FLEX LTD. FLEX LTD.
AND SUBSIDIARIES
(Company Registration Number 199002645H)
SINGAPORE STATUTORY FINANCIAL STATEMENTS
YEAR ENDED MARCH 31, 2024
SINGAPORE STATUTORY FINANCIAL STATEMENTS
FLEX LTD. AND SUBSIDIARIES
(Incorporated in the Republic of Singapore)
(Company Registration Number 199002645H)
INDEX
Page | ||
Directors' Statement | S-1 | |
Independent Auditors' Report to the Members of Flex Ltd. | S-6 | |
Consolidated Financial Statements of Flex Ltd. and its Subsidiaries | S-11 | |
Supplementary Financial Statements of Flex Ltd. (Parent company) | S-56 |
FLEX LTD. AND SUBSIDIARIES
Co. Reg. No. 199002645H
DIRECTORS' STATEMENT
March 31, 2024
(U.S. dollars in thousands unless otherwise designated as Singapore dollars, S$)
The directors present their statement together with the audited consolidated financial statements of Flex Ltd. and its subsidiaries (the "Company") and balance sheet of Flex Ltd. (the "Parent") for the financial year ended March 31, 2024.
In the opinion of the directors, except for the use of the equity method of accounting for investments in subsidiary corporations to report investments in subsidiary corporations as a separate line in the Parent's balance sheet, instead of consolidating the investments under accounting principles generally accepted in the United States of America, the consolidated financial statements of the Company and supplementary financial statements of the Parent, as set out on pages S-11 to S-55 and pages S-56 through S-67, respectively, are drawn up so as to give a true and fair view of the financial position of the Company and of the Parent as of March 31, 2024, and of the financial performance, results, changes in equity and cash flows of the Company for the financial year then ended and at the date of this statement, there are reasonable grounds to believe that the Parent will be able to pay its debts when they fall due.
Directors
The directors of Flex Ltd. in office at the date of this statement are:
Revathi Advaithi
Michael D. Capellas
John D. Harris II
Michael E. Hurlston
Erin L. McSweeney
Charles K. Stevens, III
Maryrose T. Sylvester
Lay Koon Tan
Patrick J. Ward
William D. Watkins
Arrangements to Enable Directors to Acquire Benefits by Means of the Acquisition of Shares and Debentures
Neither at the end of the financial year, nor at any time during the financial year, did there subsist any arrangement to which the Parent is a party, whose object is or one of whose objects is to enable the directors of the Parent to acquire benefits by means of the acquisition of shares in or debentures of the Parent or any other body corporate, except for the options and restricted share unit awards mentioned below.
Directors' Interests in Shares, Options and Debentures
The interest of the directors who held office at the end of the financial year ended March 31, 2024 (including those held by their spouses and infant children) in the share capital, options or debentures of the Parent and its related corporations were as follows:
Interest Held | ||||||
Ordinary Shares, no Par Value, in Flex Ltd. | As of March | As of March | ||||
31, 2023 | 31, 2024 | |||||
Revathi Advaithi (1) (2) | 789,356 | 1,103,471 | ||||
Michael D. Capellas (3) | 270,968 | 283,507 | ||||
John D. Harris II (3) | 23,317 | 33,188 | ||||
Michael E. Hurlston (3) | 38,449 | 52,614 | ||||
Erin L. McSweeney (3) | 19,438 | 19,809 | ||||
Charles K. Stevens, III (3) | 42,509 | 52,380 | ||||
Maryrose T. Sylvester (3) | - | 5,011 | ||||
Lay Koon Tan (3) | 222,195 | 236,360 | ||||
Patrick J. Ward (3) | 6,907 | 16,778 | ||||
William D. Watkins (3) | 91,550 | 101,421 | ||||
S-1 |
- As of March 31, 2023 and 2024, Ms. Advaithi held interests in 683,296* and 623,569 contingent restricted share unit awards, respectively, which are not included in the totals above. These contingent restricted share unit awards comprise ordinary shares of the Parent to be allotted and issued pursuant to the 2017 Equity Incentive Plan upon satisfaction of the terms and conditions set by the committee administering the plans upon the grant of such contingent restricted share unit awards.
- As of March 31, 2023 and 2024, Ms. Advaithi also held interests in 902,739* and 976,528 restricted share unit awards, respectively, which are not included in the totals above, where vesting is contingent upon meeting certain performance criterion.
- As of March 31, 2023 and 2024, Mr. Capellas held interests in 12,539* and 14,402 contingent restricted share unit awards, respectively, which are not included in the totals above. As of March 31, 2023 and 2024, Messrs. Harris II, Hurlston, Stevens, Tan, Ward, Watkins, Ms. McSweeney and Ms. Sylvester each held interests in 9,871* and 9,601 contingent restricted share unit awards, respectively, which are not included in the totals above. The contingent restricted share unit awards for each year vest on the date immediately prior to the date of the Parent's 2023 and 2024 annual general meetings, respectively.
As of March 31, 2023, Mr. Watkins also held interests in 4,761* contingent restricted stock unit awards granted by Nextracker LLC, a subsidiary of Nextracker Inc. ("Nextracker"), which was, in turn, a subsidiary (being a related corporation) of the Parent until January 2, 2024, which are not included in the totals above. These contingent restricted stock unit awards comprised shares of Nextracker's Class A common stock, par value $0.0001 per share, to be allotted and issued pursuant to the 2022 Nextracker Plan (as defined below) and vested on the last business day immediately prior to the date of the first annual meeting of stockholders of Nextracker. As of January 2, 2024, Nextracker ceased to be a subsidiary of the Parent by virtue of the completion of the Parent's spin-off of all of its interests in Nextracker (the "Spin-off").
Other than as disclosed above, no other directors of the Parent had an interest in any shares, debentures or share options of the Parent or related corporations either at the beginning or the end of the financial year as recorded in the register of directors' shareholdings kept by the Parent under section 164 of the Singapore Companies Act 1967.
- Interests held in (i) these respective awards; and (ii) shares (as of March 31, 2023) disclosed in the table above, and the status of Mr. Watkins' interests held in Nextracker (as of March 31, 2023), remain unchanged as of April 1, 2023.
Share Option and Award Plans (Schemes)
Flex Ltd. 2017 Equity Incentive Plan, as Amended and Restated
The Parent's primary plan used for granting equity compensation awards is the Flex Ltd. 2017 Equity Incentive Plan, as Amended and Restated (the "2017 Plan"), which is effective since August 15, 2017, and which was amended and restated with effect from August 2, 2023 to, inter alia, increase the number of ordinary shares of the Parent available for the grant of equity awards under the 2017 Plan.
Options issued to employees under the 2017 Plan generally vest over four years and expire ten years from the date of grant. Options granted to non-employee directors expire five years from the date of grant. The exercise price of options granted to employees is determined by the Parent's Board or the Compensation and People Committee of the Parent's Board and may not be less than the closing price of the Parent's ordinary shares on the date of grant. Refer to the Directors' Statement for the financial year ended March 31, 2011 through to the Directors' Statement for the financial year ended March 31, 2023 for details of the number and class of shares in respect of which the options were granted, the date of expiration of the options, the basis upon which the option may be exercised, the price or method of fixing the price of issue of the shares underlying the options, whether the holders of options have any right to participate by virtue of the option in any share issue of any other company and the particulars of shares issued during those periods.
During the financial year ended March 31, 2024, no options were granted under the 2017 Plan and no ordinary shares in the Parent were issued by virtue of the exercise of options under the 2017 Plan. As of March 31, 2024, there were no unissued shares underlying options granted under the 2017 Plan.
During the financial year ended March 31, 2024, restricted share unit awards for a total of 6,162,067 ordinary shares in the Parent were granted under the 2017 Plan at market values equal to the closing price of the Parent's ordinary shares on the date of grant ranging from $21.61 to $35.70, and a weighted-averagegrant-date market value of $27.86. Upon the satisfaction of prescribed time-based, performance based, and/or market-based vesting conditions, ordinary shares in the Parent will be issued, free of payment, to the participants. There is no exercise price payable.
During the financial year ended March 31, 2024, in connection with the Spin-off, the number of unissued shares underlying restricted share unit awards were adjusted for a total of an additional 3,380,381 ordinary shares to preserve their economic value post the Spin-off. The awards will continue to vest on its original schedule and otherwise has substantially the same terms and conditions as the original award.
During the financial year ended March 31, 2024, a total of 8,529,857 ordinary shares in the Parent were issued by virtue of the vesting of restricted share unit awards granted under the 2017 Plan. As of March 31, 2024, the number and class of unissued shares comprised in restricted share unit awards granted under the 2017 Plan was 15,367,056 ordinary shares, net of cancellation of restricted share unit awards for 994,150 ordinary shares during the financial year 2024.
S-2
Holders of options granted under the 2017 Plan have no rights to participate, by virtue of such options, in any share issuances of any other company.
2014 Nextracker Equity Incentive Plan
During the financial year ended March 31, 2016, in conjunction with the acquisition of Nextracker, the Parent assumed all the outstanding unvested restricted share unit awards and outstanding unvested options to purchase shares of common stock of Nextracker and converted all these restricted share unit awards and options into restricted share unit awards and options over ordinary shares of the Parent. As a result, the Parent granted equity compensation awards under an additional equity compensation plan as of March 31, 2016, the 2014 Nextracker Equity Incentive Plan (the "2014 Nextracker Plan"). Refer to the Directors' Statement for the financial year ended March 31, 2016 through to the Directors' Statement for the financial year ended March 31, 2023 for details of the number and class of shares in respect of which the options were granted. Options issued to employees under the 2014 Nextracker Plan generally have a vesting period of two to four years from the vesting commencement date and expire ten years from the date of grant. The exercise price of options granted to employees was determined by the Parent based on a conversion rate agreed upon in the purchase agreement of Nextracker.
During the financial year ended March 31, 2024, no options were granted under the 2014 Nextracker Plan.
During the financial year ended March 31, 2024, a total of 40,089 ordinary shares in the Parent were issued by virtue of the exercise of options under the 2014 Nextracker Plan. As of March 31, 2024, there were no unissued shares underlying options granted under the 2014 Nextracker Plan, net of cancellation of options for 27,519 ordinary shares during the financial year 2024.
During the financial year ended March 31, 2024, no restricted share unit awards in the Parent were granted under the 2014 Nextracker Plan.
During the financial year ended March 31, 2024, no ordinary shares in the Parent were issued by virtue of the vesting of restricted share unit awards granted under the 2014 Nextracker Plan. As of March 31, 2024, there were no unissued shares comprised in restricted share unit awards granted under the 2014 Nextracker Plan.
Holders of options granted under the 2014 Nextracker Plan have no rights to participate, by virtue of such options, in any share issuances of any other company.
Second Amended and Restated 2022 Nextracker Inc. Equity Incentive Plan
During the financial year ended March 31, 2023, Nextracker LLC granted equity compensation awards to its employees under the 2022 Nextracker LLC Equity Incentive Plan adopted effective February 1, 2022, which was amended and restated as the First Amended and Restated 2022 Nextracker LLC Equity Incentive Plan, effective April 6, 2022 (the "First Restatement"), and which First Restatement was then amended pursuant to the First Amendment to the First Amended and Restated 2022 Nextracker LLC Equity Incentive Plan, effective January 30, 2023 (the "First Amendment"), in each case by Nextracker LLC, but in connection with the IPO1, the 2022 Nextracker LLC Equity Incentive Plan, as modified by the First Restatement and the First Amendment (collectively, the "Prior Plan"), was assumed by Nextracker Inc. and amended and restated in the form of the Second Amended and Restated 2022 Nextracker Inc. Equity Incentive Plan (the "2022 Nextracker Plan"), which is administered by the compensation committee of the board of directors of Nextracker (the "NX Compensation Committee"). Options granted to employees under the 2022 Nextracker Plan generally have a vesting period of three years from the vesting commencement date and expire no more than ten years from the date of grant. The exercise price of options granted to employees is determined by Nextracker's board of directors or the NX Compensation Committee and may not be less than the closing price of Nextracker's shares of Class A common stock on the date of grant.
During the financial year ended March 31, 2024, prior to the completion of the Spin-off, options for a total of 470,115 shares of Class A common stock in Nextracker were granted under the 2022 Nextracker Plan, which cliff-vest on the third anniversary of the grant date, subject generally to continuous service through such vesting date, with a weighted-average exercise price of $40.47.
During the financial year ended March 31, 2024, prior to the completion of the Spin-off, no shares of Class A common stock in Nextracker were issued by virtue of the exercise of options under the 2022 Nextracker Plan. As of January 2, 2024, the number and class of unissued shares underlying options granted under the 2022 Nextracker Plan was 3,150,833 shares of Class A common stock, net of cancellation of options for 11,905 shares of Class A common stock during the financial year 2024 prior to the completion of the Spin-off. For all of Nextracker's options granted under the 2022 Nextracker Plan, the expiration date is from April 2032 to June 2033.
- On February 8, 2023, the Parent announced that Nextracker had priced its upsized initial public offering ("IPO"). Trading commenced on February 9, 2023 on the NASDAQ (National Association of Securities Dealers Automated Quotations) Global Select Market under the ticker symbol "NXT" and the offering closed on February 13, 2023.
S-3
During the financial year ended March 31, 2024, prior to the completion of the Spin-off, restricted share unit awards ("NRSUs") for a total of 1,241,197 shares of Class A common stock in Nextracker were granted under the 2022 Nextracker Plan, with a weighted-average fair value of $40.04 which vesting is contingent upon continued service over a three-year period from the date of grant.
During the financial year ended March 31, 2024, prior to the completion of the Spin-off, a total of 592,177 shares of Class A common stock in Nextracker were issued by virtue of the vesting of NRSUs granted under the 2022 Nextracker Plan. As of January 2, 2024, the number and class of unissued shares comprised in NRSUs granted under the 2022 Nextracker Plan was 2,592,120 shares of Class A common stock, net of cancellation of NRSUs for 64,479 shares of Class A common stock during the financial year 2024 prior to the completion of the Spin-off. For all of Nextracker's NRSUs under the 2022 Nextracker Plan, the vesting dates range from May 2025 to November 2026.
During the financial year ended March 31, 2024, performance-based restricted share unit awards ("NPSU") for a total of 436,675 shares in Nextracker were awarded under the 2022 Nextracker Plan, which vesting is contingent upon (i) time- based vesting with continued service through March 31, 2026, and (ii) the achievement of certain metrics specific to the Company, which could result in a range of zero to 300% of such NPSUs ultimately vesting. The weighted average fair value per share of the NPSUs granted during the period was estimated to be $54.53 per award.
During the financial year ended March 31, 2024, prior to the completion of the Spin-off, no shares of Class A common stock in Nextracker were issued by virtue of the vesting of NPSUs granted under the 2022 Nextracker Plan. As of January 2, 2024, the number and class of unissued shares comprised in NPSUs granted under the 2022 Nextracker Plan was 1,169,050 shares of Class A common stock, and no NPSUs over shares of Class A common stock were cancelled during the financial year 2024 prior to the completion of the Spin-off. For all of Nextracker's NPSUs under the 2022 Nextracker Plan, the vesting dates range from April 2025 to June 2026.
Holders of options granted under the 2022 Nextracker Plan have no rights to participate, by virtue of such options, in any share issuances of any other company.
Auditors
The auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment.
S-4
On Behalf of the Board of Directors | |
/s/ MICHAEL D. CAPELLAS | /s/ REVATHI ADVAITHI |
Chairman/Director | Director |
Singapore | |
June 6, 2024 |
S-5
Independent Auditors' Report to the Members of Flex Ltd.
Report on the Audit of the Financial Statements
Qualified Opinion
We have audited the accompanying Consolidated Financial Statements of Flex Ltd. and its subsidiaries (the "Company") and the Supplementary Financial Statements of Flex Ltd. (the "Parent") which comprise the consolidated balance sheet of the Company and balance sheet of the Parent as at March 31, 2024, the consolidated statement of operations, consolidated statement of comprehensive income, consolidated statements of redeemable noncontrolling interest and shareholders' equity, consolidated statement of cash flows of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages S-11 to S-67.
In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the accompanying Consolidated Financial Statements of the Company and the balance sheet of the Parent are properly drawn up in accordance with the provisions of the Companies Act 1967 (the "Act") and the accounting principles generally accepted in the United States of America so as to give a true and fair view of the consolidated financial position of the Company and the financial position of the Parent as at March 31, 2024 and of the consolidated financial performance, consolidated changes in equity and cash flows of the Company for the year ended on that date.
Basis for Qualified Opinion
The Parent presented its balance sheet in the Supplementary Financial Statements as required by the Provisions of the Act and accounted for its investments in subsidiary corporations using equity method. Under this method, the Parent's investments in subsidiary corporations are reported as a separate line in the Parent's balance sheet. Accounting principles generally accepted in the United States of America require that these investments be consolidated and for the consolidated balance sheet to be presented rather than reported using the equity method in the Parent's balance sheet which is not prescribed by accounting principles generally accepted in the United States of America.
We conducted our audit in accordance with Singapore Standards on Auditing ("SSAs"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Accounting and Corporate Regulatory Authority Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities ("ACRA Code") together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for Qualified Opinion section we have determined the matters described below to be the key audit matters to be communicated in our report.
S-6
Key audit matter | How the matter was addressed in the audit | ||||||||||||
Revenue - Variable Consideration and Associated Customer- | Our audit procedures related to variable consideration and | ||||||||||||
Related Accruals for Pricing Adjustments - Refer to Notes 2 | associated customer related accruals for pricing adjustments | ||||||||||||
and 4 to the consolidated financial statements | included the following, among others: | the | |||||||||||
• | We tested the effectiveness of controls | ||||||||||||
Certain of | the Company's | customer agreements | include | Company has in | place | relating | to | reviewing | |||||
customer contracts to identify price adjustment | |||||||||||||
potential price adjustments which may result in variable | |||||||||||||
clauses, estimating variable consideration and | |||||||||||||
consideration. These price adjustments include committed | assessing the reasonableness of customer related | ||||||||||||
price reductions, material margins earned over the period | accrual balances. | ||||||||||||
that are contractually required to be paid to the customers, | • | We evaluated the Company's accounting | policy | ||||||||||
and other periodic pricing | with respect to variable consideration, as well as its | ||||||||||||
process | for identifying | contracts | that | include | |||||||||
resets that may be refundable to customers. The Company | |||||||||||||
potential price adjustment clauses. | |||||||||||||
recognizes estimates of this variable consideration that are | |||||||||||||
• | We selected a sample of contracts with | customers | |||||||||||
not expected to result in a significant revenue reversal in the | |||||||||||||
that included potential price adjustment clauses and | |||||||||||||
future, primarily based on the amount of potential refunds | performed the following: | ||||||||||||
required by the contract, historical experience and other | - We read the customer contracts to develop an | ||||||||||||
surrounding facts and circumstances. | understanding of clauses that could give rise to | ||||||||||||
variable consideration and evaluated whether | |||||||||||||
We identified the recognition of variable consideration and | the | Company's | accounting conclusions | with | |||||||||
respect to those clauses were reasonable. | |||||||||||||
the associated customer-related accruals for pricing | |||||||||||||
- We obtained and tested the mathematical | |||||||||||||
adjustments as a key audit matter due to the judgments | accuracy of the Company's calculations of | ||||||||||||
necessary to determine when estimates of this variable | customer related accruals and evaluated the | ||||||||||||
consideration are no longer expected to result in a | Company's judgments regarding the amount of | ||||||||||||
significant | revenue reversal | in | the future. This | required | variable consideration that should be deferred. | ||||||||
extensive | audit effort and | a | higher degree of | auditor | In making this evaluation we considered both | ||||||||
the terms included in the customer contract and | |||||||||||||
judgment when performing audit procedures to evaluate the | |||||||||||||
the Company's historical experience in settling | |||||||||||||
reasonableness of the variable consideration and associated | |||||||||||||
amounts with the customer. | |||||||||||||
customer-related accruals for pricing adjustments. | |||||||||||||
S-7
Income Taxes - US Valuation Allowance - Refer to Note 15 | Our audit procedures related to management's determination | |||||||
to the consolidated financial statements | that in the current year it was more likely than not that the | |||||||
U.S. deferred tax assets will be realized in the future | ||||||||
The Company records income taxes under the asset | and | included the following, among others: | ||||||
liability method, whereby deferred income taxes reflect the | • We tested the effectiveness of management's | |||||||
controls over their analysis to conclude it is more | ||||||||
net tax effects of temporary differences | likely than not that sufficient future taxable income | |||||||
between the carrying amounts | of | assets and liabilities | for | will be generated to realize the deferred tax assets. | ||||
financial reporting | purposes | and | the amounts used | for | • With the assistance of our tax specialists, | we | ||
performed the following: | ||||||||
income tax purposes. The carrying amounts of | ||||||||
- Tested the accuracy of historical taxable | ||||||||
deferred tax assets are reduced by a valuation allowance if, | ||||||||
income used in the analysis. | and | |||||||
based on the available evidence, it is not more likely than | - Evaluated | management's assessment | ||||||
not that such assets will be realized. The Company assesses | weighting | of the objective three-year trend | of | |||||
the available positive and negative evidence to estimate if | taxable income and forecasts of continued | |||||||
sufficient future taxable income will be generated to realize | taxable income against the historical losses and | |||||||
volatility to conclude if a valuation allowance | ||||||||
the deferred tax | assets. During | fiscal year 2024, | the | |||||
was necessary. | ||||||||
Company determined it was more likely than not that the | of | |||||||
- Tested the | projection of future realization | |||||||
U.S. deferred tax assets are realizable. As a result, the | the deferred tax assets, including the | |||||||
Company released the valuation allowance related to these | application of tax laws to determine | the | ||||||
deferred tax assets of $461 million and recorded a | sufficiency of future projected taxable income | |||||||
corresponding net income tax benefit. | prior to expiration of the deferred tax assets. | |||||||
- Evaluated | whether the estimates of future | |||||||
taxable income were consistent with evidence | ||||||||
obtained in other areas of the audit. | ||||||||
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Flex Ltd. published this content on 25 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 June 2024 21:20:47 UTC.
