10-KPeriod: FY2014

FLEX LTD. Annual Report, Year Ended Mar 31, 2014

Filed May 20, 2014For Securities:FLEX

Summary

Flextronics International Ltd. (FLEX) reported solid performance for the fiscal year ended March 31, 2014, with net sales reaching $26.1 billion, a 10.8% increase year-over-year. This growth was primarily driven by the acquisition of certain manufacturing operations from Google's Motorola Mobility LLC and expansion in the High Reliability Solutions (HRS) and High Velocity Solutions (HVS) business groups. The company demonstrated improved profitability, with income from continuing operations increasing to $365.6 million, up from $302.5 million in the prior year, bolstered by lower restructuring charges. Flextronics continues to focus on its strategy of providing end-to-end supply chain solutions, emphasizing innovation, customer focus, and global operational capabilities. The company's diversified business across various end markets and geographies positions it to navigate economic fluctuations. Despite a competitive landscape, Flextronics leveraged its scale, end-to-end service offerings, and extensive design and engineering capabilities to maintain strong customer relationships. The company also actively managed its capital structure, including share repurchases, and maintained a healthy liquidity position with $1.6 billion in cash and cash equivalents at year-end.

Financial Highlights

54 data points
Beta

Revenue

$26.11B

5.5% Gross Margin

Net Income

$365.21M

1.4% Net Margin

EPS (Diluted)

$0.59

Total Assets

$12.50B

Cash & Equivalents

$1.59B

Free Cash Flow

$606.82M

Financial Statements
Beta
Revenue$26.11B
Cost of Revenue$24.61B
Gross Profit$1.44B
R&D Expenses$30.00M
SG&A Expenses$874.80M
Operating Income$365.59M
Interest Expense$79.90M
Net Income$365.21M
EPS (Basic)$0.60
EPS (Diluted)$0.59
Shares Outstanding (Basic)610.50M
Shares Outstanding (Diluted)623.48M

Key Highlights

  • 1Net sales increased by 10.8% to $26.1 billion for FY2014, driven by acquisitions and growth in key business segments.
  • 2Income from continuing operations rose to $365.6 million, an improvement from $302.5 million in FY2013, supported by reduced restructuring charges.
  • 3The acquisition of Google's Motorola Mobility operations significantly contributed to the revenue growth, particularly in the High Velocity Solutions (HVS) segment.
  • 4Gross margin improved to 5.5% in FY2014 from 4.9% in FY2013, benefiting from lower restructuring charges.
  • 5The company reported strong operating cash flow of $1.2 billion and free cash flow of $701.5 million for FY2014.
  • 6Flextronics maintains a diversified customer base, with its ten largest customers accounting for 52% of net sales in FY2014, and a significant portion of cash and cash equivalents held by foreign subsidiaries.
  • 7The company continued its share repurchase program, buying back approximately 59.5 million shares during FY2014.

Frequently Asked Questions

The primary growth driver for Flextronics in fiscal year 2014 was the acquisition of certain manufacturing operations from Google's Motorola Mobility LLC, which significantly boosted revenue, particularly within the High Velocity Solutions (HVS) segment. Additionally, the company saw growth in its High Reliability Solutions (HRS) business due to expanded relationships with existing and new customers.

Flextronics improved its profitability in FY2014, with income from continuing operations increasing to $365.6 million. This improvement was largely attributed to a reduction in restructuring charges compared to the prior year, along with better gross margins achieved through operational efficiencies and strategic business group performance.

Flextronics' strategy focuses on being a world-class end-to-end supply chain solutions provider. Key elements include enabling and scaling innovation for customers, maintaining leadership in core manufacturing capabilities, building extended offerings in high-growth sectors, attracting and retaining top talent, maintaining a strong customer-centric approach, and leveraging its global operational capabilities and extensive design and engineering services.

Key risks identified include dependence on industries with short product life cycles and potential customer product failure, customer order volatility and cancellations, intense competition, concentration of sales with a few major customers, potential component shortages, foreign currency exchange rate fluctuations, and risks associated with international operations. The company also notes risks related to intellectual property protection, security breaches, and compliance with environmental and conflict minerals regulations.