SAN JOSE, Calif., Oct. 26, 2017 /PRNewswire/ -- Flex (NASDAQ:
FLEX), the Sketch-to-Scale™ solutions provider that designs
and builds Intelligent Products for a Connected World™,
today announced results for its second quarter ended September 29, 2017.
"Our results this quarter strongly indicate Flex's top-line
growth, structural portfolio evolution, and capital return all
remain on track," said Mike
McNamara, CEO at Flex. "We had impressive revenue
performance across the board, growing for the third consecutive
quarter on a year-over-year basis, with revenue for all four
business groups above the midpoint of their respective guidance
ranges."
(US$ in millions,
except EPS)
|
|
Three-Month
Periods Ended
|
|
|
September 29,
2017
|
|
September 30,
2016
|
Net sales
|
$
|
6,270
|
$
|
6,009
|
GAAP income before
income taxes
|
|
218
|
|
15
|
Adjusted operating
income
|
|
188
|
|
197
|
GAAP net income
(loss)
|
|
205
|
|
(3)
|
Adjusted net
income
|
|
142
|
|
152
|
GAAP EPS
|
|
0.38
|
|
0.00
|
Adjusted
EPS
|
|
0.27
|
|
0.28
|
An explanation and reconciliation of non-GAAP financial measures
to GAAP financial measures is presented in Schedule II attached to
this press release.
Second Quarter Fiscal 2018 Results of Operations
Net sales for the second quarter ended September 29, 2017 were $6.3 billion, growing 4% year-over-year and at
the high end of the guidance range of $5.9
to $6.3 billion. GAAP income before income taxes was
$218 million for the quarter and
adjusted operating income was $188
million, above the mid-point of the guidance range of
$170 million to $200 million. GAAP
net income was approximately $205
million and adjusted net income for the quarter was
$142 million. GAAP EPS was
$0.38 for the quarter and non-GAAP
EPS was $0.27 for the quarter.
Cash Flow and Balance Sheet
For the three-month period ended September 29, 2017, Flex generated cash from
operations of approximately $142
million and free cash flow of $34
million. For the six-month period ended September 29, 2017, Flex generated cash from
operations of $281 million and free
cash flow of $53 million. The
Company remains committed to return over 50% of annual free cash
flow to its shareholders as it repurchased ordinary shares for
approximately $71 million and
$145 million during the three and
six-month periods ended September 29,
2017, respectively. Flex ended the quarter with over
$1.3 billion of cash on hand and
total debt of $3.0 billion. The
balance sheet remains strong and is well-positioned to support the
business over the long-term.
Third Quarter Fiscal Year 2018 Guidance
For the third quarter ending December 31,
2017, revenue is expected to be in the range of $6.3 to $6.7 billion, GAAP EPS is expected to be
in the range of $0.20 to $0.24 and
includes stock-based compensation expense and intangible
amortization. Adjusted EPS is expected to be in the range of
$0.28 to $0.32 per diluted share.
Webcast and Conference Call
Flex management team will host a conference call today at
2:00 PM (PT) / 5:00 PM (ET), to review second quarter fiscal
2018 results. A live webcast of the event and slides will be
available on the Flex Investor Relations website at
http://investors.flex.com. An audio replay and transcript will also
be available after the event on the Flex Investor Relations
website.
About Flex
Flex Ltd. (Reg. No. 199002645H) is the Sketch-to-Scale™
solutions provider that designs and builds Intelligent Products
for a Connected World™. With approximately 200,000
professionals across 30 countries, Flex provides innovative design,
engineering, manufacturing, real-time supply chain insight and
logistics services to companies of all sizes in various industries
and end-markets. For more information, visit flex.com or follow us
on Twitter @Flexintl. Flex – Live Smarter™
Contact
Kevin Kessel, CFA
Vice President, Investor Relations & Corporate
Communications
(408) 576-7985
kevin.kessel@flex.com
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of U.S. securities laws including statements related to
future expected revenues and earnings per share. These
forward-looking statements involve risks and uncertainties that
could cause the actual results to differ materially from those
anticipated by these forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking
statements. These risks include: that future revenues and earnings
may not be achieved as expected; the challenges of effectively
managing our operations, including our ability to control costs and
manage changes in our operations; compliance with legal and
regulatory requirements; that the expected revenue and margins from
recently launched programs may not be realized; our dependence on a
small number of customers; geopolitical risk, including the
termination and renegotiation of international trade agreements;
that recently proposed changes or future changes in tax laws in
certain jurisdictions where we operate could materially impact our
tax expense; and the effects that the current macroeconomic
environment could have on our business and demand for our products
as well as the effects that current credit and market conditions
could have on the liquidity and financial condition of our
customers and suppliers, including any impact on their ability to
meet their contractual obligations. Additional information
concerning these and other risks is described under "Risk Factors"
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in our reports on Forms 10-K and 10-Q
that we file with the U.S. Securities and Exchange Commission. The
forward-looking statements in this press release are based on
current expectations and Flex assumes no obligation to update these
forward-looking statements. Our share repurchase program does not
obligate the Company to repurchase a specific number of shares and
may be suspended or terminated at any time without prior
notice.
SCHEDULE
I
|
|
FLEX
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
Three-Month
Periods Ended
|
|
|
|
September 29,
2017
|
|
September 30,
2016
|
GAAP:
|
|
|
|
|
|
Net sales
|
$
|
6,270,420
|
$
|
6,008,525
|
|
Cost of
sales
|
|
5,877,095
|
|
5,694,834
|
|
Gross profit
|
|
393,325
|
|
313,691
|
|
Selling, general and
administrative expenses
|
|
274,149
|
|
243,943
|
|
Intangible
amortization
|
|
16,376
|
|
21,986
|
|
Interest and other,
net
|
|
27,554
|
|
24,632
|
|
Other charges
(income), net
|
|
(143,167)
|
|
8,388
|
|
Income before income
taxes
|
|
218,413
|
|
14,742
|
|
Provision for income
taxes
|
|
13,327
|
|
17,250
|
|
Net income (loss)
|
$
|
205,086
|
$
|
(2,508)
|
|
|
|
|
|
|
Earnings (losses)
per share:
|
|
|
|
|
|
GAAP
|
$
|
0.38
|
$
|
0.00
|
|
Non-GAAP
|
$
|
0.27
|
$
|
0.28
|
|
|
|
|
|
|
|
Basic shares used in
computing per share amounts (2)
|
|
531,313
|
|
544,055
|
|
Diluted shares used
in computing per share amounts (2)
|
|
536,019
|
|
544,055
|
|
|
|
|
|
|
|
See Schedule II for
the reconciliation of GAAP to non-GAAP financial measures. See the
accompanying notes on Schedule V attached to this press
release.
|
|
FLEX
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
Six-Month Periods
Ended
|
|
|
|
September 29,
2017
|
|
September 30,
2016
|
GAAP:
|
|
|
|
|
|
Net sales
|
$
|
12,278,692
|
$
|
11,885,338
|
|
Cost of
sales
|
|
11,478,435
|
|
11,165,652
|
|
Gross profit
|
|
800,257
|
|
719,686
|
|
Selling, general and
administrative expenses
|
|
524,960
|
|
483,489
|
|
Intangible
amortization
|
|
36,277
|
|
43,584
|
|
Interest and other,
net
|
|
54,430
|
|
49,031
|
|
Other charges
(income), net
|
|
(179,332)
|
|
11,917
|
|
Income before income
taxes
|
|
363,922
|
|
131,665
|
|
Provision for income
taxes
|
|
34,126
|
|
28,444
|
|
Net income
|
$
|
329,796
|
$
|
103,221
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
GAAP
|
$
|
0.61
|
$
|
0.19
|
|
Non-GAAP
|
$
|
0.51
|
$
|
0.55
|
|
|
|
|
|
|
|
Basic shares used in
computing per share amounts
|
|
530,790
|
|
544,353
|
|
Diluted shares used
in computing per share amounts
|
|
536,311
|
|
549,934
|
|
|
|
|
|
|
|
See Schedule II for
the reconciliation of GAAP to non-GAAP financial measures. See the
accompanying notes on Schedule V attached to this press
release.
|
|
SCHEDULE
II
|
|
FLEX
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES (1)
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
Three-Month
Periods Ended
|
|
|
|
September 29,
2017
|
|
September 30,
2016
|
GAAP gross
profit
|
$
|
393,325
|
$
|
313,691
|
|
Stock-based
compensation expense
|
|
4,985
|
|
2,636
|
|
Distressed customer
asset impairment (3)
|
|
-
|
|
92,915
|
|
Contingencies and
other (4)
|
|
18,933
|
|
6,824
|
Non-GAAP gross
profit
|
$
|
417,243
|
$
|
416,066
|
|
|
|
|
|
|
GAAP income before
income taxes
|
$
|
218,413
|
$
|
14,742
|
|
Intangible
amortization
|
|
16,376
|
|
21,986
|
|
Stock-based
compensation expense
|
|
20,464
|
|
22,733
|
|
Distressed customer
asset impairment (3)
|
|
4,753
|
|
92,915
|
|
Contingencies and
other (4)
|
|
43,933
|
|
11,539
|
|
Other charges
(income), net (5)
|
|
(143,167)
|
|
8,388
|
|
Interest and other,
net
|
|
27,554
|
|
24,632
|
Non-GAAP operating
income
|
$
|
188,326
|
$
|
196,935
|
|
|
|
|
|
|
GAAP provision for
income taxes
|
$
|
13,327
|
$
|
17,250
|
|
Intangible
amortization benefit
|
|
2,250
|
|
1,825
|
|
Tax benefit on
contingencies and other
|
|
2,738
|
|
196
|
Non-GAAP provision
for income taxes
|
$
|
18,315
|
$
|
19,271
|
|
|
|
|
|
|
GAAP net income
(loss)
|
$
|
205,086
|
$
|
(2,508)
|
|
Intangible
amortization
|
|
16,376
|
|
21,986
|
|
Stock-based
compensation expense
|
|
20,464
|
|
22,733
|
|
Distressed customer
asset impairment (3)
|
|
4,753
|
|
92,915
|
|
Contingencies and
other (4)
|
|
43,933
|
|
11,539
|
|
Other charges
(income), net (5)
|
|
(143,167)
|
|
7,388
|
|
Adjustments for
taxes
|
|
(4,988)
|
|
(2,021)
|
Non-GAAP net
income
|
$
|
142,457
|
$
|
152,032
|
Diluted earnings
(losses) per share:
|
|
GAAP
(2)
|
$
|
0.38
|
$
|
0.00
|
|
Non-GAAP
(2)
|
$
|
0.27
|
$
|
0.28
|
FLEX
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES (1)
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
Six-Month Periods
Ended
|
|
|
|
September 29,
2017
|
|
September 30,
2016
|
GAAP gross
profit
|
$
|
800,257
|
$
|
719,686
|
|
Stock-based
compensation expense
|
|
8,304
|
|
5,069
|
|
Distressed customer
asset impairment (3)
|
|
-
|
|
92,915
|
|
Contingencies and
other (4)
|
|
18,933
|
|
6,824
|
Non-GAAP gross
profit
|
$
|
827,494
|
$
|
824,494
|
|
|
|
|
|
|
GAAP income before
income taxes
|
$
|
363,922
|
$
|
131,665
|
|
Intangible
amortization
|
|
36,277
|
|
43,584
|
|
Stock-based
compensation expense
|
|
42,260
|
|
46,530
|
|
Distressed customer
asset impairment (3)
|
|
4,753
|
|
92,915
|
|
Contingencies and
other (4)
|
|
43,933
|
|
11,539
|
|
Other charges
(income), net (5)
|
|
(179,332)
|
|
11,917
|
|
Interest and other,
net
|
|
54,430
|
|
49,031
|
Non-GAAP operating
income
|
$
|
366,243
|
$
|
387,181
|
|
|
|
|
|
|
GAAP provision for
income taxes
|
$
|
34,126
|
$
|
28,444
|
|
Intangible
amortization benefit
|
|
4,016
|
|
3,675
|
|
Tax benefit on
contingencies and other
|
|
2,738
|
|
196
|
|
Tax benefit on
intangible assets
|
|
-
|
|
638
|
Non-GAAP provision
for income taxes
|
$
|
40,880
|
$
|
32,953
|
|
|
|
|
|
|
GAAP net
income
|
$
|
329,796
|
$
|
103,221
|
|
Intangible
amortization
|
|
36,277
|
|
43,584
|
|
Stock-based
compensation expense
|
|
42,260
|
|
46,530
|
|
Distressed customer
asset impairment (3)
|
|
4,753
|
|
92,915
|
|
Contingencies and
other (4)
|
|
43,933
|
|
11,539
|
|
Other charges
(income), net (5)
|
|
(179,332)
|
|
7,388
|
|
Adjustments for
taxes
|
|
(6,754)
|
|
(4,509)
|
Non-GAAP net
income
|
$
|
270,933
|
$
|
300,668
|
Diluted earnings
per share:
|
|
|
|
|
GAAP
|
$
|
0.61
|
$
|
0.19
|
|
Non-GAAP
|
$
|
0.51
|
$
|
0.55
|
SCHEDULE
III
|
|
FLEX
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
As of September
29, 2017
|
|
As of March 31,
2017
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,369,502
|
|
$
|
1,830,675
|
|
Accounts receivable,
net of allowance for doubtful accounts
|
2,632,934
|
|
|
2,192,704
|
|
Inventories
|
|
3,773,654
|
|
|
3,396,462
|
|
Other current
assets
|
|
1,091,957
|
|
|
967,935
|
Total current
assets
|
|
8,868,047
|
|
|
8,387,776
|
|
|
|
|
|
|
Property and
equipment, net
|
|
2,415,574
|
|
|
2,317,026
|
Goodwill
|
|
1,086,978
|
|
|
984,867
|
Other intangible
assets, net
|
420,459
|
|
|
362,181
|
Other
assets
|
|
770,848
|
|
|
541,513
|
Total
assets
|
$
|
13,561,906
|
|
$
|
12,593,363
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
Bank borrowings and
current portion of long-term debt
|
$
|
46,977
|
|
$
|
61,534
|
|
Accounts
payable
|
|
5,231,130
|
|
|
4,484,908
|
|
Accrued
payroll
|
|
400,074
|
|
|
344,245
|
|
Other current
liabilities
|
|
1,552,254
|
|
|
1,613,940
|
Total current
liabilities
|
|
7,230,435
|
|
|
6,504,627
|
|
|
|
|
|
|
|
Long-term debt, net
of current portion
|
|
2,909,144
|
|
|
2,890,609
|
Other
liabilities
|
|
550,042
|
|
|
519,851
|
|
|
|
|
|
|
|
Total shareholders'
equity
|
|
2,872,285
|
|
|
2,678,276
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
13,561,906
|
|
$
|
12,593,363
|
SCHEDULE
IV
|
|
FLEX
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Six-Month Periods
Ended
|
|
|
|
September 29,
2017
|
|
September 30,
2016
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net income
|
$
|
329,796
|
|
$
|
103,221
|
|
Depreciation,
amortization and other impairment charges
|
|
264,718
|
|
|
337,387
|
|
Gain from
deconsolidation of a subsidiary entity
|
|
(151,574)
|
|
|
—
|
|
Changes in working
capital and other
|
|
(162,135)
|
|
|
102,944
|
|
|
Net cash provided by
operating activities
|
|
280,805
|
|
|
543,552
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
(264,030)
|
|
|
(305,936)
|
|
Proceeds from the
disposition of property and equipment
|
|
36,123
|
|
|
26,561
|
|
Acquisition of
businesses, net of cash acquired
|
|
(273,167)
|
|
|
(189,895)
|
|
Proceeds from
divestiture of business, net of cash held in divested
business
|
|
(2,949)
|
|
|
36,073
|
|
Other investing
activities, net
|
|
(114,063)
|
|
|
20,357
|
|
|
Net cash used in
investing activities
|
|
(618,086)
|
|
|
(412,840)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Proceeds from bank
borrowings and long-term debt
|
|
—
|
|
|
75,035
|
|
Repayments of bank
borrowings and long-term debt
|
|
(26,483)
|
|
|
(110,592)
|
|
Payments for
repurchases of ordinary shares
|
|
(145,005)
|
|
|
(184,698)
|
|
Net proceeds from
issuance of ordinary shares
|
|
1,211
|
|
|
11,344
|
|
Other financing
activities, net
|
|
60,591
|
|
|
(6,836)
|
|
|
Net cash used in
financing activities
|
|
(109,686)
|
|
|
(215,747)
|
Effect of exchange
rates on cash and cash equivalents
|
|
(14,206)
|
|
|
14,521
|
|
Net decrease in cash
and cash equivalents
|
|
(461,173)
|
|
|
(70,514)
|
|
Cash and cash
equivalents, beginning of period
|
|
1,830,675
|
|
|
1,607,570
|
|
Cash and cash
equivalents, end of period
|
$
|
1,369,502
|
|
$
|
1,537,056
|
|
|
|
|
|
|
|
|
SCHEDULE
V
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|
FLEX AND
SUBSIDIARIES
|
NOTES TO SCHEDULES
I, II, III, & IV
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(1)
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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, including non-GAAP gross profit, non-GAAP operating
income, non-GAAP net income and non-GAAP net income per diluted
share. These supplemental measures exclude 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.
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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:
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- the ability to make
more meaningful period-to-period comparisons of the Company's
on-going operating results;
- the ability to
better identify trends in the Company's underlying business and
perform related trend analyses;
- a better
understanding of how management plans and measures the Company's
underlying business; and
- 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.
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The following are
explanations of each of the adjustments that we incorporate into
non-GAAP measures, as well as the reasons for excluding each of
these individual items in the reconciliations of these non-GAAP
financial measures:
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Stock-based
compensation expense consists of non-cash charges for the
estimated fair value of stock options and unvested restricted share
unit awards granted to employees and assumed in business
acquisitions. The Company believes that the exclusion of
these charges provides for more accurate comparisons of its
operating results to peer companies due to the varying available
valuation methodologies, subjective assumptions and the variety of
award types. In addition, the Company believes it is useful
to investors to understand the specific impact stock-based
compensation expense has on its operating results.
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Intangible
amortization consists primarily of non-cash charges that can be
impacted by, among other things, the timing and magnitude of
acquisitions. The Company considers its operating results
without these charges when evaluating its ongoing performance and
forecasting its earnings trends, and therefore excludes such
charges when presenting non-GAAP financial measures. The
Company believes that the assessment of its operations excluding
these costs is relevant to its assessment of internal operations
and comparisons to the performance of its competitors.
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Distressed
customer assets impairment consists primarily of non-cash
inventory impairments of certain inventory on hand to net
realizable value as well as additional provisions for doubtful
accounts receivable for customers that are experiencing significant
financial difficulties. 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. See additional description
related to the specific period charge as applicable
below.
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Contingencies and
other consists primarily of charges in connection with certain
legal matters of which loss contingencies are believed to be
probable and estimable. It also includes certain targeted site
restructuring costs and damages incurred from natural disasters
which are not directly related to ongoing or core business results,
and do not reflect expected future operating expense. 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.
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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 when applicable.
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Other charges
(income), net consists of various other types of items that are
not directly related to ongoing or core business results, such as
the gain or loss from certain divestitures and impairment charges
associated with non-core investments. We exclude these items
because they are not related to the Company's ongoing operating
performance or do not affect core operations. Excluding these
amounts provide investors with a basis to compare Company
performance against the performance of other companies without this
variability.
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For the three-month
period ended September 29, 2017, Free Cash Flow was $34 million
consisting of GAAP net cash flows from operating activities of
approximately $142 million less purchases of property and equipment
net of proceeds from dispositions of $108 million. We believe 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 and for certain other activities. Since Free Cash Flow
includes investments in operating assets, we believe this non-GAAP
liquidity measure is useful in addition to the most directly
comparable GAAP measure – "net cash flows provided by operating
activities."
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(2)
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Basic shares were
used in calculating diluted GAAP EPS for the quarter ended
September 30, 2016 due to the net loss recognized during the
period. Diluted shares for Q2 fiscal 2017 were 548,358 thousand
which were used in calculating diluted Non-GAAP EPS for the
quarter.
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(3)
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Distressed customer
assets impairment for the three and six-month periods ended
September 29, 2017 relates to additional
provision for doubtful accounts receivable for a customer
experiencing significant financial difficulties.
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During the fourth
quarter of fiscal year 2016, the Company accepted return of
previously shipped inventory from a former customer, SunEdison,
Inc. ("SunEdison"), of approximately $90 million. On April 21,
2016, SunEdison filed a petition for reorganization under
bankruptcy law, and as a result, the Company recognized a bad debt
reserve of $61 million as of March 31, 2016, associated with its
outstanding SunEdison receivables.
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During the second
quarter of fiscal year 2017, prices for solar panel modules
declined significantly. The Company determined that certain solar
panel inventory on hand as of September 30, 2016 was not fully
recoverable and recorded a charge of $60 million to reduce the
carrying costs to market in the three and six-month periods ended
September 30, 2016. The Company also recognized a $16 million
impairment charge for solar module equipment and $16.9 million
primarily related to negative margin sales and other associated
solar panel direct costs incurred during the same periods. The
total charge of $92.9 million is included in cost of sales for the
three and six-month periods ended September 30, 2016.
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(4)
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Contingencies and
other during the three and six-month periods ended September 29,
2017 consist of charges in connection with certain legal matters of
which loss contingencies are believed to be probable and estimable.
Additionally, during the second quarter ended September 29, 2017
the Company incurred various other charges predominantly related to
damages incurred from a typhoon that impacted one of its China
facilities.
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During fiscal year
2017, the Company initiated a plan to rationalize the current
footprint at existing sites including corporate SG&A functions
and to continue to shift the talent base in support of its
Sketch-to-Scale™ initiatives. As part of this plan,
approximately $11.5 million was recognized in the quarter ended
September 30, 2016. The plan was finalized and completed during
fiscal year 2017.
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(5)
|
During the quarter
ended September 29, 2017, the Company and other minority
shareholders of Elementum amended certain agreements and as a
result, the Company concluded it no longer had majority control and
accordingly, deconsolidated the entity. As part of the
deconsolidation, we recognized a gain of $151.6 million, which is
included in other charges (income), net for the three and six-month
periods ended September 29, 2017.
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In addition, the
company sold its Wink business during first quarter of fiscal year
2018 to an unrelated third-party venture backed company in exchange
for contingent consideration fair valued at $59 million and
recognized a gain on sale of $38.7 million, which is recorded in
other charges (income), net for the six-months ended September 29,
2017. The contingent consideration is expected to be settled in the
fourth quarter of fiscal year 2018.
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The three and
six-month periods ended September 30, 2016 includes a $7.4 million
loss attributable to a non-strategic facility sold during the
second quarter of fiscal year 2017.
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SOURCE Flex