10-K/APeriod: FY2008

FLEX LTD. Annual Report (Amendment), Year Ended Mar 31, 2008

Filed June 24, 2008For Securities:FLEX

Summary

Flextronics International Ltd. (FLEX) reported significant growth in fiscal year 2008, primarily driven by its acquisition of Solectron Corporation, which expanded its global reach and service capabilities. The company operates as a leading vertically-integrated provider of advanced design and electronics manufacturing services (EMS) across diverse markets including infrastructure, computing, consumer electronics, and medical devices. Despite a substantial increase in net sales to $27.6 billion, the company's gross margin contracted to 4.3% from 4.9% in the prior year, largely due to a significant increase in restructuring charges related to the Solectron integration. The company incurred a net loss of $639.4 million, impacted by substantial restructuring costs and a significant non-cash tax expense related to the re-evaluation of deferred tax assets. Investors should note the company's ongoing efforts to streamline operations, expand design capabilities, and manage a substantial debt load following the Solectron acquisition.

Financial Highlights

27 data points
Beta

Revenue

$27.56B

4.3% Gross Margin

Net Income

-$681.38M

-2.5% Net Margin

EPS (Diluted)

$-0.95

Cash & Equivalents

$1.72B

Free Cash Flow

$1.04B

Financial Statements
Beta
Revenue$27.56B
Cost of Revenue$25.97B
Gross Profit$1.18B
SG&A Expenses$807.03M
Net Income-$681.38M
EPS (Basic)$-0.95
EPS (Diluted)$-0.95
Shares Outstanding (Basic)720.52M
Shares Outstanding (Diluted)720.52M

Key Highlights

  • 1Net sales increased by 46% to $27.6 billion in fiscal year 2008, largely driven by the acquisition of Solectron.
  • 2The acquisition of Solectron significantly expanded the company's scale and market diversification, particularly in infrastructure and computing segments.
  • 3Gross margin decreased to 4.3% in fiscal year 2008 from 4.9% in fiscal year 2007, impacted by increased restructuring charges.
  • 4The company reported a net loss of $639.4 million for fiscal year 2008, compared to a net income of $508.6 million in fiscal year 2007.
  • 5Restructuring charges totaled $447.7 million in fiscal year 2008, primarily related to the integration of Solectron.
  • 6Long-term debt increased substantially to $3.4 billion due to debt financing for the Solectron acquisition.
  • 7The top ten customers represented 55% of net sales in fiscal year 2008, a decrease from 64% in fiscal year 2007, indicating some customer diversification.

Frequently Asked Questions

The primary driver of Flextronics' revenue growth in fiscal year 2008 was the acquisition of Solectron Corporation, which significantly expanded the company's scale, market reach, and service offerings, leading to a 46% increase in net sales.

Profitability was impacted by several factors, including a decrease in gross margin to 4.3% due to significant restructuring charges (amounting to $447.7 million) related to the Solectron integration. Additionally, a substantial non-cash tax expense of $661.3 million associated with deferred tax assets also negatively affected the net income, resulting in a net loss of $639.4 million for the year.

The acquisition of Solectron led to a significant increase in the company's total assets and goodwill. It also substantially increased the company's long-term debt, which rose to approximately $3.4 billion as of March 31, 2008, primarily due to the debt financing used to fund the acquisition.

Flextronics' strategy focuses on offering vertically-integrated, end-to-end global supply chain services. This includes expanding design and engineering capabilities, leveraging its global manufacturing footprint, and capitalizing on its industrial park concept. The company actively pursues acquisitions to achieve these goals, as demonstrated by the Solectron acquisition, and aims to streamline business processes through information technology.