Flextronics Reports Third Quarter Results

                  Flextronics Reports Third Quarter Results

- Adjusted Net Income from Continuing Operations Increased 13% to $148 Million

- Adjusted EPS from Continuing Operations Increased 22% to $0.22

- Free Cash Flow Generation of $395 Million

PR Newswire

SINGAPORE, Jan. 24, 2013

SINGAPORE, Jan. 24, 2013 /PRNewswire/ -- Flextronics (NASDAQ: FLEX) today
announced results for its third quarter ended December 31, 2012 as follows:

(US$ in millions, except EPS) Three Month Periods Ended
                              December 31,         December 31,         Y/Y
Continuing Operations:        2012                 2011                 Growth
Net sales                     $       6,123  $       7,469  -18%
Adjusted operating income     $             $             -5%
                              146                 153
Restructuring charges        $             $         
                              (103)                 -
GAAP operating income         $            $             -75%
                              35                  141
Adjusted net income           $             $             13%
                              148                 131
GAAP net income               $            $             -70%
                              32                  106
Adjusted EPS                 $             $             22%
                              0.22                 0.18
Adjusted EPS - restructuring  $              $         
charges                      (0.15)               -
GAAP EPS                     $             $             -67%
                              0.05                 0.15
An explanation and reconciliation of non-GAAP financial measures to GAAP
financial measures
is presented in Schedule II attached to this press release.

Third Quarter Results of Continuing Operations
Net sales for the third quarter ended December 31, 2012 were $6.1 billion,
above the midpoint of the Company's previously provided revenue guidance of
$5.8 billion to $6.2 billion. For the third quarter ended December 31, 2012,
adjusted net income increased 13% over the year ago quarter to $148 million,
or $0.22 per diluted share, compared to $131 million, or $0.18 per diluted
share, in the year ago quarter. The Company's adjusted earnings per diluted
share of $0.22 in the third quarter ended December 31, 2012 is at the high end
of the Company's previously provided guidance of $0.18 to $0.22.

During the third quarter ended December 31, 2012, Flextronics recognized
approximately $103 million of pre-tax restructuring charges comprised of $21
million of cash charges predominantly related to employee severance and
benefits and $82 million of non-cash asset impairment charges. The Company's
GAAP operating income and GAAP net income decreased 75% and 70%, respectively,
compared to the same quarter last year, reflecting the impacts from the
restructuring charges recognized during the third quarter ended December 31,
2012.

The Company expects to recognize an additional $100 million to $125 million in
pre-tax restructuring charges in the fourth quarter of fiscal 2013, comprised
primarily of employee severance and benefit costs of approximately $90 million
to $110 million and the remaining charges associated with other exit related
costs. These restructuring activities are intended to improve our operational
efficiencies in response to a macroeconomic environment that remains soft and
uncertain. The Company believes that upon the completion of all the
restructuring activities mentioned above, the potential savings achieved
through reduced employee expenses and lower operating costs will yield
annualized savings of $140 million to $160 million.

"It is clear that the macroeconomic environment is challenging with limited
visibility and many economic risks remain. We are aggressively optimizing our
operating footprint and improving our cost structure to better position us for
our multi-billion dollar pipeline of recent bookings, and the eventual
improvement in the business environment," said Mike McNamara, CEO of
Flextronics."We are pleased with our exceptional free cash flow generation of
$395 million for the third quarter and $678 million year-to-date. Our strong
free cash flow has enabled us to aggressively invest in our business through
niche acquisitions and supporting our stock repurchase program," added Mr.
McNamara.

Guidance
For the fourth quarter ending March 31, 2013, revenue is expected to be in the
range of $5.0 billion to $5.3 billion and adjusted EPS from continuing
operations is expected to be in the range of $0.11 to $0.15 per share.

GAAP earnings per share from continuing operations are expected to be lower
than the guidance provided herein by approximately $0.02 per diluted share for
quarterly intangible amortization and stock-based compensation expense, and by
approximately $0.15 to $0.18 per diluted share for the remaining restructuring
charges.

Conference Calls and Web Casts
A conference call hosted by Flextronics's management will be held today at
2:00 PM (PT) / 5:00 PM (ET) to discuss the Company's financial results for the
third quarter ended December 31, 2012.

The conference call will be broadcast via the Internet and may be accessed by
logging on to the Company's website at www.flextronics.com. Additional
information in the form of a slide presentation may also be found on the
Company's site. A replay of the broadcast will remain available on the
Company's website afterwards.

About Flextronics
Headquartered in Singapore (Singapore Reg. No. 199002645H), Flextronics is a
leading Electronics Manufacturing Services (EMS) provider focused on
delivering complete design, engineering and manufacturing services to
aerospace and defense, automotive, computing, consumer, industrial,
infrastructure, medical, energy, and mobile OEMs. Flextronics helps customers
design, build, ship and service electronics products through a network of
facilities in 30 countries on four continents. This global presence provides
design and engineering solutions that are combined with core electronics
manufacturing and logistics services, and are vertically integrated with
components technologies, to optimize customer operations by lowering costs and
reducing time to market. For more information, please visit
www.flextronics.com.

This press release contains forward-looking statements within the meaning of
U.S. securities laws, including statements related to the expected nature,
timing, reductions, objectives, expected cost savings, and charges associated
with restructuring actions, and 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; our dependence
on industries that continually produce technologically advanced products with
short life cycles; our ability to respond to changes in economic trends, to
fluctuations in demand for customers' products and to the short-term nature of
customers' commitments; competition in our industry, particularly from ODM
suppliers in Asia; our dependence on a small number of customers for the
majority of our sales; the challenges of effectively managing our operations,
including our ability to manage manufacturing processes, utilize available
manufacturing capacity, control costs and manage changes in our operations;
production difficulties, especially with new products; the impact on our
margins and profitability resulting from our increased components offerings;
supply shortages of required electronic components; compliance with legal and
regulatory requirements; the challenges of international operations, including
fluctuations in exchange rates beyond hedge boundaries leading to unexpected
charges; changes in government regulations and tax laws; the Company's
ability to implement the restructuring actions as planned; retention of key
employees; the possibility that benefits of the restructuring actions may not
materialize as expected; 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 Form 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 Flextronics assumes no
obligation to update these forward-looking statements. The 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.

Renee Brotherton                  Kevin Kessel
Corporate Communications          Investor Relations
(408) 576-7189                    (408) 576-7985
renee.brotherton@flextronics.com kevin.kessel@flextronics.com





                                                           SCHEDULE I
FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
                                      Three Month Periods Ended
                                      December 31,         December 31,
                                      2012                2011
GAAP:
     Net sales                        $   6,123,321      $   7,469,347
     Cost of sales                    5,778,544            7,083,600
     Restructuring charges            98,315               -
      Gross profit              246,462              385,747
     Selling, general and             207,224              244,830
     administrative expenses
     Restructuring charges            4,376                -
      Operating income          34,862               140,917
     Intangible amortization          6,137                12,901
     Interest and other expense,      (17,089)             7,695
     net
      Income before income       45,814               120,321
     taxes
     Provision for income taxes      13,526               14,115
      Net income from             $     32,288    $    106,206
     continuing operations
      Loss from discontinued      (7,248)              (4,029)
     operations
      Net income                 $     25,040    $    102,177
EPS:
     Net income from continuing
     operations:
     GAAP                             $       0.05  $       0.15
     Non-GAAP                         $       0.22  $       0.18
     Loss from discontinued
     operations:
     GAAP                             $      (0.01)  $      
                                                           (0.01)
     Non-GAAP                         $      (0.01)  $         
                                                            -
     Net income:
     GAAP                             $       0.04  $       0.14
     Non-GAAP                         $       0.21  $       0.18

See Schedule II for the reconciliation of GAAP to non-GAAP financial
measures. See the accompanying notes on Schedule IV attached to this press
release.







                                                         SCHEDULE II
FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
(unaudited)
                                  Three Month Periods Ended
                                  December 31,     % of  December 31,    % of
                                  2012             Sales 2011            Sales
Net Sales                         $   6,123,321       $  
                                                         7,469,347
GAAP gross profit                 $            4.0%  $           5.2%
                                  246,462                385,747
 Stock-based compensation     1,530                  2,021
expense
 Restructuring charges        98,315                 -
Non-GAAP gross profit             $            5.7%  $           5.2%
                                  346,307                387,768
GAAP SG&A Expenses                $            3.4%  $           3.3%
                                  207,224                244,830
 Stock-based compensation     6,986                  9,961
expense
Non-GAAP SG&A Expenses            $            3.3%  $           3.1%
                                  200,238                234,869
GAAP operating income             $           0.6%  $           1.9%
                                  34,862                 140,917
 Stock-based compensation     8,516                  11,982
expense
 Restructuring charges        102,691                -
Non-GAAP operating income         $            2.4%  $           2.0%
                                  146,069                152,899
GAAP provision for income taxes   $           0.2%  $          0.2%
                                  13,526                 14,115
 Intangible amortization      199                    296
benefit
 Restructuring charges        1,280                  -
Non-GAAP provision for income     $           0.2%  $          0.2%
taxes                             15,005                 14,411
GAAP net income from continuing   $           0.5%  $           1.4%
operations                        32,288                 106,206
 Stock-based compensation     8,516                  11,982
expense
 Intangible amortization      6,137                  12,901
 Restructuring charges        102,691                -
 Adjustments for taxes        (1,479)                (296)
Non-GAAP net income from          $            2.4%  $           1.8%
continuing operations             148,153                130,793
GAAP net income                   $           0.4%  $           1.4%
                                  25,040                 102,177
 Stock-based compensation     8,516                  11,982
expense
 Intangible amortization      6,137                  13,932
 Restructuring charges        102,691                -
 Adjustments for taxes        (1,479)                (296)
Non-GAAP net income               $            2.3%  $           1.7%
                                  140,905                127,795
EPS:
Net income from continuing
operations:
GAAP                              $               $       
                                  0.05                   0.15
Non-GAAP                          $               $       
                                  0.22                   0.18
Loss from discontinued
operations:
GAAP                              $                $      
                                  (0.01)                 (0.01)
Non-GAAP                          $                $       
                                  (0.01)                    -
Net income:
GAAP                              $               $       
                                  0.04                   0.14
Non-GAAP                          $               $       
                                  0.21                   0.18

See the accompanying notes on Schedule IV attached to this press release.





                                                           SCHEDULE III
FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
                                      December 31, 2012    March 31, 2012
ASSETS
Current Assets:
  Cash and cash equivalents           $            $        
                                      1,706,113            1,518,329
  Accounts receivable, net            2,372,706            2,593,829
  Inventories                         2,910,581            3,300,791
  Current assets of discontinued     -                    21,642
  operations
  Other current assets                1,288,643            1,099,959
Total current assets                  8,278,043            8,534,550
Property and equipment, net           2,175,445            2,076,442
Goodwill and other intangibles, net   415,816              159,924
Non current assets of                 -                    41,417
discontinued operations
Other assets                          284,390              221,471
Total assets                          $             $       
                                      11,153,694           11,033,804
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Bank borrowings, current portion of
  long-term debt and capital
   lease obligations                $           $         
                                      233,393              42,467
  Accounts payable                    4,139,618            4,294,873
  Current liabilities of              -                    24,854
  discontinued operations
  Other current liabilities           2,057,106            1,925,991
Total current liabilities             6,430,117            6,288,185
Long-term debt, net of current
portion:
  Revolving credit facility           -                    140,000
  Term loans                          1,844,563            2,004,755
  Other long-term debt and capital    11,592               13,043
  lease obligations
Other liabilities                     464,812              303,842
Total shareholders' equity            2,402,610            2,283,979
Total liabilities and                 $             $       
shareholders' equity                  11,153,694           11,033,804





    SCHEDULE IV
FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO SCHEDULES I, II, & III
    To supplement Flextronics's unaudited selected financial data presented on
    a basis 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 selling,
    general and administrative expenses, non-GAAP operating income, non-GAAP
    net income and non-GAAP net income per diluted share. These supplemental
    measures exclude stock-based compensation expense, restructuring charges,
    intangible amortization, the related tax effects and non-recurring
    settlements of tax contingencies. These non-GAAP measures are not in
(1) 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 Flextronics's results of operations as determined in
    accordance with GAAP and that these measures should only be used to
    evaluate Flextronics'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 Company performance.
    In calculating non-GAAP financial measures, we exclude certain items to
    facilitate a review of the comparability of the Company's operating
    performance on a period-to-period basis because such items are not, in our
    view, related to the Company's ongoing operational performance. We use
    non-GAAP measures to evaluate the operating performance of our business,
    for comparison with forecasts and strategic plans, for calculating return
    on investment, and for benchmarking performance externally against
    competitors. In addition, management's incentive compensation is
    determined using certain non-GAAP measures. Also, when evaluating
    potential acquisitions, we exclude certain of the items described below
    from consideration of the target's performance and valuation. Since we
    find these measures to be useful, we believe that investors benefit from
    seeing results "through the eyes" of management in addition to seeing GAAP
    results. We believe that these non-GAAP measures, when read in
    conjunction with the Company's GAAP financials, provide useful information
    to investors by offering:
      othe ability to make more meaningful period-to-period comparisons of
        the Company's on-going operating results;
      othe ability to better identify trends in the Company's underlying
        business and perform related trend analyses;
      oa better understanding of how management plans and measures the
        Company's underlying business; and
      oan 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.
    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:
                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.
                Restructuring charges include severance, asset impairment,
                lease termination, contract and product exit costs and other
                charges primarily related to the closures and consolidations
                of various manufacturing facilities. These costs may vary in
                size based on the Company's acquisition and restructuring
                activities, are not directly related to ongoing or core
                business results, and do not reflect expected future operating
                expenses. These costs are excluded by the Company's management
                in assessing current operating performance and forecasting its
                earnings trends, and are therefore excluded by the Company
                from its non-GAAP measures.
                Intangible amortization consists of non-cash charges that can
                be impacted by 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.
                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.
    Free Cash Flow of $395 million for the third quarter ended December 31,
    2012 consists of GAAP net cash flows from operating activities of $478
    million less purchases of property and equipment net of dispositions of
    $83 million. For the nine-month period ended December 31, 2012, Free Cash
    Flow was $678 million consisting of GAAP net cash flows from operating
    activities of $1.0 billion less purchases of property and equipment net of
    dispositions of $328 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."
    During the third quarter we finalized the sale of a non-core business.
    Proceeds received from the sale of this business were $3.2 million, net
    of cash sold. The Company recognized a loss on sale of this business of
    $7.4 million, which is included in interest and other expense (income),
    net in the results from discontinued operations during the three month
    period ended December 31, 2012. In the first quarter of fiscal 2013, the
(2) Company finalized the sale of certain assets of its camera modules
    business. The Company has reported the results of operations and
    financial position of these businesses as discontinued operations within
    the condensed consolidated statements of operations and the condensed
    consolidated balance sheets for all periods presented as applicable. Loss
    from discontinued operations, net of tax, was $7.2 million and $4.0
    million for the three-month periods ended December 31, 2012 and December
    31, 2011, respectively. 

The results from discontinued operations were as follows:

                                     Three-Month Periods Ended
                                     December 31,         December 31,
                                     2012                 2011
                                     (In thousands)
Net sales                            $             $      
                                     8,581               23,376
Cost of sales                        8,487                27,269
    Gross profit (loss)              94                   (3,893)
Selling, general and administrative  3                    (920)
expenses
Intangibles amortization             -                    1,031
Interest and other expense, net      7,333                80
    Loss before income taxes         (7,242)              (4,084)
Provision for income taxes           6                    (55)
    Net loss of discontinued         $              $       
    operations                       (7,248)             (4,029)



SOURCE Flextronics

Website: http://www.flextronics.com
 
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