Financial Results for Fourth Quarter Fiscal Year 2013Quarter Ended March 31, 2013Earnings Announcement: April 30, 2013
Risks and Non-GAAP Disclosures2This presentation contains forward-looking statements, which are based on currentexpectations and assumptions that are subject to risks and uncertainties and actual resultscould materially differ. Such information is subject to change and we undertake noobligation to update you of any changes to the forward-looking statements. For discussionof the risks and uncertainties, you can review our filings with the Securities and ExchangeCommission, specifically, our most recent annual and quarterly reports on form 10-K and10-Q and our current reports on form 8-K.If this presentation references non-GAAP financial measures, you can find them on the“Investor Relations” section of our website, www.flextronics.com, along with the requiredreconciliation to the most comparable GAAP financial measures.
3As a result of the Company’s decision to divest certain non-core component related businesses, current and historical operating results for these businesses have been recast as DiscontinuedOperations and are not included in the measures of performance above. Please refer to the Investor Relations section of our website which contain the reconciliation of the non-GAAP financialmeasures to the most directly comparable GAAP measures.*Weighted Average Shares Outstanding, GAAP EPS for the three month period ended March 31, 2013 and adjusted EPS – restructuring charges were calculated using basic WASO of 651M sharesMarch 31, March 31, Y/Y2013 2012 % changeNet sales $5,295 $6,370 -17%Adjusted operating income 106 158 -33%Restructuring Charges (125) - -GAAP operating income / (loss) (27) 148 -118%Adjusted net income 86 166 -48%GAAP net income / (loss) (27) 143 -119%Adjusted EPS $0.13 $0.24 -46%Adjusted EPS - restructuring charges ($0.18) - -GAAP EPS ($0.04) $0.20 -120%Diluted WASO* 664M 699M -5%($ in Millions, except per share amounts)For the Three-Month Periods EndedFourth Quarter Fiscal 2013 Income Statement Highlights
4Business Groups as a Percentage of Total Company Revenue ($ in Millions)Business Group $ % Total $ % Total $ % Total $ % Total $ % TotalIntegrated Network Solutions $2,817 44% $2,769 46% $2,726 44% $2,744 45% $2,468 47%Industrial & Emerging Industries 936 15% 998 17% 993 16% 937 15% 895 17%High Reliability Solutions 645 10% 670 11% 657 11% 714 12% 776 14%High Velocity Solutions 1,972 31% 1,539 26% 1,799 29% 1,728 28% 1,156 22%Total Revenue $6,370 $5,976 $6,175 $6,123 $5,295Revenue Growth Performance by Business Groups ($ in Millions)Business Group MAR-12 MAR-13 Y/Y % DEC-12 MAR-13 Q/Q %Integrated Network Solutions $2,817 $2,468 -12% $2,744 $2,468 -10%Industrial & Emerging Industries 936 895 -4% 937 895 -5%High Reliability Solutions 645 776 20% 714 776 9%High Velocity Solutions 1,972 1,156 -41% 1,728 1,156 -33%Total Revenue $6,370 $5,295 -17% $6,123 $5,295 -14%MAR-13Y/Y Growth Q/Q GrowthDEC-12MAR-12 JUN-12 SEP-12Revenue by Business Group
5.7%6.0% 6.0%5.7%5.9%Mar-12 Jun-12 Sep-12 Dec-12 Mar-135$289$277$305$282$2294.5% 4.6%4.9%4.6%4.3%Mar-12 Jun-12 Sep-12 Dec-12 Mar-13% Revenue$0.24$0.22$0.26$0.22$0.13Mar-12 Jun-12 Sep-12 Dec-12 Mar-13ADJUSTED GROSS MARGIN (%)Please refer to the Investor Relations section of our website which contain the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures.ADJUSTED EBITDA ($ in Millions) ADJUSTED EARNINGS PER SHARE (EPS)ADJUSTED OPERATING INCOME ($ in Millions)$158$177 $183$146$1062.5% 3.0% 3.0% 2.4%2.0%Mar-12 Jun-12 Sep-12 Dec-12 Mar-13% RevenueTrended Quarterly Income Statement Highlights
Other Q4 Income Statement Highlights6Net interest & other expense was $8 million, which included a net $7 million gainfrom our non-core investments, primarily the result of our fair value adjustment forour Workday warrantsAdjusted operating tax rate was 11.7%Reconciliation between GAAP & adjusted EPS: Restructuring and other charges was $125 million Stock based compensation was $8 million Intangible amortization was $8 million Tax benefit $28 million Combined impact on EPS is $0.17Our GAAP benefit for taxes includes approximately $22 million of non-cash benefit recognized in connection with our finalization of the intangible asset valuation for one of our acquisitions closed inthe third quarter of fiscal 2013.
($ in Millions) Q313 Q413 FY13 Q114ECash Charges $21 $102 $123 $20 - $25Non-Cash Charges 82 23 105 ~ 5Total Charges $103 $125 $228 $25 - $30Restructuring Charges Summary7• Expect to recognize remaining charges in June FY14 quarter• Savings in COGS and SG&A through reduced employee expenses, lower depreciationand reduced operating costs to yield annualized savings of more than $150 million~70% severance cost impacts high cost regionsSeverance~52%Impairment~37%Other ExitCosts~11%Restructuring Charges by CategoryEuropeAsiaAmericasRestructuring Charges by Region
Working Capital Management & ROIC8Net Working Capital = Total A/R and Inventory less A/PCash Conversion Cycle and Net Working Capital – excludes non-cash reductions to AR from our AR sales programs for all periodsReturn on Invested Capital – calculation is adjusted operating income net of taxes divided by the sum of stockholders’ equity plus net debt (avg. last five quarters)Please refer to the Investor Relations section of our website which contains the reconciliation of the adjusted financial measures to the most directly comparable GAAP measures$3,301$3,150 $3,122$2,911$2,7237.0 x 7.0 x7.4 x 7.7 x7.1 xMar-12 Jun-12 Sep-12 Dec-12 Mar-13InventoryTurns2730272426Mar-12 Jun-12 Sep-12 Dec-12 Mar-13$2,115 $2,033$1,772$1,606 $1,5428.3% 8.5%7.2%6.6% 7.3%Mar-12 Jun-12 Sep-12 Dec-12 Mar-13% Annualized RevenueINVENTORY ($ in Millions)CASH CONVERSION CYCLE (Days)NET WORKING CAPITAL ($ in Millions)RETURN ON INVESTED CAPITAL (ROIC %)22.1%20.9% 21.0% 20.8%19.0%Mar-12 Jun-12 Sep-12 Dec-12 Mar-13
Three MonthsEndedTwelve MonthsEnded($ in Millions) Mar-13 Mar-13GAAP net income /(loss) (27) 277Depreciation and amortization 112 455Non-cash restructuring and impairment charges 24 112Change in working capital and other 0 271Net cash provided by operating activities 109 1,115Purchases of property & equipment, net of dispositions (107) (435)Free Cash Flow 2 680Payments for repurchase of ordinary shares (114) (322)Payments for acquired businesses, net of cash acquired (0) (184)Net bank borrowings and other financing activities (23) (142)Other net change in cash 16 37Net change in cash and cash equivalents (119) 69Summary Statement of Cash Flows9Please refer to the Investor Relations section of our website which contain the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures.
$1,587$1,500$175$200$170 $518 $500 $500$3,087$370Liquidity 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023Asia Term Loans FY14 Term Loan FY16 Term Loan Senior NotesCash, Debt, and Debt Maturities Profile10($ in Millions) Mar-12 Jun-12 Sep-12 Dec-12 Mar-13Cash $1,518 $1,285 $1,562 $1,706 $1,587Total Debt 2,189 2,186 2,085 2,080 2,068Net Debt 671 901 523 374 481Debt / EBITDA (LTM ) 1.9x 2.0x 1.8x 1.8x 1.9xPlease refer to the Investor Relations section of our website which contain the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures.SIGNIFICANT DEBT MATURITIES BY CALENDAR YEAR (as of 3/31/13) ($ in Millions)CASHREVOLVER
Key Takeaways As We Exit Fiscal 201311 Entered into a strategic partnership with Google’s Motorola Mobility Enacted a targeted restructuring plan that will result in margin improvement Completed strategic acquisitions of Stellar Microelectronics and Saturn Electronicswhich added cable, solenoid, and microelectronics capabilities Restructured Power business to achieve profitability; Significant restructuring inprocess for Multek Generated strong cash flow from operations exceeding $1.1B and free cash flow of$680M Repurchased $322M or 8% of our outstanding shares Strengthened our capital structure by extending our debt maturities out to 2023,reduced debt by $121M and increased cash by $70M
June Quarter Fiscal Year 2014 Guidance12Adjusted EPS is a non-GAAP financial measure which excludes stock based compensation and intangible amortization expense (net of tax effect) that are included in the most directly comparablemeasures under GAAP. GAAP earnings per diluted share are expected to be lower than the guidance provided herein by approximately $0.03 reflecting quarterly intangible amortization and stock-based compensation expense, and by approximately by $0.04 to $0.05 per diluted share for the remaining restructuring charges.Business Groups Q/Q Revenue OutlookIntegrated Network Solutions FlatIndustrial & Emerging Industries Low single digit growthHigh Reliability Solutions FlatHigh Velocity Solutions Low double digit growthQuarterly Revenue($ in Millions)QuarterlyAdjusted EPS$0.11$0.15$5,600$5,300$0.12$0.16Q1 FY14E Q1 FY14E
For more informationplease visit:investors.flextronics.comThank You