WEB NEWS Deal Flow
SAN JOSE, Calif.--(BUSINESS WIRE )--
Flex (FLEX) today announced that it has priced a public offering (the “Offering”) of $450 million aggregate principal amount of 4.875% notes due 2029 (the “Notes”). The Offering is expected to close on June 6, 2019, subject to customary closing conditions.
Flex intends to use the net proceeds from the Offering, together with available cash, to fund the concurrent cash tender offer (the “Tender Offer”) for any and all of the $500,000,000 outstanding aggregate principal amount of its 4.625% Notes due 2020 (the “2020 Notes”) and any redemption of 2020 Notes not tendered in the Tender Offer.
Comments & Business Outlook
SAN JOSE, Calif., April 26, 2018 /PRNewswire / -- Flex (FLEX), the Sketch-to-Scale™ solutions provider that designs and builds Intelligent Products for a Connected World™, today announced results for its fourth quarter ended March 31, 2018.
An explanation and reconciliation of non-GAAP financial measures to GAAP financial measures is presented in Schedule II attached to this press release.
"Fiscal 2018 marked a return to revenue growth for Flex and highlighted how our strategy of pursuing portfolio evolution and investing in our Sketch-to-Scale capabilities is driving revenue momentum as we enter fiscal 2019," said Mike McNamara, CEO at Flex.
Fourth Quarter Fiscal 2018 Results of Operations
Net sales for the fourth quarter ended March 31, 2018 were $6.4 billion, growing 9% year-over-year at the higher end of the guidance range of $6.1 to $6.5 billion. GAAP income before income taxes was $16 million for the quarter and adjusted operating income was $200 million, at the low end of the guidance range of $200 million to $230 million. GAAP net loss was $20 million and adjusted net income for the quarter was $150 million. GAAP net loss per share was $0.04 for the quarter and adjusted EPS was $0.28 for the quarter.
Fiscal Year 2018 Results Operation
Net sales for the fiscal year ended March 31, 2018 were $25.4 billion. Fiscal year 2018 GAAP income before income tax was $521 million and fiscal year 2018 adjusted operating income was $786 million. GAAP EPS was $0.80 and non-GAAP EPS was $1.09 for fiscal year 2018.
Flex's fiscal year 2018 performance illustrates its portfolio evolution to higher margin businesses. The Company's two higher margin business groups, High Reliability Solutions (HRS) and Industrial & Emerging Industries (IEI), combined were $10.7 billion or 43% of net sales in the fiscal year ended March 31, 2018, a $1.6 billion increase from a year ago.
Cash Flow and Balance Sheet
Flex generated cash from operations of $323 million and $754 million for the three and twelve-month periods ended March 31, 2018, respectively. Free cash flow was $195 million and $236 million for the three and twelve-month periods ended March 31, 2018. The Company repurchased ordinary shares for approximately $180 million during the twelve-month period ended March 31, 2018, reflecting its commitment to return over 50% of annual free cash flow to its shareholders.
Flex ended the quarter with approximately $1.5 billion of cash on hand and total debt of approximately $2.9 billion. The balance sheet remains well-positioned to support the business over the long-term.
First Quarter Fiscal Year 2019 Guidance
For the first quarter ending June 29, 2018, revenue is expected to be in the range of $6.3 to $6.7 billion. Adjusted EPS is expected to be in the range of $0.22 to $0.26 per diluted share. GAAP EPS is expected to be in the range of $0.15 to $0.19 and includes stock-based compensation expense and intangible amortization. The Company's guidance excludes the impact from adoption of ASU 2014-09 "Revenue from Contracts with Customers (Topic 606)".
Comments & Business Outlook
Third Quarter 2018 Financial Results
Net sales for the third quarter ended December 31, 2017 were $6.75 billion, growing 10% year-over-year and above the high end of the guidance range of $6.3 to $6.7 billion. GAAP income before income taxes was $141 million for the quarter and adjusted operating income was $220 million, at the mid-point of the guidance range of $205 million to $235 million.
GAAP EPS was $0.22 for the quarter and non-GAAP EPS was $0.31 for the quarter.
"Our third quarter displayed continued revenue growth acceleration and the advancement of our portfolio evolution," said Mike McNamara, CEO at Flex. "This marked our fourth straight quarter of accelerating year-over-year revenue growth, with all four of our business groups beating the mid-point of their revenue guidance ranges. In addition, both our HRS and IEI businesses set new records for quarterly revenue and adjusted operating profits."
Fourth Quarter Fiscal Year 2018 Guidance
The Company plans to initiate targeted restructuring activities during its fourth quarter of fiscal 2018. The objective of the activities is to make Flex a faster, more responsive company, and one that will continuously adapt to the incredible marketplace opportunities ahead. While a detailed action plan has not been finalized, the Company expects to incur a minimum charge of $50 million in the fourth quarter and will substantially complete all the associated activities by the end of this fiscal year.
For the fourth quarter ending March 31, 2018, revenue is expected to be in the range of $6.1 to $6.5 billion. Adjusted EPS is expected to be in the range of $0.28 to $0.32 per diluted share. GAAP EPS is expected to be in the range of $0.10 to $0.15 and includes stock-based compensation expense, intangible amortization, and restructuring charges.
Notable Share Transactions
SAN JOSE, Calif., Aug. 18, 2017 /PRNewswire / -- Flex (NASDAQ: FLEX) today announced that on August 15, 2017, it received shareholder approval to purchase up to 20% of its outstanding shares. Since the beginning of fiscal 2012 through the first quarter ended June 30, 2017, the Company repurchased approximately 298.8 million shares for approximately $2.6 billion and retired all of these shares.
Under the Company's current share repurchase program, the Board of Directors authorized repurchases of its outstanding ordinary shares for up to $500 million 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 15, 2017.
Share repurchases, if any, will be made in the open market and in compliance with SEC Rule 10b-18. The timing and actual number of shares repurchased will depend on a variety of factors including price, market conditions and applicable legal requirements. The share repurchase program does not obligate the Company to repurchase any specific number of shares and may be suspended or terminated at any time without prior notice.
Joint Venture
SAN JOSE, Calif., July 12, 2016 /PRNewswire / -- Flex (FLEX), a leading Sketch-to-Scale™ solutions provider that designs and builds intelligent products for a connected world, has partnered with MAS Holdings, a technology apparel design-to-delivery solutions provider, to develop revolutionary new wearable technologies that accelerate and integrate the Intelligence of Things into clothing and enable more natural, intuitive interactions between people and technology.
The two companies will preview the new technology they have collaborated on for integration with clothing at the WT | Wearable Technologies Conference at Fort Mason Center in San Francisco, July 12-13.
In addition to working together and with an ecosystem of independent third-party collaborators, the Flex and MAS partnership focuses on:
Developing new technologies: Collaborating on development of next-generation wearables and smart clothing, optimized through key innovations in technology, textiles and fabrics. Bringing new products to market: Collaborating on Sketch-to-Scale product development, beginning at the design stages, to provide apparel brands with a simplified development process for integration of next generation wearable technology. Streamlining processes: Improving supply chain efficiency for streamlined production, procurement and distribution. Mike Dennison, president of the Consumer Technologies Group at Flex, said, "In addition to being a leading innovator in textiles and apparel, MAS has been a valued partner on many previous wearables projects Flex has worked on, including the Lumo Run product, launching later this year. We are looking forward to further expanding our relationship, and collaborating on accelerating innovation in the wearables technology market."
Lumo Run is an example of 'smart clothing' that combines fashion, technology and function, with the potential to be 'every athlete's portable running coach.' The pending launch marks a collaborative initiative by Lumo Bodytech, MAS and Flex. The technology, based on sports biomechanics research on distance running done at Loughborough University in the UK, has already resulted in new knowledge about running technique, identifying key characteristics for ideal running form.
Mahesh Amalean, chairman of MAS Holdings, said, "Global partnerships have always played a key role in MAS's success, helping us move into new frontiers in process, product and technology. This exciting collaboration with Flex is the next iteration, enabling us to work together by integrating technology into apparel and delivering revolutionary products to the consumer."
Comments & Business Outlook
Fiscal Year Ended March 31,
2016
2015
2014
(In thousands, except per share amounts)
Net sales
$
24,418,885
$
26,147,916
$
26,108,607
Cost of sales
22,810,824
24,602,576
24,609,738
Restructuring charges
—
—
58,648
Gross profit
1,608,061
1,545,340
1,440,221
Selling, general and administrative expenses
954,890
844,473
874,796
Intangible amortization
65,965
32,035
28,892
Restructuring charges
—
—
16,663
Other charges (income), net
47,738
(53,233
)
57,512
Interest and other, net
84,793
51,410
61,904
Income before income taxes
454,675
670,655
400,454
Provision for income taxes
10,594
69,854
34,860
Net income
$
444,081
$
600,801
$
365,594
Earnings per share:
Basic
$
0.80
$
1.04
$
0.60
Diluted
$
0.79
$
1.02
$
0.59
Weighted-average shares used in computing per share amounts:
Basic
557,667
579,981
610,497
Diluted
564,869
591,556
623,479
Comments & Business Outlook
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three-Month Periods Ended
Nine-Month Periods Ended
December 31, 2015
December 31, 2014
December 31, 2015
December 31, 2014
(In thousands, except per share amounts) (Unaudited)
Net sales
$
6,763,177
$
7,025,054
$
18,646,187
$
20,196,316
Cost of sales
6,310,710
6,616,397
17,444,463
19,029,793
Gross profit
452,467
408,657
1,201,724
1,166,523
Selling, general and administrative expenses
240,617
215,993
666,798
629,860
Intangible amortization
19,319
8,045
43,117
23,228
Interest and other, net
21,566
9,035
60,106
40,178
Other charges (income), net
44,415
5,067
46,257
(41,526
)
Income before income taxes
126,550
170,517
385,446
514,783
Provision for (benefit from) income taxes
(22,360
)
17,618
2,709
49,094
Net income
$
148,910
$
152,899
$
382,737
$
465,689
Earnings per share
Basic
$
0.27
$
0.26
$
0.68
$
0.80
Diluted
$
0.27
$
0.26
$
0.67
$
0.78
Weighted-average shares used in computing per share amounts:
Basic
554,919
577,157
561,070
583,383
Diluted
560,996
587,201
568,926
594,791
Deal Flow
SAN JOSE, Calif. , Jan. 15, 2016 /PRNewswire / -- Flex (NASDAQ: FLEX) today announced the expiration of its previously announced offer (the "Exchange Offer") to exchange up to $600 million aggregate principal amount of its outstanding, unregistered 4.750% Notes due 2025 (the "Original Notes") for an equivalent amount of 4.750% Notes due 2025 which have been registered under the Securities Act of 1933.
The Exchange Offer, as extended, expired at 11:59 p.m., New York City time, on January 14, 2016. Flex has been advised that $600 million in aggregate principal amount of the Original Notes, representing 100% of the aggregate principal amount outstanding of the Original Notes, were validly tendered and not validly withdrawn prior to the expiration of the Exchange Offer. Flex expects that settlement of the Exchange Offer will occur on or about January 15, 2016.
Deal Flow
SAN JOSE, Calif., Jan. 12, 2016 /PRNewswire/ -- Flex (FLEX) today announced that it has extended its previously announced offer (the "Exchange Offer") to exchange up to $600 million aggregate principal amount of its outstanding, unregistered 4.750% Notes due 2025 (the "Original Notes") for an equivalent amount of 4.750% Notes due 2025 which have been registered under the Securities Act of 1933.
The Exchange Offer, which had originally been scheduled to expire at 11:59 p.m., New York City time, on January 11, 2016 will now expire at 11:59 p.m., New York City time, on January 14, 2016, subject to Flex's right to further extend the expiration date for the Exchange Offer.
The extension of the Exchange Offer has been made to allow holders of outstanding Original Notes who have not yet tendered their Original Notes for exchange additional time to do so. All other terms of the Exchange Offer, as set forth in the prospectus dated December 7, 2015 (the "Prospectus") and the accompanying letter of transmittal, will remain in full force and effect.
Flex has been advised that, as of 5:00 p.m. New York City time, on January 11, 2016, $599,930,000 in aggregate principal amount of the Original Notes had been validly tendered and not withdrawn in the Exchange Offer, representing 99.9883% of the aggregate principal amount outstanding of the Original Notes.
Deal Flow
Flextronics International Ltd.
(Singapore Reg. No. 199002645H)
Offer to Exchange up to $600,000,000 Principal Amount of 4.750% Notes due 2025 for a Like Principal Amount of 4.750% Notes due 2025 which have been registered under the Securities Act of 1933
We hereby offer, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal, to exchange up to $600,000,000 aggregate principal amount of our outstanding, unregistered 4.750% Notes due 2025 (the "original notes" and each an "original note") for an equivalent amount of registered 4.750% Notes due 2025 (the "exchange notes" and each an "exchange note"). In this prospectus, this offer is sometimes referred to as the "exchange offer" and the original notes and the exchange notes are sometimes referred to together as the "notes." The terms of the exchange notes will be substantially identical to the terms of the original notes, except that the exchange notes will be registered under the Securities Act of 1933, as amended (the "Securities Act"), and the transfer restrictions, registration rights and payment of additional interest in case of non-registration applicable to the original notes will not apply to the exchange notes. The original notes may only be tendered in exchange for exchange notes in minimum denominations of $2,000 in principal amount and in integral multiples of $1,000 in excess thereof.
The exchange offer will expire at 11:59 p.m., New York City time, on January 11, 2016, subject to our right to extend the expiration date for the exchange offer. Upon expiration of the exchange offer, all outstanding original notes that are validly tendered and not validly withdrawn will be exchanged for a like principal amount of the exchange notes. You may withdraw tendered original notes at any time prior to the expiration date.
Comments & Business Outlook
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three-Month Periods Ended
Six-Month Periods Ended
September 25, 2015
September 26, 2014
September 25, 2015
September 26, 2014
(In thousands, except per share amounts) (Unaudited)
Net sales
$
6,316,762
$
6,528,517
$
11,883,010
$
13,171,262
Cost of sales
5,919,846
6,151,436
11,133,753
12,413,396
Gross profit
396,916
377,081
749,257
757,866
Selling, general and administrative expenses
216,796
204,590
426,181
413,867
Intangible amortization
16,127
8,232
23,798
15,183
Interest and other, net
22,035
12,506
38,540
31,143
Other charges (income), net
1,678
(2,584
)
1,842
(46,593
)
Income before income taxes
140,280
154,337
258,896
344,266
Provision for income taxes
17,303
15,434
25,069
31,476
Net income
$
122,977
$
138,903
$
233,827
$
312,790
Earnings per share
Basic
$
0.22
$
0.24
$
0.41
$
0.53
Diluted
$
0.22
$
0.23
$
0.41
$
0.52
Weighted-average shares used in computing per share amounts:
Basic
563,333
585,760
564,417
586,497
Diluted
569,655
595,871
573,288
598,586
Management Discussion and Analysis
Net sales during the three-month period ended September 25, 2015 totaled $6.3 billion, representing a decrease of approximately $0.2 billion, or 3.2% from $6.5 billion during the three-month period ended September 26, 2014. The decline in net sales was primarily due to $0.2 billion and $0.1 billion decreases in our CTG and INS segments, respectively. The decline in CTG was due to a decline in demand from our largest customer in our mobile business. The decline in INS was the result of broad declines in our server and storage, as well as our telecom and networking businesses. These decreases were offset by small increases of $73.8 million in our HRS segment and $48.6 million in our IEI segment, attributable to higher sales to our automotive, medical, appliances and energy customers. Net sales decreased $0.1 billion to $3.2 billion in Asia, $47.3 million to $2.1 billion in the Americas and $25.1 million to $1.1 billion in Europe, respectively.
Net sales during the six-month period ended September 25, 2015 totaled $11.9 billion, representing a decrease of approximately $1.3 billion, or 9.8% from $13.2 billion during the six-month period ended September 26, 2014. The decline in net sales was primarily due to softness in demand from our CTG and INS segments, primarily as a result of the same drivers listed above. These decreases were offset by increases in our HRS and IEI segments attributable to an increase across multiple product categories and customers, most notably in our medical, automotive, energy, and household businesses. Net sales decreased $0.9 billion to $5.8 billion in Asia, $0.2 billion to $4.1 billion in the Americas and $0.2 billion to $2.0 billion in Europe, respectively.
Comments & Business Outlook
Second Quarter 2016 Financial Results
Net sales for the second quarter ended September 25, 2015 were just over $6.3 billion, above the mid-point of its previously provided revenue guidance of $5.9 billion to $6.5 billion.
The Company's adjusted earnings per diluted share of $0.27 was towards the high-end of the Company's previously provided guidance of $0.22 to $0.28.
"Our strong performance this quarter was reflected in our quarterly revenue growth, improved operating margins and our continued ability to operate with discipline," said Mike McNamara, chief executive officer at Flex. "We remain committed to our strategy of expanding our sketch-to-scale offering to include exciting new partnerships such as NIKE and others that clearly demonstrate Flex's ability to provide innovative solutions for many product categories that go beyond electronics."
"We generated $300 million in cash flow from operations and $143 million in free cash flow during the quarter," said Chris Collier, chief financial officer at Flex. "Our consistent free cash flow generation reflects our strong discipline and execution and enables our shareholder return commitment. During the quarter we invested $142 million to repurchase almost 13 million shares, or over 2% of our ordinary shares."
Guidance For the third quarter ending December 31, 2015, revenue is expected to be in the range of $6.2 to $6.8 billion and adjusted EPS is expected to be in the range of $0.28 to $0.34 per diluted share.
GAAP earnings per share is expected to be lower than the adjusted EPS guidance provided herein by approximately $0.06 per diluted share for estimated intangible amortization and stock-based compensation expense.
Acquisition Activity
SAN JOSE, Calif. , Sept. 8, 2015 /PRNewswire / -- Flex (NASDAQ: FLEX) has entered into a definitive agreement to acquire NEXTracker, a leader in smart solar tracking solutions. NEXTracker designs and manufactures one of the world's most advanced single-axis photovoltaic (PV) trackers that orients PV panels to maximize energy output. The acquisition will augment the Flex Energy business and contribute to its more than $1 billion in sales, and is expected to be accretive to Flex's growth, margin, EPS and cash flow generation.
NEXTracker has achieved significant industry breakthroughs in smart and connected tracking solutions that deliver high performance and flexibility for solar power plants of all sizes. It delivers a cost-effective solution to maximize solar project returns for its range of global customers that include developers, energy procurement construction companies, and system owners of ground-mounted solar power plants.
"This acquisition aligns well with our strategy of acquiring technologies that deliver innovative, value-added solutions to our customers in industries with strong growth rates and higher margins," said Mike McNamara , CEO of Flex. "Together with our existing Energy capabilities, the NEXTracker solutions will enable Flex to further enhance our sketch-to-scale� solar offerings. Our strong, free cash flow generation enables margin-accretive acquisitions like this to be completed, while at the same time allowing us to remain committed to maximizing shareholder value through returning over 50% of free cash flow to our shareholders."
"The addition of the leading-edge NEXTracker business, along with its Chairman and CEO, Dan Shugar , and his team, will further expand Flex's solar capabilities in commercializing smart and connected energy technologies," said Doug Britt , president of Industrial and Emerging Industries at Flex. "NEXTracker's advanced solar tracking solutions, along with Flex's experience in the energy sector, solar manufacturing and our global reach, will provide valuable and scalable system-level solutions for our energy customers worldwide, improving their competitive offering."
"Joining Flex will enable NEXTracker to accelerate its growth while leveraging our best-in-class, innovative technologies, and a shared passion for advancing the future of renewable energy," said NEXTracker's Shugar. "Flex has a solid global infrastructure, an experienced team, and world-class capabilities that will allow us to scale our solar solutions and help take our business to the next level."
Upon completion of the deal, NEXTracker will operate as a subsidiary, retaining its existing brand under the continued leadership of Dan Shugar .
Under the terms of the agreement, the initial cash consideration will be approximately $245 million, net of cash acquired, with an additional $85 million of potential contingent consideration upon achievement of future performance targets. Flex will also assume an equity incentive plan. The acquisition is expected to close early in the December 2015 quarter, subject to customary closing conditions, and contribute between $80 million and $120 million in revenue for the December quarter. Flex intends to fund the acquisition from currently available resources.
Notable Share Transactions
SAN JOSE, Calif. , Aug. 24, 2015 /PRNewswire / -- On August 20, 2015, Flex (NASDAQ: FLEX) received shareholder approval to purchase up to 20% of its outstanding shares. Additionally, the Company's Board of Directors authorized management to purchase the Company's shares in an aggregate amount of up to $500 million. Since the beginning of fiscal 2011, the Company has repurchased 305 million shares for approximately $2.2 billion.
Share repurchases, if any, will be made in the open market and in compliance with SEC Rule 10b-18. The timing and actual number of shares repurchased will depend on a variety of factors including price, market conditions and applicable legal requirements. The share repurchase program does not obligate the Company to repurchase any specific number of shares and may be suspended or terminated at any time without prior notice.
Comments & Business Outlook
First Quarter 2016 Financial Results
Flextronics' net sales for the first quarter ended June 26, 2015 were just under $5.6 billion, slightly below its previously provided revenue guidance of $5.6 billion to $6.2 billion. Adjusted operating income was $159 million, above the lower end of the guidance range of $150 to $190 million.
Adjusted EPS was $0.23 vs. last years same quarter of $0.25.
Despite the lighter revenues, adjusted gross margin increased 60 basis points and adjusted operating margin increased 10 basis points compared to the same period last year.
"The first quarter of fiscal 2016 was exemplified by operating with discipline, driving a richer product mix and deploying capital thoughtfully," said Mike McNamara, chief executive officer at Flextronics. "We continued to return meaningful capital to our shareholders this quarter as we repurchased almost 8 million shares for approximately $100 million."
"We generated $362 million in cash flow from operations driving to a free cash flow of $225 millionduring the quarter," said Chris Collier, chief financial officer at Flextronics. "Our consistent strong free cash flow reflects our deliberate discipline and execution over our net working capital and capital investments."
Guidance For the second quarter ending September 25, 2015, revenue is expected to be in the range of $5.9 to $6.5 billion and adjusted EPS is expected to be in the range of $0.22 to $0.28 per diluted share.
GAAP earnings per share is expected to be lower than the adjusted EPS guidance provided herein by approximately $0.05 per diluted share for estimated intangible amortization and stock-based compensation expense.
Deal Flow
Item 1.01. Entry into a Material Definitive Agreement.
On June 8, 2015, Flextronics International Ltd. (the “Company”) completed the issuance and sale of $600,000,000 aggregate principal amount of its 4.750% Notes due 2025 (the “Notes”) through a private placement to “qualified institutional buyers” pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act (the “Notes Offering”). The Company received net proceeds of approximately $587.8 million from the Notes Offering. Flextronics intends to use the net proceeds from the Notes Offering for general corporate purposes.
Indenture
The Notes were issued pursuant to an indenture, dated as of June 8, 2015 (the “Indenture”), between the Company, certain subsidiaries of the Company party thereto (the “Guarantors”) and U.S. Bank National Association, as trustee.
The Notes mature on June 15, 2025 and bear interest at a rate of 4.750% per annum, payable semi-annually on June 15 and December 15 of each year, commencing on December 15, 2015. The Notes are senior unsecured obligations of the Company and rank equally with all of the Company’s other existing and future senior and unsecured debt obligations.
At any time prior to March 15, 2025, the Company may redeem some or all of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus an applicable premium and accrued and unpaid interest, if any, to the applicable redemption date. At any time on or after March 15, 2025, the Company may redeem some or all of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed and accrued and unpaid interest, if any, to the applicable redemption date.
Upon the occurrence of a change of control repurchase event (as defined in the Indenture), the Company must offer to repurchase the Notes at a repurchase price equal to 101% of the principal amount of the Notes repurchased, plus accrued and unpaid interest, if any, to the applicable repurchase date.
Acquisition Activity
SAN JOSE, Calif., April 29, 2015 /PRNewswire / -- Flextronics (FLEX) announced today that it has entered into a definitive agreement to acquire Mirror Controls International (MCi) from private equity firm Egeria in an all cash transaction valuing its share capital at �457 million ($494 million USD*). Based in Woerden, the Netherlands, and with three highly automated manufacturing facilities in China, Mexico, and Ireland, MCi is a leading global manufacturer of glass and powerfold mirror actuators in the automotive market and generated approximately �200 million ($216 million USD*) in revenue over the past twelve months, historically growing over 20% year over year. The acquisition is expected to be accretive to Flextronics' growth, margin, EPS and cash flow profile and is expected to close in the September quarter.
"Our M&A strategy remains focused on identifying and acquiring technologies that deliver innovative solutions to our customers in companies that have longer and stable product life cycles," said Mike McNamara, CEO of Flextronics. "MCi is an excellent example of a highly strategic acquisition that will directly enhance our automotive offering and benefit our overall capabilities platform while driving new offerings and differentiation across multiple industries. Additionally, our strong free cash flow generation enables margin accretive acquisitions like this to be completed while we remain committed to maximizing shareholder value and returning over 50% of free cash flow to shareholders," he added.
"We are pleased to announce the acquisition of MCi, a global market leader in both glass and powerfold mirror actuators that is recognized for its best-in-class engineering capabilities and product portfolio," said Chris Obey, president of Flextronics Automotive. "We look forward to combining MCi's leading component and platform capabilities and leveraging their world-class actuator technology across our automotive business and other market segments."
Mark van der Spek, CEO of MCi, said, "Flextronics' strong strategic fit, global operations and supply chain expertise make it a perfect place for MCi and our employees. Flextronics' vertical integration capabilities, global scale and culture will allow us to continue providing best-in-class offerings to our customers and to sustain our market leadership. We are excited to join the Flextronics' team and become a part of their innovative automotive platform and to continue the trajectory we have had at MCi historically."
"Flextronics has the most comprehensive end-to-end supply chain solutions serving the automotive industry today. Upon completion, the acquisition of MCi will further expand our solutions offering with expertise that addresses the key technology trends in automobile electronics," Obey concluded.
Additional terms of the deal were not disclosed and completion of the transaction is subject to customary closing conditions, including regulatory approvals. Flextronics intends to fund the acquisition from currently available resources and remains committed to returning over 50% of free cash flow to shareholders.
* Based on exchange rate of Euro/USD of 1.08.
Comments & Business Outlook
Fourth Quarter Results of Operations
Flextronics net sales for the fourth quarter ended March 31, 2015 were just under $6.0 billion, slightly below its previously provided revenue guidance of $6.0 billion to $6.4 billion
Adjusted earnings per diluted share of $0.27 in the fourth quarter ended March 31, 2015 was up 13% from $0.24 in the year ago quarter
Guidance The acquisition of Mirror Controls International ("MCi") announced today in a separate press release is expected to close in the quarter ending September 25, 2015 and as a result does not impact the guidance below for the quarter ending June 26, 2015.
For the first quarter ending June 26, 2015, revenue is expected to be in the range of $5,600 to $6,200 millionand adjusted EPS is expected to be in the range of $0.20 to $0.26 per diluted share.
GAAP earnings per share is expected to be lower than the adjusted EPS guidance provided herein by approximately $0.04 per diluted share for intangible amortization and stock-based compensation expense.
Comments & Business Outlook
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three-Month Periods Ended
Nine-Month Periods Ended
December 31, 2014
December 31, 2013
December 31, 2014
December 31, 2013
(In thousands, except per share amounts)
(Unaudited)
Net sales
$
7,025,054
$
7,183,442
$
20,196,316
$
19,384,673
Cost of sales
6,616,397
6,784,823
19,029,793
18,306,596
Gross profit
408,657
398,619
1,166,523
1,078,077
Selling, general and administrative expenses
215,993
224,576
629,860
666,695
Intangible amortization
8,045
5,575
23,228
21,495
Interest and other, net
9,035
18,342
40,178
45,516
Other charges (income), net
5,067
(3,599
)
(41,526
)
2,512
Income before income taxes
170,517
153,725
514,783
341,859
Provision for income taxes
17,618
8,568
49,094
19,240
Net income
$
152,899
$
145,157
$
465,689
$
322,619
Earnings per share:
Basic
$
0.26
$
0.24
$
0.80
$
0.52
Diluted
$
0.26
$
0.23
$
0.78
$
0.51
Weighted-average shares used in computing per share amounts:
Basic
577,157
606,724
583,383
614,539
Diluted
587,201
618,677
594,791
627,399
Management Discussion and Analysis
Net sales during the three-month period ended December 31, 2014 totaled $7.0 billion, representing a decrease of approximately $0.2 billion, or 2.2% from $7.2 billion during the three-month period ended December 31, 2013. The modest decline in net sales was primarily due to $0.3 billion and $0.2 billion decreases in our CTG and INS business groups, respectively due to broad softness in our computing and mobile devices business as well as our telecom businesses and certain targeted exits with customers in our connected home business. These decreases were offset by a $0.2 billion increase in our IEI business group, mainly attributable to an increase in our household appliances and our energy businesses, and a $0.1 billion increase in our HRS business group, attributable to higher sales to our automotive and medical customers. Net sales decreased by $0.5 billion to $3.5 billion in Asia, offset by an increase of $0.2 billion to $2.4 billion in the Americas and an increase of $0.1 billion to $1.2 billion in Europe.
Net sales during the nine-month period ended December 31, 2014 totaled $20.2 billion, representing an increase of approximately $0.8 billion, or 4.2% from $19.4 billion during the nine month period ended December 31, 2013. Revenue increased across all of our business groups, except for INS, which experienced a marginal decrease. The increase in revenue from our IEI business group is primarily attributable to a broad increase across product categories, most notably in our energy and our household appliances businesses. The increased revenue from our HRS business group is primarily due to a higher demand from our medical customers, and higher sales to our automotive customers as a result of an increased use of electronics throughout vehicles in areas such as in-car connectivity, LED lighting, and power management. The increased revenue from our CTG business group is primarily as a result of our acquisition of certain manufacturing operations from Google’s Motorola Mobility LLC (Motorola) during the first quarter of fiscal 2014 and the business ramping up during the mid to latter part of fiscal 2014. These increases were offset by a decrease in revenue in our INS business group amounting to $0.4 billion for the nine-month period ended December 31, 2014 primarily attributable to broad softness in our telecom businesses coupled with certain targeted exits with customers in our connected home business. Net sales increased $0.7 billion to $6.7 billion in the Americas and $0.2 billion to $3.3 billion in Europe, respectively. These increases were offset by a decrease of $0.1 billion to $10.1 billion in Asia.
Our ten largest customers accounted for approximately 51% of net sales for both the three month and the nine-month periods ended December 31, 2014, respectively. Motorola (including its parent Google up to when Motorola was acquired by Lenovo and including net sales from Lenovo thereafter) accounted for more than 10% of net sales during the three-month and nine-month periods ended December 31, 2014. Our ten largest customers during the three-month and nine-month periods ended December 31, 2013 accounted for approximately 54% and 52% of net sales, respectively. Motorola (including its parent Google) accounted for more than 10% of net sales during the three-month and nine-month periods ended December 31, 2013.
Comments & Business Outlook
FLEXTRONICS INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three-Month Periods Ended
Six-Month Periods Ended
September 26, 2014
September 27, 2013
September 26, 2014
September 27, 2013
(In thousands, except per share amounts)
(Unaudited)
Net sales
$
6,528,517
$
6,410,106
$
13,171,262
$
12,201,231
Cost of sales
6,151,436
6,041,683
12,413,396
11,521,773
Gross profit
377,081
368,423
757,866
679,458
Selling, general and administrative expenses
204,590
218,500
413,867
442,119
Intangible amortization
8,232
7,718
15,183
15,920
Interest and other, net
12,506
14,601
31,143
27,174
Other charges (income), net
(2,584
)
(1,000
)
(46,593
)
6,111
Income before income taxes
154,337
128,604
344,266
188,134
Provision for income taxes
15,434
10,399
31,476
10,672
Net income
$
138,903
$
118,205
$
312,790
$
177,462
Earnings per share:
Basic
$
0.24
$
0.19
$
0.53
$
0.29
Diluted
$
0.23
$
0.19
$
0.52
$
0.28
Weighted-average shares used in computing per share amounts:
Basic
585,760
610,775
586,497
618,447
Diluted
595,871
623,620
598,586
631,760
Management Discussion and Analysis
Net sales during the three-month and six-month periods ended September 26, 2014 totaled $6.5 billion and $13.2 billion, respectively. Sales increased by approximately $0.1 billion, or 2%, and $1.0 billion, or 8% from $6.4 billion and $12.2 billion during the three-month and six-month periods ended September 27, 2013, respectively. Revenue increased across all of our business groups, except for INS, which experienced a marginal decrease.
The increase in revenue from our IEI business group is primarily attributable to a broad increase across product categories, most notably in our energy business and in our household appliances businesses. The increased revenue from our HRS business group is primarily due to higher sales to our automotive customers as a result of an increased use of electronics throughout vehicles in areas such as in-car connectivity, LED lighting, and power management. The increased revenue from our CTG business group is primarily as a result of our acquisition of certain manufacturing operations from Google’s Motorola Mobility LLC (Motorola) during the first quarter of fiscal 2014 and the business ramping up during the mid to latter part of fiscal 2014. These increases were offset by a decrease in revenue in our INS business group amounting to $0.2 billion for both the three-month and six-month periods ended September 26, 2014 primarily attributable to broad softness in our connected home and telecom businesses.
For the three-month and six-month periods ended September 26, 2014, net sales increased $100.1 million to $2.1 billion and $450.4 million to $4.3 billion in the Americas, respectively, and increased $46.6 million to $1.1 billion and $115.1 million to $2.1 billion in Europe, respectively. Net sales in Asia decreased $28.3 million to $3.3 billion for the three-month period ended September 26, 2014, while increasing $404.6 million to $6.7 billion for the six-month period then ended.
Our ten largest customers during the three-month and six-month periods ended September 26, 2014 accounted for approximately 51% and 52% of net sales, respectively. Google (including Motorola) accounted for more than 10% of net sales during the three-month and six-month periods ended September 26, 2014. Our ten largest customers during the three-month and six-month periods ended September 27, 2013 accounted for approximately 52% and 50% of net sales, respectively. Google (including Motorola) accounted for more than 10% of net sales during the three-month period ended September 27, 2013. No single customer accounted for greater than 10% of our net sales during the six-month period ended September 27, 2013.
Notable Share Transactions
SAN JOSE, Calif., Sept. 2, 2014 /PRNewswire / -- On August 28, 2014, Flextronics (FLEX) received shareholder approval to purchase up to 20% of its outstanding shares. Additionally, the Company's Board of Directors authorized management to purchase the Company's shares in an aggregate amount of up to $500 million. The Company continues to return value to its shareholders as it has purchased approximately $1.7 billion or 247 million of its shares over the last four years .
Share repurchases, if any, will be made in the open market and in compliance with SEC Rule 10b-18. The timing and actual number of shares repurchased will depend on a variety of factors including price, market conditions and applicable legal requirements. The share repurchase program does not obligate the Company to repurchase any specific number of shares and may be suspended or terminated at any time without prior notice.
Comments & Business Outlook
FLEXTRONICS INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three-Month Periods Ended
June 27, 2014
June 28, 2013
(In thousands, except per share amounts)
(Unaudited)
Net sales
$
6,642,745
$
5,791,125
Cost of sales
6,261,960
5,480,090
Gross profit
380,785
311,035
Selling, general and administrative expenses
209,277
223,619
Intangible amortization
6,951
8,202
Interest and other, net
18,637
12,573
Other charges (income), net
(44,009
)
7,111
Income before income taxes
189,929
59,530
Provision for income taxes
16,042
273
Net income
$
173,887
$
59,257
Earnings per share:
Basic
$
0.30
$
0.09
Diluted
$
0.29
$
0.09
Weighted-average shares used in computing per share amounts:
Basic
587,233
626,120
Diluted
601,300
639,899
Management Discussion and Analysis
Net sales during the three-month period ended June 27, 2014 totaled $6.6 billion. Sales increased by approximately $0.8 billion, or 14.7%, from $5.8 billion during the three-month period ended June 28, 2013. Revenue increased across all of our business groups, except for INS, which experienced a marginal decrease year over year. Revenue from our CTG and IEI business groups increased by $0.6 billion and $0.2 billion, respectively. The increased revenue from our CTG business group is primarily a result of our acquisition of certain manufacturing operations from Google’s Motorola Mobility LLC (Motorola) during the first quarter of fiscal 2014 and the business ramping up during the mid to latter part of fiscal 2014. The increase in revenue from our IEI business group is primarily attributable to an increase broadly across product categories, most notably in our semiconductor capital equipment and our household appliances businesses versus the prior year period. For the three-month period ended June 27, 2014, net sales increased $0.4 billion in Asia, $0.3 billion in the Americas and $0.1 billion in Europe.
Our ten largest customers during the three-month period ended June 27, 2014 and June 28, 2013 accounted for approximately 53% and 49% of net sales, respectively. Google (including Motorola) accounted for more than 10% of net sales during the three-month period ended June 27, 2014. No single customer accounted for greater than 10% of our net sales during the three-month period ended June 28, 2013.
Comments & Business Outlook
First Quarter Fiscal 2015 Financial Results
Net sales for the first quarter were $6.6 billion vs. last years $5.8 billion.
Adjusted earnings per diluted share of $0.25 in the first quarter vs. last years of $0.18.
"We are the most advanced worldwide supply chain solutions provider and continue to make steady improvements across most of our core financial metrics," said Mike McNamara, chief executive officer at Flextronics. "During the June quarter, all four of our business groups exceeded our expectations and both our IEI and our HRS businesses reached record levels for quarterly sales."
"We continue to return value to shareholders through our stock buyback program by repurchasing another 10.5 million shares during the quarter for $106 million," said Chris Collier, chief financial officer at Flextronics.
Guidance
For the second quarter ending September 26, 2014, revenue is expected to be in the range of $6.2 to $6.6 billion and adjusted EPS is expected to be in the range of $0.22 to $0.26 per diluted share.
GAAP earnings per share is expected to be lower than the guidance provided herein by approximately $0.03 per diluted share for intangible amortization and stock-based compensation expense.
Comments & Business Outlook
FLEXTRONICS INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF OPERATIONS
Fiscal Year Ended March 31,
2014
2013
2012
(In thousands, except per share amounts)
Net sales
$
26,108,607
$
23,569,475
$
29,343,029
Cost of sales
24,609,738
22,187,393
27,825,079
Restructuring charges
58,648
215,834
—
Gross profit
1,440,221
1,166,248
1,517,950
Selling, general and administrative expenses
874,796
805,235
877,564
Intangible amortization
28,892
29,529
49,572
Restructuring charges
16,663
11,600
—
Other charges (income), net
57,512
(65,190
)
(19,935
)
Interest and other, net
61,904
56,259
36,019
Income from continuing operations before income taxes
400,454
328,815
574,730
Provision for income taxes
34,860
26,313
53,960
Income from continuing operations
365,594
302,502
520,770
Loss from discontinued operations, net of tax
—
(25,451
)
(32,005
)
Net income
$
365,594
$
277,051
$
488,765
Earnings per share:
Income from continuing operations:
Basic
$
0.60
$
0.46
$
0.73
Diluted
$
0.59
$
0.45
$
0.72
Loss from discontinued operations:
Basic
$
—
$
(0.04
)
$
(0.04
)
Diluted
$
—
$
(0.04
)
$
(0.04
)
Net income:
Basic
$
0.60
$
0.42
$
0.68
Diluted
$
0.59
$
0.41
$
0.67
Weighted-average shares used in computing per share amounts:
Basic
610,497
662,874
716,247
Diluted
623,479
675,033
727,807
Management Discussion and Analysis
Net sales
Net sales during fiscal year 2014 totaled $26.1 billion, representing an increase of $2.5 billion, or 10.8%, from $23.6 billion during fiscal year 2013. During fiscal year 2014, net sales increased $2.0 billion in Asia and $0.9 billion in the Americas, offset by a decrease of $0.4 billion in Europe.
Net sales during fiscal year 2013 totaled $23.6 billion, representing a decrease of $5.8 billion, or 19.7%, from $29.3 billion during fiscal year 2012. Net sales decreased across all of the geographical regions we serve, consisting of decreases of $3.7 billion in Asia, $1.2 billion in the Americas and $0.9 billion in Europe.
Deal Flow
Item 1.01 Entry into a Material Definitive Agreement.
On March 31, 2014 (the “Closing Date”), Flextronics International Ltd. (the “Company”) and certain of its subsidiaries, as borrowers, entered into a new $2.0 billion Credit Agreement (the “New Credit Facility”) with Bank of America, N.A., as Administrative Agent and Swing Line Lender, Citibank, N.A., as Syndication Agent, Bank of America as L/C Issuer, BNP Paribas, HSBC Bank USA, National Association, JPMorgan Chase Bank, N.A., the Royal Bank of Scotland plc and The Bank of Nova Scotia, as Co-Documentation Agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets, Inc., BNP Paribas Securities Corp., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, RBS Securities Inc. and The Bank of Nova Scotia, as Joint Lead Arrangers and Joint Bookrunners, and the other Lenders party thereto. The New Credit Facility, which matures on March 31, 2019, consists of (i) a $1.5 billion revolving credit facility with a sublimit of $300 million available for swing line loans and a sublimit of $150 million available for the issuance of letters of credit and (ii) a $500 million term loan facility. The New Credit Facility permits the Company, at its option, to add one or more incremental term loan facilities and/or increase the revolving commitments in an aggregate amount not to exceed $500 million. Any incremental term loan facility or increase in revolving commitments would be on terms to be agreed among the Company, the Administrative Agent, and the lenders who agree to participate in the facility.
On the Closing Date, the Company borrowed $500 million under the term loan facility of the New Credit Facility for working capital and to repay approximately $438.5 million of outstanding term loans including interest and fees owing under the Company’s existing $2.0 billion Credit Agreement, dated as of October 19, 2011, among the Company and certain of its subsidiaries, as borrowers, Bank of America, N.A., as Administrative Agent and Swing Line Lender, and the other Lenders party thereto (the “Existing Credit Facility”), which term loans were otherwise due to mature on October 19, 2016. The New Credit Facility replaced the Company’s Existing Credit Facility, which was terminated on the Closing Date.
Borrowings under the New Credit Facility bear interest, at the Company’s option, either at (i) the Base Rate, which is defined as the greatest of (a) the Administrative Agent’s prime rate, (b) the federal funds effective rate, plus 0.50% and (c) one-month LIBOR (the London Interbank Offered Rate), plus 1.0%; plus, in the case of each of clauses (a) through (c), an applicable margin ranging from 0.125% to 1.125% per annum, based on the Company’s credit ratings (as determined by Standard & Poor’s Rating Services and Moody’s Investor Service) or (ii) LIBOR plus the applicable margin for LIBOR loans ranging from 1.125% to 2.125% per annum, based on the Company’s credit ratings. The Company is required to pay a quarterly commitment fee on the unutilized portion of the revolving credit commitments under the New Credit Facility ranging from 0.15% to 0.40% per annum, based on the Company’s credit ratings. The Company is also required to pay letter of credit usage fees ranging from 1.125% to 2.125% per annum (based on the Company’s credit ratings) on the amount of the daily average outstanding letters of credit and a fronting fee of 0.125% per annum on the undrawn and unexpired amount of each letter of credit.
The New Credit Facility is unsecured, and contains customary restrictions on the ability of the Company and its subsidiaries to (i) incur certain debt, (ii) make certain investments, (iii)
make certain acquisitions of other entities, (iv) incur liens, (v) dispose of assets, (vi) make non-cash distributions to shareholders, and (vii) engage in transactions with affiliates. These covenants are subject to a number of significant exceptions and limitations. The New 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, as defined, during the term of the New Credit Facility. Borrowings under the New Credit Facility are guaranteed by the Company and certain of its subsidiaries.
The New Credit Facility contains customary events of default. If an event of default under the New Credit Facility occurs and is continuing, then the Administrative Agent shall, at the request of, or may, with the consent of, the required lenders, declare any outstanding obligations under the New Credit Facility to be immediately due and payable. In addition, if an actual or deemed entry of an order for relief with respect to the Company is made under the United States bankruptcy code or comparable foreign law, then any outstanding obligations under the New Credit Facility will automatically become immediately due and payable.
The foregoing description of the New Credit Facility is not complete and is qualified in its entirety by reference to the full terms and conditions of the New Credit Facility, which is filed as Exhibit 10.01 to this Current Report on Form 8-K.
Some of the lenders under the New Credit Facility and the Existing Credit Facility and/or their respective affiliates have from time to time performed and may in the future perform various commercial banking, investment banking and other financial advisory services for the Company and/or its subsidiaries in the ordinary course of business, for which they received or will receive customary fees and commissions.
Comments & Business Outlook
FLEXTRONICS INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three-Month Periods Ended
Nine-Month Periods Ended
December 31, 2013
December 31, 2012
December 31, 2013
December 31, 2012
(In thousands, except per share amounts)
(Unaudited)
Net sales
$
7,183,442
$
6,123,321
$
19,384,673
$
18,274,157
Cost of sales
6,784,823
5,778,544
18,271,470
17,205,251
Restructuring charges
—
98,315
35,126
98,315
Gross profit
398,619
246,462
1,078,077
970,591
Selling, general and administrative expenses
224,576
207,224
661,061
589,751
Intangible amortization
5,575
6,137
21,495
21,211
Restructuring charges
—
4,376
5,634
4,376
Interest and other, net
14,743
(17,089
)
48,028
(16,754
)
Income from continuing operations before income taxes
153,725
45,814
341,859
372,007
Provision for (benefit from) income taxes
8,568
(8,782
)
19,240
20,189
Income from continuing operations
145,157
54,596
322,619
351,818
Loss from discontinued operations, net of tax
—
(7,248
)
—
(25,451
)
Net income
$
145,157
$
47,348
$
322,619
$
326,367
Earnings per share:
Income from continuing operations:
Basic
$
0.24
$
0.08
$
0.52
$
0.53
Diluted
$
0.23
$
0.08
$
0.51
$
0.52
Loss from discontinued operations:
Basic
$
—
$
(0.01
)
$
—
$
(0.04
)
Diluted
$
—
$
(0.01
)
$
—
$
(0.04
)
Net income:
Basic
$
0.24
$
0.07
$
0.52
$
0.49
Diluted
$
0.23
$
0.07
$
0.51
$
0.48
Weighted-average shares used in computing per share amounts:
Basic
606,724
658,925
614,539
666,852
Diluted
618,677
669,488
627,399
678,610
Deal Flow
Item 1.01 Entry into a Material Definitive Agreement.
On August 30, 2013, Flextronics International Ltd. (the “Company ”), entered into a $600 million term loan agreement (the “ Term Loan Agreement ”) with The Bank of Tokyo - Mitsubishi UFJ, Ltd., as Administrative Agent (the “ Administrative Agent ”), Lead Arranger and Bookrunner, and the other Lenders party thereto. The Term Loan Agreement consists of a $600 million term loan facility. On the same date, the Company borrowed the full amount under the term loan facility, which it used to repay the remaining outstanding loans under its 2007 term loan facility, which was scheduled to mature in October 2014, and under its Asia term loans, which were scheduled to mature in September 2013 and February 2014. Within 180 days of the closing date, the Company is required to use the remainder of the borrowed funds to repay additional existing indebtedness. The Term Loan Agreement matures on August 30, 2018. The Term Loan Agreement permits the Company, at its option, to request an increase in the term loan facility and/or request a new tranche or tranches of term loans in an aggregate amount not to exceed $150 million. Any increase or new incremental term loan facility would be on terms to be agreed among the Company, the Administrative Agent, and the lenders who agree to participate in the facility.
Borrowings under the Term Loan Agreement bear interest, at the Company’s option, either at (i) the greatest of (a) the prime rate in effect on such day as published in The Wall Street Journal, (b) the federal funds effective rate in effect on such day, plus 0.50% and (c) the LIBOR (the London Interbank Offered Rate) rate that would be calculated as of such day in respect of a proposed LIBOR loan with a one-month interest period, plus 1.0%; plus , in the case of each of clauses (a) through (c), an applicable margin ranging from 0.00% to 1.00%, based on the Company’s credit ratings (as determined by Standard & Poor’s Financial Services LLC and Moody’s Investors Service, Inc.) or (ii) LIBOR plus the applicable margin for LIBOR loans ranging between 1.00% and 2.00%, based on the Company’s credit ratings.
The Term Loan Agreement is unsecured, and contains customary restrictions on the ability of the Company and its subsidiaries to (i) incur certain debt, (ii) make certain investments, (iii) make certain acquisitions of other entities, (iv) incur liens, (v) dispose of assets, (vi) make non-cash distributions to shareholders, and (vii) engage in transactions with affiliates. These covenants are subject to a number of significant exceptions and limitations. The Term Loan Agreement 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, as defined, during the term of the Term Loan Agreement. Borrowings under the Term Loan Agreement are guaranteed by certain of the Company’s subsidiaries.
The Term Loan Agreement also contains customary events of default. If an event of default under the Term Loan Agreement occurs and is continuing, then the Administrative Agent shall, at the request of, or may, with the consent of, the required lenders, declare any outstanding obligations under the Term Loan Agreement to be immediately due and payable. In addition, if an actual or deemed entry of an order for relief with respect to the Company is made under the United States bankruptcy code or comparable foreign law, then any outstanding obligations under the Term Loan Agreement will automatically become immediately due and payable.
Comments & Business Outlook
FLEXTRONICS INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three-Month Periods Ended
June 28, 2013
June 29, 2012
(In thousands, except per share amounts)
(Unaudited)
Net sales
$
5,791,125
$
5,975,995
Cost of sales
5,444,964
5,618,638
Restructuring charges
35,126
—
Gross profit
311,035
357,357
Selling, general and administrative expenses
217,985
190,344
Intangible amortization
8,202
7,809
Restructuring charges
5,634
—
Interest and other expense, net
19,684
10,785
Income from continuing operations before income taxes
59,530
148,419
Provision for income taxes
273
11,650
Income from continuing operations
59,257
136,769
Loss from discontinued operations, net of tax
—
(8,297
)
Net income
$
59,257
$
128,472
Earnings per share:
Income from continuing operations:
Basic
$
0.09
$
0.20
Diluted
$
0.09
$
0.20
Loss from discontinued operations:
Basic
$
—
$
(0.01
)
Diluted
$
—
$
(0.01
)
Net income:
Basic
$
0.09
$
0.19
Diluted
$
0.09
$
0.19
Weighted-average shares used in computing per share amounts:
Basic
626,120
675,366
Diluted
639,899
688,256
CFO Trail
On May 1, 2013, Paul Read, the Chief Financial Officer of Flextronics International Ltd. (the “Company”), decided to leave , effective as of May 3, 2013.
On May 1, 2013, the Company named Christopher Collier as Chief Financial Officer of the Company, effective May 3, 2013. Mr. Collier, age 44 and the Company’s Principal Accounting Officer since May 1, 2007, has served as Senior Vice President, Finance since December 2004. Prior to his appointment as Senior Vice President, Finance in 2004, Mr. Collier served as Vice President, Finance and Corporate Controller since he joined the Company in April 2000. On May 1, 2013, the Board approved the following compensation arrangements for Mr. Collier: