.
We may be required to take additional charges in the future to align our operations and cost structures with global
economic conditions, market demands, cost competitiveness, and our geographic footprint as it relates to our customers'
production requirements. We may consolidate or divest certain manufacturing facilities or transfer certain of our operations to
other geographies. If we are required to take additional restructuring charges in the future, our operating results, financial
condition, and cash flows could be adversely impacted. Additionally, there are other potential risks associated with our
restructurings that could adversely affect us, such as delays encountered with the finalization and implementation of the
restructuring activities, work stoppages, and the failure to achieve targeted cost savings.
A breach of our IT or physical security systems, or violation of data privacy laws, may cause us to incur significant legal and
financial exposure and adversely affect our operations.
We rely on our information systems, some of which are managed by third parties, to process, transmit and store electronic
information (including sensitive data such as confidential business information and personally identifiable information in each
case relating to employees, customers, vendors, consumers, and other business partners), and to manage or support a variety of
critical business processes and activities including manufacturing, design and engineering services, financial reporting,
recordkeeping, compliance and internal controls, human and capital asset and inventory management, procurement, invoicing,
treasury activities, and electronic communications. With increased work-from-home arrangements, we are increasingly
dependent upon our information systems to operate our business and our ability to effectively manage our business depends on
the security, reliability and adequacy of our information systems. We may be adversely affected if our information systems
break down, fail, or are no longer supported. In addition, we continue to invest in and implement modifications and upgrades to
our information systems, which may be complex and require significant management oversight, and subject us to inherent costs
and associated risks including disruption of operations and loss of information.
We regularly face attempts by sophisticated and malicious actors to gain unauthorized access to our information systems,
including those using techniques that change frequently or may be disguised or difficult to detect and remain dormant until a
triggering event or that may continue undetected for an extended period of time. They may attempt to gain access to our
networks, data centers or cloud resources - including those managed by third parties - or those of our customers, vendors or end
users; steal proprietary information related to our business, products, employees, and customers; or interrupt our systems,
operations or services or those of our customers, vendors or others. We believe such attempts are increasing in number and in
technical sophistication, including through the use of adversarial artificial intelligence techniques, which, if we are subject to,
could have material adverse effects. Due to increasing global tensions and conflicts, including involving China, the ongoing
Russia/Ukraine conflict, and the conflict in the Middle East, we and the third parties upon which we rely may be vulnerable to a
currently heightened risk of information technology breaches, computer malware, ransomware or other cyber attacks, including
attacks that could materially disrupt our systems and operations, supply chain and ability to produce, sell and distribute our
products.
In some instances, we, our customers, vendors, or the users of our products and services might be unaware of an incident
or its magnitude and effects. We have implemented and maintain security systems with the intent of protecting the physical
security of our facilities and inventory and protecting our information systems including our customers’ and vendors’
information. We seek to prevent, detect, investigate, contain and mitigate security-related threats and unauthorized attempts and
attacks against our information systems, networks, products, and services, and to prevent their recurrence where practicable
through changes to our internal processes and tools. There can be no assurance, however, that our security measures will be
sufficient to prevent a material breach or compromise in the future.
We are subject to, and at times have suffered from, breach or attempted breach of our security systems which have in the
past and may in the future result in unauthorized access to our facilities and/or unauthorized acquisition, use or theft of the
assets, inventory or information we are trying to protect. If unauthorized parties gain physical access to our facilities,
operations, assets, inventory, or information or if they gain electronic access to our information systems or if such facilities,
operations, assets, inventory or information are used in an unauthorized manner, misdirected, or lost or stolen during
transmission or transport, any theft or misuse of such operations, assets, inventory or information could result in, among other
things, unfavorable publicity, loss of competitive advantage, governmental inquiry and oversight, difficulty in marketing and
selling our services, increased security and compliance costs, significant costs related to rebuilding internal systems, higher
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insurance premiums, allegations by our customers that we have not performed our contractual obligations, litigation by affected
parties including our customers and possible financial penalties, fines or obligations for damages related to the theft or misuse
of such assets, inventory or information, any of which could have a material adverse effect on our profitability and cash flows.
Further, third parties, such as cloud or hosted solution providers, could be a source of risk in the event of a failure of their own
systems and infrastructure or could experience their own privacy or security event which could create risks similar to those
described above. These risks are likely to be elevated in times of geopolitical instability and escalated tensions between
countries. Moreover, we may be required to invest significant additional resources to comply with evolving cybersecurity
regulations and to modify and enhance our information systems, information security and controls, and to investigate and
remediate any security vulnerabilities.
We are subject to laws and regulations in the U.S. and in other countries relating to privacy and the collection, use,
transfer, storage and security of personal data, including the European Union General Data Protection Regulation (“GDPR”),
the UK GDPR, the EU ePrivacy Directive, Singapore’s Personal Data Protection Act, China’s Personal Information Protection
Law (“PIPL”), and other privacy and data security laws throughout the Asia Pacific region and across the globe. In the U.S.,
many states including California, Colorado, Connecticut, Utah and Virginia have enacted data privacy laws. The California
Consumer Privacy Act (“CCPA”) became effective January 1, 2020 and was further amended by the California Privacy Rights
Act (“CPRA”), which became effective on January 1, 2023. The CCPA and CPRA, among other requirements, require covered
companies to provide new rights and disclosures to California consumers, and allow such consumers abilities to opt-out of
certain sales of personal information and other activities, and creates a new regulatory enforcement body. These recent and
potential additional regulations and avenues for enforcement could result in, among other things, government inquiries, which
could result in significant penalties. Additionally, new privacy and data protection laws and regulations are being considered,
under development or are pending at the U.S. Federal and state level and many international jurisdictions.
These laws continue to develop and may have conflicting requirements or be inconsistent from jurisdiction to jurisdiction.
This poses increasingly complex compliance challenges, which have resulted, and will continue to result in, increased
compliance costs, and have required, and may in the future require, us to modify our data processing practices and policies and
to incur substantial costs and expenses in an effort to comply. Any actual or perceived failures to comply with these laws or
regulations, or related contractual or other obligations, or any perceived privacy rights violation, whether by us, one of our
third-party service providers or vendors or another third party, could lead to investigations, claims, and proceedings by
governmental entities and private parties, damages for contract breach, and other significant costs, penalties, and other
liabilities, as well as harm to our reputation and market position. The GDPR, the PIPL, U.S. state laws and other laws and self-
regulatory codes may affect our ability to reach current and prospective customers, to understand how our solutions and
services are being used, to respond to customer requests allowed under the laws, to transfer information among the Company
and its international subsidiaries, and to implement our business strategy effectively. These laws and regulations could similarly
affect our customers.
We may not achieve some or all of the intended or anticipated benefits of the separation of Nextracker, which could
negatively impact our business, financial condition and results of operations.
On January 2, 2024, we completed the separation of Nextracker and, as a result, Flex no longer beneficially owns any of
the outstanding shares of Nextracker’s capital stock. The separation is expected to provide various benefits including, among
others, enabling our investors to evaluate the merits, performance and future prospects of each of Flex’s and Nextracker’s
respective businesses and to invest in each company separately based on their distinct characteristics, and allowing us to more
effectively pursue our distinct operating priorities and strategies, and enabling our management to focus more closely on the
development and growth of our remaining businesses and operating segments. We may not achieve these or some or all of the
other benefits expected to result from the separation of Nextracker, or such benefits may be delayed, for a variety of reasons,
including, among others, as a separate company, Flex may be more susceptible to market fluctuations and other adverse events
than if Nextracker was still fully integrated with Flex, as our businesses may be less diversified than when combined with
Nextracker; and the risk of claims, suits, or legal proceedings that may arise in connection with the separation and the
agreements that were entered into in connection with or as part of the separation. If we fail to achieve some or all of the benefits
expected to result from the separation of Nextracker, or if such benefits are delayed, our businesses, financial condition and
results of operations could be materially and adversely affected.
If the Nextracker Spin-off fails to qualify for tax-free treatment, we, our subsidiaries and our former shareholders could
incur significant tax liabilities.
Pursuant to that certain Merger Agreement by and among us, Nextracker, Yuma, Inc. (“Yuma”) and Yuma Acquisition
Corp. (“Merger Sub”) dated as of February 7, 2023 (the “Merger Agreement”), on January 2, 2024, we effectuated a
distribution of the remaining interests that we owned in Nextracker to all our shareholders through the following transactions
(together, the “Transactions”): (i) a court-approved capital reduction carried out pursuant to Section 78G of the Singapore
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Companies Act (the “Capital Reduction”), (ii) a distribution of all the shares of the common stock, par value $0.001, of Yuma
(the “Yuma Common Stock”) by way of a distribution in specie to our shareholders (the “Distribution” and, together with any
distribution in the series of internal distributions of the shares of Yuma Common Stock from Flextronics International USA,
Inc. (“FIUI”) to us through a chain of our wholly-owned subsidiaries, the “Distributions”), (iii) the merger of Yuma Merger Sub
with and into Yuma, with Yuma surviving the merger as a wholly-owned subsidiary of Nextracker (the “Merger”) and pursuant
to which each share of Yuma Common Stock outstanding immediately prior to the Merger was automatically converted into the
right to receive a number of shares of Class A common stock of Nextracker (the “Class A common stock”) based on the
Exchange Ratio (as defined in the Merger Agreement) (with cash payments to holders of shares of Yuma Common Stock in lieu
of any fractional shares of Class A common stock in accordance with the terms of the Merger Agreement), and (iv) the merger
of Yuma with and into a wholly-owned limited liability company subsidiary of Nextracker, with such limited liability company
surviving the merger as a wholly-owned subsidiary of Nextracker, which was undertaken on January 2, 2024 shortly following
the completion of the Merger (together with the Merger, the “Mergers”).
We have received a private letter ruling from the Internal Revenue Service (the “IRS”) regarding certain matters germane
to the Distributions qualifying as tax-free under Section 355 of the Internal Revenue Code of 1986, as amended (the “Code”). In
addition to the private letter ruling, we have received an opinion from Deloitte Tax LLP to the effect that the Distributions will
qualify as tax-free under Section 355 of the Code and the Mergers will qualify as a tax-free reorganization under Section 368(a)
of the Code. The private letter ruling and opinion are based on certain facts and assumptions, and certain representations and
undertakings, from us and Nextracker establishing that certain conditions that are necessary to obtain tax-free treatment under
the Code have been satisfied. If any of the facts, representations, assumptions or undertakings with respect to the private letter
ruling or the opinion is not correct or has been violated, we may not be able to rely on the private letter ruling or opinion. The
opinion represents Deloitte Tax LLP’s judgment and is not binding on the IRS or the courts, and the IRS or the courts may not
agree with the conclusions reached in the opinion, so there can be no certainty that the IRS will not challenge the conclusions
reflected in the opinion or that a court will not sustain such a challenge. In addition, the opinion was based on then-current law,
and cannot be relied on if such law changes with retroactive effect. If, notwithstanding the conclusions expressed in the private
letter ruling and the opinion, the Distributions or the Mergers were determined to be taxable, we, our subsidiaries and our
former shareholders could incur significant tax liabilities. For example, if one or more of the Distributions were determined to
be taxable, we would generally recognize gain in an amount equal to the excess of the fair market value of the Yuma common
stock distributed at the time of the Distributions over the tax basis in the shares distributed.
In connection with the separation of Nextracker, Nextracker has agreed to retain and indemnify us for certain liabilities.
However, there can be no assurance that the indemnity will be sufficient to insure us against the full amount of such
liabilities, or that Nextracker’s ability to satisfy its indemnification obligation will not be impaired in the future.
Pursuant to the separation agreement, the tax matters agreement and certain other agreements with Nextracker, Nextracker
has agreed to retain and indemnify us for certain liabilities. However, third parties could also seek to hold us responsible for any
of the liabilities that Nextracker has agreed to retain, and there can be no assurance that the indemnity from Nextracker will be
sufficient to protect us against the full amount of such liabilities, or that Nextracker will be able to fully satisfy its
indemnification obligations. In addition, Flex’s and/or Nextracker’s insurance coverage may not be available or sufficient to
cover certain occurrences of indemnified liabilities, and in any event insurers may deny coverage for liabilities associated with
certain occurrences of indemnified liabilities. Moreover, even if we ultimately succeed in recovering from Nextracker or such
insurance providers any amounts for which we are held liable, we may be temporarily required to bear these losses. Each of
these risks could have a material adverse effect on our businesses, financial condition and results of operations.
We or Nextracker may fail to perform under various transaction agreements that have been executed in connection with or
as part of the separation of Nextracker.
The separation agreement, the tax matters agreement and other agreements that were entered into in connection with or as
part of the separation of Nextracker determine, among other matters, the allocation of assets and liabilities between the
companies following the separation for those respective areas and include related indemnifications related to liabilities and
obligations. Further, the Nextracker LLC operating agreement provides certain obligations of Nextracker and its affiliates with
respect to specified tax distributions and other matters. We have relied and will continue to rely on Nextracker to satisfy its
performance and payment obligations in good faith under these agreements. If Nextracker is unable or unwilling to satisfy its
obligations under these agreements, including its indemnification obligations, we could incur operational difficulties or losses.
In addition, from time to time, claims, suits, or legal proceedings may arise in connection with the separation of
Nextracker and the agreements that were entered into in connection with or as part of the separation. If we receive an adverse
judgment in any such matter, we could be required to pay damages or cease certain practices or activities. Regardless of the
merits of the claims, suits or other legal proceedings may be both time-consuming and disruptive to our business. The defense
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and ultimate outcome of any claims, suits or other legal proceedings could have a material adverse effect on our businesses,
financial condition and results of operations.
We may encounter difficulties with acquisitions and divestitures, which could harm our business.
We have completed numerous acquisitions of businesses, including the recent acquisition of Anord Mardix, and we may
acquire additional businesses in the future. Any future acquisitions may require additional equity financing, which could be
dilutive to our existing shareholders, or additional debt financing, which could increase our leverage and potentially affect our
credit ratings. Any downgrades in our credit ratings associated with an acquisition could adversely affect our ability to borrow
by resulting in more restrictive borrowing terms.
To integrate acquired businesses, we must implement our management information systems, operating systems and
internal controls, and assimilate and manage the personnel of the acquired operations. The difficulties of this integration may be
further complicated by geographic distances. The integration of acquired businesses may not be successful and could result in
disruption to other parts of our business. In addition, the integration of acquired businesses may require that we incur significant
restructuring charges.
In addition, acquisitions involve numerous risks and challenges, including:
•
diversion of management’s attention from the normal operation of our business;
•
potential loss of key employees and customers of the acquired companies;
•
difficulties managing and integrating operations in geographically dispersed locations;
•
the potential for deficiencies in internal controls at acquired companies;
•
increases in our expenses and working capital requirements, which reduce our return on invested capital;
•
lack of experience operating in the geographic market or industry sector of the acquired business;
•
cybersecurity and compliance related issues;
•
initial dependence on unfamiliar supply chain or relatively small supply chain partners; and
•
exposure to unanticipated liabilities of acquired companies.
In addition, divestitures involve significant risks, including without limitation, difficulty finding financially sufficient
buyers or selling on acceptable terms in a timely manner, and the agreed-upon terms could be renegotiated due to changes in
business or market conditions. Divestitures could adversely affect our profitability and, under certain circumstances, require us
to record impairment charges or a loss as a result of the transaction. In addition, completing divestitures requires expenses and
management attention and could leave us with certain continuing liabilities.
These and other factors have harmed, and in the future could harm, our ability to achieve anticipated levels of profitability
at acquired operations or realize other anticipated benefits of an acquisition or divestiture, and could adversely affect our
business and operating results.
Our operating results may fluctuate significantly due to seasonal demand.
Two of our significant end markets are the lifestyle market and the consumer devices market. These markets exhibit
particular strength generally in the two quarters leading up to the end of the calendar year in connection with the holiday
season. As a result, we have historically experienced stronger revenues in our second and third fiscal quarters as compared to
our other fiscal quarters. Economic or other factors leading to diminished orders in the end of the calendar year could harm our
business.
We depend on our executive officers and skilled personnel.
Our success depends to a large extent upon our ability to hire and retain a workforce with the skills necessary for our
business to develop and manufacture the products desired by our customers. We need highly skilled personnel in multiple areas
including, among others, engineering, manufacturing, information technology, cybersecurity, supply chain, business
development, and management including our executive officers and other key employees. Generally, our employees are not
bound by employment or non-competition agreements, and we cannot assure you that we will retain our executive officers and
other key employees. We could be seriously harmed by the loss of any of our executive officers or other key employees. Future
leadership transitions and management changes may cause uncertainty in, or a disruption to, our business, and may increase the
likelihood of senior management or other employee turnover. In addition, in connection with expanding our design and
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engineering services offerings, we must attract and retain experienced design engineers. Our failure to recruit and retain
experienced design engineers could limit the growth of our design and engineering services offerings, which could adversely
affect our business. There is substantial competition in our industry for skilled employees and we may incur higher labor,
recruiting and/or training costs in order to attract and retain employees with the requisite skills. We may not be successful in
hiring or retaining such employees which could adversely impact our business and results of operations. Additionally, hiring,
training and retaining skilled employees may be adversely impacted by global economic uncertainty and changes to office
environments and workforce trends. From time to time, we face challenges that may impact employee retention, such as
workforce reductions and facility consolidations and closures, and some of our most experienced employees are retirement-
eligible which may adversely impact retention. To the extent that we lose experienced personnel through retirement or
otherwise, it is critical for us to develop other employees, hire new qualified employees and successfully manage the transfer of
critical knowledge.
There also is the risk that we will be unable to achieve our diversity, equity and inclusion objectives and goals or meet the
related expectations of our shareholders and other stakeholders. Our ability to successfully identify, hire, and promote
employees, and meet our objectives and goals, may also be impacted by legal and judicial developments outside of our control
and may necessitate changes to employment practices. For example, some advocacy groups and state attorneys general have
asserted that the U.S. Supreme Court’s decision striking down race-based affirmative action in higher education in June 2023
should be analogized to private employment matters and private contract matters, and scrutiny of certain corporate diversity,
equity and inclusion practices since this decision have been increasing.
Union disputes or other labor disruptions could adversely affect our operations and financial results.
Certain of our employees are represented by labor unions or works councils. There has been a general increase in workers
exercising their right to form or join a union globally. The unionization of significant employee populations could result in
increased labor costs or other terms that are less favorable to us, and increased risk of strikes and work stoppages. We may also
be subject to general country strikes or work stoppages unrelated to our business. A work stoppage or other limitations on
production at our facilities, or strikes or work stoppages experienced by our customers or suppliers, could have an adverse
effect on our business, results of operations and financial condition.
Catastrophic events could have a material adverse effect on our operations and financial results.
Our operations or systems could be disrupted by natural disasters, terrorist activity, public health issues, cybersecurity
incidents, interruptions of service from utilities, political crises and conflicts (including the Russian invasion of Ukraine, the
Israel-Hamas war, and other geopolitical conflicts), interruptions of service from transportation or telecommunications
providers, or other catastrophic events. Climate change may exacerbate the frequency and intensity of natural disasters and
adverse weather conditions. Such events could make it difficult or impossible to manufacture or deliver products to our
customers, receive production materials from our suppliers, or perform critical functions, which could adversely affect our
revenue and require significant recovery time and expenditures to resume operations. While we maintain business recovery
plans that are intended to allow us to recover from natural disasters or other events that can be disruptive to our business, some
of our systems are not fully redundant and we cannot be sure that our plans will fully protect us from all such disruptions.
We maintain a program of insurance coverage for a variety of property, casualty, and other risks. We place our insurance
coverage with multiple carriers in numerous jurisdictions. However, one or more of our insurance providers may be unable or
unwilling to pay a claim. The types and amounts of insurance we obtain vary depending on availability, cost, and decisions with
respect to risk retention. The policies have deductibles and exclusions that result in us retaining a level of self-insurance. Losses
not covered by insurance may be large, which could harm our results of operations and financial condition.
Industry Risks
We depend on industries that continually produce technologically advanced products with short product lifecycles and our
business would be adversely affected if our customers' products are not successful or if our customers lose market share.
We derive our revenue from customers in a number of end markets and factors affecting any of these industries in general
or our customers in particular, could adversely impact us. These factors include:
•
rapid changes in technology, including as a result of artificial intelligence, evolving industry standards, and
requirements for continuous improvement in products and services that result in short product lifecycles;
•
demand for our customers' products may be seasonal;
•
our customers may fail to successfully market their products, and our customers' products may fail to gain widespread
commercial acceptance;
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•
our customers' products may have supply chain issues; and
•
our customers may experience dramatic market share shifts in demand which may cause them to lose market share or
exit businesses.
Our industry is extremely competitive; if we are not able to continue to provide competitive services, we may lose business. In
addition, our customers may decide to manufacture their products internally, which could harm our business.
We compete with a number of different companies, depending on the type of service we provide or the location of our
operations. For example, we compete with major global EMS providers, other smaller EMS companies that have a regional or
product-specific focus and Original Design Manufacturers ("ODMs") with respect to some of the services that we provide. We
also compete with our current and prospective customers, who evaluate our capabilities in light of their own capabilities and
cost structures. In the past, some of our customers moved a portion of their manufacturing from us in order to more fully utilize
their excess internal manufacturing capacity. Any of these developments could cause a decline in our sales, loss of market
acceptance of our products or services, decreases of our profits or loss of our market share. Our industry is extremely
competitive, many of our competitors have achieved substantial market share, and some may have lower cost structures or
greater design, manufacturing, financial or other resources than we do. We face particular competition from Asian-based
competitors, including Taiwanese ODM suppliers who compete in a variety of our end markets and have a substantial share of
global information technology hardware production. If we are unable to provide comparable manufacturing services and
improved products at lower cost than the other companies in our market, our net sales could decline.
Our strategic relationships with major customers create risks.
In the past, we have completed numerous strategic transactions with customers. Under these arrangements, we generally
acquire inventory, equipment and other assets from the customers, and lease or acquire their manufacturing facilities, while
simultaneously entering into multi-year manufacturing and supply agreements for the production of their products. We may
pursue these customer divestiture transactions in the future. These arrangements entered into with divesting customers typically
involve many risks, including the following:
•
we may need to pay a purchase price to the divesting customers that exceeds the value we ultimately may realize from
the future business of the customer;
•
the integration of the acquired assets and facilities into our business may be time-consuming and costly, including the
incurrence of restructuring charges;
•
we, rather than the divesting customer, bear the risk of excess capacity at the facility;
•
we may not achieve anticipated cost reductions and efficiencies at the facility;
•
we may be unable to meet the expectations of the customer as to volume, product quality, timeliness and cost
reductions;
•
our supply agreements with the customers generally do not require any minimum volumes of purchase by the
customers, and the actual volume of purchases may be less than anticipated; and
•
if demand for the customers’ products declines, the customer may reduce its volume of purchases, and we may not be
able to sufficiently reduce the expenses of operating the facility or use the facility to provide services to other
customers.
As a result of these and other risks, we have been, and in the future may be, unable to achieve anticipated levels of
profitability under these arrangements. In addition, these strategic arrangements have not, and in the future may not, result in
any material revenues or contribute positively to our earnings per share.
Financial Risks
Our exposure to financially troubled customers or suppliers has in the past adversely affected, and may in the future
adversely affect, our financial results.
We provide manufacturing services to companies and industries that have in the past, and may in the future, experience
financial difficulty. When our customers experience financial difficulty, we have difficulty recovering amounts owed to us by
these customers, or demand for our products from these customers sometimes declines. Additionally, if our suppliers
experience financial difficulty, we could have difficulty sourcing supplies necessary to fulfill production requirements and meet
scheduled shipments. When one or more of our customers becomes insolvent or otherwise is unable to pay for the services
provided by us on a timely basis, or at all, our operating results and financial condition are adversely affected. Such adverse
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effects have in the past included and could in the future include one or more of the following: an increase in our provision for
doubtful accounts, a charge for inventory write-offs, a reduction in revenue, and an increase in our working capital
requirements due to higher inventory levels and increases in days our accounts receivables are outstanding.
We are subject to the risk of increased income taxes.
We are subject to taxes in numerous jurisdictions. Our future effective tax rates could be affected by changes in the mix of
earnings in countries with differing statutory rates and changes in tax laws or their interpretation including changes related to
tax holidays or tax incentives. The international tax environment continues to change as a result of both coordinated efforts by
governments and unilateral measures designed by individual countries, both intended to tackle concerns over perceived
international tax avoidance techniques, which could ultimately have an adverse effect on the taxation of international
businesses. In the U.S., various proposals to raise corporate income taxes are under active consideration. On August 16, 2022,
the U.S. government enacted the Inflation Reduction Act of 2022 (the “IRA”), which includes a new corporate minimum tax, a
stock repurchase excise tax, numerous green energy credits, and other tax provisions. Pending further guidance, it is possible
that the IRA could increase our future tax liability, which could in turn adversely impact our business and future profitability.
In addition, the Organization for Economic Co-operation and Development (“OECD”) has proposed certain international
tax reforms that would impose a global minimum tax rate of 15%, among other provisions, as part of its Base Erosion and Profit
Shifting Project. On December 14, 2022, the European Union (EU) approved a directive requiring member states to incorporate
the global minimum tax rules. Several other countries are also considering changes to their tax law to implement the OECD’s
minimum tax proposal. Certain countries, including certain EU member states, have enacted or are expected to enact legislation
incorporating the global minimum tax with effect as early as 2024 and further implementation of a global minimum tax is
expected by 2025. Important details of these minimum tax developments are still to be determined and, in some cases,
enactment and timing remain uncertain. While it is too early to assess the overall impact of these potential changes, as these and
other tax laws and related regulations are revised, enacted and implemented, they could increase tax complexity and
uncertainty, adversely impact our effective tax rate and may have a material impact on our results of operations, cash flows and
financial position. The foregoing and other changes to tax laws could have broader implications, including impacts to the
economy, currency markets, inflation or competitive dynamics, which are difficult to predict, and may positively or negatively
impact the Company.
Our taxes could also increase if certain tax holidays or incentives are not renewed upon expiration, or if tax rates
applicable to us in such jurisdictions are otherwise increased. Our continued ability to qualify for specific tax holiday
extensions will depend on, among other things, our anticipated investment and expansion in these countries and the manner in
which the local governments interpret the requirements for modifications, extensions or new incentives.
In addition, the Company and its subsidiaries are regularly subject to tax return audits and examinations by various taxing
jurisdictions around the world. For example, one of the Company’s Brazilian subsidiaries has received assessments for certain
sales and import taxes which the Company is opposing. In determining the adequacy of our provision for income taxes, we
regularly assess the likelihood of adverse outcomes resulting from tax examinations. While it is often difficult to predict the
final outcome or the timing of the resolution of a tax examination, we believe that our reserves for uncertain tax benefits reflect
the outcome of tax positions that are more likely than not to occur. However, we cannot assure you that the final determination
of any tax examinations will not be materially different than that which is reflected in our income tax provisions and accruals.
Should additional taxes be assessed as a result of a current or future examination, there could be a material adverse effect on our
tax provision, operating results, financial position and cash flows in the period or periods for which that determination is made.
Our debt level may create limitations.
As of March 31, 2024, our total debt was approximately $3.3 billion. This level of indebtedness could limit our flexibility
as a result of debt service requirements and restrictive covenants, and may limit our ability to access additional capital or
execute our business strategy.
The market price of our ordinary shares is volatile.
The stock market in recent years has experienced significant price and volume fluctuations that have affected the market
prices of companies, including technology companies. These fluctuations have often been unrelated to or disproportionately
impacted by the operating performance of these companies. The market for our ordinary shares has been and may in the future
be subject to similar volatility. Factors such as fluctuations in our operating results, announcements of technological
innovations or events affecting other companies in the electronics industry, currency fluctuations, general market fluctuations,
and macro-economic conditions may cause the market price of our ordinary shares to decline. Stock price fluctuations could
impact the value of our equity compensation, which could affect our ability to recruit and retain employees.
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Changes in our credit rating may make it more expensive for us to raise additional capital or to borrow additional funds. We
are also exposed to interest rate fluctuations on our borrowings and investments.
Our credit is rated by credit rating agencies. Our 4.750% Notes due 2025, our 3.750% Notes due 2026, our 6.000% Notes
due 2028, our 4.875% Notes due 2029 and our 4.875% Notes due 2030 are currently rated BBB- by Standard and Poor's
("S&P") which is considered to be “investment grade” by S&P, rated Baa3 by Moody’s which is considered to be “investment
grade” by Moody's, and rated BBB- by Fitch which is considered to be "investment grade" by Fitch. Any decline in our credit
rating may make it more expensive for us to raise additional capital in the future on terms that are acceptable to us, if at all,
negatively impact the price of our ordinary shares, increase our interest payments under some of our existing debt agreements,
and have other negative implications on our business, many of which are beyond our control. In addition, the interest rate
payable on some of our credit facilities is subject to adjustment from time to time if our credit ratings change. Thus, any
potential future negative change in our credit rating may increase the interest rate payable on these credit facilities.
In addition, we are exposed to interest rate risk under our variable rate, bilateral facilities, revolving credit facility and
term loans that we may enter into from time to time for indebtedness we have incurred or may incur under such facilities to the
extent they are used. The interest rates on our borrowings under our revolving credit facility may be based on either (i) the
Term Secured Overnight Financing Rate ("Term SOFR") or (ii) the base rate (the greatest of the agent's prime rate, the federal
funds rate plus 0.50%, and the Term SOFR plus 1.00%) plus an applicable margin, in each case depending on our credit rating,
and other borrowings also may be based on Term SOFR. Refer to the discussion in note 9 to the consolidated financial
statements, "Bank Borrowings and Long-Term Debt" for further details of our debt obligations. We are also exposed to interest
rate risk on our invested cash balances and our factoring activities.
We are subject to risks associated with investments.
We invest in private funds and companies for strategic reasons and may not realize a return on our investments. We make
investments in private funds and companies to further our strategic objectives, support key business initiatives, and develop
business relationships with related portfolio companies. Many of the instruments in which we invest are non-marketable at the
time of our initial investment. If any of the funds or companies in which we invest fail, we could lose all or part of our
investment. From time-to-time we have identified observable price changes, or impairments in investments, and we have
written down investments' fair values and recognized a loss.
Our goodwill and identifiable intangible assets could become impaired, which could reduce the value of our assets and
reduce our net income in the year in which the write-off occurs.
Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. We also ascribe
value to certain identifiable intangible assets, which consist primarily of customer relationships, developed technology and trade
names, among others, as a result of acquisitions. We have in the past incurred and may in the future incur impairment charges
on goodwill or identifiable intangible assets if we determine that the fair values of goodwill or identifiable intangible assets are
less than their current carrying values. We evaluate, on a regular basis, whether events or circumstances have occurred that
indicate all, or a portion, of the carrying amount of goodwill may no longer be recoverable, in which case an impairment charge
to earnings would become necessary. If the financial performance of our businesses were to decline significantly, we could
incur a material non-cash charge in our statement of operations for the impairment of goodwill and other intangible assets.
Refer to note 2 to the consolidated financial statements and "Critical Accounting Estimates" in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" for further discussion of the impairment testing of goodwill and
identifiable intangible assets.
A decline in general economic conditions or global equity valuations could impact the judgments and assumptions about
the fair value of our businesses and we could be required to record impairment charges on our goodwill or other identifiable
intangible assets in the future, which could impact our consolidated balance sheet, as well as our consolidated statement of
operations. If we are required to recognize an impairment charge in the future, the charge would not impact our consolidated
cash flows, liquidity, capital resources, and covenants under our existing credit facilities, asset securitization program, and other
outstanding borrowings.
Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity,
defaults, or non-performance by financial institutions, could adversely affect our business, financial condition or results of
operations.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial
institutions, transactional counterparties or other companies in the financial services industry or the financial services industry
generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future
lead to market-wide liquidity problems. For example, during 2023, Silicon Valley Bank, Signature Bank and First Republic
Bank; were closed and placed under the Federal Deposit Insurance Corporation receivership. Increasing concerns over bank
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failures and bailouts and their potential broader effects and potential systemic risk on the banking sector generally may
adversely affect our access to capital and our business and operations more generally. Although we assess our banking
relationships as we believe necessary or appropriate, our access to funding sources in amounts adequate to finance or capitalize
our current and projected future business operations could be significantly impaired by factors that affect us, the financial
institutions with which we have arrangements directly, or the financial services industry or economy in general.
Changes in financial accounting standards or policies have affected, and in the future may affect, our reported financial
condition or results of operations.
We prepare our financial statements in conformity with U.S. GAAP. These principles are subject to interpretation by the
Financial Accounting Standards Board ("FASB"), the American Institute of Certified Public Accountants ("AICPA"), the SEC
and various bodies formed to interpret and create accounting policies. Changes to accounting rules or challenges to our
interpretation or application of the rules by regulators may have a material adverse effect on our reported financial results or on
the way we conduct business. Refer to "Recently Adopted Accounting Pronouncements" within note 2 of Item 8, Financial
Statements and Supplementary Data.
International Risks
Global economic conditions, including inflationary pressures, currency volatility, slower growth or recession, higher interest
rates, geopolitical uncertainty (including arising from the ongoing conflict between Russia and Ukraine and the Israel-
Hamas war) and instability in financial markets may adversely affect our business, results of operations, financial
condition, and access to capital markets.
Our operations and the execution of our business plans and strategies are subject to the effects of global economic trends,
geopolitical risks and demand or supply shocks from events that could include political crises and conflict (including the
Russian invasion of Ukraine, the Israel-Hamas war, the attacks on shipping vessels in the Red Sea), war, a major terrorist
attack, natural disasters or actual or threatened public health emergencies (such as COVID-19). They are also affected by local
and regional economic environments, supply chain constraints and policies in the U.S. and other markets that we serve,
including interest rates, monetary policy, inflation, economic growth, recession, commodity prices, currency volatility, currency
controls or other limitations on the ability to expatriate cash, sovereign debt levels and actual or anticipated defaults on
sovereign debt. For example, the ongoing conflict between Russia and Ukraine and the related sanctions and other measures
imposed by the European Union, the U.S. and other countries and organizations in response have led, and may continue to lead,
to disruption and instability in global markets, supply chains and industries that could negatively impact our businesses,
financial condition and results of operations. Additionally, changes in local economic conditions or outlooks, such as lower
rates of investment or economic growth in China, Europe or other key markets, affect the demand for or profitability of our
products and services outside the U.S., and the impact on the Company could be significant given the extent of our activities
outside the United States. Political changes and trends such as populism, protectionism, economic nationalism and sentiment
toward multinational companies and resulting tariffs, export controls or other trade barriers, or changes to tax or other laws and
policies, have been and may continue to be disruptive and costly to our businesses, and these can interfere with our global
operating model, supply chain, production costs, customer relationships and competitive position. Further escalation of specific
trade tensions, including intensified decoupling between the U.S. and China, or in global trade conflict more broadly could be
harmful to global economic growth or to our business in or with China or other countries, and related decreases in confidence or
investment activity in the global markets would adversely affect our business performance. We also do business in many
emerging market jurisdictions where economic, political and legal risks are heightened. Further, an increase in inflation
pressures, such as what the market is currently experiencing, could affect our profitability and cash flows, due to higher wages,
higher operating costs, higher financing costs, and/or higher supplier prices. Inflation may also adversely affect foreign
exchange rates. We may be unable to pass along such higher costs to our customers. In addition, inflation may adversely affect
customers’ financing costs, cash flows, and profitability, which could adversely impact their operations and our ability to
collect receivables. Rising interest rates could have a dampening effect on overall economic activity and/or the financial
condition of our customers, either or both of which could negatively affect customer demand for our manufacturing services
and our customers’ ability to repay obligations to us.
These conditions may result in reduced consumer and business confidence and spending in many countries, a tightening in
the credit markets, a reduced level of liquidity in many financial markets, high volatility in credit, fixed income and equity
markets, currency exchange rate fluctuations, and global economic uncertainty. In addition, longer term disruptions in the
capital and credit markets could adversely affect our access to liquidity needed for our business. If financial institutions that
have extended credit commitments to us are adversely affected by the conditions of the U.S. and international capital markets,
they may become unable to fund borrowings under their credit commitments to us, which could have an adverse impact on our
financial condition and our ability to borrow additional funds, if needed, for working capital, capital expenditures, acquisitions,
research and development and other corporate purposes. These conditions could also adversely impact our customers and
suppliers, which in turn could adversely affect us.
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We have facilities across the globe including in Israel and Ukraine. If these facilities were to be damaged, destroyed or
otherwise unable to operate, whether due to war, acts of hostility, or terrorist acts, such an event could jeopardize our ability to
develop, manufacture and deliver certain products and adversely affect our operations and results of operations. Our operations
have been, and could continue to be, disrupted by the absence of employees called to active duty to perform military service.
The Russia-Ukraine conflict, the Israel-Hamas war, the attacks on shipping vessels in the Red Sea, and other hostilities or
armed conflicts, or the interruption or curtailment of trade or transport between the countries where our facilities are located and
their respective trading partners, could adversely affect our operations and results of operations.
We conduct operations in a number of countries and are subject to the risks inherent in international operations.
The geographic distances between the Americas, Asia and Europe create a number of logistical and communications
challenges for us. These challenges include managing operations across multiple time zones, directing the manufacture and
delivery of products across long distances, coordinating procurement of components and raw materials and their delivery to
multiple locations, and coordinating the activities and decisions of the core management team, which is based in a number of
different countries.
Facilities in several different locations may be involved at different stages of the production process of a single product,
leading to additional logistical difficulties.
Because our manufacturing operations are located in a number of countries throughout the Americas, Asia and Europe, we
are subject to risks of changes in economic, social and political conditions in those countries, including:
•
fluctuations in the value of local currencies;
•
labor unrest, including labor strikes, difficulties in staffing and geographic labor shortages;
•
longer payment cycles;
•
cultural differences;
•
increases in duties, tariffs, and taxation levied on our products including anti-dumping and countervailing duties;
•
trade restrictions including limitations on imports or exports of components or assembled products, unilaterally or
bilaterally;
•
trade sanctions and related regulatory enforcement actions and other proceedings;
•
potential trade wars;
•
increased scrutiny by the media and other third parties of labor practices within our industry (including but not limited
to forced labor and adverse working conditions) which may result in allegations of violations, more stringent and
burdensome labor laws and regulations and inconsistency in the enforcement and interpretation of such laws and
regulations, higher labor costs, and/or loss of revenues if our customers become dissatisfied with our labor practices
and diminish or terminate their relationship with us;
•
inflationary pressures, such as those the market is currently experiencing, which may increase costs for materials,
supplies, and services;
•
imposition of restrictions on currency conversion or the transfer of funds;
•
environmental protection laws and regulations, including those related to climate change;
•
expropriation of private enterprises;
•
ineffective legal protection of our intellectual property rights in certain countries;
•
natural disasters;
•
exposure to infectious disease, epidemics and pandemics on our business operations in geographic locations impacted
by the outbreak and on the business operations of our customers and suppliers;
•
inability of international customers and suppliers to obtain financing resulting from tightening of credit in international
financial markets;
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•
ongoing global supply chain disruptions, including disruptions in international commerce as a result of attacks on
shipping vessels in the Red Sea, which have slowed the ability of our facilities to import necessary materials and
export our products and adversely affected our business;
•
political unrest; and
•
a potential reversal of current favorable policies encouraging foreign investment or foreign trade by our host countries.
The attractiveness of our services to customers and our ability to conduct business with certain customers can be affected
by changes in U.S. and other countries' policies, including regarding trade. We have significant operations located in China,
which have been in the past, and could in the future be, adversely affected by evolving laws, regulations and policies, import
and export tariffs and restrictions, and information security and privacy, as well as changes in the political and geopolitical
environment involving China. U.S.-China bilateral trade relations remain uncertain. The U.S.’s various trade actions, including
imposing tariffs on certain goods imported from China or deemed to be of Chinese origin, as well as the potential for new
tariffs, trade embargoes or sanctions by the U.S., and countermeasures imposed by China in response, could, depending on their
duration and implementation as well as our ability to mitigate their impact, materially affect our business, including in the form
of increased cost of goods sold, decreased margins, increased pricing for customers, and reduced sales. Moreover, we could be
subject to reputational harm if any of our customers, former customers or vendors were subject to U.S. sanctions or if our
customers, former customers or vendors did business with sanctioned countries. Furthermore, geopolitical changes in China-
Taiwan relations could disrupt the operations of several companies in Taiwan that are critical to the global supply of
semiconductors and other electronic components on which many of our customers depend.
In addition, some countries in which we operate, such as Brazil, Hungary, India, Malaysia, Mexico and Poland, have
experienced periods of slow or negative growth, high inflation, significant currency devaluations or limited availability of
foreign exchange. Furthermore, in countries such as Brazil, China, India and Mexico, governmental authorities exercise
significant influence over many aspects of the economy, and their actions could have a significant effect on us.
We could be seriously harmed by inadequate infrastructure, including lack of adequate power and water supplies,
transportation, raw materials and parts in countries in which we operate. In addition, we may encounter labor disruptions,
including labor strikes or claims, and rising labor costs, including the introduction or expansion of certain social programs, in
particular within the lower-cost regions in which we operate due to, among other things, demographic changes and economic
development in those regions. Any increase in labor costs that we are unable to recover in our pricing to our customers could
adversely impact our operating results.
Operations in foreign countries also present risks associated with currency exchange and convertibility, inflation and
repatriation of earnings. Inflation may impact the Company’s profits and cash flows as well as adversely affect foreign
exchange rates. In some countries, economic and monetary conditions and other factors could affect our ability to convert our
cash distributions to U.S. dollars or other freely convertible currencies, or to move funds from our accounts in these countries.
Furthermore, the central bank of any of these countries may have the authority to suspend, restrict or otherwise impose
conditions on foreign exchange transactions or to approve distributions to foreign investors.
Fluctuations in foreign currency exchange rates could increase our operating costs.
We have manufacturing operations and industrial parks that are located in various part of the world, including Asia,
Eastern Europe, Mexico and Brazil. A portion of our purchases and our sale transactions are denominated in currencies other
than the United States dollar. As a result, we are exposed to fluctuations in these currencies impacting our fixed cost overhead
or our supply base relative to the currencies in which we conduct transactions.
Currency exchange rates fluctuate on a daily basis as a result of a number of factors, including changes in a country's
political and economic policies. The primary impact of currency exchange fluctuations is on the cash, receivables, payables and
expenses of our operating entities. As part of our currency hedging strategy, we use financial instruments such as forward
exchange, swap contracts, and options to hedge our foreign currency exposure in order to reduce the short-term impact of
foreign currency rate fluctuations on our operating results. If our hedging activities are not successful, if counterparties to these
hedging activities default on their obligations to us, or if we change or reduce these hedging activities in the future, we may
experience significant unexpected fluctuations in our operating results as a result of changes in exchange rates.
We are also exposed to risks related to the valuation of the Mexican and Chinese currencies relative to the U.S. dollar. The
Mexican currency is the peso ("MXN") and the Chinese currency is the renminbi ("RMB"). A significant increase in the value
of the MXN or RMB could adversely affect our financial results and cash flows by increasing both our manufacturing costs and
the costs of our local supply base. Volatility in the functional and non-functional currencies of our entities and the United States
dollar could seriously harm our business, operating results and financial condition.
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Legal and Regulatory Risks
We are subject to risks relating to litigation and regulatory investigations and proceedings, which may have a material
adverse effect on our business.
From time to time, we are involved in various claims, suits, investigations and legal proceedings. For example, on
February 14, 2019, we submitted an initial notification of voluntary disclosure to the U.S. Department of the Treasury, Office of
Foreign Assets Control (“OFAC”) regarding possible noncompliance with U.S. economic sanctions requirements among certain
non-U.S. Flex-affiliated operations, in response to which the Company received a No Action Letter dated February 22, 2024
from OFAC, stating that OFAC had closed its investigation without taking further action. Additional legal claims or regulatory
matters may arise in the future and could involve matters relating to commercial disputes, government regulatory and
compliance, intellectual property, antitrust, tax, employment or shareholder issues, product liability claims and other issues on a
global basis. If we receive an adverse judgment in any such matter, we could be required to pay substantial damages and cease
certain practices or activities. Regardless of the merits of the claims, litigation and other proceedings may be both time-
consuming and disruptive to our business. The defense and ultimate outcome of any lawsuits or other legal proceedings may
result in higher operating expenses and a decrease in operating margin, which could have a material adverse effect on our
business, financial condition, or results of operations.
Any existing or future lawsuits could be time-consuming, result in significant expense and divert the attention and
resources of our management and other key employees, as well as harm our reputation, business, financial condition or results
of operations.
Exports and imports of certain of our products are subject to various export control, sanctions, and import regulations and
may require authorization from regulatory agencies of the U.S. or other countries.
Due to the global nature of our business, we are subject to a complex system of import- and export-related laws and
regulations, including a range of regulations in the United States and other countries. Non-compliance with these laws and
regulations by us, our customers, or our suppliers can result in a wide range of penalties including the denial of export
privileges, fines, criminal penalties, and the seizure of inventories. Moreover, any changes in export control, sanctions, or
import regulations may further restrict the export or import of our products or services. Our ability to obtain required licenses
and authorizations on a timely basis, or at all, is subject to risks and uncertainties, including changing laws, regulations, or
foreign policies and geopolitical factors. If we are not successful in obtaining or maintaining the necessary licenses or
authorizations in a timely manner, our sales relating to those approvals may be prevented or delayed, and revenue and profit
previously recognized may be reversed. Any restrictions on the export or import of our products could have a material adverse
effect on our competitive position, results of operations, financial condition, or liquidity.
The success of certain of our activities depends on our ability to protect our intellectual property rights; claims of
infringement or misuse of intellectual property and/or breach of license agreement provisions against our customers or us
could harm our business.
We retain certain intellectual property rights to some of the technologies that we develop as part of our engineering,
design, and manufacturing services and components offerings. The measures we have taken to prevent unauthorized use of our
technology may not be successful. If we are unable to protect our intellectual property rights, this could reduce or eliminate the
competitive advantages of our proprietary technology, which would harm our business.
Our engineering, design and manufacturing services and component offerings involve the creation and use of intellectual
property rights, which subject us to the risk of claims of infringement or misuse of intellectual property from third parties and/
or breach of our agreements with third parties, as well as claims arising from the allocation of intellectual property risk among
us and our customers. From time to time, we enter into intellectual property licenses (e.g., patent licenses and software licenses)
with third parties which obligate us to report covered behavior to the licensor and pay license fees to the licensor for certain
activities or products, or that enable our use of third party technologies. We may also decline to enter into licenses for
intellectual property that we do not think is useful for or used in our operations, or for which our customers or suppliers have
licenses or have assumed responsibility.
Given the diverse and varied nature of our business and the location of our business around the world, certain activities we
perform, such as providing assembly services in China and India, may fall outside the scope of those licenses or may not be
subject to the applicable intellectual property rights. Our licensors may disagree and claim royalties are owed for such activities.
In addition, the basis (e.g., base price) for any royalty amounts owed are audited by licensors and may be challenged. Our
customers often require us to indemnify them against the risk of intellectual property-related claims and licensors are claiming
that activities we perform are covered by licenses to which we are a party.
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If any claims of infringement or misuse of intellectual property from third parties and/or breach of our agreements with
third parties, as well as claims arising from the allocation of intellectual property risk among us and our customers, are brought
against us or our customers, whether or not these have merit, we could be required to expend significant resources in defense of
such claims. In the event of such a claim, we may be required to spend a significant amount of money to develop alternatives or
obtain licenses or to resolve the issue through litigation. We may not be successful in developing such alternatives or obtaining
such licenses on reasonable terms or at all, and any such litigation might not be resolved in our favor, in which cases we may be
required to curtail certain of our services and offerings. Additionally, litigation could be lengthy and costly, and could
materially harm our financial condition regardless of outcome.
We also face certain heightened risks to our intellectual property rights due to our extensive operations in foreign
jurisdictions, including the risk of theft or misuse of our intellectual property rights in certain foreign jurisdictions. The laws of
certain countries in which we operate may not protect intellectual property rights to the same extent as the laws of the United
States, and the mechanisms to enforce intellectual property rights may be inadequate to protect our rights, which could harm
our business.
If our compliance policies are breached, we may incur significant legal and financial exposure.
We have implemented local and global compliance policies to ensure compliance with our legal obligations across our
operations. A significant legal risk resulting from our international operations is compliance with the U.S. Foreign Corrupt
Practices Act or similar local laws of the countries in which we do business, including the UK Anti-Bribery Act, which
prohibits covered companies from making payments to foreign government officials to assist in obtaining or retaining business.
Our Code of Business Conduct and Ethics prohibits corrupt payments on a global basis and precludes us from offering or giving
anything of value to a government official for the purpose of obtaining or retaining business, to win a business advantage or to
improperly influence a decision regarding Flex. Nevertheless, there can be no assurance that all of our employees and agents
will refrain from taking actions in violation of this and our related anti-corruption policies and procedures. Any such violation
could have a material adverse effect on our business.
If our products or components contain defects, demand for our services may decline, our reputation may be damaged, and
we may be exposed to product liability and product warranty liability.
Our customers’ products and the manufacturing processes and design and engineering services that we use to produce
them often are highly complex. Some of the products we design and manufacture, including in the automotive and health
solutions industries, must satisfy strict safety, quality and regulatory standards. Defects in the products we manufacture or
design, whether caused by a design, engineering, manufacturing or component failure or error, or deficiencies in our
manufacturing processes, have occurred from time to time and, have in the past resulted, and may in the future result in delayed
shipments to customers, reduced or canceled customer orders, or product or component failures. If these defects or deficiencies
are significant, our business reputation could be damaged.
The failure of the products that we manufacture or of our manufacturing processes or facilities may subject us to
regulatory enforcement, fines or penalties and, in some cases, require us to shut down, temporarily halt operations or incur
considerable expense to correct a manufacturing process or facility.
In addition, we may be exposed to product liability or product warranty claims, which may include liability for personal
injury or property damage. Product warranty claims may include liability to pay for the recall, repair or replacement of a
product or component. Although we generally allocate liability for these claims in our contracts with our customers,
increasingly we are unsuccessful in allocating such liability, and even where we have allocated liability to our customers, our
customers may not have the resources to satisfy claims for costs or liabilities arising from a defective product or component for
which they have assumed responsibility.
If we design, engineer or manufacture a product or component that is found to cause any personal injury or property
damage or is otherwise found to be defective, we could spend a significant amount of money to resolve the claim. In addition,
product liability and product recall insurance coverage are expensive and may not be available for some or all of our services
offerings on acceptable terms, in sufficient amounts, or at all. A successful product liability or product warranty claim in excess
of our insurance coverage or any material claim for which insurance coverage is denied, limited or is not available could have a
material adverse effect on our business, results of operations and financial condition.
We may not meet regulatory quality standards applicable to our manufacturing and quality processes for medical devices,
which could have an adverse effect on our business, financial condition or results of operations.
As a medical device manufacturer, we have additional compliance requirements. We are required to register with the U.S.
Food and Drug Administration ("FDA") and are subject to periodic inspection by the FDA for compliance with the FDA's
Quality System Regulation ("QSR") requirements, which require manufacturers of medical devices to adhere to certain
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regulations, including testing, quality control and documentation procedures. Compliance with applicable regulatory
requirements is subject to continual review and is rigorously monitored through periodic inspections and product field
monitoring by the FDA. If any FDA inspection reveals noncompliance with QSR or other FDA regulations, and the Company
does not address the observation adequately to the satisfaction of the FDA, the FDA may take action against us. FDA actions
may include issuing a letter of inspectional observations, issuing a warning letter, imposing fines, bringing an action against the
Company and its officers, requiring a recall of the products we manufactured for our customers, refusing requests for clearance
or approval of new products or withdrawal of clearance or approval previously granted, issuing an import detention on products
entering the U.S. from an offshore facility, or shutting down a manufacturing facility. If any of these actions were to occur, it
would harm our reputation and cause our business to suffer.
In the EU, we are required to maintain certain standardized certifications in order to sell our products and must undergo
periodic inspections to obtain and maintain these certifications. Continued noncompliance to the EU regulations could stop the
flow of products into the EU from us or from our customers. In China, the National Medical Products Administration controls
and regulates the manufacture and commerce of healthcare products. We must comply with the regulatory laws applicable to
medical device manufacturers, or our ability to manufacture products in China could be impacted. In Japan, the Pharmaceutical
Affairs Laws regulate the manufacture and commerce of healthcare products. These regulations also require that subcontractors
manufacturing products intended for sale in Japan register with authorities and submit to regulatory audits. Other countries
where we operate, including elsewhere in Asia and Latin America, have similar laws regarding the regulation of medical device
manufacturing. In the event of any noncompliance with these requirements, interruption of our operations and/or ability to sell
into these markets could occur, which in turn could cause our reputation and business to suffer.
Failure to comply with domestic or international employment and related laws could result in the payment of significant
damages, which would reduce our net income.
We are subject to a variety of domestic and foreign employment laws, including those related to safety, wages and
overtime, discrimination, whistle-blowing, classification of employees and independent contractors, and severance payments.
Enforcement activity relating to these laws, particularly outside of the United States, can increase as a result of increased media
attention due to violations by other companies, changes in law, and political and other factors. There can be no assurance that
we won’t be found to have violated such laws in the future, due to a more aggressive enforcement posture by governmental
authorities or for any other reason. Any such violations could lead to the assessment of fines against us by federal, state or
foreign regulatory authorities or damages payable to employees, which fines could be substantial and which would reduce our
net income.
Our business could be impacted as a result of actions by activist shareholders or others.
We may be subject, from time to time, to legal and business challenges in the operation of our company due to actions
instituted by activist shareholders or others. Responding to such actions could be costly and time-consuming, may not align
with our business strategies and could divert the attention of our Board of Directors and senior management from the pursuit of
our business strategies. Perceived uncertainties as to our future direction as a result of shareholder activism may lead to the
perception of a change in the direction of the business or other instability and may make it more difficult to attract and retain
qualified personnel and business partners and may affect our relationships with vendors, customers and other third parties.
Failure to meet sustainability, including environmental, social and governance (ESG) expectations or standards, or to
achieve our sustainability goals, may have an adverse impact on our business, impose additional costs on us, and expose us
to additional risks.
There remains increased focus from investors, customers, consumers, and other stakeholders, as well as by governmental
and non-governmental organizations, on sustainability practices and matters, including greenhouse gas (“GHG”) emissions and
climate-related risks, environmental stewardship, responsible sourcing, social responsibility, human capital management,
diversity, equity, and inclusion, workplace conduct, data privacy and cybersecurity and human rights, with some market
participants having evidenced opposition to certain companies’ consideration of such practices and matters. This increased
focus on sustainability is present in our industry. This attention has resulted in a variety of required and voluntary reporting
regimes that are not harmonized and continue to change. For example, on March 7, 2024, the SEC adopted rules that require
new climate-related disclosure in SEC filings, and California passed a series of climate disclosure bills in October 2023 which
may lead to other states proposing regulations that require additional climate-related disclosures. In addition, governments
around the world have enacted or are contemplating legislation and regulations that may impact how we conduct and/or report
on our business by requiring the disclosure and tracking of certain GHG emissions and other climate and biodiversity
information, and/or cyber security or human capital matters related to our business. A number of our customers have adopted,
or may adopt, procurement policies that include social and environmental responsibility provisions that their suppliers should
comply with, or they may seek to include such provisions in their procurement terms and conditions. Moreover, an increasing
number of investors have adopted, or may adopt, ESG policies with which they expect their portfolio companies to comply.
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We currently align our sustainability program with the standards set forth by various voluntary sustainability initiatives
and organizations, and we have joined the Science Based Targets Initiative and the U.N. Global Compact, voluntary initiatives
for businesses to develop, implement and disclose sustainability policies and practices. These sustainability practices, policies,
provisions and initiatives are subject to change, can be unpredictable, and may be difficult and expensive for us to comply with.
We have established sustainability programs and practices aligned with sound principles and have established and
publicly announced our strategy, certain goals, commitments, and targets, which we may refine in the future. These programs,
goals, commitments and targets reflect our current initiatives, plans and aspirations, and are not guarantees that we will be able
to achieve them. Evolving stakeholder expectations, and our ability to successfully execute these initiatives and accurately
report our progress and accomplish our goals present numerous operational, financial, legal, regulatory, reputational and other
risks and uncertainties, many of which are outside our control, and all of which could have a material adverse impact on our
business. Additionally, the implementation of and reporting on these initiatives impose additional costs on us and a diversion of
resources. If our sustainability initiatives fail to satisfy investors, current or potential customers, consumers and our other
stakeholders, our reputation, our ability to manufacture and sell products and services, our ability to attract or retain employees,
and our attractiveness as an investment, business partner or acquirer could be negatively impacted. Similarly, our failure or
perceived failure to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards within the
timelines we announce or otherwise as may be required, or at all, could also have similar negative impacts and expose us to
government enforcement actions and private litigation.
Climate change, and the legal and regulatory initiatives related to climate change, could adversely affect our business,
results of operations and financial condition.
There continues to be increasing concern that a gradual increase in global average temperatures due to increased
concentration of carbon dioxide and other GHGs in the atmosphere will cause significant changes in weather patterns around
the globe and an increase in the frequency and severity of natural disasters. Changes in weather patterns and an increased
frequency, intensity and duration of extreme weather conditions, such as hurricanes, earthquakes, wildfires, water or other
natural resource shortages, droughts, or flooding, could, among other things, pose physical risks to and impair our production
capabilities, disrupt the operations of our supply chain and infrastructure, and impact our customers and their demand for our
services. The geographic locations of our manufacturing facilities could intensify the negative impacts resulting from any of
these issues. As a result, the effects of climate change could have a long-term adverse impact on our business, results of
operations and financial condition. In many of the countries in which we operate, governmental bodies are increasingly enacting
legislation and regulations in response to the potential impacts of climate change. For example, some have enacted or are
contemplating legislation and regulations that may impact how we conduct and/or report on our business by requiring the
disclosure and tracking of certain GHG emissions, such as the climate-related disclosure rules and regulations recently adopted
by both the SEC and the State of California. These laws and regulations have, and will continue to have, the potential to impact
our operations directly or indirectly as a result of required compliance by us and our suppliers. In addition, we have committed
to reduce our absolute scope 1 and scope 2 GHG emissions by fifty percent by 2030 and to reach net zero GHG emissions by
2040 as part of our long-term sustainability strategy and we may take additional voluntary steps to mitigate our impact on
climate change. As a result, we may experience increases in energy, production, transportation and raw material costs, capital
expenditures and insurance premiums and deductibles. Inconsistency of legislation and regulations among jurisdictions may
also affect the costs of compliance with such laws and regulations. Any assessment of the potential impact of future climate
change legislation, regulations or industry standards, as well as any international treaties and accords, is uncertain given the
scope of potential regulatory change in the countries in which we operate. Given the political significance and uncertainty
around the impact of climate change and how it should be addressed, we cannot predict how legislation and regulation will
affect our financial condition, operating performance and ability to compete. Furthermore, even without such regulation,
increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by us or
other companies in our industry could harm our reputation. Any of the foregoing could result in a material adverse effect on our
business, results of operations and financial condition.
Our failure to comply with environmental, health and safety, product stewardship and producer responsibility laws or
regulations could adversely affect our business.
We are subject to extensive and changing federal, state, local and international environmental, health and safety laws and
regulations, concerning, among other things, the health and safety of our employees, and the generation, use, storage,
transportation, discharge and disposal of certain materials (including chemicals and hazardous substances) used in or derived
from our manufacturing processes. We are also subject to laws and regulations governing the recyclability of products, the
materials that may be included in products, and our obligations to dispose of these products after end users have finished with
them. Additionally, we may be exposed to liability to our customers relating to the materials that may be included in the
components that we procure for our customers’ products. Any violation or alleged violation by us of these laws or regulations
could subject us to significant costs, fines or other penalties, the suspension of production, or prohibitions on sales of products
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we manufacture. In addition, such regulations could restrict our ability to expand our facilities or could require us to acquire
costly equipment, or to incur other significant expenses, including expenses associated with the recall of any non-compliant
product or with changes in our operational, procurement and inventory management activities.
We are also required to comply with an increasing number of global and local product environmental compliance
regulations focused on the restriction of certain hazardous substances. We are subject to the EU directives, including the
Restrictions of Hazardous Substances in Electrical and Electrical Equipment (“RoHS”), the Waste Electrical and Electronic
Equipment Directive (“WEEE”) as well as the EU’s REACH regulation. In addition, technical classifications of e-Waste were
adopted in June 2022 by the Basel Convention regarding electronics repair and refurbishment which become effective January
1, 2025. Also of note is China’s Management Methods for Controlling Pollution Caused by Electronic Information Products
regulation, commonly referred to as “China RoHS”, which restricts the importation into and production within China of
electrical equipment containing certain hazardous materials. Similar legislation has been or may be enacted in other
jurisdictions, including in the United States. RoHS and other similar legislation bans or restricts the use of lead, mercury and
certain other specified substances in electronics products and WEEE requires EU importers and/or producers to assume
responsibility for the collection, recycling and management of waste electronic products and components. We have developed
rigorous risk mitigating compliance programs designed to meet the needs of our customers as well as applicable regulations.
These programs may include collecting compliance data from our suppliers, full laboratory testing and public reporting of other
environmental metrics such as carbon emissions, electronic waste and water, and we also require our supply chain to comply.
Non-compliance could potentially result in our customers refusing to purchase our products, and significant costs, penalties,
and/or other sanctions, such as restrictions on our products entering certain jurisdictions. In the case of WEEE, the compliance
responsibility rests primarily with the EU importers and/or producers rather than with EMS companies. However, customers
may turn to EMS companies for assistance in meeting their obligations under WEEE.
In addition, we are responsible for the cleanup of contamination at some of our current and former manufacturing
facilities and at some third party sites. If more stringent compliance or cleanup standards under environmental laws or
regulations are imposed, or the results of future testing and analyses at our current or former operating facilities indicate that we
are responsible for the release of hazardous substances into the air, ground and/or water, we may be subject to additional
liability. Additional environmental matters may arise in the future at sites where no problem is currently known or at sites that
we may acquire in the future. Some environmental laws impose liability without fault, leading companies to be responsible for
investigating, removing, or remediating possible hazardous substances released at properties it owns or operates, regardless of
when such substances were released. Additionally, we could be required to alter our manufacturing and operations and incur
substantial expense in order to comply with environmental regulations. Our failure to comply with environmental laws and
regulations or adequately address contaminated sites could limit our ability to expand our facilities or could require us to incur
significant expenses, which would harm our business.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Risk Management and Strategy
Our cybersecurity risk management program is intended to protect the confidentiality, integrity, and availability of our
critical information technology (“IT”) systems and information. Our program is integrated into, and among the risks evaluated
and considered by, our broader enterprise risk management program, which is designed to identify, assess, prioritize and
mitigate risks across the organization to enhance our resilience and support the achievement of our strategic objectives. We
designed and assess our cybersecurity risk management program based on multiple cybersecurity frameworks, such as the
National Institute of Standards and Technology Cybersecurity Framework, as well as information security standards issued by
the International Organization for Standardization, including ISO 27001, which we use as a guide to help us identify, assess,
and manage cybersecurity risks relevant to our business. Our global information security management program is ISO
27001:2013 certified.
Our cybersecurity risk management program is led by our Chief Information Security Officer (“CISO”), who manages
our security team principally responsible for managing our cybersecurity risk assessment processes, our security controls, and
our detection and response to cybersecurity incidents. Our program includes protocols for preventing, detecting and responding
to cybersecurity incidents, and cross-functional coordination and governance of business continuity and disaster recovery plans.
Components of our program include:
•
risk assessments designed to help identify cybersecurity threats to our critical IT systems, information, and our broader
enterprise IT environment;
33
Q
•
the periodic engagement of independent security firms and other third-party experts, where appropriate, to assess, test,
and certify components of our cybersecurity program, and to otherwise assist with aspects of our cybersecurity
processes and controls;
•
annual cybersecurity awareness training for our employees;
•
regular assessments of the design and operational effectiveness of the program’s key processes and controls by our
internal audit team as well as external consultants; and
•
a risk management process for third-party service providers and vendors that includes due diligence in the selection
process and periodic monitoring regarding adherence to applicable cybersecurity standards.
We also have a cybersecurity incident response plan to assess and manage cybersecurity incidents, which includes
escalation procedures based on the nature and severity of the incident including, where appropriate, escalation to the Audit
Committee and the Board. We periodically (at least annually) perform tabletop exercises to test our incident response
procedures, identify gaps and improvement opportunities and exercise team preparedness.
As part of our overall risk mitigation strategy, we maintain insurance coverage that is intended to address certain aspects
of cybersecurity risks; however, such insurance may not be sufficient in type or amount to cover us against claims related to
cybersecurity breaches, cyberattacks and other related breaches.
As of the date of this report, we do not believe that any risks from cybersecurity threats, including as a result of any
previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect our Company, including
our business strategy, results of operations or financial condition. Despite our security measures, however, there can be no
assurance that we, or third parties with which we interact, will not experience a cybersecurity incident in the future that will
materially affect us. For more information on our cybersecurity related risks, see Item IA,, “Risk Factors - “A breach of our IT
or physical security systems, or violation of data privacy laws, may cause us to incur significant legal and financial exposure
and adversely affect our operations.”
Governance
The Audit Committee of our Board of Directors has primary responsibility for overseeing our cybersecurity risks and
other information technology risks, including our plans to mitigate cybersecurity risks and to respond to data breaches.
The Audit Committee receives regular reports (at least quarterly) from our CISO and our Chief Information Officer
(“CIO”) on cybersecurity matters. These reports include a range of topics, including our cybersecurity risk profile, the current
cybersecurity and emerging threat landscape, the status of ongoing cybersecurity initiatives, incident reports, and the results of
internal and external assessments of our information systems. The Audit Committee also annually reviews the adequacy and
effectiveness of our information and technology security policies and the internal controls regarding information and
technology security and cybersecurity, and periodically receives updates from our internal audit function on the results of our
cybersecurity audits and related mitigation activities. The Chair of the Audit Committee reports to the full Board on these
discussions as appropriate.
The full Board also receives briefings from our CISO and CIO on cybersecurity matters twice annually. In addition,
Board members periodically receive presentations on cybersecurity matters from external experts as part of the Board’s
continuing education and overall risk oversight.
At the management level, our CISO leads our enterprise-wide cybersecurity program, and is responsible for assessing and
managing our materials risks from cybersecurity threats. In performing his role, our CISO is informed about and monitors the
prevention, detection, mitigation, and remediation of cybersecurity risks and incidents through the management of, and
participation in, the cybersecurity risk management and strategy processes described above, including the operation of our
incident response plan. Our CISO reports to our CIO who, in turn, reports directly to our CEO.
Our CISO is an experienced cybersecurity executive with more than 20 years of experience building and leading
cybersecurity, risk management, and information technology teams. Our CISO holds industry-recognized cybersecurity
certifications, including Certified Information Systems Security Professional (CISSP) certification.
ITEM 2. PROPERTIES
We own or lease facilities located primarily in the geographies listed below. Our facilities consist of a global network of
industrial parks, regional manufacturing operations, and design, engineering and product introduction centers. The majority of
the square footage is active manufacturing space used by the FRS and FAS operating segments, as both use these properties.
34
Q
Our facilities are well maintained and suitable for the operations conducted. The productive capacity of our plants is adequate
for current needs.
As of March 31, 2024, the square footage of our facilities by region is as follows:
Approximate Square Footage
(In millions)
Asia
19.7
Americas
15.8
Europe
11.2
Total (1)
46.7
(1)
Consists of 21.6 million square feet in facilities that we own with the remaining 25.1 million square feet in leased facilities.
ITEM 3. LEGAL PROCEEDINGS
For a description of our material legal proceedings, see note 14 "Commitments and Contingencies" to the consolidated
financial statements included under Item 8, which is incorporated herein by reference.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
35
Q
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
MARKET AND SHAREHOLDER INFORMATION
Our ordinary shares are quoted on the Nasdaq Global Select Market under the symbol "FLEX."
As of May 10, 2024, there were 2,821 holders of record of our ordinary shares. This does not include persons whose
stock is in nominee or "street name" accounts through brokers.
DIVIDENDS
Since inception, we have not declared or paid any cash dividends on our ordinary shares. We currently do not have plans
to pay any cash dividends in fiscal year 2025.
CERTAIN TAXATION CONSIDERATIONS UNDER SINGAPORE LAW
Dividends. Singapore does not impose a withholding tax on dividends. All dividends on our ordinary shares are not
taxable in Singapore to shareholders, provided that any dividends are paid to shareholders outside of Singapore for this purpose
and such dividends are not received or deemed to be received in Singapore by shareholders and are not derived by shareholders
pursuant to any trade or business carried on in Singapore. Certain tax exemptions are available for foreign-sourced dividends
received by Singapore tax residents, subject to conditions. Since inception, we have not declared nor paid any cash dividends on
our ordinary shares, and we currently do not have plans to pay any cash dividends.
Gains on Disposal. Under current Singapore tax law there is no tax on capital gains, and thus any profits from the
disposal of shares are not taxable in Singapore unless the gains arising from the disposal of shares are income in nature and
subject to tax, especially if they arise from activities which the Inland Revenue Authority of Singapore regards as the carrying
on of a trade or business in Singapore (in which case, the profits on the sale would be taxable as trade or business profits rather
than capital gains).
Shareholders who apply, or who are required to apply, the Singapore Financial Reporting Standard ("FRS") 39, FRS 109
or Singapore Financial Reporting Standard (International) 9 (“SFRS(I) 9”) (as the case may be) for the purposes of Singapore
income tax may be required to recognize gains or losses (not being gains or losses in the nature of capital) in accordance with
the provisions of FRS 39, FRS 109 or SFRS(I) 9 (as the case may be) (as modified by the applicable provisions of Singapore
income tax law) even though no sale or disposal of shares is made.
Stamp Duty. There is no stamp duty payable for holding shares, and no duty is payable on the issue of new shares.
Singapore stamp duty is payable on a transfer of existing shares if there is an instrument of transfer executed in Singapore or if
there is an instrument of transfer executed outside Singapore that is received in Singapore. In such situations, stamp duty is
payable on the instrument of transfer of such shares at the rate of 0.2% of the consideration for, or market value of, such shares,
whichever is higher. The stamp duty is borne by the purchaser unless there is an agreement to the contrary. If the instrument of
transfer is executed outside of Singapore, the stamp duty must be paid only if the instrument of transfer is received in
Singapore.
Estate Taxation. Singapore estate duty was abolished for deaths occurring on or after February 15, 2008.
Tax Treaties Regarding Withholding. There is no reciprocal income tax treaty between the U.S. and Singapore
regarding withholding taxes on dividends and capital gains.
STOCK PRICE PERFORMANCE GRAPH
The following stock price performance graph and accompanying information is not deemed to be "soliciting material" or
to be "filed" with the SEC or subject to Regulation 14A under the Securities Exchange Act of 1934 or to the liabilities of
Section 18 of the Securities Exchange Act of 1934, and will not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, regardless of any general incorporation language in any
such filing.
The graph below compares the cumulative total shareholder return on our ordinary shares, the Standard & Poor's 500
Stock Index and a peer group comprised of Benchmark Electronics, Inc., Celestica Inc., Jabil Inc., and Sanmina Corporation.
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The graph below assumes that $100 was invested in our ordinary shares, in the Standard & Poor's 500 Stock Index and in
the peer group described above on March 31, 2019 and reflects the annual return through March 31, 2024, assuming dividend
reinvestment.
The comparisons in the graph below are based on historical data and are not indicative of, or intended to forecast, the
possible future performances of our ordinary shares.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Flex, the S&P 500 Index, and Peer Group
Period Ending
Index Value
Flex Ltd.
S&P 500 Index
Peer Group
2019
2020
2021
2022
2023
2024
0
100
200
300
400
500
3/19
3/20
3/21
3/22
3/23
3/24
Flex Ltd.
100.00
83.75
183.10
185.50
230.10
379.54
S&P 500 Index
100.00
93.02
145.44
168.20
155.20
201.57
Peer Group
100.00
84.67
163.15
184.77
254.99
403.96
Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2024.
Index Data: Copyright Standard and Poor's, Inc. Used with permission. All rights reserved.
37
Q
Issuer Purchases of Equity Securities
The following table provides information regarding purchases of our ordinary shares made by us for the period from
January 1, 2024 through March 31, 2024.
Period (2)
Total Number
of Shares
Purchased (1)
Average
Price
Paid per
Share
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
Approximate Dollar Value
of Shares that May Yet
Be Purchased Under the
Plans or Programs
January 1 - February 2, 2024
7,817,510 $
23.58
7,817,510 $
1,345,691,848
February 3 - March 1, 2024
6,306,583 $
27.11
6,306,583 $
1,174,692,742
March 2 - March 31, 2024
5,641,778 $
28.71
5,641,778 $
1,012,693,933
Total
19,765,871
19,765,871
(1) During the period from January 1, 2024 through March 31, 2024, all purchases were made pursuant to the program discussed below
in open market transactions. All purchases were made in accordance with Rule 10b-18 under the Securities Exchange Act of 1934.
(2) On August 2, 2023, our Board of Directors authorized repurchases of our outstanding ordinary shares for up to $2.0 billion. This is
in accordance with the share purchase mandate whereby our shareholders approved a repurchase limit of 20% of our issued ordinary
shares outstanding at the Annual General Meeting held on the same date as the Board authorization. As of March 31, 2024, shares
in the aggregate amount of $1.0 billion were available to be repurchased under the current plan.
RECENT SALES OF UNREGISTERED SECURITIES
None.
38
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ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction
with our consolidated financial statements and notes thereto included in Item 8, “Financial Statements and Supplementary
Data.” In addition to historical consolidated financial information, the following discussion and analysis contains forward-
looking statements that involve risks, uncertainties, and assumptions. Our actual results could differ materially from those
anticipated by these forward-looking statements as a result of many factors. We discuss factors that we believe could cause or
contribute to these differences below and elsewhere in this report, including those set forth under Item 1A,“Risk Factors.”
OVERVIEW
We are the advanced, end-to-end manufacturing partner of choice that helps market-leading brands design, build, deliver
and manage innovative products that improve the world. Through the collective strength of a global workforce across
approximately 30 countries with responsible, sustainable operations, we support our customers' entire product lifecycle with a
broad array of services in every major region. Our full suite of specialized capabilities includes design and engineering, supply
chain, manufacturing, post-production and post-sale services. We partner with customers across a diverse set of industries
including cloud, communications, enterprise, automotive, industrial, consumer devices, lifestyle, healthcare, and energy. As of
March 31, 2024, as a result of the Spin-off in the fourth quarter of fiscal year 2024, we now report our financial performance
based on two operating and reportable segments as follows:
•
Flex Agility Solutions ("FAS"), which is comprised of the following end markets:
◦
Communications, Enterprise and Cloud ("CEC"), 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, embedded and critical power offerings,
and renewables and grid edge.
Our strategy is to provide customers with a full range of cost competitive, vertically-integrated global supply chain
solutions through which we can design, build, ship and service a complete packaged product for our customers. This enables
our customers to leverage our supply chain solutions to meet their product requirements throughout the entire product lifecycle.
Over the past few years, we have seen an increased level of diversification by many companies, primarily in the
technology sector. Some companies that have historically identified themselves as software providers, Internet service providers
or e-commerce retailers have entered the highly competitive and rapidly evolving technology hardware markets, such as mobile
devices, home entertainment and wearable devices. This trend has resulted in a significant change in the manufacturing and
supply chain solution requirements of such companies. While the products have become more complex, the supply chain
solutions required by such companies have become more customized and demanding, and it has changed the manufacturing and
supply chain landscape significantly.
We use a portfolio approach to manage our extensive service offerings. As our customers change the way they go to
market, we have the capability to reorganize and rebalance our business portfolio in order to align with our customers' needs
and requirements in an effort to optimize operating results. The objective of our business model is to allow us to be flexible and
redeploy and reposition our assets and resources as necessary to meet specific customers' supply chain solution needs across all
the markets we serve and earn a return on our invested capital above the weighted average cost of that capital.
We believe that our strategy is positioning us to take advantage of the long-term, future growth prospects for outsourcing
of advanced manufacturing capabilities, design and engineering services and after-market services.
We are continuously evaluating our capital structure in response to the current environment and expect that our current
financial condition, including our liquidity sources are adequate to fund future commitments. See additional discussion in the
Liquidity and Capital Resources section below.
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Nextracker Spin-off
On February 13, 2023, our former subsidiary, Nextracker completed an initial public offering (the “IPO”) of its Class A
common stock and on July 3, 2023 completed a follow-on offering to the IPO. Prior to the IPO, we maintained an 82.6%
indirect ownership in Nextracker and consolidated Nextracker. Subsequent to the IPO and follow-on offering, we retained a
51.5% indirect ownership in Nextracker and continued to consolidate Nextracker and report Nextracker as an operating
segment.
On January 2, 2024, we completed the previously announced Spin-off to Flex shareholders on a pro-rata basis based on
the number ordinary shares of Flex held by each shareholder of Flex (the “Distribution”) as of December 29, 2023, which was
the record date of the Distribution, pursuant to the Agreement and Plan of Merger, dated as of February 7, 2023. Under the
terms of the Spin-off, Flex shareholders received approximately 0.17 shares of Nextracker Class A common stock for each Flex
ordinary share held as of the record date of the Distribution. Flex shareholders received cash in lieu of any fractional shares.
As a result of the completion of the Spin-off, Nextracker became a fully independent public company, we no longer
directly or indirectly hold any shares of Nextracker common stock or any securities convertible into or exchangeable for shares
of Nextracker common stock and subsequent to the third quarter ended December 31, 2023 we no longer consolidate
Nextracker into our financial results. Flex ordinary shares continue to trade on Nasdaq under the ticker symbol “FLEX” and
shares of Nextracker Class A common stock continue to trade on Nasdaq under the ticker symbol “NXT”.
The historical financial results and financial position of Nextracker are presented as discontinued operations in the
consolidated statements of operations and balance sheets for all periods presented. The historical statements of comprehensive
income and cash flows and the balances related to stockholders’ equity have not been revised to reflect the effect of the Spin-
off. See note 7 "Discontinued Operations" to the consolidated financial statements in Item 8, “Financial Statements and
Supplementary Data” for further information. Unless otherwise indicated, any reference to income statement items in this
"Management’s Discussion and Analysis of Financial Condition and Results of Operations" refers to results from continuing
operations.
Update on Component Shortages and Logistical Constraints on our Business
Component shortages and logistical constraints improved as the year progressed. We continue to monitor potential supply
chain disruptions, including disruptions in international commerce as a result of attacks on shipping vessels in the Red Sea.
Refer to “Risk Factors - Supply chain disruptions, manufacturing interruptions or delays, or the failure to accurately forecast
customer demand, have in the past affected, and may in the future affect, our ability to meet customer demand, lead to higher
costs, or result in excess or obsolete inventory.”
Russian Invasion of Ukraine and Israel-Hamas War
We continue to monitor and respond to the conflict in Ukraine and the associated sanctions and other restrictions. We also
are monitoring and responding to the Israel-Hamas war. As of the date of this report, there is no material impact to our business
operations and financial performance in Ukraine and Israel. The full impact of the conflicts on our business operations and
financial performance remains uncertain and will depend on future developments, including the severity and duration of the
conflicts and their impact on regional and global economic conditions. We will continue to monitor the conflicts and assess the
related restrictions and other effects and pursue prudent decisions for our team members, customers, and business.
Business Overview
We are one of the world's largest providers of global supply chain solutions, with revenues from continuing operations of
$26.4 billion in the fiscal year ended March 31, 2024. We have established an extensive network of manufacturing facilities in
the world's major consumer and enterprise markets (Asia, the Americas, and Europe) to serve the growing outsourcing needs of
both multinational and regional customers. We design, build, ship, and service consumer and enterprise products for our
customers through a network of approximately 100 facilities in approximately 30 countries across four continents. As of
March 31, 2024, our total manufacturing capacity was approximately 27 million square feet. The following tables set forth the
relative percentages and dollar amounts of net sales by region and by country, and net property and equipment, by country,
based on the location of our manufacturing sites (amounts may not sum due to rounding):
40
Q
Fiscal Year Ended March 31,
2024
2023
2022
(In millions)
Net sales by region:
Americas
$
12,232 46 % $
11,906 42 % $
9,414 38 %
Asia
8,540 32 %
10,384 36 %
9,615 39 %
Europe
5,643 22 %
6,212 22 %
5,604 23 %
$
26,415
$
28,502
$
24,633
Net sales by country:
Mexico
$
6,935 26 % $
6,626 23 % $
5,092 21 %
China
5,117 19 %
6,562 23 %
6,160 25 %
U.S.
3,598 14 %
3,394 12 %
2,414 10 %
Malaysia
2,122
8 %
2,448
9 %
1,866
8 %
Brazil
1,529
6 %
1,769
6 %
1,842
7 %
Hungary
1,368
5 %
1,310
5 %
1,230
5 %
Other
5,746 22 %
6,393 22 %
6,029 24 %
$
26,415
$
28,502
$
24,633
Fiscal Year Ended March 31,
2024
2023
(In millions)
Property and equipment, net:
Mexico
$
793 35 % $
763 33 %
U.S.
334 15 %
358 15 %
China
307 14 %
338 14 %
Malaysia
142
6 %
152
6 %
Hungary
124
5 %
140
6 %
Brazil
88
4 %
89
4 %
Other
481 21 %
502 22 %
$
2,269
$
2,342
We believe that the combination of our extensive open innovation platform solutions, design and engineering services,
advanced supply chain management solutions and services, significant scale and global presence, and manufacturing campuses
in low-cost geographic areas provide us with a competitive advantage and strong differentiation in the market for designing,
manufacturing and servicing consumer and enterprise products for leading multinational and regional customers. Specifically,
we offer our customers the ability to simplify their global product development, manufacturing process, and after-sales services,
and enable them to meaningfully accelerate their time to market and cost savings.
Our operating results are affected by a number of factors, including the following:
•
global economic conditions, including inflationary pressures, currency volatility, slower growth or recession,
higher interest rates, and geopolitical uncertainty (including arising from the ongoing conflict between Russia
and Ukraine and the Israel-Hamas war);
•
the mix of the manufacturing services we are providing, the number, size, and complexity of new
manufacturing programs, the degree to which we utilize our manufacturing capacity, seasonal demand, and
other factors;
•
the effects on our business when our customers are not successful in marketing their products, or when their
products do not gain widespread commercial acceptance;
41
Q
•
our ability to achieve commercially viable production yields and to manufacture components in commercial
quantities to the performance specifications demanded by our customers;
•
the effects on our business due to certain customers' products having short product lifecycles, our customers'
ability to cancel or delay orders or change production quantities or locations, the short-term nature of our
customers' commitments and rapid changes in demand;
•
the effects that current credit and market conditions (including as a result of the ongoing conflict between
Russia and Ukraine and the Israel-Hamas war) could have on the liquidity and financial condition of our
customers and suppliers, including any impact on their ability to meet their contractual obligations;
•
the impacts on our business due to supply chain issues, including component shortages, disruptions in
transportation or other supply chain related constraints including disruptions in international commerce as a
result of attacks on shipping vessels in the Red Sea;
•
integration of acquired businesses and facilities;
•
increased labor costs due to adverse labor conditions in the markets we operate;
•
changes in tax legislation;
•
changes in trade regulations and treaties; and
•
exposure to infectious disease, epidemics and pandemics on our business operations in geographic locations
impacted by an outbreak and on the business operations of our customers and suppliers.
We also are subject to other risks as outlined in Item 1A, "Risk Factors".
Net sales for fiscal year 2024 decreased approximately 7%, or $2.1 billion, to $26.4 billion from the prior year. Net sales
for our FAS segment decreased $1.8 billion, or 12%, from the prior year, primarily driven by a decrease in net sales of 24% in
our Consumer Devices business, a 17% decrease in our Lifestyle business and a 7% decrease in our CEC business due to softer
demand in consumer end markets and difficult year-over-year comparisons in CEC. Net sales for our FRS segment decreased
$0.2 billion, or 2%, from the prior year, primarily driven by a decrease in net sales of 8% in our Industrial business due to lower
customer demand, partially offset by a 6% increase in our Automotive business and a 3% increase in our Health Solutions
business which benefited from ramps across various end markets. Our fiscal year 2024 gross profit totaled $1.9 billion,
representing a decrease of $0.1 billion, or 6%, from the prior year. The decrease in gross profit due to lower sales was mitigated
by higher gross profit margins and the $0.1 billion gross profit decrease was primarily driven by $0.1 billion in higher
restructuring charges. Our net income totaled $0.9 billion, representing an increase of $0.2 billion, or 28%, compared to fiscal
year 2023, due to the factors explained above and a net $0.2 billion income tax benefit in fiscal year 2024 attributed primarily to
the release of a U.S. deferred tax asset valuation allowance.
Cash provided by operating activities increased by approximately $0.4 billion primarily driven by the $0.2 billion increase
in net income and improvement in net working capital, offset by a change in deferred income taxes.
We believe adjusted free cash flow is an important liquidity metric because it measures, during a given period, the amount
of cash generated that is available to repay debt obligations, make investments, fund acquisitions, repurchase company shares
and for certain other activities. Our adjusted free cash flow is defined as cash from operations, less net purchases of property
and equipment to present adjusted cash flows on a consistent basis for investor transparency. Our adjusted free cash flow was
$0.8 billion and $0.3 billion for fiscal years 2024 and 2023, respectively. Refer to the Liquidity and Capital Resources section
for the adjusted free cash flows reconciliation to the most directly comparable GAAP financial measure of cash flows from
operations. Cash used in investing activities decreased by approximately $0.1 billion to a cash outflow of $0.5 billion for fiscal
year 2024, compared with a cash outflow of $0.6 billion for fiscal year 2023, primarily due to a decrease of approximately $0.1
billion cash paid for purchases of property and equipment in fiscal year 2024. Cash provided by financing activities decreased
by approximately $1.7 billion to a cash outflow of $1.7 billion for fiscal year 2024, primarily driven by an approximately
$1.0 billion increase in cash paid for share repurchases, a $0.4 billion increase in capital reduction as part of the Spin-off, a $0.1
billion increase in net debt payment, along with a $0.1 billion decrease in proceeds from the issuance of Nextracker shares in
fiscal year 2024 compared to fiscal year 2023.
42
Q
CRITICAL ACCOUNTING 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. Due to geopolitical conflicts (including the Russian
invasion of Ukraine and the Israel-Hamas war), there has been and we expect there will continue to be uncertainty and
disruption in the global economy and financial markets. We have made estimates and assumptions taking into consideration
certain possible impacts due to the Russian invasion of Ukraine, the Israel-Hamas war, and other geopolitical conflicts. 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 consolidated financial statements. Estimates and assumptions
are reviewed periodically, and the effects of revisions are reflected in the period they occur.
We believe the following critical accounting estimates affect our more significant judgments and estimates used in the
preparation of our consolidated financial statements. For further discussion of our significant accounting policies, refer to note 2
to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data."
Revenue Recognition
In determining the appropriate amount of revenue to recognize, we apply 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) we satisfy a
performance obligation. Further, we assess 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). We are first required to evaluate whether our contracts meet the
criteria for OT recognition. We have determined that for a portion of our contracts, we are manufacturing products for which
there is no alternative use (due to the unique nature of the customer-specific product and intellectual property restrictions) and
we have an enforceable right to payment including a reasonable profit for work-in-progress inventory with respect to these
contracts. For certain other contracts, the Company’s performance creates and enhances an asset that the customer controls as
the Company performs under the contract. 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 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, we
recognize revenue when we have transferred control of the related manufactured products which generally occurs upon delivery
and passage of title to the customer. Refer to note 4 to the consolidated financial statements in Item 8, "Financial Statements
and Supplementary Data" for further details.
Customer Contracts and Related Obligations
Certain of our 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. We estimate the variable consideration
related to these price adjustments as part of the total transaction price and recognize revenue in accordance with the pattern
applicable to the performance obligation, subject to a constraint. We constrain the amount of revenues recognized for these
contractual provisions based on our best estimate of the amount which will not result in a significant reversal of revenue in a
future period. We determine the amounts to be recognized based on the amount of potential refunds required by the contract,
historical experience and other surrounding facts and circumstances. Refer to note 4 to the consolidated financial statements in
Item 8, "Financial Statements and Supplementary Data" for further details.
Inventory Valuation
Our inventories are stated at the lower of cost (on a first-in, first-out basis) or net realizable value. Our industry is
characterized by rapid technological change, short-term customer commitments and rapid changes in demand. We purchase our
inventory based on forecasted demand and anticipated component shortages, and we estimate write downs for excess and
obsolete inventory based on our regular reviews of inventory quantities on hand, and the latest forecasts of product demand and
production requirements from our customers. If actual market conditions or our customers' product demands are less favorable
than those projected, additional write downs may be required. In addition, unanticipated changes in the liquidity or financial
position of our customers and/or changes in economic conditions may require additional write downs for inventories due to our
customers' inability to fulfill their contractual obligations with regards to inventory procured to fulfill customer demand.
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Carrying Value of Long-Lived Assets
We review property and equipment and acquired amortizable intangible assets for impairment at least annually and
whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable. An
impairment loss is recognized when the carrying amount of the asset group exceeds its fair value. Recoverability of property
and equipment and acquired amortizable intangible assets are measured by comparing their carrying amount to the projected
cash flows the assets are expected to generate. If such asset groups are determined to be impaired, the impairment loss
recognized, if any, is the amount by which the carrying amount of the property and equipment and acquired amortizable
intangible assets exceeds fair value. Our judgments regarding projected cash flows for an extended period of time and the fair
value of assets may be impacted by changes in market conditions, the general business environment and other factors including
geopolitical conflicts (including the Russian invasion of Ukraine and the Israel-Hamas war), which remain highly uncertain and
unpredictable. To the extent our estimates relating to cash flows and fair value of assets change adversely we may have to
recognize material impairment charges in the future.
Goodwill
Goodwill is tested for impairment on an annual basis and whenever events or changes in circumstances indicate that the
carrying amount of goodwill may not be recoverable. 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 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 us to make
various judgmental assumptions about sales, operating margins, growth rates and discount rates which consider our 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 market comparables and credit ratings. While we believe we have made
reasonable estimates and assumptions to calculate the fair value of the reporting units, it is possible a material change could
occur. If our actual results are not consistent with our estimates and assumptions used to calculate fair value, it could result in
material impairments of our goodwill. Refer to note 2 to the consolidated financial statements in Item 8, "Financial Statements
and Supplementary Data" for further detail on our goodwill.
Income Taxes
Our deferred income tax assets represent temporary differences between the carrying amount and the tax basis of existing
assets and liabilities, which will result in deductible amounts in future years, including net operating loss carry forwards. Based
on estimates, the carrying value of our net deferred tax assets assumes that it is more likely than not that we will be able to
generate sufficient future taxable income in certain tax jurisdictions to realize these deferred income tax assets. Our judgments
regarding future profitability may change due to future market conditions, changes in U.S. or international tax laws and other
factors. If these estimates and related assumptions change in the future, we may be required to increase or decrease our
valuation allowance against deferred tax assets previously recognized, resulting in additional or lesser income tax expense.
We are regularly subject to tax return audits and examinations by various taxing jurisdictions around the world, and there
can be no assurance that the final determination of any tax examinations will not be materially different than that which is
reflected in our income tax provisions and accruals. Should additional taxes be assessed as a result of a current or future
examination, there could be a material adverse effect on our tax position, operating results, financial position and cash flows.
Refer to note 15 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for further
discussion of our tax position.
44
Q
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain statements of operations data expressed as a percentage of
net sales (amounts may not sum due to rounding). The financial information and the discussion below should be read in
conjunction with the consolidated financial statements and notes thereto included in Item 8, "Financial Statements and
Supplementary Data." As further discussed in note 2 to the consolidated financial statements in Item 8, as a result of the Spin-
off in the fourth quarter of fiscal year 2024, the historical results of operations and balance sheets for periods prior to the Spin-
off are presented as discontinued operations in these consolidated financial statements. For comparability purposes, the prior
periods have been recast to conform to the current presentation.
The data below, and discussion that follows, represents our results from operations, and relative percentages.
Fiscal Year Ended
March 31,
2024
2023
2022
Net sales
100.0 %
100.0 %
100.0 %
Cost of sales
92.4
93.0
92.7
Restructuring charges
0.5
0.1
0.1
Gross profit
7.1
6.9
7.2
Selling, general and administrative expenses
3.5
3.1
3.4
Intangible amortization
0.3
0.2
0.2
Restructuring charges
0.1
—
—
Operating income
3.2
3.6
3.6
Interest expense
0.8
0.8
0.7
Interest income
0.2
—
0.1
Other charges (income), net
0.2
—
(0.7)
Equity in earnings (losses) of unconsolidated affiliates
0.1
—
0.2
Income from continuing operations before income taxes
2.5
2.8
3.9
(Benefit from) provision for income taxes
(0.8)
0.4
0.4
Net income from continuing operations
3.3
2.4
3.5
Net income from discontinued operations, net of tax
1.4
1.2
0.3
Net income
4.7
3.6
3.8
Net income attributable to noncontrolling interest and redeemable
noncontrolling interest
0.9
0.8
—
Net income attributable to Flex Ltd.
3.8 %
2.8 %
3.8 %
Net sales
The following table sets forth our net sales by segment, and their relative percentages:
Fiscal Year Ended March 31,
2024
2023
2022
Net sales:
(In millions)
Flex Agility Solutions
$
13,923
53 % $
15,769
55 % $
14,027
57 %
Flex Reliability Solutions
12,492
47 %
12,733
45 %
10,606
43 %
$
26,415
$
28,502
$
24,633
Net sales for the fiscal year ended March 31, 2024 totaled $26.4 billion, representing a decrease of approximately $2.1
billion, or 7%, from $28.5 billion for the fiscal year ended March 31, 2023. Net sales for our FAS segment decreased $1.8
billion, or 12%, from fiscal year 2023, mainly due to a decrease in net sales of 24% in our Consumer Devices business, a 17%
decrease in our Lifestyle business and a 7% decrease in our CEC business due to softer demand in consumer end markets and
difficult year-over-year comparisons in CEC. Net sales in our FRS segment decreased $0.2 billion, or 2%, from fiscal year
2023, driven primarily by a decrease in net sales of 8% in our Industrial business due to lower customer demand, offset by a 6%
increase in our Automotive business, and a 3% increase in our Health Solution business which benefited from ramps across
various end markets.
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Net sales for the fiscal year ended March 31, 2023 totaled $28.5 billion, representing an increase of approximately $3.9
billion, or 16%, from $24.6 billion for the fiscal year ended March 31, 2022. Net sales for our FAS segment increased $1.7
billion, or 12%, from the prior year, mainly due to an increase in net sales of 30% in our CEC business and 2% in our Lifestyle
business due to new ramps, customer expansion, along with some effect from inflation pass-through while overcoming
challenges from supply constraints. These increases in FAS were offset by a 19% decrease in net sales in our Consumer
Devices business due to relatively softer market demand and a planned project completion in the fiscal year ended 2022. Net
sales in our FRS segment increased $2.1 billion, or 20%, driven primarily by an increase of 24% in net sales in our Industrial
business, a 22% increase in our Automotive business, and a 9% increase in our Health Solutions business from the prior year
due to strong customer demand and ramps across various end markets coupled with incremental revenues from our Anord
Mardix acquisition and the recovery of inflationary costs, despite continued supply constraints.
Net sales for the fiscal year ended March 31, 2024 increased $0.3 billion to $12.2 billion in the Americas, decreased $1.8
billion to $8.5 billion in Asia, and decreased $0.6 billion to $5.6 billion in Europe.
Net sales for the fiscal year ended March 31, 2023 increased $2.5 billion to $11.9 billion in the Americas, increased $0.8
billion to $10.4 billion in Asia, and increased $0.6 billion to $6.2 billion in Europe.
Our ten largest customers during fiscal years 2024, 2023 and 2022 accounted for approximately 37%, 37% and 36% of net
sales, respectively. We have made substantial efforts to maintain a diverse portfolio which allows us to operate at scale in many
different industries, and, as a result, no customer accounted for greater than 10% of net sales in fiscal year 2024, 2023 or 2022.
Cost of sales
Cost of sales is affected by a number of factors, including the number and size of new manufacturing programs, product
mix, labor cost fluctuations by region, component costs and availability and capacity utilization.
Cost of sales during fiscal year 2024 totaled $24.4 billion, representing a decrease of approximately $2.1 billion, or 8%
from $26.5 billion during fiscal year 2023. The decrease in cost of sales is primarily driven by decreased consolidated sales of
$2.1 billion, or 7%. Cost of sales in FAS decreased $1.8 billion or approximately 12%, from fiscal year 2023, which is in line
with the 12% decrease in FAS revenue primarily as a result of lower revenue in our Consumer Devices, Lifestyle, and CEC
businesses. Cost of sales in FRS for fiscal year 2024 decreased $0.3 billion, or approximately 3% from fiscal year 2023, which
is in line with the 2% decrease in FRS revenue, primarily driven by lower revenue in our Industrial business.
Cost of sales during fiscal year 2023 totaled $26.5 billion, representing an increase of approximately $3.7 billion or 16%
from $22.8 billion during fiscal year 2022. The increase in cost of sales is most notable in our FRS segment. Cost of sales in
FRS for fiscal year 2023 increased $2.0 billion, or approximately 21% from fiscal year 2022, which is in line with the 20%
increase in revenue, primarily as a result of higher revenue in our Industrial and Automotive businesses. Cost of sales in FAS
increased $1.6 billion, or approximately 12%, from fiscal year 2022, which is relatively consistent with the 12% increase in
revenue, primarily as a result of higher revenue in our CEC and Lifestyle businesses, and partially offset by improved
efficiencies.
Gross profit
Gross profit is affected by a fluctuation in cost of sales elements as outlined above and further by a number of factors,
including product lifecycles, unit volumes, product mix, pricing, competition, new product introductions, and the expansion or
consolidation of manufacturing facilities, as well as specific restructuring activities initiated from time to time. The flexible
design of our manufacturing processes allows us to manufacture a broad range of products in our facilities and better utilize our
manufacturing capacity across our diverse geographic footprint and service customers from all markets. In the case of new
programs, profitability normally lags revenue growth due to product start-up costs, lower manufacturing program volumes in
the start-up phase, operational inefficiencies, and under-absorbed overhead. Gross margin for these programs often improves
over time as manufacturing volumes increase, as our utilization rates and overhead absorption improve, and as we increase the
level of manufacturing services content. As a result of these various factors, our gross margin varies from period to period.
Gross profit during fiscal year 2024 decreased $0.1 billion to $1.9 billion, or 7.1% of net sales, from $2.0 billion, or 6.9%
of net sales, during fiscal year 2023. The decrease in gross profit during fiscal year 2024 due to lower sales was mitigated by
higher gross profit margins and the $0.1 billion gross profit decrease was primarily driven by $0.1 billion in higher restructuring
charges, compared to the prior year.
Gross profit during fiscal year 2023 increased $0.2 billion to $2.0 billion, or 6.9% of net sales, from $1.8 billion, or 7.2%
of net sales, during fiscal year 2022. The increase in gross profit during fiscal year 2023 primarily resulted from the overall
stronger customer demand across various end markets which allowed for improved fixed cost absorption, despite continued
46
Q
pressure on margins from component shortages, logistics constraints and the pass-through effect of inflationary cost recoveries,
compared to the prior year.
Segment income
An operating segment's performance is evaluated based on its pre-tax operating contribution, or segment income. Segment
income is defined as net sales less cost of sales, and segment selling, general and administrative expenses, and does not include
amortization of intangibles, stock-based compensation, restructuring charges, customer related asset impairment, legal and
other, interest expense, interest income, other charges (income), net, and equity in earnings of unconsolidated affiliates. A
portion of depreciation is allocated to the respective segments, together with other general corporate, research and development
and administrative expenses.
The following table sets forth segment income and margins. Segment margins in the table below may not recalculate
exactly due to rounding.
Fiscal Year Ended March 31,
2024
2023
2022
(In millions)
Segment income:
Flex Agility Solutions
$
669
4.8 % $
694
4.4 % $
605
4.3 %
Flex Reliability Solutions
666
5.3 %
607
4.8 %
546
5.1 %
FAS segment margin increased 40 basis points, to 4.8% for fiscal year 2024, from 4.4% for fiscal year 2023. The margin
increase during the period was driven by strong execution, product mix and cost actions taken.
FRS segment margin increased 50 basis points, to 5.3% for fiscal year 2024, from 4.8% for fiscal year 2023. The margin
increase in the FRS segment was primarily driven by improving margins in our Health Solutions and Automotive businesses
due to increased productivity and favorable mix, the resolution of previous supply-chain-related disruptions and cost actions
taken, partially offset by lower sales in our Industrial business.
FAS segment margin increased 10 basis points, to 4.4% for fiscal year 2023, from 4.3% for fiscal year 2022. The margin
increase during the period was driven by strong execution against new project ramps and product mix, partially offset by
elevated costs due to component shortages and logistics constraints and the effect of certain inflation pass-through recoveries.
FRS segment margin decreased 30 basis points, to 4.8% for fiscal year 2023, from 5.1% for fiscal year 2022. The margin
decrease in the FRS segment was primarily driven by component shortage-related production disruptions, inflationary cost
pressures as well as program investments impacting our Automotive and Health Solutions businesses during fiscal year 2023.
Restructuring charges
During fiscal year 2024, we committed to targeted restructuring activities to improve operational efficiency by reducing
excess workforce capacity. As a result, we recognized approximately $175 million of restructuring charges, primarily related to
employee severance. During fiscal year 2023, we recognized approximately $27 million of restructuring charges, primarily
related to employee severance. During fiscal year 2022, we recognized approximately $15 million of restructuring charges,
primarily related to employee severance.
Refer to note 16 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for
further discussion of our restructuring activities.
Selling, general and administrative expenses
Selling, general and administrative expenses ("SG&A") totaled $0.9 billion, or 3.5% of net sales, during fiscal year 2024,
compared to $0.9 billion, or 3.1% of net sales, during fiscal year 2023, increasing by $48 million or 5%, which was attributed to
the recognition of an accrual of a $50 million loss contingency for a commercial dispute related to a construction matter with
related production objectives.
SG&A totaled $0.9 billion, or 3.1% of net sales, during fiscal year 2023, compared to $0.8 billion, or 3.4% of net sales,
during fiscal year 2022, increasing by $44 million or 5%, which reflects our enhanced cost control efforts to support higher
revenue growth while keeping our SG&A expenses relatively flat.
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Q
Intangible amortization
Amortization of intangible assets in fiscal years 2024 and 2023 were $70 million and $81 million, respectively,
representing a decrease of $11 million, from fiscal year 2023, primarily due to certain intangibles being fully amortized during
fiscal year 2024.
Amortization of intangible assets in fiscal years 2023 and 2022 were $81 million and $60 million, respectively,
representing an increase of $21 million, from fiscal year 2022, primarily due to amortization expense related to new intangible
assets from the Anord Mardix acquisition completed in December 2021, partially offset by certain intangible assets being fully
amortized during fiscal year 2023.
Interest expense
Interest expense was $207 million during fiscal year 2024, compared to $230 million during fiscal year 2023, decreasing
$23 million primarily due to lower bank borrowings and repayment of bank loans during fiscal year 2024.
Interest expense was $230 million during fiscal year 2023, compared to $166 million during fiscal year 2022, increasing
$64 million primarily due to new bank borrowings and higher variable interest expense during fiscal year 2023.
Interest income
Interest income was $56 million during fiscal year 2024, compared to $30 million during fiscal year 2023, increasing
$26 million primarily due to increased cash deposits and higher interest rates.
Interest income was $30 million during fiscal year 2023, compared to $14 million during fiscal year 2022, increasing
$16 million primarily due to the same drivers as discussed above.
Other charges (income), net
During fiscal year 2024, we recorded $44 million of other charges, net, compared to $6 million of other charges, net, in
fiscal year 2023, which was primarily driven by an increase of approximately $31 million in foreign exchange transaction
losses compared to fiscal year 2023.
During fiscal year 2023, we recorded $6 million of other charges, net, compared to $165 million of other income, net, in
fiscal year 2022, which was primarily driven by a $150 million gain related to a Brazilian tax credit recognized in fiscal year
2022 coupled with an approximately $26 million reduction in foreign exchange transaction gains compared to fiscal year 2022.
Refer to note 17 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for
further discussion of our other charges (income), net.
Equity in earnings (losses) of unconsolidated affiliates
During fiscal year 2024, we recorded $8 million of equity in earnings of unconsolidated affiliates, compared to $4 million
of equity in losses of unconsolidated affiliates during fiscal year 2023. The increase during fiscal year 2024 was primarily due
to higher investment fund gains versus fiscal year 2023, resulting from discrete market events such as financing rounds
completed by certain companies included in those funds.
During fiscal year 2023, we recorded $4 million of equity in losses of unconsolidated affiliates, compared to $61 million
of equity in earnings of unconsolidated affiliates during fiscal year 2022. The decrease during fiscal year 2023 was primarily
due to lower investment fund gains versus fiscal year 2022, resulting from discrete market events such as initial public offerings
and financing rounds completed by certain companies included in those funds.
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Q
Income taxes
We work to ensure that we accrue and pay the appropriate amount of income taxes according to the laws and regulations
of each jurisdiction in which we operate. Certain of our subsidiaries have, at various times, been granted tax relief in their
respective countries, resulting in lower income taxes than would otherwise be the case under ordinary tax rates. The
consolidated effective tax rates were (30.9)%, 15.4% and 9.5% for the fiscal years 2024, 2023 and 2022 respectively. The
effective rate varies from the Singapore statutory rate of 17.0% in each year as a result of the following items:
Fiscal Year Ended March 31,
2024
2023
2022
Income taxes based on domestic statutory rates
17.0 %
17.0 %
17.0 %
Effect of jurisdictional tax rate differential
10.3 %
6.4 %
(10.1) %
Change in unrecognized tax benefit
(1.4) %
(0.8) %
1.2 %
Change in valuation allowance
(102.9) %
(35.9) %
(14.0) %
Foreign exchange movement on prior year taxes recoverable
(0.2) %
0.5 %
(0.9) %
Liability for undistributed earnings
20.3 %
— %
0.1 %
Global intangible low-taxes income (GILTI) / Subpart F income
1.9 %
2.2 %
3.1 %
Nextracker related transactions gains
17.2 %
19.5 %
11.5 %
Earnings from partnership
7.0 %
4.8 %
— %
U.S. state taxes
1.5 %
0.2 %
0.5 %
Excess compensation (Section 162(m))
2.3 %
1.2 %
0.5 %
Other
(3.9) %
0.3 %
0.6 %
(Benefit from) provision for income taxes
(30.9) %
15.4 %
9.5 %
The variation in our effective tax rate each year to the statutory rate is primarily a result of recognition of earnings in
foreign jurisdictions which are taxed at rates lower than the Singapore statutory rate including the effect of tax holidays and tax
incentives we received primarily for our subsidiaries in China, Malaysia, Netherlands, Costa Rica, and Israel of $20 million,
$14 million and $23 million in fiscal years 2024, 2023 and 2022, respectively. The primary driver of the negative effective tax
rate for fiscal year 2024 relates to changes in valuation allowances of the Company's U.S. operations on deferred tax assets of
$447 million in fiscal year 2024. Refer to note 15 to the consolidated financial statements in Item 8, "Financial Statements and
Supplementary Data" for further discussion. We generate most of our revenues and profits from operations outside of
Singapore.
We are regularly subject to tax return audits and examinations by various taxing jurisdictions around the world, and there
can be no assurance that the final determination of any tax examinations will not be materially different than that which is
reflected in our income tax provisions and accruals. Should additional taxes be assessed as a result of a current or future
examination, there could be a material adverse effect on our effective tax rate, tax position, operating results, financial position
and cash flows.
On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted into law, which includes a new corporate
minimum tax, a stock repurchase excise tax, numerous green energy credits, other tax provisions, and significantly increased
enforcement resources. While detailed regulations on some aspects of the act are still outstanding, we do not anticipate a
material impact to our consolidated financial statements from these provisions.
Net income from continuing operations
Net income from continuing operations was $872 million during fiscal year 2024, compared to $683 million during fiscal
year 2023, primarily driven by the same factors attributable to income from continuing operations before income taxes and the
release of U.S. deferred tax asset valuation allowances in fiscal year 2024 as discussed above.
Net income from continuing operations was $683 million during fiscal year 2023, compared to $872 million during fiscal
year 2022, primarily driven by the same factors attributable to income from continuing operations before income taxes as
discussed above and offset by a $150 million gain related to a Brazilian tax credit recognized in fiscal year 2022
Net income from discontinued operations
Net income from discontinued operations was $373 million, which represented the nine months prior to the Spin-off in
the fourth quarter of fiscal year 2024, compared to $350 million for the full year of fiscal year 2023. Operating results for
49
Q
Nextracker were strong in fiscal year 2024 with a 37% increase in gigawatts delivered (on a like-for-like basis), improved
pricing and cost control and a reduction in global freight rates leading to a 93% increase in income before income taxes
(comparing the nine month period in fiscal year 2024 to the full fiscal year 2023). This effect was offset by greater tax benefits
in fiscal year 2023 as compared to fiscal year 2024, principally as the result of the Nextracker IPO in fiscal year 2023.
Net income from discontinued operations was $350 million during fiscal year 2023, compared to $68 million during
fiscal year 2022, due to improved operational performance with a 20% increase in gigawatts delivered, an easing of global
freight rates and tax benefits associated with the Nextracker IPO in fiscal year 2023.
Net income attributable to noncontrolling interest and redeemable noncontrolling interest
Net income attributable to noncontrolling interest and redeemable noncontrolling interest was $239 million, prior to the
Spin-off during fiscal year 2024, compared to $240 million during fiscal year 2023, primarily driven by the same factors noted
in the discussion above for net income from discontinued operations in fiscal year 2024.
Net income attributable to noncontrolling interest and redeemable noncontrolling interest was $240 million during fiscal
year 2023, compared to $4 million during fiscal year 2022, primarily due to tax benefits and distributions associated with the
Nextracker IPO during fiscal year 2023.
LIQUIDITY AND CAPITAL RESOURCES
We continuously evaluate our ability to meet our obligations over the next 12 months and have proactively adjusted our
capital structure to improve maturities and liquidity. We expect that our current financial condition, including our liquidity
sources, are adequate to fund current and future commitments. As of March 31, 2024, we had cash and cash equivalents of
approximately $2.5 billion and bank and other borrowings of approximately $3.3 billion. We have a $2.5 billion revolving
credit facility that is due to mature in July 2027 (the "2027 Credit Facility"), under which we had no borrowings outstanding as
of March 31, 2024. During fiscal year 2024, the Company repaid its JPY term and delayed draw term loans. The Company also
settled the associated USD JPY cross currency swap. Refer to note 9 to the consolidated financial statement in Item 8,
"Financial Statements and Supplementary Data" for additional details. As of March 31, 2024, we were in compliance with the
covenants under all of our credit facilities and indentures and expect to remain in compliance with the covenants in the
upcoming 12 months for our credit facilities and indentures.
In fiscal year 2024, we implemented a 10b5-1 bond buyback program, aiming to repurchase certain outstanding bonds
issued by us. During the twelve- month period ended March 31, 2024, we repurchased approximately $15 million of our
4.750% Notes due 2025, resulting in an immaterial gain in our consolidated statement of operations.
Our cash balances are held in numerous locations throughout the world. As of March 31, 2024, approximately 55% of our
cash and cash equivalents were held by foreign subsidiaries outside of Singapore. Although substantially all of the amounts
held outside of Singapore could be repatriated, under current laws, a significant amount could be subject to income tax
withholdings. We provide for tax liabilities on these amounts for financial statement purposes, except for certain of our foreign
earnings that are considered indefinitely reinvested outside of Singapore (approximately $0.7 billion as of March 31, 2024).
Repatriation could result in an additional income tax payment; however, our intent is to permanently reinvest these funds
outside of Singapore and our current plans do not demonstrate a need to repatriate them to fund our operations in jurisdictions
outside of where they are held. Where local restrictions prevent an efficient intercompany transfer of funds, our intent is that
cash balances would remain outside of Singapore and we would meet our liquidity needs through ongoing cash flows, external
borrowings, or both.
Fiscal Year 2024
Cash provided by operating activities was $1.3 billion during fiscal year 2024. The total cash provided by operating
activities resulted primarily from $1.2 billion of net income for the period plus $0.3 billion of non-cash charges such as
depreciation, amortization, non-cash lease expense, restructuring and impairment charges, provision for doubtful accounts,
deferred income taxes and stock-based compensation. Depreciation expense was $0.4 billion and relatively consistent with prior
years. These additions were offset by a net change in our operating assets and liabilities of $0.3 billion.
We believe net working capital is a key metric that measures our liquidity. Net working capital is calculated as current
assets less current liabilities. Net working capital decreased by $0.7 billion to $4.5 billion as of March 31, 2024 from $5.2
billion as of March 31, 2023. This decrease was primarily driven by a $1.2 billion decrease in inventories, a $0.5 billion
decrease in accounts receivable, net and derecognition of $0.4 billion of Nextracker's working capital following the Spin-off,
partially offset by a $1.3 billion decrease in accounts payables.
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Q
Cash used in investing activities totaled $0.5 billion during fiscal year 2024. This was primarily driven by $0.5 billion of
capital expenditures for property and equipment to continue expanding capabilities and capacity in support of our CEC,
Automotive, and Industrial businesses.
Cash used in financing activities was $1.7 billion during fiscal year 2024. This was primarily driven by $1.3 billion of
cash paid for the repurchase of our ordinary shares and $0.4 billion net cash for repayments of bank borrowings and long-term
debt, as cash received from the sale of Nextracker shares was offset by the capital reduction from the Nextracker Spin-off and
other financing items. Refer to note 9 and note 20 to the consolidated financial statement in Item 8, "Financial Statements and
Supplementary Data" for additional details.
Fiscal Year 2023
Cash provided by operating activities was $1.0 billion during fiscal year 2023. The total cash provided by operating
activities resulted primarily from $1.0 billion of net income for the period plus $0.5 billion of non-cash charges such as
depreciation, amortization, non-cash lease expense, restructuring and impairment charges, provision for doubtful accounts,
deferred income taxes and stock-based compensation. Depreciation expense was $0.4 billion and relatively consistent with prior
years. These additions were offset by a net change in our operating assets and liabilities of $0.6 billion primarily driven by
changes in net working capital.
Cash used in investing activities totaled $0.6 billion during fiscal year 2023. This was primarily driven by $0.6 billion of
capital expenditures for property and equipment to continue expanding capabilities and capacity in support of our expanding
CEC, Industrial, Health Solutions and Automotive businesses.
Cash provided by financing activities was $2 million during fiscal year 2023. This was primarily driven by $0.7 billion of
net proceeds received from the sale of Nextracker Class A common stock through the IPO and $0.7 billion of proceeds from
bank borrowings and long-term debt, partially offset by $1.0 billion net cash for repayments of bank borrowings and long-term
debt, and $0.3 billion of cash paid for the repurchase of our ordinary shares.
Fiscal Year 2022
Cash provided by operating activities was $1.0 billion during fiscal year 2022. The total cash provided by operating
activities resulted primarily from $0.9 billion of net income for the period plus $0.6 billion of non-cash charges such as
depreciation, amortization, non-cash lease expense, restructuring and impairment charges, provision for doubtful accounts,
deferred income taxes and stock-based compensation. Depreciation expense was $0.4 billion and relatively consistent with prior
years. These additions were offset by a net change in our operating assets and liabilities of $0.5 billion as increases in inventory
holdings were not fully offset by growth in accounts payable and working capital advances.
Cash used in investing activities totaled $1.0 billion during fiscal year 2022. This was primarily driven by approximately
$0.5 billion of cash paid for the acquisition of Anord Mardix in December 2021, net of cash acquired, and approximately $0.4
billion of capital expenditures for property and equipment to continue expanding capabilities and capacity in support of our
expanding Lifestyle, Automotive, and Industrial businesses.
Cash provided by financing activities was $0.3 billion during fiscal year 2022. This was primarily driven by $0.7 billion
of proceeds received in aggregate, after premiums, following the issuance of the HUF 100 billion Bonds due December 2031
and the €350 million term loan due December 2022, and $0.5 billion of proceeds received from the sale of Nextracker
redeemable preferred units, partially offset by $0.7 billion of cash paid for the repurchase of our ordinary shares and $0.2
billion of cash paid for the repayment of the Euro term loan due January 2022.
Adjusted Free Cash Flow
We believe adjusted free cash flow is an important liquidity metric because it measures, during a given period, the
amount of cash generated that is available to repay debt obligations, make investments, fund acquisitions, repurchase company
shares and for certain other activities. Our adjusted free cash flow is defined as cash from operations, less net purchases of
property and equipment to present adjusted cash flows on a consistent basis for investors. Our adjusted free cash flow was $0.8
billion, $0.3 billion and $0.6 billion for fiscal years 2024, 2023 and 2022, respectively. Adjusted free cash flow is not a measure
of liquidity under U.S. GAAP, and may not be defined and calculated by other companies in the same manner. Adjusted free
cash flow should not be considered in isolation or as an alternative to net cash provided by operating activities. Adjusted free
cash flows reconcile to the most directly comparable GAAP financial measure of cash flows from operations as follows:
51
Q
Fiscal Year Ended March 31,
2024
2023
2022
(In millions)
Net cash provided by operating activities
$
1,326 $
950 $
1,024
Purchases of property and equipment
(530)
(635)
(443)
Proceeds from the disposition of property and equipment
25
20
11
Adjusted free cash flow (1)
$
821 $
335 $
593
(1)
Fiscal year 2022 figures in the table may not foot exactly due to rounding.
Our cash balances are generated and held in numerous locations throughout the world. Liquidity is affected by many
factors, some of which are based on normal ongoing operations of the business and some of which arise from fluctuations
related to global economics and markets. Local government regulations may restrict our ability to move cash balances to meet
cash needs under certain circumstances; however, any current restrictions are not material. We do not currently expect such
regulations and restrictions to impact our ability to pay vendors and conduct operations throughout the global organization. We
believe that our existing cash balances, together with anticipated cash flows from operations and borrowings available under
our credit facilities, will be sufficient to fund our operations through at least the next twelve months and beyond.
Future liquidity needs will depend on fluctuations in levels of inventory, accounts receivable and accounts payable, the
timing of capital expenditures for new equipment, the extent to which we utilize operating leases for new facilities and
equipment, and the levels of shipments and changes in the volume of customer orders.
We maintain a commercial paper program which provides short-term financing under which there were no borrowings
outstanding as of March 31, 2024.
Historically, we have funded operations from cash and cash equivalents generated from operations, proceeds from public
offerings of debt securities, bank debt and lease financings. We may enter into debt and equity financings, sales of accounts
receivable and lease transactions to fund acquisitions and anticipated growth as needed. During fiscal year 2024, 2023 and
2022, we received approximately $3.6 billion, $3.5 billion, and $1.6 billion, respectively, from other sales of receivables under
our factoring programs. As of March 31, 2024 and 2023, the outstanding balance on receivables sold for cash was $0.8 billion
and $0.8 billion, respectively, under our accounts receivable factoring programs, which were removed from accounts receivable
balances in our consolidated balance sheets.
Historically we have been successful in refinancing and extending the maturity dates on our term loans and credit
facilities. In July 2022, the Company entered into a new $2.5 billion credit agreement which matures in July 2027 and consists
of a $2.5 billion revolving credit facility with a sub-limit of $360 million available for swing line loans, and a sub-limit of
$175 million available for the issuance of letters of credit.
The sale or issuance of equity or convertible debt securities could result in dilution to current shareholders. Further, we
may issue debt securities that have rights and privileges senior to those of holders of ordinary shares, and the terms of this debt
could impose restrictions on operations and could increase debt service obligations. This increased indebtedness could limit our
flexibility as a result of debt service requirements and restrictive covenants, potentially affect our credit ratings, and may limit
our ability to access additional capital or execute our business strategy. Any downgrades in credit ratings could adversely affect
our ability to borrow as a result of more restrictive borrowing terms. We continue to assess our capital structure and evaluate
the merits of redeploying available cash to reduce existing debt or repurchase ordinary shares.
Under our current share repurchase program, our Board of Directors authorized repurchases of our outstanding ordinary
shares for up to $2 billion in accordance with the share purchase mandate approved by our shareholders at the date of the most
recent Annual General Meeting which was held on August 2, 2023. During fiscal year 2024, we paid $1.3 billion to repurchase
shares under the current and prior repurchase plans at an average price of $25.65 per share. As of March 31, 2024, shares in the
aggregate amount of $1.0 billion were available to be repurchased under the current plan.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
Refer to the note 9 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for
details of our debt obligations.
In addition. we have leased certain of our property and equipment under finance lease commitments, and certain of our
facilities and equipment under operating lease commitments. The following table summarizes current and non-current material
cash requirements as of March 31, 2024 including future payments due under our debt including finance leases and related
interest obligations and operating leases (amounts may not sum due to rounding):
52
Q
Total
1 Year or Less
2 - 3 Years
4 - 5 Years
Greater Than
5 Years
(In millions)
Contractual Obligations:
Bank borrowings, long-term debt and
finance lease obligations:
Bank borrowings and long-term debt
$
3,276 $
— $
1,266 $
424 $
1,586
Finance leases
1
1
—
—
—
Interest on long-term debt obligations
558
139
207
153
59
Operating leases, net of subleases
712
160
239
157
156
Restructuring costs
80
79
1
—
—
Total contractual obligations
$
4,627 $
379 $
1,713 $
734 $
1,801
We also have outstanding firm purchase orders with certain suppliers for the purchase of inventory, which are not
included in the table above. The majority of the purchase obligations are generally short-term in nature. We generally do not
enter into non-cancelable purchase orders for materials until we receive a corresponding production forecast from our
customers. Our purchase obligations can fluctuate significantly from period to period and can materially impact our future
operating asset and liability balances, and our future working capital requirements. We intend to use our existing cash balances,
together with anticipated cash flows from operations to fund our existing and future contractual obligations.
RECENT ACCOUNTING PRONOUNCEMENTS
Refer to note 2 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for
recent accounting pronouncements.
53
Q
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
A portion of our exposure to market risk for changes in interest rates relates to our highly liquid investment portfolio,
with maturities of three months or less from original dates of purchase and are classified as cash equivalents on our
consolidated balance sheet. We do not use derivative financial instruments in our highly liquid investment portfolio. We place
cash and cash equivalents with various major financial institutions and highly rated money market accounts. Our investment
policy has strict guidelines focusing on preservation of capital. The portfolio is comprised of various instruments including term
deposits with banks, marketable securities and money market accounts. Our cash is principally invested in the U.S. dollar and
China renminbi serving as a natural hedge of our renminbi denominated costs. As of March 31, 2024, the outstanding amount in
the highly liquid investment portfolio was $0.8 billion, the largest components of which were U.S. dollar, Indian rupee,
Brazilian real and Israeli shekel denominated money market accounts with an average return of 4.0%. A hypothetical 10%
change in interest rates would not be expected to have a material effect on our financial position, results of operations and cash
flows over the next fiscal year.
As of March 31, 2024, the approximate average fair value of our debt outstanding under our Notes due June 2025,
February 2026, January 2028, June 2029, and May 2030 was 98.3% of the face value of the debt obligations based on broker
trading prices in active markets.
FOREIGN CURRENCY EXCHANGE RISK
We transact business in various foreign countries and are, therefore, subject to risk of foreign currency exchange rate
fluctuations. We have established a foreign currency risk management policy to manage this risk. To the extent possible, we
manage our foreign currency exposure by evaluating and using non-financial techniques, such as currency of invoice, leading
and lagging payments and receivables management. In addition, we may borrow in various foreign currencies and enter into
short-term and long-term foreign currency derivative contracts, including forward, swap, and option contracts to hedge only
those currency exposures associated with certain assets and liabilities, mainly accounts receivable, accounts payable, debt, and
cash flows denominated in non-functional currencies.
We endeavor to maintain a partial or fully hedged position for certain transaction exposures. These exposures are
primarily, but not limited to, revenues, customer and vendor payments and inter-company balances in currencies other than the
functional currency of the operating entity. The credit risk of our foreign currency derivative contracts is minimized since all
contracts are with large financial institutions and accordingly, fair value adjustments related to the credit risk of the counter-
party financial institutions were not material. The gains and losses on foreign currency derivative contracts generally offset the
losses and gains on the assets, liabilities and transactions hedged. The fair value of currency derivative contracts is reported on
the balance sheet. The aggregate notional amount of outstanding contracts as of March 31, 2024 amounted to $8.6 billion and
the recorded fair values of the associated assets and liabilities were not material to the Company's consolidated financial
position. The majority of these foreign exchange contracts expire in less than three months. They will settle primarily in the
Brazilian real, British pound, China renminbi, Euro, Malaysian ringgit, Mexican peso, and U.S. dollar.
Based on our overall currency rate exposures as of March 31, 2024, including the derivative financial instruments
intended to hedge the nonfunctional currency-denominated monetary assets, liabilities and cash flows, and other factors, a 10%
appreciation or depreciation of the U.S. dollar from its cross-functional rates would not be expected, in the aggregate, to have a
material effect on our financial position, results of operations and cash flows in the near-term.
54
Q
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Flex Ltd., Singapore
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Flex Ltd. and subsidiaries (the “Company”) as of March 31,
2024 and 2023, and the related consolidated statements of operations, comprehensive income, redeemable noncontrolling
interest and shareholders’ equity, and cash flows for each of the three years in the period ended March 31, 2024, and the related
notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all
material respects, the financial position of the Company as of March 31, 2024 and 2023, and the results of its operations and its
cash flows for each of the three years in the period ended March 31, 2024, in conformity with accounting principles generally
accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of March 31, 2024, based on the criteria established in
Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated May 17, 2024 expressed an unqualified opinion on the Company's internal control over
financial reporting.
Basis of Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
these financial statements based on our audits. 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 US federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits also
included assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on
the accounts or disclosures to which they relate.
Revenue - Variable Consideration and Associated Customer-Related Accruals for Pricing Adjustments - Refer to Notes 2
and 4 to the Financial Statements
Critical Audit Matter Description
Certain of the Company’s customer agreements include potential price adjustments which may result in variable consideration.
These price adjustments include committed price reductions, material margins earned over the period that are contractually
required to be paid to the customers, and other periodic pricing resets that may be refundable to customers. The Company
recognizes estimates of this variable consideration that are not expected to result in a significant revenue reversal in the future,
primarily based on the amount of potential refunds required by the contract, historical experience and other surrounding facts
and circumstances.
We identified the recognition of variable consideration and the associated customer-related accruals for pricing adjustments as a
critical audit matter due to the judgments necessary to determine when estimates of this variable consideration are no longer
expected to result in a significant revenue reversal in the future. This required extensive audit effort and a higher degree of
auditor judgment when performing audit procedures to evaluate the reasonableness of the variable consideration and associated
customer-related accruals for pricing adjustments.
55
Q
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to variable consideration and associated customer related accruals for pricing adjustments included
the following, among others:
•
We tested the effectiveness of controls the Company has in place relating to reviewing customer contracts to identify
price adjustment clauses, estimating variable consideration and assessing the reasonableness of customer related
accrual balances.
•
We evaluated the Company’s accounting policy with respect to variable consideration, as well as its process for
identifying contracts that include potential price adjustment clauses.
•
We selected a sample of contracts with customers that included potential price adjustment clauses and performed the
following:
–
We read the customer contracts to develop an understanding of clauses that could give rise to variable
consideration and evaluated whether the Company’s accounting conclusions with respect to those clauses were
reasonable.
–
We obtained and tested the mathematical accuracy of the Company’s calculations of customer related accruals and
evaluated the Company’s judgments regarding the amount of variable consideration that should be deferred. In
making this evaluation we considered both the terms included in the customer contract and the Company’s
historical experience in settling amounts with the customer.
Income Taxes - US Valuation Allowance - Refer to Note 15 to the Financial Statements
Critical Audit Matter Description
The Company records income taxes under the asset and liability method, whereby deferred income taxes reflect the net tax
effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. The carrying amounts of deferred tax assets are reduced by a valuation allowance if,
based on the available evidence, it is not more likely than not that such assets will be realized. The Company assesses the
available positive and negative evidence to estimate if sufficient future taxable income will be generated to realize the deferred
tax assets. During fiscal year 2024, the Company determined it was more likely than not that the U.S. deferred tax assets are
realizable. As a result, the Company released the valuation allowance related to these deferred tax assets of $461 million and
recorded a corresponding net income tax benefit.
We identified as a critical audit matter management’s determination that the positive evidence of the three-year trend of
objective and verifiable taxable income and forecasts of continued taxable income outweighed the negative evidence of
historical losses and volatility because of the judgment required by management to determine forecasted taxable income. This
required a higher degree of auditor judgment and an increased extent of effort, including the need to involve our income tax
specialists, when performing audit procedures to evaluate the reasonableness of management’s forecasts of sufficient future
taxable income.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s determination that in the current year it was more likely than not that the U.S.
deferred tax assets will be realized in the future included the following, among others:
•
We tested the effectiveness of management's controls over their analysis to conclude it is more likely than not that
sufficient future taxable income will be generated to realize the deferred tax assets.
•
With the assistance of our tax specialists, we performed the following:
–
Tested the accuracy of historical taxable income used in the analysis.
–
Evaluated management's assessment and weighting of the objective three-year trend of taxable income and
forecasts of continued taxable income against the historical losses and volatility to conclude if a valuation
allowance was necessary.
–
Tested the projection of future realization of the deferred tax assets, including the application of tax laws to
determine the sufficiency of future projected taxable income prior to expiration of the deferred tax assets.
–
Evaluated whether the estimates of future taxable income were consistent with evidence obtained in other areas of
the audit.
/s/ DELOITTE & TOUCHE LLP
San Jose, California
May 17, 2024
We have served as the Company’s auditors since 2002.
56
Q
FLEX LTD.
CONSOLIDATED BALANCE SHEETS
As of March 31,
2024
2023
(In millions, except share amounts)
ASSETS
Current assets:
Cash and cash equivalents
$
2,474 $
3,164
Accounts receivable, net of allowance for doubtful accounts
3,033
3,480
Contract assets
249
243
Inventories
6,205
7,388
Other current assets
1,031
875
Current assets of discontinued operations
—
883
Total current assets
12,992
16,033
Property and equipment, net
2,269
2,342
Operating lease right-of-use assets, net
601
605
Goodwill
1,135
1,139
Other intangible assets, net
245
315
Other non-current assets
1,015
490
Non-current assets of discontinued operations
—
483
Total assets
$
18,257 $
21,407
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank borrowings and current portion of long-term debt
$
— $
150
Accounts payable
4,468
5,724
Accrued payroll and benefits
488
506
Deferred revenue and customer working capital advances
2,615
2,955
Other current liabilities
968
1,019
Current liabilities of discontinued operations
—
513
Total current liabilities
8,539
10,867
Long-term debt, net of current portion
3,261
3,544
Operating lease liabilities, non-current
490
504
Other non-current liabilities
642
554
Non-current liabilities of discontinued operations
—
232
Total liabilities
12,932
15,701
Commitments and contingencies (Note 14)
Shareholders' equity
Flex Ltd. shareholders' equity
Ordinary shares, no par value; 1,500,000,000 authorized, 408,101,772 and
500,362,046 issued, and 408,101,772 and 450,122,691 outstanding as of March 31,
2024 and 2023, respectively
5,074
6,493
Treasury stock, at cost; zero and 50,239,355 shares as of March 31, 2024 and 2023,
respectively
—
(388)
Accumulated earnings (deficit)
446
(560)
Accumulated other comprehensive loss
(195)
(194)
Total Flex Ltd. shareholders' equity
5,325
5,351
Noncontrolling interest of discontinued operations
—
355
Total shareholders' equity
5,325
5,706
Total liabilities and shareholders' equity
$
18,257 $
21,407
The accompanying notes are an integral part of these consolidated financial statements.
57
Q
FLEX LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
Fiscal Year Ended March 31,
2024
2023
2022
(In millions, except per share amounts)
Net sales
$
26,415 $
28,502 $
24,633
Cost of sales
24,395
26,503
22,838
Restructuring charges
155
23
15
Gross profit
1,865
1,976
1,780
Selling, general and administrative expenses
922
874
830
Intangible amortization
70
81
60
Restructuring charges
20
4
—
Operating income
853
1,017
890
Interest expense
207
230
166
Interest income
56
30
14
Other charges (income), net
44
6
(165)
Equity in earnings (losses) of unconsolidated affiliates
8
(4)
61
Income from continuing operations before income taxes
666
807
964
(Benefit from) provision for income taxes
(206)
124
92
Net income from continuing operations
872
683
872
Net income from discontinued operations, net of tax
373
350
68
Net income
1,245
1,033
940
Net income attributable to noncontrolling interest and redeemable
noncontrolling interest
239
240
4
Net income attributable to Flex Ltd.
$
1,006 $
793 $
936
Basic earnings per share from continuing operations
$
2.00 $
1.50 $
1.83
Basic earnings per share from discontinued operations
0.31
0.25
0.14
Basic earnings per share attributable to the shareholders of Flex Ltd.
$
2.31 $
1.75 $
1.97
Diluted earnings per share from continuing operations
$
1.98 $
1.48 $
1.81
Diluted earnings per share from discontinued operations
0.30
0.24
0.13
Diluted earnings per share attributable to the shareholders of Flex Ltd.
$
2.28 $
1.72 $
1.94
Weighted-average shares used in computing per share amounts:
Basic
435
454
476
Diluted
441
462
483
The accompanying notes are an integral part of these consolidated financial statements.
58
Q
FLEX LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Fiscal Year Ended March 31,
2024
2023
2022
(In millions)
Net income
$
1,245 $
1,033 $
940
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments
(19)
(64)
(39)
Unrealized gains (loss) on derivative instruments and other
18
52
(24)
Comprehensive income
$
1,244 $
1,021 $
877
Comprehensive income attributable to noncontrolling interest and
redeemable noncontrolling interest
239
240
4
Comprehensive income attributable to Flex Ltd.
$
1,005 $
781 $
873
The accompanying notes are an integral part of these consolidated financial statements.
59
Q
FLEX LTD.
CONSOLIDATED STATEMENTS OF REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY
Redeemable
Noncontrolling
Interest
Ordinary Shares
Accumulated Other Comprehensive Loss
Total
Amount
Shares
Outstanding
Amount
Accumulated
Earnings
(Deficit)
Unrealized
Gains (Loss) on
Derivative
Instruments
And Other
Foreign
Currency
Translation
Adjustments
Total
Accumulated
Other
Comprehensive
Loss
Total Flex Ltd.
Shareholders'
Equity
Noncontrolling
Interest of
Discontinued
Operations
Shareholders'
Equity
(In millions)
BALANCE AT MARCH 31, 2021
$
—
492 $ 5,844 $ (2,289) $
(42) $
(77) $
(119) $
3,436 $
— $
3,436
Sale of subsidiary's redeemable preferred units,
net of transaction cost
74
—
414
—
—
—
—
414
—
414
Repurchase of Flex Ltd. ordinary shares at cost
—
(38)
(686)
—
—
—
—
(686)
—
(686)
Exercise of stock options
—
1
1
—
—
—
—
1
—
1
Issuance of Flex Ltd. vested shares under
restricted share unit awards
—
6
—
—
—
—
—
—
—
—
Net income
4
—
—
936
—
—
—
936
—
936
Stock-based compensation
—
—
91
—
—
—
—
91
—
91
Total other comprehensive loss
—
—
—
—
(24)
(39)
(63)
(63)
—
(63)
BALANCE AT MARCH 31, 2022
78
461
5,664
(1,353)
(66)
(116)
(182)
4,129
—
4,129
Issuance of Nextracker common stock and
related transactions
(99)
—
644
—
—
—
—
644
158
802
Payment for pre-IPO dividend to redeemable
noncontrolling interest
(22)
—
—
—
—
—
—
—
—
—
Repurchase of Flex Ltd. ordinary shares at cost
—
(20)
(337)
—
—
—
—
(337)
—
(337)
Issuance of Flex Ltd. vested shares under
restricted share unit awards
—
9
1
—
—
—
—
1
—
1
Net income
43
—
—
793
—
—
—
793
197
990
Stock-based compensation
—
—
133
—
—
—
—
133
—
133
Total other comprehensive gains (loss)
—
—
—
—
52
(64)
(12)
(12)
—
(12)
BALANCE AT MARCH 31, 2023
—
450
6,105
(560)
(14)
(180)
(194)
5,351
355
5,706
Spin-off of Nextracker
—
—
(492)
—
—
—
—
(492)
(480)
(972)
Nextracker follow-on transactions and
distribution
—
—
607
—
—
—
—
607
(114)
493
Repurchase of Flex Ltd. ordinary shares at cost
—
(51) (1,298)
—
—
—
—
(1,298)
—
(1,298)
Issuance of Flex Ltd. vested shares under
restricted share unit awards
—
9
—
—
—
—
—
—
—
—
Net income
—
—
—
1,006
—
—
—
1,006
239
1,245
Stock-based compensation
—
152
—
—
—
—
152
—
152
Total other comprehensive gains (loss)
—
—
—
—
18
(19)
(1)
(1)
—
(1)
BALANCE AT MARCH 31, 2024
$
—
408 $ 5,074 $
446 $
4 $
(199) $
(195) $
5,325 $
— $
5,325
The accompanying notes are an integral part of these consolidated financial statements.
60
Q
FLEX LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Year Ended March 31,
2024
2023
2022
(In millions)
Cash flows from operating activities:
Net income
$
1,245 $
1,033 $
936
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation
431
414
409
Amortization and other impairment charges
106
87
75
Provision for doubtful accounts (Note 2)
9
3
(3)
Other non-cash income
(25)
(44)
(54)
Non-cash lease expense
139
131
130
Stock-based compensation
152
133
91
Deferred income taxes
(480)
(192)
(44)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable
380
(388)
624
Contract assets
(41)
(27)
(226)
Inventories
1,105
(974)
(2,655)
Other current and noncurrent assets
(297)
(55)
(295)
Accounts payable
(986)
(341)
969
Other current and noncurrent liabilities
(412)
1,170
1,067
Net cash provided by operating activities
1,326
950
1,024
Cash flows from investing activities:
Purchases of property and equipment
(530)
(635)
(443)
Proceeds from the disposition of property and equipment
25
20
11
Acquisitions of businesses, net of cash acquired
—
2
(539)
Proceeds from divestiture of businesses, net of cash held in divested
businesses
12
2
9
Other investing activities, net
1
7
11
Net cash used in investing activities
(492)
(604)
(951)
Cash flows from financing activities:
Proceeds from bank borrowings and long-term debt
2
718
759
Repayments of bank borrowings and long-term debt
(409)
(1,024)
(284)
Payments for repurchases of ordinary shares
(1,298)
(337)
(686)
Proceeds from issuances of Nextracker shares
552
694
—
Payment for pre-IPO dividend to redeemable noncontrolling interest
—
(22)
—
Payment for purchase of Nextracker LLC units from TPG
(57)
—
—
Proceeds from sale of subsidiary's redeemable preferred units
—
—
488
Capital reduction from Nextracker spin off
(368)
—
—
Other financing activities, net
(78)
(27)
3
Net cash (used in) provided by financing activities
(1,656)
2
280
Effect of exchange rates on cash
2
(18)
(26)
Net (decrease) increase in cash and cash equivalents
(820)
330
327
Cash and cash equivalents, beginning of year
3,294
2,964
2,637
Cash and cash equivalents, end of year
$
2,474 $
3,294 $
2,964
The accompanying notes are an integral part of these consolidated financial statements.
61
Q
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION OF THE COMPANY
Flex Ltd. ("Flex" or the "Company") is the advanced, end-to-end manufacturing partner of choice that helps market-
leading brands design, build, deliver and manage innovative products that improve the world. Through the collective strength of
a global workforce across approximately 30 countries with responsible, sustainable operations, Flex supports our customers'
entire product lifecycle with a broad array of services in every major region. The Company's full suite of specialized
capabilities include design and engineering, supply chain, manufacturing, post-production and post-sale services. Flex partners
with customers across a diverse set of industries including cloud, communications, enterprise, automotive, industrial, consumer
devices, lifestyle, healthcare, and energy. As of March 31, 2024, as a result of the Spin-off (defined below) of Nextracker Inc.
("Nextracker"), formerly Flex's subsidiary and Nextracker segment, in the fourth quarter of fiscal year 2024, Flex now reports
its financial performance based on two operating and reportable segments 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, embedded and critical power offerings,
and renewables and grid edge.
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).
Nextracker Follow-on Offering and Spin-off
On February 13, 2023, Nextracker completed an initial public offering (the “IPO”) of its Class A common stock. Prior to
the IPO, the Company maintained an 82.6% indirect ownership in Nextracker and consolidated Nextracker. On July 3, 2023,
Nextracker completed a follow-on offering to its IPO and issued 15,631,562 shares of Class A common stock and received net
proceeds of $552 million. The entire net proceeds were used by Nextracker to acquire 14,025,000 Nextracker LLC common
units from Yuma, Inc., the Company’s indirect wholly-owned subsidiary, and 1,606,562 Nextracker LLC common units from
TPG Rise Flash, L.P., an affiliate of the global alternative asset management firm TPG. As a result of the repurchase of
Nextracker LLC common units by Nextracker, 15,631,562 shares of Nextracker Class B common stock were cancelled. The
Company received approximately $495 million from the follow-on offering, after distribution of net proceeds to TPG and
expenses. After the follow-on transaction, Flex held approximately 51.5% of Nextracker's common stock.
In connection with the IPO, Nextracker entered into a Tax Receivable Agreement ("TRA") with Flex and TPG wherein
85% of the tax benefits realized in relation to the IPO would be paid to those parties. Flex has not recorded an asset in relation
to amounts potentially due to Flex under the TRA as the amounts are contingent upon Nextracker realizing the IPO related tax
benefits. As such, amounts will be recognized in income, if and when they are received. Amounts that could be received by
Flex, over a 20 year period, range from zero to approximately $300 million.
On January 2, 2024, the Company completed its previously announced spin-off of its remaining interest in Nextracker (the
"Spin-off") to Flex shareholders on a pro-rata basis based on the number of ordinary shares of Flex held by each shareholder of
Flex (the “Distribution”) as of December 29, 2023, which was the record date of the Distribution, pursuant to the Agreement
62
Q
and Plan of Merger, dated as of February 7, 2023. Under the terms of the Spin-off, Flex shareholders received approximately
0.17 shares of Nextracker Class A common stock for each Flex ordinary share held as of the record date of the Distribution.
Flex shareholders received cash in lieu of any fractional shares. The Spin-off qualifies as a tax-free transaction for U.S. federal
income tax purposes.
As a result of the completion of the Spin-off, Nextracker became a fully independent public company, Flex no longer
directly or indirectly holds any shares of Nextracker common stock or any securities convertible into or exchangeable for shares
of Nextracker common stock and Flex no longer consolidates Nextracker into its financial results. All noncontrolling interest
related to Nextracker have been eliminated through additional paid-in capital. Prior to or in connection with the Spin-off, Flex
entered into various agreements to effect the Spin-off and provide a framework for the relationship between Flex and
Nextracker following the Spin-off, including a Separation Agreement, a Tax Matters Agreement, a Transition Services
Agreement, as well as agreements governing future trading relationships.
Subsequent to the Spin-off, Flex will present Nextracker’s historical operations as discontinued operations and, as such,
Nextracker’s historical results have been excluded from continuing operations and unless otherwise indicated Flex’s disclosures
are presented on a continuing operations basis.
2. SUMMARY OF ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Flex and its majority-owned subsidiaries,
after elimination of intercompany accounts and transactions. Amounts included in these consolidated financial statements are
expressed in U.S. dollars unless otherwise designated. 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.
As a result of the Spin-off in the fourth quarter of fiscal year 2024, the historical financial results and financial position of
Nextracker are presented as discontinued operations in the consolidated statements of operations and balance sheets for all
periods presented. The historical statements of comprehensive income and cash flows and the balances related to stockholders’
equity have not been revised to reflect the effect of the Spin-off. See note 7 "Discontinued Operations" for additional
information.
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
geopolitical conflicts (including the Russian invasion of Ukraine, the Israel-Hamas war, and other geopolitical conflicts), 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 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 dates. Revenue and expense items are translated
at the average exchange rates prevailing during the period. Cumulative gains and losses from the translation of these
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
63
Q
subsidiaries' financial statements are reported as other comprehensive income (loss), a component of shareholders' equity.
Foreign exchange gains and losses arising from transactions denominated in a currency other than the functional currency of the
entity involved, and re-measurement adjustments for foreign operations where the U.S. dollar is the functional currency, are
included in the Company's consolidated results of operations. Non-functional currency transaction gains and losses, and re-
measurement adjustments were not material to the Company's consolidated results of operations for all periods presented, and
have been classified as a component of other charges (income), net in the consolidated statements of operations.
Revenue Recognition
In determining the appropriate amount of revenue to recognize, the Company applies the following steps: (i) identifies the
contracts with the customers; (ii) identifies performance obligations in the contracts; (iii) determines the transaction price; (iv)
allocates the transaction price to the performance obligations per the contracts; and (v) recognizes revenue when (or as) the
Company satisfies a performance obligation. Further, the Company assesses whether control of the products 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
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 intellectual property restrictions) and the Company has an enforceable right to payment including
a reasonable profit for work-in-progress inventory with respect to these contracts. For certain other contracts, the Company’s
performance creates and enhances an asset that the customer controls as the Company performs under the contract. 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. 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 recognizes estimates of this variable consideration that are not expected to result in a significant revenue reversal in
the future, primarily based on the amount of potential refunds required by the contract, historical experience and other
surrounding facts and circumstances. Refer to note 4 "Revenue" for further details.
Government Incentives and Grants
The Company receives incentives from federal, state and local governments in different regions of the world that
primarily encourage the Company to establish, maintain, or increase investment, employment, or production in the regions. The
Company accounts for government incentives as a reduction in the cost of the capital investment or a reduction of expense,
based on the substance of the incentives received. Benefits are generally recorded when all conditions attached to the incentive
have been met and there is reasonable assurance of receipt. The Company records capital-related incentives as a reduction to
Property and equipment, net on the consolidated balance sheets and recognizes a reduction to depreciation and amortization
expense over the useful life of the corresponding acquired asset. The Company records operating grants as a reduction to
expense in the same line item on the consolidated statements of operations as the expenditure for which the grant is intended to
compensate. Government incentives and grants transactions are not material to the Company's financial position, results of
operations or cash flows.
Concentration of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk are primarily accounts
receivable, derivative instruments, and cash and cash equivalents.
Customer Credit Risk
The Company has an established customer credit policy, through which it manages customer credit exposures through
credit evaluations, credit limit setting, monitoring, and enforcement of credit limits for new and existing customers. The
Company performs ongoing credit evaluations of its customers' financial condition and makes provisions for doubtful accounts
based on the outcome of those credit evaluations. The Company evaluates the collectability of its accounts receivable based on
specific customer circumstances, current economic trends, historical experience with collections and the age of past due
receivables. To the extent the Company identifies exposures as a result of credit or customer evaluations, the Company also
reviews other customer related exposures, including but not limited to inventory and related contractual obligations.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
64
Q
The following table summarizes the activity in the Company's allowance for doubtful accounts during fiscal years 2024,
2023 and 2022:
Balance at
Beginning
of Year
Charges
(Recoveries) to
Costs and
Expenses(1)
Deductions/
Write-Offs (2)
Balance at
End of
Year
(In millions)
Allowance for doubtful accounts:
Year ended March 31, 2022
$
57 $
(3) $
(2) $
52
Year ended March 31, 2023
52
4
(50)
6
Year ended March 31, 2024
6
9
(3)
12
(1)
Charges and recoveries incurred during fiscal years 2024, 2023 and 2022 are primarily for costs and expenses or bad debt recoveries
related to various distressed customers.
(2)
Deductions and write-offs during fiscal year 2023 is primarily as a result of a settlement reached with a certain former customer.
No customer accounted for greater than 10% of the Company's net sales in fiscal years 2024, 2023 or 2022. No customer
accounted for greater than 10% of the Company's total balance of accounts receivable, net as of the fiscal year ended March 31,
2024, March 31, 2023 or March 31, 2022.
The Company's ten largest customers accounted for approximately 37%, 37% and 36%, of its net sales in fiscal years
2024, 2023 and 2022, respectively.
Derivative Instruments
The amount subject to credit risk related to derivative instruments is generally limited to the amount, if any, by which a
counterparty's obligations exceed the obligations of the Company with that counterparty. To manage counterparty risk, the
Company limits its derivative transactions to those with recognized financial institutions. See additional discussion of
derivatives in note 10.
Cash and Cash Equivalents
The Company maintains cash and cash equivalents with various financial institutions that management believes to be of
high credit quality. These financial institutions are located in many different locations throughout the world. The Company's
investment portfolio, which consists of short-term bank deposits and money market accounts, is classified as cash equivalents
on the consolidated balance sheets.
All highly liquid investments with maturities of three months or less from original dates of purchase are carried at cost,
which approximates fair market value, and are considered to be cash equivalents. Cash and cash equivalents consist of cash
deposited in checking accounts, money market funds and time deposits.
Cash and cash equivalents consisted of the following:
As of March 31,
2024
2023
(In millions)
Cash and bank balances
$
1,715 $
840
Money market funds and time deposits
759
2,324
$
2,474 $
3,164
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
65
Q
Inventories
Inventories are stated at the lower of cost (on a first-in, first-out basis) or net realizable value. The stated cost is comprised
of direct materials, labor and overhead. The components of inventories, net of applicable lower of cost or net realizable value
write-downs, were as follows:
As of March 31,
2024
2023
(In millions)
Raw materials
$
5,045 $
6,111
Work-in-progress
623
705
Finished goods
537
572
$
6,205 $
7,388
Property and Equipment, Net
Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization
are recognized on a straight-line basis over the estimated useful lives of the related assets, with the exception of building
leasehold improvements, which are depreciated over the term of the lease, if shorter. Repairs and maintenance costs are
expensed as incurred. Property and equipment is comprised of the following:
Depreciable
Life
(In Years)
As of March 31,
2024
2023
(In millions)
Machinery and equipment
2 - 10
$
3,960 $
3,728
Buildings
30
1,212
1,162
Leasehold improvements
Shorter of lease term or useful life of the
improvement
651
586
Furniture, fixtures, computer equipment
and software, and other
3 - 7
549
543
Land
—
123
124
Construction-in-progress
—
214
399
6,709
6,542
Accumulated depreciation and
amortization
(4,440)
(4,200)
Property and equipment, net
$
2,269 $
2,342
Total depreciation expense associated with property and equipment was approximately $428 million, $411 million and
$406 million in fiscal years 2024, 2023 and 2022, respectively.
The Company reviews property and equipment for impairment at least annually and whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of property and equipment
is determined by comparing its carrying amount to the lowest level of identifiable projected undiscounted cash flows the
property and equipment are expected to generate. An impairment loss is recognized when the carrying amount of property and
equipment exceeds its fair value.
Deferred Income Taxes
The Company provides for income taxes in accordance with the asset and liability method of accounting for income taxes.
Under this method, deferred income taxes are recognized for the tax consequences of temporary differences between the
carrying amount and the tax basis of existing assets and liabilities by applying the applicable statutory tax rate to such
differences. Additionally, the Company assesses whether each income tax position is "more likely than not" of being sustained
on audit, including resolution of related appeals or litigation, if any. For each income tax position that meets the "more likely
than not" recognition threshold, the Company would then assess the largest amount of tax benefit that is greater than 50% likely
of being realized upon effective settlement with the tax authority.
Accounting for Business and Asset Acquisitions
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
66
Q
The Company has strategically pursued business and asset acquisitions. For business combinations, the fair value of the
net assets acquired and the results of the acquired businesses are included in the Company's consolidated financial statements
from the acquisition dates forward. The Company is required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and results of operations during the reporting period. Estimates are used in accounting for,
among other things, the fair value of acquired net operating assets, property and equipment, intangible assets and related
deferred tax liabilities, useful lives of plant and equipment and amortizable lives for acquired intangible assets. Any excess of
the purchase consideration over the fair value of the identified assets and liabilities acquired is recognized as goodwill.
The Company estimates the preliminary fair value of acquired assets and liabilities as of the date of acquisition based on
information available at that time. Contingent consideration is recorded at fair value as of the date of the acquisition with
subsequent adjustments recorded in earnings. Changes to valuation allowances on acquired deferred tax assets are recognized in
the provision for, or benefit from, income taxes. The valuation of these tangible and identifiable intangible assets and liabilities
is subject to further management review and may change materially between the preliminary allocation and end of the purchase
price allocation period. Any changes in these estimates may have a material effect on the Company's consolidated operating
results or financial position.
Goodwill
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. The Company performed its
annual goodwill impairment assessment on January 1, 2024 and as a result of the quantitative assessment of its goodwill, the
Company determined that no impairment existed as of the date of the impairment test because the fair value of each one of its
six reporting units exceeded its respective carrying value.
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
valuations, market multiples for comparable companies as well as a discounted cash flow analysis. Certain of 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.
If the recorded value of the assets, including goodwill, and liabilities ("net book value") of any reporting unit exceeds its
fair value, an impairment loss may be required to be recognized.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
67
Q
The following table summarizes the activity in the Company's goodwill during fiscal years 2024 and 2023:
FAS
FRS
Total
(In millions)
Balance at March 31, 2022
$
371 $
767 $
1,138
Acquisitions (1)
—
(2)
(2)
Foreign currency translation adjustments
—
3
3
Balance at March 31, 2023
371
768
1,139
Divestitures (2)
—
(1)
(1)
Foreign currency translation adjustments
—
(3)
(3)
Balance at March 31, 2024
$
371 $
764 $
1,135
(1)
Represents purchase price adjustment for the acquisition of Anord Mardix in fiscal year 2023.
(2)
A reduction of approximately $1 million as a result of the divestiture of a non-strategic immaterial business within the FRS segment
in fiscal year 2024.
Goodwill of $204 million was derecognized as part of the Spin-off in the fiscal year ended March 31, 2024. Following the
Spin-off, all assets and liabilities of Nextracker are presented separately and so the $204 million of goodwill is presented in
non-current assets of discontinued operations in the consolidated balance sheet as of March 31, 2023 in these financial
statements.
Other Intangible Assets
The Company's acquired intangible assets are subject to amortization over their estimated useful lives and are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be
recoverable. An impairment loss is recognized when the carrying amount of an intangible asset exceeds its fair value. The
Company reviewed the carrying value of its intangible assets as of March 31, 2024 and concluded that such amounts continued
to be recoverable.
Intangible assets are comprised of customer-related intangible assets that include contractual agreements and customer
relationships, and licenses and other intangible assets that are primarily comprised of licenses, patents and trademarks, and
developed technologies. Generally, both customer-related intangible assets and licenses and other intangible assets are
amortized on a straight-line basis, over a period of up to ten years. No residual value is estimated for any intangible assets. The
fair value of the Company's intangible assets purchased through business combinations is determined based on management's
estimates of cash flow and recoverability.
The components of acquired intangible assets are as follows:
As of March 31, 2024
As of March 31, 2023
Weighted-
Average
Remaining
Useful life
(in Years)
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
(In millions)
Intangible assets:
Customer-related intangibles
6.2
$
316 $
(186) $
130 $
373 $
(204) $
169
Licenses and other
intangibles
5.5
298
(183)
115
297
(151)
146
Total
$
614 $
(369) $
245 $
670 $
(355) $
315
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
68
Q
Total intangible asset amortization expense recognized in operations during fiscal years 2024, 2023 and 2022 was
$70 million, $81 million and $60 million, respectively. The gross carrying amounts of intangible assets are removed when fully
amortized. During fiscal year 2024, the gross carrying amounts of fully amortized intangible assets totaled $50 million. The
estimated future annual amortization expense for acquired intangible assets is as follows:
Fiscal Year Ending March 31,
Amount
(In millions)
2025
$
63
2026
43
2027
35
2028
27
2029
24
Thereafter
53
Total amortization expense
$
245
The Company owns or licenses various United States and foreign patents relating to a variety of technologies. For certain
of the Company's proprietary processes, inventions, and works of authorship, the Company relies on trade secret or copyright
protection. The Company also maintains trademark rights (including registrations) for the Company's corporate name and
several other trademarks and service marks that the Company uses in the Company's business in the United States and other
countries throughout the world. The Company has policies and procedures (including both technological means and training
programs for the Company's employees) to identify and protect the Company's intellectual property, as well as that of the
Company's customers and suppliers. As of March 31, 2024 and 2023, the carrying value of the Company's intellectual property
was not material.
Derivative Instruments and Hedging Activities
All derivative instruments are recognized on the consolidated balance sheets at fair value. If the derivative instrument is
designated as a cash flow hedge, effectiveness is tested monthly using a regression analysis of the change in spot currency rates
and the change in present value of the spot currency rates. The spot currency rates are discounted to present value using
functional currency Inter-bank Offering Rates over the maximum length of the hedge period. The effective portion of changes
in the fair value of the derivative instrument (excluding time value) is recognized in shareholders' equity as a separate
component of accumulated other comprehensive income (loss), and recognized in the consolidated statements of operations
when the hedged item affects earnings. Ineffective and excluded portions of changes in the fair value of cash flow hedges are
recognized in earnings immediately. If the derivative instrument is designated as a fair value hedge, the changes in the fair
value of the derivative instrument and of the hedged item attributable to the hedged risk are recognized in earnings in the
current period. Cash receipts and cash payments related to derivative instruments are recorded in the same category as the cash
flows from the items being hedged on the consolidated statements of cash flows. Additional information is included in note 10.
Investments
The Company has an investment portfolio that consists of strategic investments in privately held companies, and certain
venture capital funds which are included within other non-current assets. These privately held companies range from startups to
more mature companies with established revenue streams and business models. As of March 31, 2024, and March 31, 2023, the
Company's investments in non-consolidated companies totaled $123 million and $115 million, respectively.
The Company recognized $8 million of net equity in earnings and $4 million of equity in losses, associated with its equity
method investments, in equity in earnings of unconsolidated affiliates on the consolidated statement of operations during fiscal
years 2024 and 2023, respectively.
Non-consolidated investments in entities are accounted for using the equity method when the Company has an investment
in common stock or in-substance common stock, and either (a) has the ability to significantly influence the operating decisions
of the issuer, or (b) if the Company has a voting percentage generally equal to or greater than 20% but less than 50%, and for
non-majority-owned investments in partnerships when generally greater than 5%. Cost method is used for investments where
the Company does not have the ability to significantly influence the operating decisions of the investee, or if the Company’s
investment is in securities other than common stock or in-substance common stock.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
69
Q
The Company monitors these investments for impairment indicators and makes appropriate reductions in carrying values
as required whenever events or changes in circumstances indicate that the assets may be impaired. The factors the Company
considers in its evaluation of potential impairment of its investments include, but are not limited to, a significant deterioration in
the earnings performance or business prospects of the investee, or factors that raise significant concerns about the investee’s
ability to continue as a going concern, such as negative cash flows from operation or working capital deficiencies. Fair values
of these investments, when required, are estimated using unobservable inputs, or Level 3 inputs, as defined by the fair value
hierarchy, and require management to make various judgmental assumptions primarily about comparable company multiples
and discounted cash flow projections. Some of the inherent estimates and assumptions used in determining the fair value of the
investments are outside the control of management. While the Company believes it has made reasonable estimates and
assumptions to calculate the fair value of the investments, 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 investments.
For investments accounted for under the cost method that do not have readily determinable fair values, the Company
measures them at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly
transactions for the identical or a similar investment of the same issuer.
Customer Working Capital Advances
Customer working capital advances were $2.2 billion and $2.3 billion, as of March 31, 2024 and 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 non-current assets
Other non-current assets include deferred tax assets of $644 million and $153 million as of March 31, 2024 and 2023,
respectively.
Other Current Liabilities
Other current liabilities include customer-related accruals of $277 million and $301 million as of March 31, 2024 and
2023, respectively.
Leases
The Company is a lessee with several non-cancellable operating leases, primarily for warehouses, buildings, and other
assets such as vehicles and equipment. The Company determines if an arrangement is a lease at contract inception. A contract is
a lease or contains a lease when (1) there is an identified asset, and (2) the Company has the right to control the use of the
identified asset. The Company recognizes a right-of-use (“ROU”) asset and a lease liability at the lease commencement date for
the Company's operating leases. For operating leases, the lease liability is initially measured at the present value of the unpaid
lease payments at the lease commencement date. The Company has elected the short-term lease recognition and measurement
exemption for all classes of assets, which allows the Company to not recognize ROU assets and lease liabilities for leases with a
lease term of 12 months or less and with no purchase option the Company is reasonably certain of exercising. The Company has
also elected the practical expedient to account for the lease and non-lease components as a single lease component, for all
classes of underlying assets. Therefore, the lease payments used to measure the lease liability include all of the fixed
considerations in the contract. Lease payments included in the measurement of the lease liability comprise the following: fixed
payments (including in-substance fixed payments), and variable payments that depend on an index or rate (initially measured
using the index or rate at the lease commencement date). As the Company cannot determine the interest rate implicit in the
lease for the Company's leases, the Company uses the Company's estimate of the incremental borrowing rate as of the
commencement date in determining the present value of lease payments. The Company's estimated incremental borrowing rate
is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under
similar terms. The lease term for all of the Company's leases includes the non-cancellable period of the lease plus any additional
periods covered by either an option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise,
or an option to extend (or not to terminate) the lease controlled by the lessor.
As of March 31, 2024 and 2023, current operating lease liabilities were $136 million and $124 million, respectively,
which are included in other current liabilities on the consolidated balance sheets.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
70
Q
Restructuring Charges
The Company recognizes restructuring charges related to its plans to close or consolidate excess manufacturing facilities
and reduce excess workforce capacity. In connection with these activities, the Company records restructuring charges for
employee termination costs, long-lived asset impairment and other exit-related costs.
The recognition of restructuring charges requires the Company to make certain judgments and estimates regarding the
nature, timing and amount of costs associated with the planned exit activity. To the extent the Company's actual results differ
from its estimates and assumptions, the Company may be required to revise the estimates of future liabilities, requiring the
recognition of additional restructuring charges or the reduction of liabilities already recognized. Such changes to previously
estimated amounts may be material to the consolidated financial statements. At the end of each reporting period, the Company
evaluates the remaining accrued balances to ensure that no excess accruals are retained, and the utilization of the provisions are
for their intended purpose in accordance with developed restructuring plans. See note 16 for additional information regarding
restructuring charges.
Recently Issued Accounting Pronouncements
In March 2024, the FASB issued ASU 2024-02 "Codification Improvements—Amendments to Remove References to the
Concepts Statements", which removes various references to concepts statements from the FASB Accounting Standards
Codification. This ASU is effective for the Company beginning in the first quarter of fiscal year 2026, 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 2026.
In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax
Disclosures", which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in
the U.S. and foreign jurisdictions. The guidance is effective for the Company beginning in the fourth quarter of fiscal year
2026. The Company expects the new guidance will have an immaterial impact on its consolidated financial statements, and
intends to adopt the guidance prospectively when it becomes effective in the fourth quarter of fiscal year 2026.
In November 2023, the FASB issued ASU 2023-07 "Segment Reporting - Improvements to Reportable Segment
Disclosures", which updates reportable segment disclosure requirements, primarily through enhanced disclosures about
significant segment expenses and information used to assess segment performance. The guidance is effective for the Company
beginning in the fourth quarter of fiscal year 2025, with early adoption permitted. The Company is currently assessing the
impact of ASU 2023-07 on its consolidated financial statements, and intends to adopt the guidance retrospectively when it
becomes effective in the fourth quarter of fiscal year 2025.
In October 2023, the FASB issued ASU 2023-06 "Disclosure Improvements - Codification Amendments in Response to
the SEC's Disclosure Update and Simplification Initiative", which amends the disclosure or presentation requirements related to
various subtopics in the FASB Accounting Standard Codification (the "Codification"). This ASU will become effective on the
date the SEC removes the applicable disclosure from Regulation S-X or Regulation S-K, with early adoption prohibited. If by
June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending
content of the related amendment will be removed from the Codification and will not be become effective for any entity. 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.
Recently Adopted Accounting Pronouncements
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 programs. The
guidance is effective for the Company beginning in the first quarter of fiscal year 2024, except for the amendment on roll-
forward 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 roll-forward of changes in those obligations, with
immaterial impacts on its consolidated financial statements.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
71
Q
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 receivables' 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 consolidated balance sheets, with the
associated payments reflected in the operating activities section of the consolidated statement of cash flows. The roll-forward of
the Company's outstanding obligations confirmed as valid under its supplier finance programs for the fiscal year ended March
31, 2024 is as follows.
Fiscal Year Ended
March 31, 2024
(In millions)
Confirmed obligations outstanding at the beginning of the year
$
157
Invoices confirmed during the year
604
Confirmed invoices paid during the year
(643)
Foreign currency exchange impact
5
Confirmed obligations outstanding at the end of the year
$
123
3. LEASES
The Company has several commitments under operating leases for warehouses, buildings, and equipment. The Company
also has a minimal number of finance leases with an immaterial impact on its consolidated financial statements. Leases have
remaining lease terms ranging from approximately 1 year to 20 years.
The components of lease cost recognized were as follow (in millions):
Lease cost
Fiscal Year Ended
March 31, 2024
March 31, 2023
Operating lease cost
$
167 $
149
Amounts reported in the consolidated balance sheet as of the fiscal years ended March 31, 2024 and 2023 were (in
millions, except weighted average lease term and discount rate):
As of March 31, 2024
As of March 31, 2023
Operating Leases:
Operating lease right of use assets
$
601
$
605
Operating lease liabilities
626
628
Weighted-average remaining lease term (In years)
Operating leases
6.3
6.6
Weighted-average discount rate
Operating leases
4.4 %
4.3 %
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
72
Q
Other information related to leases was as follow (in millions):
Fiscal Year Ended
March 31, 2024
March 31, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
$
160 $
149
Right-of-use assets obtained in exchange for lease liabilities
Operating Lease
$
134 $
119
Future lease payments under non-cancellable leases as of March 31, 2024 were as follows (in millions):
Fiscal Year Ended March 31,
Operating Leases
2025
$
160
2026
135
2027
104
2028
88
2029
69
Thereafter
157
Total undiscounted lease payments
713
Less: imputed interest
87
Total lease liabilities
$
626
Total rent expense amounted to $188 million, $182 million, and $178 million in fiscal years 2024, 2023 and 2022,
respectively.
4. REVENUE
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 (“MSAs”) 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, forecast commitments, 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) identifies the
contracts with the customers; (ii) identifies performance obligations in the contracts; (iii) determines the transaction price; (iv)
allocates the transaction price to the performance obligations per the contracts; and (v) recognizes revenue when (or as) the
Company satisfies a performance obligation. Further, the Company assesses whether control of the products or services
promised under the contract are 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
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 intellectual property restrictions) and the Company has an enforceable right to payment including
a reasonable profit for work-in-progress inventory with respect to these contracts. For certain other contracts, the Company’s
performance creates and enhances an asset that the customer controls as the Company performs under the contract. 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
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
73
Q
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 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 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 $490 million and $662 million as of March 31, 2024 and 2023,
respectively, of which $449 million and $607 million, respectively, is included in deferred revenue and customer working
capital advances under current liabilities.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
74
Q
Disaggregation of Revenue
The following table presents the Company’s revenue disaggregated based on timing of transfer - point in time and over
time for the fiscal years ended March 31, 2024, 2023 and 2022:
Fiscal Year Ended March 31,
2024
2023
2022
Timing of Transfer
(In millions)
FAS
Point in time
$
12,811 $
14,942 $
13,288
Over time
1,112
827
739
Total
13,923
15,769
14,027
FRS
Point in time
11,706
12,004
9,904
Over time
786
729
702
Total
12,492
12,733
10,606
Flex
Point in time
24,517
26,946
23,192
Over time
1,898
1,556
1,441
Total
$
26,415 $
28,502 $
24,633
5. SHARE-BASED COMPENSATION
Equity Compensation Plan
Flex historically maintains stock-based compensation plans at a corporate level. The Company granted equity
compensation awards under its 2017 Equity Incentive Plan (the "2017 Plan").
Share-Based Compensation Expense
The following table summarizes the Company's share-based compensation expense for the 2017 Plan:
Fiscal Year Ended March 31,
2024
2023
2022
(In millions)
Cost of sales
$
28 $
24 $
23
Selling, general and administrative expenses
85
77
65
Total share-based compensation expense
$
113 $
101 $
88
Cash flows resulting from excess tax benefits (tax benefits related to the excess of proceeds from employee exercises of
share options over the share-based compensation cost recognized for those options) are classified as operating cash flows.
During fiscal years 2024, 2023 and 2022, the Company did not recognize any excess tax benefits as an operating cash inflow.
The 2017 Plan
As of March 31, 2024, the Company had approximately 23.0 million shares available for grant under the 2017 Plan. The
Company grants restricted share unit ("RSU") awards under its 2017 Plan. RSU awards are rights to acquire a specified number
of ordinary shares for no cash consideration in exchange for continued service with the Company. RSU awards generally vest in
installments over a two to three-year period and unvested RSU awards are generally forfeited upon termination of employment.
Vesting for certain RSU awards is contingent upon both service and market conditions or both service and performance
conditions.
As of March 31, 2024, the total unrecognized compensation cost related to unvested RSU awards under the 2017 Plan was
approximately $173 million. These costs will be amortized generally on a straight-line basis over a weighted-average period of
approximately 2.0 years. Approximately $14 million of the total unrecognized compensation cost is related to RSU awards
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
75
Q
granted to certain key employees whereby vesting is contingent on meeting certain market conditions. Approximately
$10 million of the total unrecognized compensation cost is related to RSU awards granted to certain key employees whereby
vesting is contingent on meeting certain performance conditions.
Determining Fair Value - RSU awards
Valuation and Amortization Method—The fair market value of RSU awards granted, other than those awards with a
market condition, is the closing price of the Company's ordinary shares on the date of grant and is generally recognized as
compensation expense on a straight-line basis over the respective vesting period.
Determining Fair Value - RSU awards with service and market conditions
Valuation and Amortization Method—The Company estimates the fair value of RSU awards granted under the 2017 Plan
whereby vesting is contingent on meeting certain market conditions using Monte Carlo simulation. This fair value is then
amortized on a straight-line basis over the vesting period, which is the service period.
Expected volatility of Flex—Volatility used in a Monte Carlo simulation is derived from the historical volatility of Flex's
stock price over a period equal to the service period of the RSU awards granted. The service period is three years for those RSU
awards granted in fiscal years 2024, 2023, and 2022.
Average peer volatility—Volatility used in a Monte Carlo simulation is derived from the historical volatilities of Flex's
peer companies for the RSU awards granted in fiscal years 2024, 2023, and 2022.
Average Peer Correlation—Correlation coefficients were used to model the movement of Flex's stock price relative to
Flex's peer companies for the RSU awards granted in fiscal years 2024, 2023, and 2022.
Expected Dividend —The Company has never paid dividends on its ordinary shares and accordingly the dividend yield
percentage is zero for all periods.
Risk-Free Interest Rate assumptions—The Company bases the risk-free interest rate used in the Monte Carlo simulation
on the implied yield currently available on U.S. Treasury constant maturities issued with a term equivalent to the expected term
of the RSU awards.
The fair value of the Company's RSU awards under the 2017 Plan, whereby vesting is contingent on meeting certain
market conditions, for fiscal years 2024, 2023, and 2022 was estimated using the following weighted-average assumptions:
Fiscal Year Ended March 31,
2024
2023
2022
Expected volatility
36.9 %
49.0 %
54.6 %
Average peer volatility
35.2 %
41.4 %
39.8 %
Average peer correlation
0.4
0.4
0.4
Expected dividends
— %
— %
— %
Risk-free interest rate
4.3 %
3.0 %
0.3 %
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
76
Q
Share-Based Awards Activity
The following table summarizes the Company's RSU award activity under the 2017 Plan ("Price" reflects the weighted-
average grant-date fair value):
Fiscal Year Ended March 31,
2024
2023
2022
Shares
Price
Shares
Price
Shares
Price
Unvested RSU awards outstanding, beginning
of fiscal year
15,348,615 $ 16.79
17,019,559 $ 14.13
17,308,625 $ 11.14
Granted (1)
6,162,067 27.86
8,416,650 18.22
7,276,643 18.48
Vested (1)
(8,529,857) 14.34
(9,229,198) 12.51
(5,933,605) 10.87
Forfeited (2)
(994,150) 19.76
(858,396) 15.31
(1,632,104) 12.42
Adjustment due to the Spin-off (3)
3,380,381
—
—
Unvested RSU awards outstanding, end of
fiscal year (4)
15,367,056 $ 17.73
15,348,615 $ 16.79
17,019,559 $ 14.13
(1)
Included in both the fiscal years 2024 and 2023 amounts are 1.2 million of share bonus awards representing the number of awards
achieved above target levels based on the achievement of certain market conditions for awards granted in the fiscal years 2021 and
2020, respectively. These awards were issued and immediately vested in accordance with the terms and conditions of the underlying
awards.
(2)
Includes immaterial RSU awards previously granted to Nextracker employees under the 2017 Plan canceled due to the Spin-off.
(3)
Represents an adjustment to the outstanding RSU awards under the terms of the 2017 Plan using a conversion ratio of
approximately 1.29 as a result of the Spin-off.
(4)
The weighted-average grant date fair value of the RSUs included in the line item “Adjustment due to the Spin-off” is equal to the
weighted-average grant date fair value of the awards at their respective grant date divided by a factor of approximately 1.29. The
weighted-average grant date fair value of the unvested RSUs as of March 31, 2024 reflects the adjustment.
Of the 6.2 million unvested RSU awards granted in fiscal year 2024, approximately 4.3 million are plain-vanilla unvested
RSU awards with no performance or market conditions with an average grant date price of $27.29 per share. Further,
approximately 0.4 million of these unvested RSU awards granted in fiscal year 2024 represents the target amount of grants
made to certain key employees whereby vesting is contingent on certain market conditions, with an average grant date fair
value estimated to be $35.55 per award calculated using a Monte Carlo simulation. Vesting information for these shares is
further detailed in the table below.
Of the 15.4 million unvested RSU awards outstanding under the 2017 Plan as of the fiscal year ended March 31, 2024,
approximately 1.5 million unvested RSU awards represents the target amount of grants made to certain key employees whereby
vesting is contingent on meeting certain market conditions summarized as follows:
Target
number of
awards as of
March 31, 2024
(in shares) (1)
Range of shares
that may be issued (2)
Average
grant date
fair value
(per share)
Assessment dates
Year of grant
Minimum
Maximum
Fiscal 2024
443,253 $
35.55
—
886,506
June 2026
Fiscal 2023
628,720 $
23.45
—
1,257,440
June 2025
Fiscal 2022
436,006 $
25.86
—
872,012
June 2024
Totals
1,507,979
3,015,958
(1) Includes an adjustment to the outstanding RSU awards under the terms of the 2017 Plan using a conversion ratio of approximately
1.29 as a result of the Spin-off.
(2) Vesting ranges from zero to 200% based on measurement of Flex's total shareholder return against Flex's peer companies for RSU
awards granted in fiscal years 2024, 2023 and 2022.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
77
Q
The Company will continue to recognize share-based compensation expense for awards with market conditions regardless
of whether such awards will ultimately vest. During fiscal year 2024, 2.3 million shares vested in connection with the awards
with market conditions granted in fiscal year 2021.
Approximately 0.4 million of these unvested RSU awards granted in fiscal year 2024 represents the target amount of
grants made to certain key employees whereby vesting is contingent on certain performance conditions, with an average grant
date price of $26.67 per share. Vesting information for these shares is further detailed in the table below.
Of the 15.4 million unvested RSU awards outstanding under the 2017 Plan as of the fiscal year ended March 31, 2024,
approximately 1.5 million unvested RSU awards represents the target amount of grants made to certain key employees whereby
vesting is contingent on meeting certain performance conditions summarized as follows:
Target
number of
awards as of
March 31, 2024
(in shares) (1)
Range of shares
that may be issued (2)
Average
grant date
fair value
(per share)
Assessment date
Year of grant
Minimum
Maximum
Fiscal 2024
443,253 $
26.67
—
886,506
Mar 2027
Fiscal 2023
628,720 $
16.52
—
1,257,440
Mar 2026
Fiscal 2022
436,003 $
18.24
—
872,006
Mar 2025
Totals
1,507,976
3,015,952
(1) Includes an adjustment to the outstanding RSU awards under the terms of the 2017 Plan using a conversion ratio of approximately
1.29 as a result of the Spin-off.
(2) Vesting ranges from zero to 200% based on performance of Flex's average earnings per share growth.
The total intrinsic value of RSU awards vested under the Company's 2017 Plan was $227 million, $148 million and $108
million during fiscal years 2024, 2023 and 2022, respectively, based on the closing price of the Company's ordinary shares on
the date vested.
Impact from Nextracker Spin-off on Equity Awards
Starting from fiscal year 2023, Nextracker granted equity compensation awards to Nextracker employees under the First
Amended and Restated 2022 Nextracker LLC Equity Incentive Plan (the "2022 Nextracker Plan"), which was administered by
Nextracker, a majority owned subsidiary of the Company prior to the Spin-off. Subsequent to the Spin-off, no stock-based
compensation expense for the Nextracker awards granted under the 2022 Nextracker Plan will be included in Flex's
consolidated financial statements.
In connection with the Spin-off, the Company was required to make certain adjustments to the number of share-based
compensation awards under the 2017 Plan using a conversion ratio designed to preserve the intrinsic value of the awards to the
holders immediately prior to the Spin-off. Adjustments to the outstanding share-based compensation awards did not result in
material additional compensation expense. All outstanding RSU awards under the 2017 Plan for employees transferred to
Nextracker were canceled in connection with the Spin-off. The Company did not recognize any compensation cost related to
awards held by Nextracker employees post the Spin-off. Approximately $39 million of stock-based compensation expense was
recognized in respect of Nextracker employees for fiscal year 2024 (prior to the Spin-off) and is included in net income from
discontinued operations, net of tax.
6. EARNINGS PER SHARE
Basic earnings per share excludes dilution and is computed by dividing net income by the weighted-average number of
ordinary shares outstanding during the applicable periods.
Diluted earnings per share reflects the potential dilution from share-based compensation awards. The potential dilution
from restricted share unit awards was computed using the treasury stock method based on the average fair market value of the
Company's ordinary shares for the period.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
78
Q
The computation of earnings per share and weighted average shares outstanding of the Company’s common stock for the
following periods is presented below:
Fiscal Year Ended March 31,
2024
2023
2022
(In millions, except per share amounts)
Numerator:
Net income from continuing operations
$
872 $
683 $
872
Net income from discontinued operations, net of tax (Note 7)
373
350
68
Less: Net income attributable to noncontrolling interest and redeemable
noncontrolling interest (Note 7)
239
240
4
Net income from discontinued operations attributable to Flex Ltd. (Note 7)
134
110
64
Total net income attributable to Flex Ltd.
$
1,006 $
793 $
936
Denominator:
Weighted-average ordinary shares outstanding - basic
435
454
476
Weighted-average ordinary share equivalents from RSU awards (1)
6
8
7
Weighted-average ordinary shares and ordinary share equivalents
outstanding - diluted
441
462
483
Earnings per share - basic
Continuing operations
$
2.00 $
1.50 $
1.83
Discontinued operations, net of tax (Note 7)
0.31
0.25
0.14
Total attributable to the shareholders of Flex Ltd.
$
2.31 $
1.75 $
1.97
Earnings per share - diluted
Continuing operations
$
1.98 $
1.48 $
1.81
Discontinued operations, net of tax (Note 7)
0.30
0.24
0.13
Total attributable to the shareholders of Flex Ltd.
$
2.28 $
1.72 $
1.94
_________________________________________________________________________
(1)
An immaterial amount of RSU awards during fiscal years 2024, 2023, and 2022, respectively, were excluded from the computation
of diluted earnings per share due to their anti-dilutive impact on the weighted average ordinary shares equivalents.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
79
Q
7. DISCONTINUED OPERATIONS
On January 2, 2024, Flex completed the Spin-off of our remaining interests in Nextracker to Flex shareholders on a pro-
rata basis based on the number ordinary shares of Flex held by each shareholder of Flex as of December 29, 2023, which was
the record date of the Distribution.
Nextracker's financial results for periods prior to the Spin-off have been reflected in our consolidated statement of
operations, retrospectively, as discontinued operations. Details of net income from discontinued operations included in our
consolidated statements of operations are as follows:
Fiscal Year Ended March 31,
2024 (1)
2023
2022
(In millions)
Net sales (2)
$
1,664 $
1,844 $
1,408
Cost of sales (2)
1,198
1,555
1,256
Gross profit
466
289
152
Selling, general and administrative expenses
145
121
62
Intangible amortization
—
1
8
Operating income
321
167
82
Interest, net
1
1
—
Other charges (income), net
(2)
(1)
1
Income before income taxes
322
167
81
(Benefit from) provision for income taxes
(51)
(183)
13
Net income from discontinued operations
373
350
68
Net income from discontinued operations attributable to noncontrolling interest
and redeemable noncontrolling interest (3)
239
240
4
Net income from discontinued operations attributable to Flex Ltd.
$
134 $
110 $
64
(1)
Represents the financial results for the nine-month period prior to the Spin-off. The financial results for the period from January 1,
2024 to the Spin-off date were immaterial.
(2)
Both net sales and cost of sales from discontinued operations includes the effect of intercompany transactions that were eliminated
from Flex's consolidated operations of approximately $99 million, $59 million, and $50 million for fiscal years ended March 31,
2024, 2023, and 2022, respectively.
(3)
Net income from discontinued operations attributable to noncontrolling interest represented a share of pre-tax income of
$145 million, zero, and zero and of income tax benefits of $94 million, $197 million, and zero and distributions to redeemable
noncontrolling interest of zero, $43 million, and $4 million for the fiscal years ended March 31, 2024, 2023, and 2022, respectively.
As such, pre-tax income attributable to Flex Ltd. from discontinued operations was $177 million, $167 million and $81 million for
the same periods.
Details of cash flows from discontinued operations are as follows:
Fiscal Year Ended March 31,
2024 (1)
2023
2022
(In millions)
Net cash provided by (used in) discontinued operations operating activities (2)
$
317 $
108 $
(147)
Net cash used in discontinued operations investing activities
(4)
(3)
(6)
(1)
Represents the financial results for the nine-month period prior to the Spin-off.
(2)
Cash flows from discontinued operations operating activities includes the effect of intercompany transactions that were eliminated
from Flex's consolidated operations of $54 million, ($23) million, and $11 million for the fiscal years ended March 31, 2024, 2023,
and 2022, respectively.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
80
Q
The following table summarizes the major classes of assets and liabilities of discontinued operations that were included in
the Company's consolidated balance sheet as of March 31, 2023. There were no assets and liabilities of discontinued operations
as of March 31, 2024.
As of March 31,
2023
(In millions)
Cash and cash equivalents
$
130
Accounts receivable, net
271
Contract assets
298
Inventories
142
Other current assets
42
Current assets of discontinued operations
$
883
Property and equipment, net
$
7
Operating lease right-of-use assets, net
3
Goodwill
204
Other intangible assets, net
1
Other non-current assets
268
Non-current assets of discontinued operations
$
483
Accounts payable
$
206
Accrued payroll and benefits
16
Deferred revenue and customer working capital advances
188
Other current liabilities
103
Current liabilities of discontinued operations
$
513
Long-term debt
$
147
Operating lease liabilities, non-current
2
Other non-current liabilities
83
Non-current liabilities of discontinued operations
$
232
8. SUPPLEMENTAL CASH FLOW DISCLOSURES
The following table represents supplemental cash flow disclosures and non-cash investing and financing activities:
Fiscal Year Ended March 31,
2024
2023
2022
(In millions)
Net cash paid for:
Interest
$
226 $
227 $
169
Income taxes
243
124
122
Non-cash investing and financing activity:
Unpaid purchases of property and equipment
$
97 $
184 $
126
Pre-IPO paid-in-kind dividend to redeemable noncontrolling interest
—
21
4
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
81
Q
9. BANK BORROWINGS AND LONG-TERM DEBT
Bank borrowings and long-term debt are as follows:
Maturity Date
As of March 31,
2024
2023
(In millions)
4.750% Notes ("2025 Notes") (1)(2)
June 2025
584
599
3.750% Notes ("2026 Notes") (1)(2)
February 2026
682
686
6.000% Notes ("2028 Notes") (1)(2)
January 2028
397
396
4.875% Notes ("2029 Notes") (1)(2)
June 2029
657
658
4.875% Notes ("2030 Notes") (1)(2)
May 2030
681
685
JPY Term Loan (3)
April 2024
—
253
Delayed Draw Term Loan (4)
November 2023
—
150
3.600% HUF Bonds (5)
December 2031
274
284
Other
1
1
Debt issuance costs
(15)
(18)
3,261
3,694
Current portion, net of debt issuance costs
—
(150)
Non-current portion
$
3,261 $
3,544
(1)
The notes are carried at the principal amount of each note, less any unamortized discount or premium and unamortized debt
issuance costs.
(2)
The notes are the Company’s senior unsecured obligations and rank equally with all other existing and future senior unsecured debt
obligations.
(3)
In April 2019, the Company entered into a JPY 33.5 billion term loan agreement at three-month TIBOR plus 0.430%, which was
then swapped to U.S. dollars. The term loan, which is subject to quarterly interest payments, was used to fund general operations
and refinance certain other outstanding debt. During fiscal year 2024, the Company repaid the outstanding balance.
(4)
In September 2022, the Company entered into a $450 million delayed draw term loan credit agreement, under which $300 million
was repaid during fiscal year 2023. Borrowings under the delayed draw term loan may be used for working capital, capital
expenditures, refinancing of current debt, and other general corporate purposes. Interest is based on either (a) a Term SOFR-based
formula plus a margin of 100.0 basis points to 162.5 basis points, depending on the Company's credit ratings, or (b) a Base Rate (the
greatest of the agent's prime rate, the federal funds rate plus 0.50%, and the Term SOFR plus 1.00%) formula plus a margin of 0.0
basis point to 62.5 basis points, depending on the Company's credit ratings. During fiscal year 2024, the Company repaid the
remaining $150 million outstanding balance.
(5)
In December 2021, the Company issued HUF 100 billion (approximately $274 million as of March 31, 2024) in aggregate principal
amount of bonds under the National Bank of Hungary’s Bond Funding for Growth Scheme. The bonds are unsecured and
unsubordinated obligations of the Company and rank equally with all of the Company’s other existing and future unsecured and
unsubordinated obligations. The outstanding principal amount of the bonds bear interest at 3.60% per annum. The proceeds of the
bonds were used for general corporate purposes.
Revolving Credit Facilities:
In July 2022, the Company entered into a $2.5 billion credit agreement which matures in July 2027 (the "2027 Credit
Facility") and consists of a $2.5 billion revolving credit facility with a sub-limit of $360 million available for swing line loans,
and a sub-limit of $175 million available for the issuance of letters of credit. The 2027 Credit Facility replaced the previous
$2.0 billion revolving credit facility, which was due to mature in January 2026. As of March 31, 2024 and 2023, no borrowings
were outstanding.
Borrowings under the 2027 Credit Facility bear interest, at the Company’s option, either at (i) the Base Rate (as defined in
the 2027 Credit Facility), plus 1.0% and an applicable margin ranging from 0.125% to 0.750% per annum based on credit
ratings or (ii) Term SOFR (or an Alternative Currency Term Rate based on the applicable currency at issue or Alternative
Currency Daily Rate based on Sterling Overnight Index Average) plus the applicable margin ranging between 1.125% and
1.750% per annum based on credit ratings, plus an adjustment for Term SOFR loans of 0.10% per annum and an adjustment for
Sterling Overnight Index Average loans of 0.0326% per annum. Interest on the outstanding borrowings is payable, (i) in the
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
82
Q
case of borrowings at the Base Rate, on the last business day of March, June, September and December of each calendar year
and the maturity date, (ii) in the case of borrowings at the Term SOFR rate (or Alternative Currency Term Rate), on the last day
of the applicable interest period selected by the Company, which date shall be no later than the last day of every third month
and the maturity date and (iii) in the case of borrowings at the Alternative Currency Daily Rate, on the last day of each calendar
month and the maturity date. The Company is required to pay a quarterly commitment fee on the unutilized portion of the
revolving credit commitments under the 2027 Credit Facility ranging from 0.125% to 0.275% per annum, based on credit
ratings. The Company is also required to pay letter of credit usage fees ranging from 1.125% to 1.750% per annum (based on
the credit ratings) on the amount of the daily average outstanding letters of credit and a fronting fee of 0.125% per annum on
the undrawn and unexpired amount of each letter of credit.
Under the 2027 Credit Facility, the interest rate margins, commitment fee and letter of credit usage fee are subject to
upward or downward adjustments if the Company achieves, or fails to achieve, certain specified sustainability targets with
respect to workplace safety and greenhouse gas emissions. Such upward or downward sustainability adjustments may be up to
0.05% per annum in the case of the interest rate margins and letter of credit usage fee and up to 0.01% per annum in the case of
the commitment fee.
As of March 31, 2024, the Company and certain of its subsidiaries had various uncommitted revolving credit facilities,
lines of credit and other credit facilities in the amount of $318 million in the aggregate. There were no borrowings outstanding
under these facilities as of March 31, 2024 and 2023. These unsecured credit facilities, and lines of credit and other credit
facilities bear annual interest at the respective country's inter-bank offering rate, plus an applicable margin.
Debt Covenants:
Borrowings under the Company’s debt agreements are subject to various covenants that limit the Company’s ability to
incur additional indebtedness, sell assets, effect mergers and certain transactions, and effect certain transactions with
subsidiaries and affiliates. In addition, the 2027 Credit 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 interest
coverage ratio. The Company is also subject to certain covenants requiring the Company to offer to repurchase the 2025 Notes,
2026 Notes, 2028 Notes, 2029 Notes, and 2030 Notes upon a change of control. As of March 31, 2024 and 2023, the Company
was in compliance with its debt covenants.
The weighted-average interest rates for the Company's long-term debt were 4.5% and 4.6% as of March 31, 2024 and
2023, respectively.
Scheduled repayments of the Company's bank borrowings and long-term debt are as follows:
Fiscal Year Ending March 31,
Amount
(In millions)
2025
$
—
2026
1,266
2027
—
2028
397
2029
27
Thereafter
1,586
Total
$
3,276
10. FINANCIAL INSTRUMENTS
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 partial or fully hedged position for certain transaction exposures, which are primarily, but not
limited to, forecasted sales and cost of sales, and monetary assets and liabilities in currencies other than the functional currency
of the operating entity. The Company enters into short-term and long-term foreign currency derivative contracts, including
forward, swap, and option contracts, to hedge only those currency exposures associated with certain assets and liabilities,
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
83
Q
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 institution were not material.
As of March 31, 2024, the aggregate notional amount of the Company's outstanding foreign currency derivative contracts
was $8.6 billion as summarized below:
Notional Contract
Value in USD
Currency
Buy
Sell
(In millions)
Cash Flow Hedges
HUF
$
443 $
—
MXN
609
—
Other
550
20
1,602
20
Other Foreign Currency Contracts
BRL
—
361
CNY
321
84
EUR
1,883
1,815
MXN
532
448
MYR
264
120
Other
707
458
3,707
3,286
Total Notional Contract Value in USD
$
5,309 $
3,306
As of March 31, 2024 and 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 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
consolidated statements of operations. The Company also has included net deferred gains and losses in accumulated other
comprehensive loss, a component of shareholders' equity in the consolidated balance sheets, relating to changes in fair value of
its foreign currency contracts that are accounted for as cash flow hedges. Deferred gains were $19 million as of March 31,
2024, and are expected to be recognized primarily as a component of cost of sales in the consolidated statement of operations
primarily over the next twelve-month period, except for gain attributable to changes in fair value of the USD HUF cross
currency swaps, which are discussed below.
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 other current assets and other
non-current liabilities as of March 31, 2024 and March 31, 2023, respectively. 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.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
84
Q
The following table presents the fair value of the Company's derivative instruments utilized for foreign currency risk
management purposes at March 31, 2024 and 2023:
Fair Values of Derivative Instruments
Asset Derivatives
Liability Derivatives
Fair Value
Fair Value
Balance Sheet
Location
March 31,
2024
March 31,
2023
Balance Sheet
Location
March 31,
2024
March 31,
2023
(In millions)
Derivatives designated as
hedging instruments
Foreign currency contracts
Other current
assets
$
45 $
46
Other current
liabilities
$
(9) $
22
Foreign currency contracts
Other non-current
assets
—
—
Other non-current
liabilities
(33)
88
Derivatives not designated
as hedging instruments
Foreign currency contracts
Other current
assets
$
14 $
26
Other current
liabilities
$
(10) $
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 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.
11. ACCUMULATED OTHER COMPREHENSIVE LOSS
The changes in accumulated other comprehensive loss by component, net of tax, during fiscal years ended March 31,
2024, 2023 and 2022 are as follows:
Unrealized gains
(loss) on
derivative
instruments and
other
Foreign currency
translation
adjustments
Total
(In millions)
Ending balance on March 31, 2021
$
(42) $
(77) $
(119)
Other comprehensive loss before reclassifications
(49)
(44)
(93)
Net loss reclassified from accumulated other comprehensive loss
25
5
30
Net current-period other comprehensive loss
(24)
(39)
(63)
Ending balance on March 31, 2022
$
(66) $
(116) $
(182)
Other comprehensive loss before reclassifications
(25)
(67)
(92)
Net loss reclassified from accumulated other comprehensive loss
77
3
80
Net current-period other comprehensive gains (loss)
52
(64)
(12)
Ending balance on March 31, 2023
$
(14) $
(180) $
(194)
Other comprehensive gains (loss) before reclassifications
95
(19)
76
Net (gains) loss reclassified from accumulated other comprehensive loss
(77)
—
(77)
Net current-period other comprehensive gains (loss)
18
(19)
(1)
Ending balance on March 31, 2024
$
4 $
(199) $
(195)
Substantially all unrealized gains and losses relating to derivative instruments and other, reclassified from accumulated
other comprehensive loss for the fiscal year 2024 were reclassified out of accumulated other comprehensive loss to other
charges (income), net and cost of sales in the consolidated statement of operations, which primarily relate to the Company's
foreign currency contracts accounted for as cash flow hedges.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
85
Q
The tax impact to other comprehensive loss was immaterial for all periods presented.
12. TRADE RECEIVABLES SALES PROGRAMS
The Company sells accounts receivables to certain third-party banking institutions under factoring programs. The
outstanding balance of receivables sold and not yet collected on accounts where the Company has continuing involvement was
approximately $0.8 billion and $0.8 billion as of March 31, 2024 and 2023, respectively. For the fiscal years ended March 31,
2024, 2023 and 2022, total accounts receivable sold to certain third party banking institutions was approximately $3.6 billion,
$3.5 billion and $1.6 billion, respectively. The receivables that were sold were removed from the consolidated balance sheets
and the cash received was included as cash provided by operating activities in the consolidated statements of cash flows.
13. FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. When determining the fair value measurements for assets and
liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market
in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability.
The accounting guidance for fair value establishes a fair value hierarchy based on the level of independent, objective evidence
surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is
based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:
Level 1 - Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
There were no balances classified as level 1 in the fair value hierarchy as of March 31, 2024.
Level 2 - Applies to assets or liabilities for which there are inputs other than quoted prices included within level 1 that are
observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for
identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets) such as cash
and cash equivalents and money market funds; or model-derived valuations in which significant inputs are observable or can be
derived principally from, or corroborated by, observable market data.
The Company values foreign exchange forward contracts using level 2 observable inputs which primarily consist of an
income approach based on the present value of the forward rate less the contract rate multiplied by the notional amount.
The Company's cash equivalents include bank time deposits and money market funds, which are valued using level 2
inputs, such as interest rates and maturity periods. Due to their short-term nature, their carrying amount approximates fair value.
The Company has deferred compensation plans for its officers and certain other employees. Amounts deferred under the
plans are invested in hypothetical investments selected by the participant or the participant's investment manager. The
Company's deferred compensation plan assets are included in other non-current assets on the consolidated balance sheets and
include money market funds, mutual funds, corporate and government bonds and certain convertible securities that are valued
using prices obtained from various pricing sources. These sources price these investments using certain market indices and the
performance of these investments in relation to these indices. As a result, the Company has classified these investments as
level 2 in the fair value hierarchy.
Level 3 - Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are
significant to the measurement of the fair value of the assets or liabilities.
There were no transfers between levels in the fair value hierarchy during fiscal years 2024 and 2023.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
86
Q
Financial Instruments Measured at Fair Value on a Recurring Basis
The following table presents the Company's assets and liabilities measured at fair value on a recurring basis as of
March 31, 2024 and 2023:
Fair Value Measurements as of March 31, 2024
Level 1
Level 2
Level 3
Total
(In millions)
Assets:
Money market funds and time deposits (Note 2)
$
— $
759 $
— $
759
Foreign currency contracts (Note 10)
—
59
—
59
Deferred compensation plan assets:
Mutual funds, money market accounts and equity
securities
—
41
—
41
Liabilities:
Foreign currency contracts (Note 10)
$
— $
(52) $
— $
(52)
Fair Value Measurements as of March 31, 2023
Level 1
Level 2
Level 3
Total
(In millions)
Assets:
Money market funds and time deposits (Note 2)
$
— $
2,324 $
— $
2,324
Foreign currency contracts (Note 10)
—
72
—
72
Deferred compensation plan assets:
Mutual funds, money market accounts and equity
securities
—
35
—
35
Liabilities:
Foreign currency contracts (Note 10)
$
— $
(129) $
— $
(129)
Other financial instruments
The following table presents the Company's major debts not carried at fair value as of March 31, 2024 and 2023:
As of March 31, 2024
As of March 31, 2023
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Fair Value
Hierarchy
(In millions)
(In millions)
JPY Term Loan due April 2024
—
—
253
253
Level 2
4.750% Notes due June 2025
584
578
599
590
Level 1
3.750% Notes due February 2026
682
662
686
657
Level 1
6.000% Notes due January 2028
397
404
396
399
Level 1
4.875% Notes due June 2029
657
643
658
631
Level 1
4.875% Notes due May 2030
681
662
685
661
Level 1
Delayed Draw Term Loan
—
—
150
150
Level 2
3.600% HUF Bonds due December 2031
274
219
284
196
Level 2
The Notes due June 2025, February 2026, January 2028, June 2029 and May 2030 are valued based on broker trading
prices in active markets. HUF Bonds are valued based on the broker trading prices in an inactive market.
14. COMMITMENTS AND CONTINGENCIES
Commitments
As of March 31, 2024 and 2023, the gross carrying amount and associated accumulated depreciation of the Company's
property and equipment financed under finance leases, and the related obligations was not material. The Company also leases
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
87
Q
certain of its facilities and equipment under non-cancelable operating leases. These operating leases expire in various years
through 2044. Refer to note 3 for additional details on the minimum lease payments.
Litigation and other legal matters
In connection with the matters described below, the Company has accrued for loss contingencies where it believes that
losses are probable and estimable. Although it is reasonably possible that actual losses could be in excess of the Company’s
accrual, the Company is unable to estimate a reasonably possible loss or range of loss in excess of its accrual, due to various
reasons, including, among others, that: (i) the proceedings are in early stages or no claims have been asserted, (ii) specific
damages have not been sought in all of these matters, (iii) damages, if asserted, are considered unsupported and/or exaggerated,
(iv) there is uncertainty as to the outcome of pending appeals, motions, or settlements, (v) there are significant factual issues to
be resolved, and/or (vi) there are novel legal issues or unsettled legal theories presented. Any such excess loss could have a
material effect on the Company’s results of operations or cash flows for a particular period or on the Company’s financial
condition.
The Company is currently involved in a commercial dispute related to a construction matter with related production
objectives. Management has assessed the potential outcomes of this dispute, considered available information, and consulted
with legal counsel and as a result of this assessment has recognized $50 million in Selling, general and administrative expenses
in the fiscal quarter ended March 31, 2024 as an accrual. The ultimate resolution of this dispute is uncertain, and the actual
outcome may differ from the estimates made by management. Changes in circumstances or additional information may impact
the Company’s assessment of its loss and could result in adjustments to the $50 million accrual, however, management
currently believes that the resolution of this dispute will not have a material effect on the Company’s financial position, results
of operations or cash flows. The Company will continue to monitor developments related to this matter and will adjust its
accrual and disclosures accordingly in future reporting periods as additional information becomes available.
One of the Company's Brazilian subsidiaries has received assessments for certain sales and import taxes. There were
originally six tax assessments totaling the updated amount inclusive of interest and penalties of 419 million Brazilian reals
(approximately USD $84 million based on the exchange rate as of March 31, 2024). The Company successfully defeated one of
the six assessments in September 2019 (totaling approximately 61 million Brazilian reals or USD $12 million) and the
government lost its appeal on February 21, 2024. The Company successfully defeated another three of the assessments in
September 2022 (totaling the updated amount inclusive of interest and penalties of approximately 261 million Brazilian reals or
USD $52 million). These three assessments are pending appeal by the government. The Company was unsuccessful at the
administrative level for the remaining two assessments and filed annulment actions in federal court in Brasilia, Brazil on March
23, 2020 and September 19, 2023, respectively; the updated amount of those assessments inclusive of interest and penalties is
approximately 94 million Brazilian reals (approximately USD $19 million). The Company believes that it has meritorious
defenses to each of these assessments and will continue to vigorously oppose all of them, as well as any future assessments. The
Company does not expect final judicial determination on any of these claims in the near future.
On February 14, 2019, the Company submitted an initial notification of voluntary disclosure to the U.S. Department of the
Treasury, Office of Foreign Assets Control ("OFAC") regarding possible noncompliance with U.S. economic sanctions
requirements among certain non-U.S. Flex-affiliated operations. On September 28, 2020, the Company made a submission to
OFAC that completed the Company’s voluntary disclosure based on the results of an internal investigation regarding the matter.
On June 11, 2021, the Company notified OFAC that it had identified possible additional relevant transactions at one non-U.S.
Flex-affiliated operation. The Company submitted an update to OFAC on November 16, 2021 reporting on the results of its
review of those transactions. The Company received a No Action Letter dated February 22, 2024 from OFAC, stating that
OFAC had closed its investigation without taking further action.
A foreign Tax Authority (“Tax Authority”) has assessed a cumulative total of approximately $221 million in taxes owed
for multiple Flex legal entities within its jurisdiction for various fiscal years ranging from fiscal year 2010 through fiscal year
2020. The assessed amounts related to the denial of certain deductible intercompany payments and taxability of income earned
outside such jurisdiction. The Company disagrees with the Tax Authority’s assessments and is actively contesting the
assessments through the administrative and judicial processes.
As the final resolution of the above outstanding tax item remains uncertain, the Company continues to provide for the
uncertain tax positions based on the more likely than not standard. While the resolution of the issues may result in tax liabilities,
interest and penalties, which may be significantly higher than the amounts accrued for these matters, management currently
believes that the resolution will not have a material effect on the Company’s financial position, results of operations or cash
flows.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
88
Q
In addition to the matters discussed above, from time to time, 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 expects that any losses that are probable or reasonably
possible of being incurred as a result of these matters, which are in excess of amounts already accrued in the Company’s
consolidated balance sheets, would not be material to the financial statements as a whole.
15. INCOME TAXES
The domestic (Singapore) and foreign components of income from continuing operations before income taxes were
comprised of the following:
Fiscal Year Ended March 31,
2024
2023
2022
(In millions)
Domestic
$
(165) $
99 $
352
Foreign
831
708
612
Total
$
666 $
807 $
964
The (benefit from) provision for income taxes from continuing operations consisted of the following:
Fiscal Year Ended March 31,
2024
2023
2022
(In millions)
Current:
Domestic
$
3 $
6 $
3
Foreign
161
117
133
164
123
136
Deferred:
Domestic
(1)
1
—
Foreign
(369)
—
(44)
(370)
1
(44)
(Benefit from) provision for income taxes
$
(206) $
124 $
92
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
89
Q
The domestic statutory income tax rate was approximately 17.0% in fiscal years 2024, 2023 and 2022. The reconciliation
of the income tax expense (benefit) from continuing operations 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,
2024
2023
2022
(In millions)
Income taxes based on domestic statutory rates
$
113 $
137 $
164
Effect of jurisdictional tax rate differential
68
52
(97)
Change in unrecognized tax benefit
(10)
(7)
12
Change in valuation allowance
(685)
(290)
(135)
Foreign exchange movement on prior year taxes recoverable
(1)
4
(9)
Liability for undistributed earnings
135
—
—
Global intangible low-taxed income (GILTI) / Subpart F income
13
18
30
Nextracker related transactions gains
115
158
110
Earnings from partnership
47
39
—
U.S. state taxes
10
2
5
Excess compensation (Section 162(m))
15
9
4
Other
(26)
2
8
(Benefit from) provision for income taxes
$
(206) $
124 $
92
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, 2024, 2023 and 2022 was $20 million, $14 million and $23 million, respectively.
For the fiscal year ended March 31, 2024, the effect on basic and diluted earnings per share was $0.05, and the effects on basic
and diluted earnings per share during fiscal years 2023 and 2022 were $0.03, and $0.05, respectively. Unless extended or
otherwise renegotiated, the Company's existing holidays will expire in various years through the end of fiscal year 2032.
The Company provides a valuation allowance against deferred tax assets that in the Company's estimation are not more
likely than not to be realized. During fiscal years 2024, 2023 and 2022, the Company released net valuation allowances totaling
$447 million, $6 million and $26 million, respectively. For fiscal year 2024, included in the $447 million net release was a
$461 million valuation allowance release related to the Company’s U.S. operations as these amounts were deemed to be more
likely than not to be realized. As of each reporting date, the Company considers new evidence, both positive and negative, that
could affect its view of the future realization of deferred tax assets. The net deferred tax asset before valuation allowance of the
Company’s U.S. group totaled $509 million and $701 million as of March 31, 2024 and 2023, respectively, $358 million and
$541 million of which relate to tax loss carryforwards generated in prior years. The Company has, until the current year, carried
a valuation allowance ($692 million as of March 31, 2023) against the net deferred tax assets of the U.S. group due to a long-
term trend of historical losses as well as unpredictability of U.S. taxable income, particularly with regard to its Nextracker
subsidiary. This trend represented negative evidence that outweighed positive evidence of taxable income in the U.S. in fiscal
years ended March 31, 2023 and 2022. During fiscal year ended March 31, 2024, the Company has experienced a further year
of taxable income in the U.S. and successfully divested its Nextracker business in the fourth quarter, providing greater stability
in its U.S. profits and giving visibility to continued taxable income in the U.S. This three-year trend of objective and verifiable
taxable income, forecasts showing continued taxable income and removal of uncertainty about Flex’s ownership of Nextracker
and the contribution of that business to U.S. taxable income, represent, in the three months and fiscal year ended March 31,
2024, positive evidence that outweighed the negative evidence of historical losses and volatility. This positive evidence enabled
the Company to conclude that it is more likely than not that additional deferred taxes of $461 million are realizable. It therefore
reduced the valuation allowance accordingly.
In addition, various other valuation allowance positions in other jurisdictions were increased or decreased to offset
movement in deferred tax positions due to varying factors such as one-time income recognition in loss entities with existing
valuation allowances, liquidation of entities with existing valuation allowances, recognition of uncertain tax positions impacting
deferred tax assets with existing valuation allowances, foreign exchange impacts on deferred tax balances with existing
valuation allowances, and current period losses in legal entities with existing valuation allowance positions. These offsetting
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
90
Q
changes in the valuation allowance included an increase of $43 million in the fiscal year ended March 31, 2024 and decreases
of $254 million and $69 million in the fiscal years ended March 31, 2023 and 2022, respectively.
Under its territorial tax system, Singapore generally does not tax foreign sourced income until repatriated to Singapore.
The Company has included the effects of Singapore's territorial tax system in the rate differential line above. The tax effect of
foreign income not repatriated to Singapore for the fiscal years ended March 31, 2024, 2023 and 2022 were zero, $31 million
and $105 million, respectively.
The components of deferred income taxes are as follows:
As of March 31,
2024
2023
(In millions)
Deferred tax liabilities:
Fixed assets
$
(59) $
(63)
Intangible assets
(56)
(71)
Others
(149)
(23)
Total deferred tax liabilities
(264)
(157)
Deferred tax assets:
Fixed assets
82
77
Intangible assets
4
5
Deferred compensation
25
27
Inventory valuation
26
24
Provision for doubtful accounts
2
3
Net operating loss and other carryforwards
1,168
1,354
Tax receivable agreement
77
—
Others
184
131
Total deferred tax assets
1,568
1,621
Valuation allowances
(838)
(1,371)
Total deferred tax assets, net of valuation allowances
730
250
Net deferred tax asset
$
466 $
93
The net deferred tax asset is classified as follows:
Long-term asset
$
644 $
164
Long-term liability
(178)
(71)
Total
$
466 $
93
Utilization of the Company's deferred tax assets is limited by the future earnings of the Company in the tax jurisdictions
in which such deferred assets arose. As a result, management is uncertain as to when or whether these operations will generate
sufficient profit to realize any benefit from the deferred tax assets. The valuation allowance provides a reserve against deferred
tax assets that are not more likely than not to be realized by the Company. However, management has determined that it is more
likely than not that the Company will realize certain of these benefits and, accordingly, has recognized a deferred tax asset from
these benefits. The change in valuation allowance is net of certain increases and decreases to prior year losses and other
carryforwards that have no current impact on the tax provision.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
91
Q
The Company has recorded deferred tax assets of approximately $1.2 billion related to tax losses and other carryforwards
against which the Company has recorded a valuation allowance for all but $436 million of the deferred tax assets. These tax
losses and other carryforwards will expire at various dates as follows:
Expiration dates of deferred tax assets related to operating losses and other carryforwards
Fiscal year
(In millions)
2025 - 2030
$
244
2031 - 2036
157
2037 and post
57
Indefinite
741
$
1,199
The amount of deferred tax assets considered realizable, however, could be reduced or increased in the near-term if facts,
including the amount of taxable income or the mix of taxable income between subsidiaries, differ from management’s
estimates.
The Company does not provide for income taxes on approximately $659 million of undistributed earnings of its
subsidiaries which are considered to be indefinitely reinvested outside of Singapore as management has plans for the use of
such earnings to fund certain activities outside of Singapore. The estimated amount of the unrecognized deferred tax liability on
these undistributed earnings is approximately $77 million. During fiscal year 2024, the Company, as part of its regular process,
assessed its cash position in overseas territories relative to the levels needed to manage operations and fund future investment in
those territories. Following a sustained improvement in the working capital position in China and a trend of customers near
shoring their manufacturing operations, management noted that the current and forecasted cash position in China was in excess
of levels required to fund the Company’s business in the country. As a result, in the fourth quarter, management declared a
dividend of the equivalent of $100 million to be paid from China. This dividend was subject to withholding tax of $10 million
and the distribution from China represented a change in intention to indefinitely reinvest earnings in the country. As a result, a
deferred tax liability of $135 million was recorded on the remaining distributable earnings from China of approximately
$1.4 billion.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Fiscal Year Ended
March 31,
2024
2023
(In millions)
Balance, beginning of fiscal year
$
268 $
282
Additions based on tax position related to the current year
10
15
Additions for tax positions of prior years
22
8
Reductions for tax positions of prior years
(82)
(5)
Reductions related to lapse of applicable statute of limitations
(17)
(13)
Settlements
—
(7)
Impact from foreign exchange rates fluctuation
(4)
(12)
Balance, end of fiscal year
$
197 $
268
The Company’s unrecognized tax benefits are subject to change over the next twelve months primarily as a result of the
expiration of certain statutes of limitations and as audits are settled. The Company believes it is reasonably possible that the
total amount of unrecognized tax benefits could decrease by an additional approximate $24 million within the next twelve
months primarily due to potential settlements of various audits and the expiration of certain statutes of limitations.
The Company and its subsidiaries file federal, state, and local income tax returns in multiple jurisdictions around the
world. With few exceptions, the Company is no longer subject to income tax examinations by tax authorities for years before
2008.
Of the $197 million of unrecognized tax benefits at March 31, 2024, $170 million will affect the annual effective tax rate
(“ETR”) if the benefits are eventually recognized. The amount that doesn’t impact the ETR relates to positions that would be
settled with a tax loss carryforward previously subject to a valuation allowance.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
92
Q
The Company recognizes interest and penalties accrued related to unrecognized tax benefits within the Company’s tax
expense. During the fiscal years ended March 31, 2024, 2023 and 2022, the Company recognized interest and penalties of
approximately ($2) million, ($1) million and $2 million, respectively. The Company had approximately $13 million, $15
million and $16 million accrued for the payment of interest and penalties as of the fiscal years ended March 31, 2024, 2023, and
2022, respectively.
16. RESTRUCTURING CHARGES
Fiscal Year 2024
During fiscal year 2024, the Company committed to targeted restructuring activities to improve operational efficiency by
reducing excess workforce capacity. As a result, the Company recognized approximately $175 million of restructuring charges,
most of which related to employee severance. Restructuring charges are not included in segment income, as disclosed further in
note 21.
Fiscal Year 2023
The Company identified certain structural changes to restructure its business throughout fiscal year 2023. During fiscal
year 2023, the Company recognized approximately $27 million of restructuring charges, most of which related to employee
severance. Restructuring charges are not included in segment income.
Fiscal Year 2022
The Company identified certain structural changes to restructure its business throughout fiscal year 2022. During fiscal
year 2022, the Company recognized approximately $15 million of restructuring charges, most of which related to employee
severance. Restructuring charges are not included in segment income.
The following table summarizes the provisions for charges incurred, respective payments for the fiscal years ended
March 31, 2024, 2023, and 2022, respectively, and remaining accrued balances as of the same periods:
Severance
Long-Lived
Asset
Impairment
Other
Exit Costs
Total
(In millions)
Balance as of March 31, 2021
$
45 $
— $
8 $
53
Provision for charges incurred in fiscal year 2022
11
1
3
15
Cash payments for charges incurred in fiscal year 2021 and prior
(15)
—
—
(15)
Cash payments for charges incurred in fiscal year 2022
(6)
—
—
(6)
Non-cash reductions incurred in fiscal year 2022
—
(1)
(3)
(4)
Balance as of March 31, 2022
35
—
8
43
Provision for charges incurred in fiscal year 2023
27
—
—
27
Cash payments for charges incurred in fiscal year 2022 and prior
(7)
—
—
(7)
Cash payments for charges incurred in fiscal year 2023
(11)
—
—
(11)
Non-cash reductions incurred in fiscal year 2023
—
—
(2)
(2)
Balance as of March 31, 2023
44
—
6
50
Provision for charges incurred in fiscal year 2024
161
14
—
175
Cash payments for charges incurred in fiscal year 2023 and prior
(13)
—
—
(13)
Cash payments for charges incurred in fiscal year 2024
(115)
—
—
(115)
Non-cash reductions incurred in fiscal year 2024
—
(14)
(3)
(17)
Balance as of March 31, 2024
77
—
3
80
Less: Current portion (classified as other current liabilities)
76
—
3
79
Accrued restructuring costs, net of current portion (classified as other
non-current liabilities)
$
1 $
— $
— $
1
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
93
Q
17. OTHER CHARGES (INCOME), NET
Other charges (income), net for the fiscal years ended March 31, 2024, 2023 and 2022 are comprised of the following:
Fiscal Year Ended March 31
2024
2023
2022
(In millions)
(Gain)/Loss on foreign exchange transactions
$
24 $
(7) $
(33)
Brazil tax credit (1)
—
—
(150)
Others
20
13
18
(1)
The Company recognized a $150 million gain related to a certain tax credit upon approval of a "Credit Habilitation" request by the
relevant Brazil tax authorities for fiscal year 2022.
18. INTEREST EXPENSE AND INTEREST INCOME
Interest expense and interest income for the fiscal years ended March 31, 2024, 2023 and 2022 are primarily comprised of
the following:
Fiscal Year Ended March 31
2024
2023
2022
(In millions)
Interest expenses on debt obligations
$
161 $
191 $
160
AR sales programs related expenses
46
39
6
Interest income
(56)
(30)
(14)
19. BUSINESS AND ASSET ACQUISITIONS & DIVESTITURES
Fiscal 2024 Divestitures
During the fiscal year ended March 31, 2024, the Company completed the spin-off of Nextracker. See "Note 7 -
Discontinued Operations" for additional information.
In addition, the Company disposed of a non-strategic business within the FRS segment and received proceeds of
approximately $14 million. The property and equipment and various other assets sold and liabilities transferred were not
material to the Company's consolidated financial results. The net loss on dispositions was not material to the Company’s
consolidated financial results, and was included in other charges (income), net in the consolidated statements of operations for
fiscal year 2024.
Fiscal 2023 Divestitures
During the fiscal year ended March 31, 2023, the Company disposed of a non-strategic business within the FRS segment
and received approximately $4 million of proceeds. The property and equipment and various other assets sold and liabilities
transferred were not material to the Company's consolidated financial results. The net gain on dispositions was not material to
the Company’s consolidated financial results, and was included in other charges (income), net in the consolidated statements of
operations for the fiscal year 2023.
Fiscal 2022 Business acquisition
On December 1, 2021, the Company completed the business acquisition of Anord Mardix, a global leader in critical
power solutions for an initial purchase consideration of $523 million, net of $25 million cash acquired, with an additional
$17 million deferred purchase price paid out in the fourth quarter of fiscal year 2022, for a total purchase consideration of
$539 million. The acquisition added to the Company's portfolio of Power products and expanded its offering in the data center
market. For reporting purposes, Anord Mardix was included in the Industrial reporting unit within the FRS segment. The
allocation of the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed was based on
their estimated fair values as of the date of acquisition. The excess of the purchase price over the tangible and identifiable
intangible assets acquired and liabilities assumed has been allocated to goodwill. The results of operations of the acquisition
were included in the Company’s consolidated financial results beginning on the date of acquisition, and the total amount of net
income and revenue were not material to the Company's consolidated financial results for fiscal year 2022.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
94
Q
The intangible assets of $273 million are comprised of customer related intangible assets of $147 million and licenses and
other intangible assets such as trade names and developed technology of $126 million. Customer related assets are amortized
over a weighted-average estimated useful life of 8.7 years while licensed and other intangibles are amortized over a weighted-
average estimated useful life of 8.9 years.
20. SHARE REPURCHASE PLAN
During fiscal year 2024, the Company repurchased approximately 50.6 million shares for an aggregate purchase price of
approximately $1.3 billion and retired all of these shares. During fiscal year 2024, the Company also retired an additional
50.2 million shares of treasury stock which were repurchased in prior periods, at an aggregate purchase price of $388 million.
Under the Company’s current share repurchase program, the Board of Directors authorized repurchases of its outstanding
ordinary shares for up to $2.0 billion in accordance with the share repurchase mandate approved by the Company’s
shareholders at the date of the most recent Annual General Meeting held on August 2, 2023. As of March 31, 2024, shares in
the aggregate amount of $1.0 billion were available to be repurchased under the current plan.
21. SEGMENT REPORTING
The Company's Chief Executive Officer is our Chief Operating Decision Maker ("CODM") who evaluates how we
allocate resources, assess performance and make strategic and operational decisions. Based on such evaluation, the Company
determined as of and for the period ended March 31, 2024, that Flex has two operating and reportable segments. During the
fourth quarter of fiscal year 2024, following the Spin-off, the Company has classified the results of Nextracker, formerly our
Nextracker segment, as discontinued operations in our consolidated statement of income for all periods presented. See note 7
"Discontinued Operations" for additional information.
The FAS segment is optimized for speed to market based on a highly flexible supply and manufacturing system. FAS is
comprised of the following end markets that represent reporting units:
•
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.
The FRS segment is optimized for longer product lifecycles requiring complex ramps with specialized production models
and critical environments. FRS is comprised of the following end markets that represent reporting units:
•
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, embedded and critical power offerings, and renewables and
grid edge.
The determination of the separate operating and reporting segments is based on several factors, including the nature of
products and services, the nature of production processes, customer base, delivery channels and similar economic
characteristics.
An operating segment's performance is evaluated based on its pre-tax operating contribution, or segment income. Segment
income is defined as net sales less cost of sales, and segment selling, general and administrative expenses, and does not include
amortization of intangibles, stock-based compensation, restructuring charges, customer related asset impairment, legal and
other, interest expense, interest income, other charges (income), net, and equity in earnings of unconsolidated affiliates. A
portion of depreciation is allocated to the respective segments, together with other general corporate, research and development
and administrative expenses.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
95
Q
Selected financial information by segment is in the table below.
Fiscal Year Ended March 31,
2024
2023
2022
(In millions)
Net sales:
Flex Agility Solutions
$
13,923 $
15,769 $
14,027
Flex Reliability Solutions
12,492
12,733
10,606
$
26,415 $
28,502 $
24,633
Segment income and reconciliation of income from continuing
operations before income taxes:
Flex Agility Solutions
$
669 $
694 $
605
Flex Reliability Solutions
666
607
546
Corporate and Other
(68)
(69)
(81)
Total segment income
1,267
1,232
1,070
Reconciling items:
Intangible amortization
70
81
60
Stock-based compensation
113
101
88
Restructuring charges
172
27
15
Customer related asset impairment
14
—
—
Legal and other (1)
45
6
17
Interest expenses
207
230
166
Interest income
56
30
14
Other charges (income), net
44
6
(165)
Equity in earnings (losses) of unconsolidated affiliates
8
(4)
61
Income from continuing operations before income taxes
$
666 $
807 $
964
(1)
Legal and other consists of costs not directly related to core business results including matters relating to commercial disputes,
government regulatory and compliance, intellectual property, antitrust, tax, employment or shareholder issues, product liability
claims and other issues on a global basis as well as acquisition related costs and customer related asset recoveries. During fiscal
year 2024, the Company recognized a $50 million loss contingency for a commercial dispute related to a construction matter with
related production objectives.
During fiscal years 2023 and 2022, the Company accrued for certain loss contingencies where losses are considered probable and
estimable offset by a gain upon successful settlement of certain supplier claims.
Corporate and Other primarily includes corporate service costs that are not included in the CODM's assessment of the
performance of each of the identified reporting segments.
The Company provides an overall platform of assets and services, which the segments utilize for the benefit of their
various customers. The shared assets and services are contained within the Company's global manufacturing and design
operations and include manufacturing and design facilities. Most of the underlying manufacturing and design assets are co-
mingled in the operating campuses and are compatible to operate across segments and highly interchangeable throughout the
platform. Given the highly interchangeable nature of the assets, they are not separately identified by segment nor reported by
segment to the Company's CODM.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
96
Q
Property and equipment on a segment basis is not separately identified and is not internally reported by segment to the
Company's CODM as described above. During fiscal years 2024, 2023 and 2022, depreciation expense included in the
segments' measure of operating performance above is as follows.
Fiscal Year Ended March 31,
2024
2023
2022
(In millions)
Depreciation expense:
Flex Agility Solutions
$
171 $
177 $
184
Flex Reliability Solutions
241
217
204
Total depreciation expense
$
412 $
394 $
388
Geographic information of net sales is as follows:
Fiscal Year Ended March 31,
2024
2023
2022
(In millions)
Net sales by region:
Americas
$
12,232 46 % $
11,906 42 % $
9,414 38 %
Asia
8,540 32 %
10,384 36 %
9,615 39 %
Europe
5,643 22 %
6,212 22 %
5,604 23 %
$
26,415
$
28,502
$
24,633
Revenues are attributable to the country in which the product is manufactured or service is provided.
During fiscal years 2024, 2023 and 2022, net sales generated from Singapore, the country of domicile, were
approximately $660 million, $552 million and $519 million, respectively.
The following table summarizes the countries that accounted for more than 10% of net sales in fiscal years 2024, 2023,
and 2022:
Fiscal Year Ended March 31,
2024
2023
2022
(In millions)
Net sales by country:
Mexico
$
6,935 26 % $
6,626 23 % $
5,092 21 %
China
5,117 19 %
6,562 23 %
6,160 25 %
U.S.
3,598 14 %
3,394 12 %
2,414 10 %
No other country accounted for more than 10% of net sales for the fiscal periods presented in the table above.
Geographic information of property and equipment, net is as follows:
As of March 31,
2024
2023
(In millions)
Property and equipment, net:
Americas
$
1,220 54 % $
1,214 52 %
Asia
565 25 %
618 26 %
Europe
484 21 %
510 22 %
$
2,269
$
2,342
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
97
Q
As of March 31, 2024 and 2023, property and equipment, net held in Singapore was approximately $5 million and $5
million, respectively.
The following table summarizes the countries that accounted for more than 10% of property and equipment, net in fiscal
years 2024 and 2023:
Fiscal Year Ended March 31,
2024
2023
(In millions)
Property and equipment, net:
Mexico
$
793 35 % $
763 33 %
U.S.
334 15 %
358 15 %
China
307 14 %
338 14 %
No other country accounted for more than 10% of property and equipment, net for the fiscal periods presented in the table
above.
22. NONCONTROLLING INTEREST
On January 2, 2024, the Company completed its previously announced Spin-off of its remaining interests in Nextracker to
Flex shareholders on a pro-rata basis based on the number of ordinary shares of Flex held by each shareholder of Flex as of
December 29, 2023, which was the record date of the Distribution, pursuant to the Agreement and Plan of Merger, dated as of
February 7, 2023.
Flex's noncontrolling and redeemable noncontrolling interest related solely to Nextracker. As of March 31, 2024 and
2023, noncontrolling interest was zero and $355 million, respectively. Net income attributable to noncontrolling interest was
$239 million, $197 million and zero in fiscal years 2024, 2023, and 2022, respectively. Net income attributable to redeemable
noncontrolling interest was zero, $43 million and $4 million in fiscal years 2024, 2023 and 2022, respectively.
23. QUARTERLY FINANCIAL DATA (UNAUDITED)
The Company's third fiscal quarter ends on December 31, and the fourth fiscal quarter and fiscal year ends on March 31 of
each year. The first fiscal quarters of 2024 and 2023 ended on June 30, 2023 and July 1, 2022, respectively, and the second
fiscal quarters of 2024 and 2023, ended on September 29, 2023 and September 30, 2022, respectively.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
98
Q
The Company completed the Spin-off in the fourth quarter of fiscal year 2024, which resulted in material retrospective
changes to our consolidated statements of operations. See note 7 "Discontinued Operations" for further information. The
following tables contain unaudited quarterly financial data for fiscal year 2024 and 2023:
Fiscal Year 2024
Three Months Ended
June 30, 2023
September 29, 2023
December 31, 2023
March 31, 2024
(In millions, except per share amounts)
Net sales
$
6,892 $
6,933 $
6,421 $
6,169
Gross profit
476
519
433
437
Operating income
215
281
198
159
Net income from continuing operations
147
201
129
395
Net income from discontinued operations, net of tax
64
205
104
—
Net income
211
406
233
395
Net income attributable to noncontrolling interest
and redeemable noncontrolling interest
25
178
36
—
Net income attributable to Flex Ltd.
$
186 $
228 $
197 $
395
Weighted-average ordinary shares outstanding -
basic
447
443
431
417
Weighted-average ordinary shares outstanding -
diluted
455
448
436
425
Earnings per share - basic (1)
Continuing operations
$
0.33 $
0.45 $
0.30 $
0.95
Discontinued operations, net of tax
0.09
0.06
0.16
—
Total attributable to the shareholders of Flex Ltd.
$
0.42 $
0.51 $
0.46 $
0.95
Earnings per share - diluted (1)
Continuing operations
$
0.32 $
0.45 $
0.30 $
0.93
Discontinued operations, net of tax
0.09
0.06
0.15
—
Total attributable to the shareholders of Flex Ltd.
$
0.41 $
0.51 $
0.45 $
0.93
(1)
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.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
99
Q
Fiscal Year 2023
Three Months Ended
July 1, 2022
September 30, 2022
December 31, 2022
March 31, 2023
(In millions, except per share amounts)
Net sales
$
6,961 $
7,303 $
7,254 $
6,984
Gross profit
487
525
499
465
Operating income
253
282
259
223
Net income from continuing operations
176
195
173
139
Net income from discontinued operations, net of tax
19
43
64
224
Net income
195
238
237
363
Net income attributable to noncontrolling interest
and redeemable noncontrolling interest
6
6
7
221
Net income attributable to Flex Ltd.
$
189 $
232 $
230 $
142
Weighted-average ordinary shares outstanding -
basic
458
455
452
451
Weighted-average ordinary shares outstanding -
diluted
468
460
459
459
Earnings per share - basic (1)
Continuing operations
$
0.38 $
0.43 $
0.38 $
0.30
Discontinued operations, net of tax
0.03
0.08
0.13
0.01
Total attributable to the shareholders of Flex Ltd.
$
0.41 $
0.51 $
0.51 $
0.31
Earnings per share - diluted (1)
Continuing operations
$
0.38 $
0.42 $
0.38 $
0.30
Discontinued operations, net of tax
0.02
0.08
0.12
0.01
Total attributable to the shareholders of Flex Ltd.
$
0.40 $
0.50 $
0.50 $
0.31
(1)
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.
FLEX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
100
Q
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
The Company's management, with the participation of the Chief Executive Officer and Chief Financial Officer, has
evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2024. Based on that evaluation, the
Company's Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2024, the Company's
disclosure controls and procedures were effective in ensuring that information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act, is (i) recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms and (ii) accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
(b) Management's Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such
term is defined in Rule 13a-15(f) under the Exchange Act. Internal control over financial reporting consists of policies and
procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the Company; (2) are designed and operated to provide reasonable assurance regarding the
reliability of the Company's financial reporting and the Company's process for the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles and that receipts and expenditures of the
Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s
assets that could have a material effect on the financial statements. Because of its inherent limitations, a system of internal
control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements or prevent
or detect instances of fraud. These inherent limitations include the realities that judgments in decision-making can be faulty, and
that breakdowns can occur because of simple error or mistake. Additionally, controls may be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management override of the control. The projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As of March 31, 2024, under the supervision and with the participation of management, including the Company's Chief
Executive Officer and Chief Financial Officer, an evaluation was conducted of the effectiveness of the Company's internal
control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on that evaluation, management
concluded that the Company's internal control over financial reporting was effective as of March 31, 2024.
(c) Attestation Report of the Registered Public Accounting Firm
The effectiveness of the Company's internal control over financial reporting as of March 31, 2024 has been audited by
Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which appears in this Item
under the heading "Report of Independent Registered Public Accounting Firm."
(d) Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the fourth quarter
ended March 31, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
101
Q
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Flex Ltd., Singapore
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Flex Ltd. and subsidiaries (the "Company") as of March 31,
2024, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of March 31, 2024, based on criteria established in Internal Control—
Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended March 31, 2024 of the Company, and our report
dated May 17, 2024 expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
San Jose, California
May 17, 2024
102
Q
ITEM 9B. OTHER INFORMATION
Insider Trading Arrangements
During the fiscal quarter ended March 31, 2024, the officer listed below adopted a trading plan intended to satisfy the
affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.
On March 5, 2024, Paul R. Lundstrom, Chief Financial Officer, adopted a trading plan that provides for the sale of up to
200,000 ordinary shares of the Company. The plan will terminate on June 13, 2024, subject to early termination for certain
specified events set forth in the plan.
No other officers or directors adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading
arrangement", as those terms are defined in Regulation S-K, Item 408, during the fiscal quarter ended March 31, 2024.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information with respect to this item may be found in the Company's definitive proxy statement to be delivered to
shareholders in connection with the Company's 2024 Annual General Meeting of Shareholders. Such information is
incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item may be found in the Company's definitive proxy statement to be delivered to
shareholders in connection with the Company's 2024 Annual General Meeting of Shareholders. Such information is
incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
SHAREHOLDER MATTERS
Information with respect to this item may be found in the Company's definitive proxy statement to be delivered to
shareholders in connection with the Company's 2024 Annual General Meeting of Shareholders. Such information is
incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information with respect to this item may be found in the Company's definitive proxy statement to be delivered to
shareholders in connection with the Company's 2024 Annual General Meeting of Shareholders. Such information is
incorporated by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES (Deloitte & Touche LLP, PCAOB ID: 34)
Information with respect to this item may be found in the Company's definitive proxy statement to be delivered to
shareholders in connection with the Company's 2024 Annual General Meeting of Shareholders. Such information is
incorporated by reference.
103
Q
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of this annual report on Form 10-K:
1.
Financial Statements. See Item 8, "Financial Statements and Supplementary Data."
2.
Financial Statement Schedules. "Schedule II—Valuation and Qualifying Accounts" is included in the financial
statements, see Concentration of Credit Risk in Note 2, "Summary of Accounting Policies" of the Notes to
Consolidated Financial Statements in Item 8, "Financial Statements and Supplementary Data."
3.
Exhibits. Reference is made to Item 15(b) below.
(b) Exhibits. The Exhibit Index, which immediately precedes the signature page to this annual report on Form 10-K, is
incorporated by reference into this annual report on Form 10-K.
(c) Financial Statement Schedules. Reference is made to Item 15(a)(2) above.
ITEM 16. FORM 10-K SUMMARY
None
EXHIBIT INDEX
3.01
Constitution of the Registrant (incorporating all
amendments as at August 20, 2019)
10-Q
000-23354
10/30/2019
3.01
4.01
Indenture, dated as of June 8, 2015, by and
between the Registrant, the Guarantors party
thereto and U.S. Bank National Association, as
Trustee
8-K
000-23354
6/8/2015
4.1
4.02
Form of 4.750% Note due 2025 (included in
Exhibit 4.01)
8-K
000-23354
6/8/2015
4.1
4.03
First Supplemental Indenture, dated as of
September 11, 2015, among the Registrant, the
Guarantor party thereto and U.S. Bank National
Association, as Trustee, related to the
Registrant’s 4.750% Notes due 2025
S-4
333-207067
9/22/2015
4.04
4.04
Indenture, dated as of June 6, 2019, by and
between the Company and U.S. Bank National
Association, as trustee
8-K
000-23354
6/6/2019
4.1
4.05
First Supplemental Indenture, dated as of
June 6, 2019, by and between the Company and
U.S. Bank National Association, as trustee
8-K
000-23354
6/6/2019
4.2
4.06
Form of 4.875% Global Note due 2029
(included in Exhibit 4.05)
8-K
000-23354
6/6/2019
4.3
4.07
Second Supplemental Indenture, dated as of
November 7, 2019, by and between the
Company and U.S. Bank National Association,
as trustee
8-K
000-23354
11/7/2019
4.3
4.08
Form of 4.875% Global Note due 2029
(included in Exhibit 4.07)
8-K
000-23354
11/7/2019
4.4
4.09
Third Supplemental Indenture dated as of May
12, 2020, by and between the Company and
U.S. Bank National Association, as trustee
8-K
000-23354
5/12/2020
4.2
4.10
Form of 3.750% Global Note due 2026
(included in Exhibit 4.09)
8-K
000-23354
5/12/2020
4.3
4.11
Form of 4.875% Global Note due 2030
(included in Exhibit 4.09)
8-K
000-23354
5/12/2020
4.4
Incorporated by Reference
Exhibit No.
Exhibit
Form
File No.
Filing Date
Exhibit No.
Filed
Herewith
104
Q
4.12
Fourth Supplemental Indenture, dated as of
August 17, 2020, by and between the Company
and U.S. Bank National Association, as trustee
8-K
000-23354
8/17/2020
4.3
4.13
Form of 3.750% Global Note due 2026
(included in Exhibit 4.12)
8-K
000-23354
8/17/2020
4.4
4.14
Form of 4.875% Global Note due 2030
(included in Exhibit 4.12)
8-K
000-23354
8/17/2020
4.5
4.15
Fifth Supplemental Indenture, dated as of
December 7, 2022, by and between the
Company and U.S. Bank Trust Company,
National Association, as trustee
8-K
000-23354
12/7/2022
4.2
4.16
Form of 6.000% Global Note due 2028
(included in Exhibit 4.15)
8-K
000-23354
12/7/2022
4.3
4.17
Description of Registrant's Securities
10-K
000-23354
5/28/2020
4.14
10.01
Credit Agreement, dated as of July 19, 2022,
among Flex Ltd. and certain of its subsidiaries,
from time to time party thereto, as borrowers,
Bank of America, N.A., as Administrative
Agent, an L/C Issuer and a Swing Line Lender,
and the other L/C Issuers, Swing Line Lenders
and Lenders party thereto
8-K
000-23354
7/22/2022
10.01
10.02
Form of Indemnification Agreement between
the Registrant and its Directors and certain
officers†
10-K
000-23354
5/20/2009
10.01
10.03
Form of Indemnification Agreement between
Flextronics Corporation and Directors and
certain officers of the Registrant†
10-K
000-23354
5/20/2009
10.02
10.04
Flex Ltd. Amended and Restated 2017 Equity
Incentive Plan†
DEF
14A
000-23354
6/21/2023
Annex B
10.05
Form of Restricted Share Unit Award
Agreement under the 2017 Equity Incentive
Plan for time-based vesting awards (FY21)†
10-Q
000-23354
8/5/2020
10.02
10.06
Form of Restricted Share Unit Award
Agreement under the 2017 Equity Incentive
Plan for performance-based vesting awards (20-
day trading average) (FY21)†
10-Q
000-23354
8/5/2020
10.03
10.07
Form of Restricted Share Unit Award
Agreement under the Amended and Restated
2017 Equity Incentive Plan for performance-
based vesting awards (FY22)†
10-Q
000-23354
7/30/2021
10.02
10.08
Form of Restricted Share Unit Award
Agreement under the Amended and Restated
Flex Ltd. 2017 Equity Incentive Plan for
performance-based vesting awards (FY23)†
10-Q
000.23354
7/29/2022
10.03
10.09
Form of Restricted Share Unit Award
Agreement under the Flex Ltd. Amended and
Restated 2017 Equity Incentive Plan for Non-
Employee Directors †
10-Q
000-23354
10/31/2022
10.02
10.10
Form of Restricted Share Unit Award
Agreement under the Amended and Restated
Flex Ltd. 2017 Equity Incentive Plan for
performance-based vesting awards (FY24)†
10-Q
000-23354
7/31/2023
10.03
10.11
2010 Flextronics International USA, Inc.
Deferred Compensation Plan†
10-Q
000-23354
11/3/2010
10.04
10.12
First Amendment to Flex 2010 Deferred
Compensation Plan, dated December 17, 2018†
10-Q
000-23354
10/29/2021
10.01
10.13
Second Amendment to Flex 2010 Deferred
Compensation Plan, dated August 16, 2019†
10-Q
000-23354
10/29/2021
10.02
Incorporated by Reference
Exhibit No.
Exhibit
Form
File No.
Filing Date
Exhibit No.
Filed
Herewith
105
Q
10.14
Third Amendment to Flex 2010 Deferred
Compensation Plan, dated June 3, 2020†
10-Q
000-23354
10/29/2021
10.03
10.15
Form of Award Agreement under 2010
Deferred Compensation Plan†
10-Q
000-23354
7/30/2012
10.01
10.16
Form of 2010 Deferred Compensation Plan
Award Agreement (performance targets, cliff
vesting)†
10-Q
000-23354
8/2/2013
10.02
10.17
Form of 2010 Deferred Compensation Plan
Award Agreement (non-performance, periodic
vesting, continuing Participant)†
10-Q
000-23354
8/2/2013
10.03
10.18
Award Agreement under the 2010 Deferred
Compensation Plan†
10-Q
000-23354
7/28/2014
10.01
10.19
Form of Addendum Award Agreement under
the 2010 Deferred Compensation Plan (FY21)†
10-Q
000-23354
1/29/2021
10.02
10.20
Summary of Directors' Compensation†
10-Q
000-23354
10/30/2017
10.02
10.21
Summary of Compensation Arrangements of
Certain Executive Officers of Flex Ltd.†
10-Q
000-23354
7/31/2023
10.02
10.22
Flex Ltd. Executive Severance Plan†
10-K
000-23354
5/21/2019
10.27
10.23
Revathi Advaithi Offer Letter, dated February
7, 2019†
10-K
000-23354
5/21/2019
10.29
10.24
Scott Offer Amended Offer Letter, dated as of
January 27, 2019†
10-K
000-23354
5/28/2020
10.29
10.25
Paul R. Lundstrom Offer Letter, dated August
5, 2020†
10-Q
000-23354
11/2/2020
10.02
10.26
Description of Annual Incentive Bonus Plan for
Fiscal Year 2024†
10-Q
000-23354
7/31/2023
10.01
10.27
Agreement and Plan of Merger, by and among
Flex Ltd., Yuma, Inc., Nextracker Inc. and
Yuma Acquisition Corp, dated as of February 7,
2023
8-K
000-23354
2/13/2023
10.1
10.28
Tax Matters Agreement, by and among Flex
Ltd., Yuma, Inc., and Nextracker Inc., dates as
of January 2, 2024
8-K
000-23354
1/2/2024
10.2
19.01
Insider Trading Policy
X
21.01
Subsidiaries of Registrant
X
23.01
Consent of Deloitte & Touche LLP
X
24.01
Power of Attorney (included on the signature
page to this Form 10-K)
X
31.01
Certification of Chief Executive Officer
pursuant to Rule 13a-14(a) of the Exchange Act
X
31.02
Certification of Chief Financial Officer
pursuant to Rule 13a-14(a) of the Exchange Act
X
32.01
Certification of Chief Executive Officer and
Chief Financial Officer pursuant to Rule
13a-14(b) of the Exchange Act and 18 U.S.C.
Section 1350*
X
97.01
Executive Incentive Compensation Recoupment
Policy
X
101.INS
Inline XBRL Instance Document
X
101.SCH
Inline XBRL Taxonomy Extension Scheme
Document
X
101.CAL
Inline XBRL Taxonomy Extension Calculation
Linkbase Document
X
101.DEF
Inline XBRL Taxonomy Extension Definition
Linkbase Document
X
Incorporated by Reference
Exhibit No.
Exhibit
Form
File No.
Filing Date
Exhibit No.
Filed
Herewith
106
Q
101.LAB
Inline XBRL Taxonomy Extension Label
Linkbase Document
X
101.PRE
Inline XBRL Taxonomy Extension Presentation
Linkbase Document
X
104
Cover Page Interactive Data File (formatted as
inline XBRL with applicable taxonomy
extension information contained in Exhibits
101)
X
Incorporated by Reference
Exhibit No.
Exhibit
Form
File No.
Filing Date
Exhibit No.
Filed
Herewith
_______________________________________________________________________________
*
This exhibit is furnished with this Annual Report on Form 10-K, is not deemed filed with the Securities and Exchange
Commission, and is not incorporated by reference into any filing of Flex Ltd. under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and
irrespective of any general incorporation language contained in such filing.
†
Management contract, compensatory plan or arrangement.
107
Q
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Flex Ltd.
Date: May 17, 2024
By:
/s/ REVATHI ADVAITHI
Revathi Advaithi
Chief Executive Officer
108
Q
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints
jointly and severally, Revathi Advaithi and Paul R. Lundstrom and each one of them, her or his attorneys-in-fact, each with the power
of substitution, for her or him in any and all capacities, to sign any and all amendments to this Report, and to file the same, with
exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or her or his substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ REVATHI ADVAITHI
Chief Executive Officer (Principal Executive Officer)
and Director
May 17, 2024
Revathi Advaithi
/s/ PAUL R. LUNDSTROM
Chief Financial Officer (Principal Financial Officer)
May 17, 2024
Paul R. Lundstrom
/s/ DANIEL J. WENDLER
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
May 17, 2024
Daniel J. Wendler
/s/ MICHAEL D. CAPELLAS
Chairman of the Board
May 17, 2024
Michael D. Capellas
/s/ JOHN D. HARRIS II
Director
May 17, 2024
John D. Harris II
/s/ MICHAEL E. HURLSTON
Director
May 17, 2024
Michael E. Hurlston
/s/ ERIN L. MCSWEENEY
Director
May 17, 2024
Erin L. McSweeney
/s/ CHARLES K. STEVENS, III
Director
May 17, 2024
Charles K. Stevens, III
/s/ MARYROSE T. SYLVESTER
Director
May 17, 2024
Maryrose T. Sylvester
/s/ LAY KOON TAN
Director
May 17, 2024
Lay Koon Tan
/s/ PATRICK J. WARD
Director
May 17, 2024
Patrick J. Ward
/s/ WILLIAM D. WATKINS
Director
May 17, 2024
William D. Watkins
109
Q
2024 Proxy Statement
Notice & Proxy Statement
Annual Report
Shareholder Info
Shareholder Information
REGISTERED OFFICE
2 Changi South Lane
Singapore 486123
Tel: +65.6876.9899
ANNUAL GENERAL MEETING
The Annual General Meeting of Shareholders will be held August 8,
2024 beginning at 11:00 a.m. Central time. The meeting will be held at:
Flex Ltd.
12455G Research Blvd
Welcome Center
Austin, TX 78759
Tel: +1.512.425.4100
STOCK LISTING
The Company’s Ordinary Shares are traded on the NASDAQ Global
Select Market under the symbol FLEX.
WEBSITE
www.flex.com
INVESTOR RELATIONS
For shareholder or investor related inquiries, contact:
Flex Ltd.
Investor Relations
12455G Research Blvd.
Austin, TX 78759
Tel: +1.408.577.4632
investors.flex.com
In order to help reduce costs, please report any duplicate mailings of
shareholder materials by contacting Investor Relations.
SEC FILINGS
The Company makes available through its Internet website, annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K, Section 16 reports and amendments to those reports filed or furnished
pursuant to Section 13(a) of the Securities Exchange Act of 1934 as soon
as reasonably practicable after electronically filing such material with, or
furnishing it to, the Securities and Exchange Commission. Upon request,
we will furnish without charge to each person to whom this report is
delivered a copy of any exhibit listed in our Annual Report on Form
10-K for the fiscal year ended March 31, 2024. You may request a
copy of this information at no cost, by writing or telephoning us at our
principal U.S. offices at the Investor Relations contact above.
TRANSFER AGENT AND REGISTRAR
For questions regarding misplaced share certificates, changes of address
or the consolidation of accounts, please contact the Company’s transfer
agent: Computershare Trust Company NA
By Regular Mail
Computershare
PO Box 43006
Providence, RI 02940-3006
UNITED STATES
By Overnight Delivery
Computershare
150 Royall Street, Suite 101
Canton, MA 02021
UNITED STATES
Telephone
US & Canada
Toll Free
877.373.5374
Outside US & Canada
Toll
+1.781.575.2879
Information in this document is subject to change without notice. FLEX and Flextronics are trademarks of Flex Ltd. All other trademarks are
the properties of their respective owners.
© 2024 FLEX LTD. All rights reserved. Flextronics International, LTD. All rights reserved. Reproduction, adaptation, or translation without
prior written permission is prohibited except as allowed under the copyright laws.
EXECUTIVE OFFICERS
Revathi Advaithi—Chief Executive Officer
Paul R. Lundstrom—Chief Financial Officer
Michael P. Hartung—President, Agility Solutions
Scott Offer—Executive Vice President and General Counsel
Rebecca S. Sidelinger—President, Reliability Solutions
Hooi Tan—President, Global Operations and Components
Daniel J. Wendler—Chief Accounting Officer
DIRECTORS
Revathi Advaithi—Chief Executive Officer, Flex Ltd.
Michael D. Capellas—Founder and CEO, Capellas Partners
John D. Harris II—Retired Vice President of Business
Development, Raytheon Company and Chief Executive Officer,
Raytheon International, Inc.
Michael E. Hurlston—President and Chief Executive Officer,
Synaptics Incorporated
Erin L. McSweeney—Executive Vice President and Chief People
Officer, UnitedHealth Group Incorporated
Charles K. Stevens, III—Retired Executive Vice President and
Chief Financial Officer, General Motors Company
Maryrose T. Sylvester—Retired U.S. Managing Director and
U.S. Head of Electrification, ABB Ltd.
Lay Koon Tan—Retired President, Chief Executive Officer and
member of the Board of Directors, STATS ChipPAC Ltd.
Patrick J. Ward— Retired Vice President and Chief Financial
Officer, Cummins Inc.
William D. Watkins—Retired Chief Executive Officer, Imergy
Power Systems, Inc.
FORWARD LOOKING STATEMENTS
This proxy statement contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934
and Section 27A of the Securities Act of 1933. All statements other
than statements of historical or current facts, including statements
regarding our future business expectations and our environmental
and other sustainability plans and goals, and related timeframes made
in this document are forward-looking. The words “will,” “may,”
“designed to,” “believe,” “should,” “would,” “could,” “anticipate,”
“plan,” “expect,” “intend,” “estimate,” “goals,” “opportunity,”
“future,” “to be,” “achieve,” “grow,” “committed,” “seeks,”
“targets,” “continues,” “likely,” “possible,” “might,” “potentially,”
“will,” “on track,” “working to,” “encourage,” “continue,” “strive,”
“endeavor,” “looking forward,” “efforts, aim,” and variations of such
words and similar expressions identify forward-looking statements,
which speak only as of the date of this proxy statement. Because these
forward-looking statements are subject to risks and uncertainties,
actual results could differ materially from the expectations expressed
in the forward-looking statements. Important factors that could cause
actual results to differ materially from the expectations reflected in
the forward-looking statements include those described in Item 1A,
“Risk Factors” and Item 7, “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in our Annual
Report on Form 10-K for the fiscal year ended March 31, 2024,
and in our Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K that we file with the U.S. Securities and Exchange
Commission. In addition, new risks emerge from time to time and it
is not possible for management to predict all such risk factors or to
assess the impact of such risk factors on our business. Given these
risks and uncertainties, the reader should not place undue reliance
on these forward-looking statements. We undertake no obligation
to update or revise these forward-looking statements to reflect
subsequent events or circumstances.
Q
Flex Ltd.
Annual General Meeting of Shareholders Directions and Parking Information
August 8, 2024
11:00 A.M. Central time
The Annual General Meeting of Shareholders will be held at Flex Ltd., 12455G Research Blvd., Welcome Center, Austin,
TX 78759 beginning at 11:00 A.M. Central time.
Directions from Austin-Bergstrom International Airport
• Take Hotel Dr to State Hwy 71 W/E Ben White Blvd
o Head southwest on Presidential Blvd toward Service Dr
10 ft
o Slight right onto Service Dr
482 ft
o Turn right onto Hotel Dr
0.3 mi
o Turn right onto Spirit or Texas Dr
0.2 mi
o Turn left to merge onto State Hwy 71 W
0.9 mi
o Keep left to stay on State Hwy 71 W
0.1 mi
• Continue on State Hwy 71 W/E Ben White Blvd.,
Take US-290 W, TX-1 Loop N and US-183 Hwy N to Research Blvd.,
Take the exit toward Oak Knoll Dr from US-183 Hwy N
o Use any lane to turn slightly left onto State Hwy 71 W/E Ben White Blvd
5.2 mi
o Continue onto State Hwy 71 W/US-290 W/W Ben White Blvd
2.2 mi
o Use the right 2 lanes to take the Texas Loop 360/Capital of Tx Hwy exit
0.5 mi
o Continue onto TX-360 Loop N
0.7 mi
o Turn right onto Frontage Rd
0.2 mi
o Use the left lane to take the ramp onto TX-1 Loop N
3.3 mi
o Keep right at the fork to stay on TX-1 Loop N
6.6 mi
o Use the right 2 lanes to take the exit toward US-183 Hwy N
0.2 mi
o Keep left at the fork, follow signs for US-183 N/Research Blvd N and merge onto US-183 Hwy N
3.2 mi
o Take the exit toward Oak Knoll Dr
0.3 mi
• Drive to your destination
o Merge onto Research Blvd
0.2 mi
o Turn right onto Riata Trace Pkwy
0.2 mi
o Turn left
0.2 mi
• Arrive at Flex Ltd., 12455G Research Blvd, Austin, TX 78759
o Follow Flex Shareholders’ Meeting signage directing you to our Welcome Center
Parking
Flex has reserved parking spaces for shareholders attending the meeting. These spaces will be designated as
“Reserved for Flex Shareholders’ Meeting.”
Q
flex.com
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