10q10k10q10k.net

What changed in FLEX LTD.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of FLEX LTD.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+430 added−410 removedSource: 10-K (2024-05-17) vs 10-K (2023-05-19)

Top changes in FLEX LTD.'s 2024 10-K

430 paragraphs added · 410 removed · 309 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

82 edited+14 added−19 removed39 unchanged
Biggest changeOur deep cross-industry knowledge and multi-domain expertise accelerate the production of complex products for increasingly interconnected industries. • Global and regional scale : Flex’s physical infrastructure includes over 100 facilities in approximately 30 countries, staffed by approximately 172,000 employees, providing customers with truly global scale and strategic geographic distribution capabilities to meet their market needs.
Biggest changeWe believe our key competitive advantages are our people, processes, and capabilities for making products, systems, and solutions for customers: • Time to market advantage : Our deep vertical and cross-industry expertise, unique set of full product lifecycle capabilities, and global and regional presence accelerate the production of complex products for increasingly interconnected markets and provide customers with a time to market advantage. • End-to-end specialized services : Our full range of services help customers optimize and streamline the product lifecycle and seamlessly design, build, deliver, and manage products at scale with increased quality, productivity and speed. • Global and regional scale : Flex’s physical infrastructure includes approximately 100 facilities in approximately 30 countries, staffed by approximately 148,000 employees, providing customers with truly global scale and strategic geographic distribution capabilities to meet their market needs.
Further, we are committed to respecting the human rights of our employees and improving their quality of life. The Company's vision, mission, purpose, and value statements aim to cultivate an inclusive, high-performing culture where employees are empowered and given opportunities to reach their full potential.
Further, we are committed to respecting the human rights of our employees and improving their quality of life. The Company's purpose, vision, mission and value statements aim to cultivate an inclusive, high-performing culture where employees are empowered and given opportunities to reach their full potential.
Additionally, litigation could be lengthy and costly and could materially harm our financial condition regardless of the outcome. We also could be required to incur substantial costs to redesign a product or re-perform design services.
Additionally, litigation could be lengthy and costly and could materially harm our financial condition regardless of the outcome. We also could be required to incur substantial costs to redesign a product or re-perform design and engineering services.
Flex is exposed to different and, in some cases greater, potential liabilities from the various design services we provide than those we typically face in our core assembly and manufacturing services.
Flex is exposed to different and, in some cases greater, potential liabilities from the various design and engineering services we provide than those we typically face in our core assembly and manufacturing services.
For the last three years, we were named an Advanced member of the United Nations Global Compact ("UNGC"), the world's largest corporate sustainability initiative, showcasing our commitment to integrate sustainability throughout our company and across our entire supply chain. Our 2030 sustainability strategy includes our most ambitious goals to date and spans several environmental, social, and governance pillars.
For the last four years, we were named an Advanced member of the United Nations Global Compact ("UNGC"), the world's largest corporate sustainability initiative, showcasing our commitment to integrate sustainability throughout our company and across our entire supply chain. Our 2030 sustainability strategy includes our most ambitious goals to date and spans several environmental, social, and governance pillars.
As described above, we are committed to maintaining compliance with ESG-related laws applicable to our operations, products, and services. We do not believe that costs of compliance with these environmental laws and regulations will have a material adverse effect on our capital expenditures, operating results, or competitive position.
As described above, we are committed to maintaining compliance with sustainability-related laws applicable to our operations, products, and services. We do not believe that costs of compliance with these environmental laws and regulations will have a material adverse effect on our capital expenditures, operating results, or competitive position.
We determine the amount of our accruals for environmental matters by analyzing and estimating the probability of occurrence and the reasonable possibility of incurring costs in light of information currently available. Compliance with environmental laws and regulations, including those concerning climate change and other ESG-related matters, requires continuing management efforts by the Company.
We determine the amount of our accruals for environmental matters by analyzing and estimating the probability of occurrence and the reasonable possibility of incurring costs in light of information currently available. Compliance with environmental laws and regulations, including those concerning climate change and other sustainability-related matters, requires continuing management efforts by the Company.
In support of cultivating an inclusive, high-performing culture with our workforce, we continued to proliferate our Ways of Working, four specific behaviors that bring our values to life through actions, provide a framework for how we make decisions, and support ongoing progress on our Flex Forward strategy.
In support of cultivating an inclusive, high-performing culture with our workforce, we continue to proliferate our Ways of Working, four specific behaviors that bring our values to life through actions, provide a framework for how we make decisions, and support ongoing progress on our Flex Forward strategy.
Through our 2030 goals, we are committed to reducing our environmental impact, advancing a safe, inclusive and respectful work environment for our employees, investing in our communities, partnering with our customers and suppliers to help mitigate value chain emissions, and driving ESG-focused practices with transparency.
Through our 2030 goals, we are committed to reducing our environmental impact, advancing a safe, inclusive and respectful work environment for our employees, investing in our communities, partnering with our customers and suppliers to help mitigate value chain emissions, and driving sustainability-focused practices with transparency.
We have established global scale through an extensive network of innovation labs, manufacturing operations, and services sites in the world's major consumer and enterprise products markets (Asia, the Americas, and Europe) to serve the supply chain needs of both multinational and regional companies.
We have established global scale through an extensive network of manufacturing operations and services sites in the world's major consumer and enterprise products markets (Asia, the Americas, and Europe) to serve the supply chain needs of both multinational and regional companies.
Information contained on or connected to our website is not incorporated by reference into, and does not form a part of, this Annual Report on Form 10-K or any of our other filings with the SEC. We were incorporated in the Republic of Singapore in May 1990. Our principal corporate office is located at 2 Changi South Lane, Singapore 486123.
Information contained on or connected to our website is not incorporated by reference into, and does not form a part of, this Annual Report on Form 10-K or any of our other filings with the SEC. We were incorporated in the Republic of Singapore in May 1990. Our registered office is located at 2 Changi South Lane, Singapore 486123.
We offer global economies of scale in advanced materials and technology sourcing, manufacturing and after-market services, as well as market-focused expertise and capabilities in design and engineering. As a result of extensive experience in specific markets, we have developed a deep understanding of complex market dynamics, giving us the ability to anticipate trends that impact customers' businesses.
We offer global economies of scale in advanced materials and technology sourcing, manufacturing and post-sale services, as well as market-focused expertise and capabilities in design and engineering. As a result of extensive experience in specific markets, we have developed a deep understanding of complex market dynamics, giving us the ability to anticipate trends that impact customers' businesses.
The Company also held cultural awareness activities throughout the year to highlight specific groups including People with DiversAbilities Awareness Weeks, Black History Month, Asian Pacific Heritage Month, PRIDE Month, LatinX Heritage Month, and Women’s History Month.
The Company also held cultural awareness activities throughout the year to highlight specific groups including People with DiversAbilities Awareness Weeks, Black History Month, Asian Pacific Heritage Month, PRIDE Month, LatinX Heritage Month, and Women’s History Month among others.
Our systems assembly and manufacturing operations generate the majority of our revenues and include printed circuit board assembly and assembly of systems and subsystems that incorporate printed circuit 5 Table of Contents boards and complex electromechanical components. We assemble electronic products with custom electronic enclosures on either a build-to-order or configure-to-order basis.
Our manufacturing operations and systems assembly generate the majority of our revenues and include printed circuit board assembly and assembly of systems and subsystems that incorporate printed circuit boards and complex electromechanical components. We assemble electronic products with custom electronic enclosures on either a build-to-order or configure-to-order basis.
Across all of the key industries and markets in which Flex does business, the Company offers industry-leading global design services, with extensive product design engineering resources that provide design services, product development, systems integration services, and solutions to satisfy a wide array of customer requirements, including: • System architecture; • User interface and industrial design; • Cross-industry technologies; • Hardware design; • Software integration; and • Design for excellence.
Across all of the key industries and markets in which Flex does business, we offer industry-leading global design and engineering services, with extensive product design and engineering resources that provide design services, product development, systems integration services, and solutions to satisfy a wide array of customer requirements, including: • System architecture; • User interface and industrial design; • Cross-industry technologies; • Hardware design; • Software integration; and • Design for excellence.
Our expertise can help improve customers' market positioning by effectively adjusting product plans and roadmaps to efficiently and cost-effectively deliver high quality products that meet their geographic and time to market requirements. Our services include all processes necessary to design, build, ship, and service a wide range of products for customers. These services include: Design and Engineering Services .
Our expertise can help improve customers' market positioning by effectively adjusting product plans and roadmaps to efficiently and cost-effectively deliver high quality products that meet their geographic and time to market requirements. Our end-to-end services include all processes necessary to design, build, deliver, and manage a wide range of products for customers. These services include: Design and Engineering Services .
Markets . We focus on companies that are leaders in their industry and value our superior capabilities in design, manufacturing, and supply chain services. Flex focuses on high-growth industries and markets where we have distinctive competence and a compelling value proposition. Examples include investments in specific technologies and industries such as healthcare, automotive, industrial, and energy.
We focus on companies that are leaders in their industry and value our superior capabilities in design and engineering, supply chain, manufacturing, post-production and post-sale services. Flex focuses on high-growth industries and markets where we have distinctive competence and a compelling value proposition. Examples include investments in specific technologies and industries such as automotive, cloud, healthcare, industrial, and energy.
Our leadership uses the results of the survey to continue developing our strengths and identify and take action on opportunities for improvement. This year 88% of employees completed the Flex Voice survey and the results reflected increased enthusiasm and engagement. Compensation and Benefits . Our total rewards are designed to attract, motivate and retain employees.
Our leadership uses the results of the survey to continue developing our strengths and identify and take action on opportunities for improvement. This year 93% of employees completed the Flex Voice survey and the results reflected continued engagement. Compensation and Benefits . Our total rewards are designed to attract, motivate and retain employees.
We continue to invest in maintaining a leadership position in our world-class manufacturing and services capabilities including automation, simulation tools, digitizing our factories, and implementing leading edge Industry 4.0 methodologies.
We continue to invest in maintaining a leadership position in our world-class manufacturing services and capabilities including automation, simulation tools, digitizing our factories, and implementing leading edge advanced manufacturing methodologies.
How we live our values defines our culture: • We support each other as we strive to find a better way. 7 Table of Contents • We move fast with discipline and purpose. • We do the right thing always. We bring our values to life through four behaviors: 1. Respect and value others. 2. Collaborate and share openly. 3.
How we live our values defines our culture: • We support each other as we strive to find a better way. • We move fast with discipline and purpose. • We do the right thing always. We bring our values to life through four behaviors: 1. Respect and value others. 2. Collaborate and share openly. 3. Learn and adapt. 4.
In 2022, we maintained our AA rating from Morgan Stanley Capital International ("MSCI"), and strong marks from CDP (formally known as Carbon Disclosure Project) for water security and climate change, receiving an A and A- respectively. The Company also aligned its sustainability report to the Sustainability Accounting Standards Board framework.
In 2023, we maintained our AA rating from Morgan Stanley Capital International ("MSCI"), and strong marks from CDP (formally known as Carbon Disclosure Project) for supplier engagement, water security and climate change, receiving an A- in each category. The Company also aligned its sustainability report to the Sustainability Accounting Standards Board framework.
We leverage our broad set of capabilities globally to provide a competitive advantage by minimizing logistics costs, manufacturing costs, and cycle times while increasing flexibility and responsiveness. 4 Table of Contents SERVICE OFFERINGS Flex provides design, manufacturing and supply chain services through a network of over 100 locations in approximately 30 countries across four continents.
We leverage our broad set of capabilities globally to provide a competitive advantage by minimizing logistics costs, manufacturing costs, and cycle times while increasing flexibility and responsiveness. 4 Table of Content s SERVICE OFFERINGS Flex provides design and engineering, supply chain, manufacturing, post-production and post-sale services through a network of approximately 100 locations in approximately 30 countries across four continents.
We leverage both formal and informal programs, including in-person, virtual, social and self-directed learning, mentoring, coaching, and external development to identify, foster, and retain top talent. Employees have access to courses through our learning and development plat form , Flex Learn. In 2022, our employees completed more than five million hours of training programs.
We leverage both formal and informal programs, including in-person, virtual, social and self-directed learning, mentoring, coaching, and external development to identify, foster, and retain top talent. Employees have access to courses through our learning and development platform, Flex Learn. In 2023, our employees completed more than six million hours of training programs.
We also comply with an increasing number of regulations concerning product safety and stewardship, packaging and labeling as well as product environmental compliance regulations focused on the restriction of certain hazardous substances, including: • Restrictions on Hazardous Substances (“RoHS”) 2011/65/EU • Waste Electrical and Electronic Equipment (“WEEE”) 2012/19/EU directives • The regulation EC 1907/2006 EU Directive REACH (“Registration, Evaluation, Authorization, and Restriction of Chemicals”) • China's RoHS entitled, Management Methods Caused by Controlling Pollution for Electronic Information Products (“EIPs”) Moreover, climate change and other ESG-related laws, regulations, treaties, and similar initiatives and programs are being adopted and implemented throughout the world, many of which we will be required to comply with.
We have implemented processes and procedures aimed to ensure that our operations comply with all applicable environmental regulations. 10 Table of Content s We also comply with an increasing number of regulations concerning product safety and stewardship, packaging and labeling as well as product environmental compliance regulations focused on the restriction of certain hazardous substances, including: • Restrictions on Hazardous Substances (“RoHS”) 2011/65/EU • Waste Electrical and Electronic Equipment (“WEEE”) 2012/19/EU directives • The regulation EC 1907/2006 EU Directive REACH (“Registration, Evaluation, Authorization, and Restriction of Chemicals”) • China's RoHS entitled, Management Methods Caused by Controlling Pollution for Electronic Information Products (“EIPs”) Moreover, climate change and other sustainability-related laws, regulations, treaties, and similar initiatives and programs are being adopted and implemented throughout the world, many of which we will be required to comply with.
See "Risk Factors— The success of certain of our activities depends on our ability to protect our intellectual property rights; claims of infringement or misuse of intellectual property and/or breach of license agreement provisions against our customers or us could harm our business ." Systems Assembly and Manufacturing .
See "Risk Factors— The success of certain of our activities depends on our ability to protect our intellectual property rights; claims of infringement or misuse of intellectual property and/or breach of license agreement provisions against our customers or us could harm our business ." Supply Chain Services.
Flex is committed to transparency in sustainability reporting. The Company has adhered to the Global Reporting Initiative since 2013 and has published an annual sustainability report each year since 2016.
Flex is committed to transparency in sustainability reporting. Since 2013, the Company has adhered to the Global Reporting Initiative framework and has published an annual sustainability report.
We have focused on attracting the best engineering, functional and operational leaders and have accelerated efforts to develop the future leaders of the Company. Customer Focus . We believe that building strong partnerships with our customers and delivering on our commitments strengthens trust and customer retention.
We have focused on attracting the best engineering, functional and operational leaders and are focused on developing the future leaders of the Company. Customer Focus . We believe that building strong partnerships with our customers and delivering on our commitments strengthens trust and customer retention.
As of March 31, 2023, women represent 44% of our global employees, and underrepresented minorities (those who identify as Black/African American, Hispanic/Latinx, Native American, Asian and Pacific Islander and/or two or more races) represent 49% of our U.S. employees. Approximately 20% of our executive team and approximately 22% of our leadership team (director level and above) are female.
As of March 31, 2024, women represent 44% of our global employees, and underrepresented minorities (those who identify as Black/African American, Hispanic/Latinx, Native American, Asian and Pacific Islander and/or two or more races) represent 52% of our U.S. employees. Approximately 21% of our executive team and approximately 23% of our leadership team (director level and above) are female.
ITEM 1. BUSINESS OVERVIEW Flex is the diversified manufacturing partner of choice that helps market-leading brands design, build and deliver innovative products that improve the world.
ITEM 1. BUSINESS OVERVIEW Flex is the advanced, end-to-end manufacturing partner of choice that helps market-leading brands design, build, deliver and manage innovative products that improve the world.
We believe Nextracker is extremely competitive with regard to all of these factors. COMPETITIVE STRENGTHS We continuously enhance our business through the development and expansion of our product and service offerings. We strive to maintain the efficiency and flexibility of the organization, with repeatable execution that adapts to macro-economic changes to provide clear value to customers, while increasing their competitiveness.
COMPETITIVE STRENGTHS We continuously enhance our business through the development and expansion of our product and service offerings. We strive to maintain the efficiency and flexibility of the organization, with repeatable execution that adapts to macro-economic changes to provide clear value to customers, while increasing their competitiveness.
We offer a suite of integrated reverse logistics, repair and refurbishment solutions that use globally consistent processes, which help increase our customers' brand loyalty by improving turnaround times and raising end-customer satisfaction levels while significantly reducing the carbon footprint for our customers.
We provide a suite of integrated reverse logistics and circular economy services that use globally consistent processes, which help increase our customers' brand loyalty by improving turnaround times and raising end-customer satisfaction levels while significantly reducing the carbon footprint for our customers.
We have a very balanced global manufacturing footprint with 38% of net sales in North America, 22% in China, 20% in Europe, the Middle East and Africa ("EMEA"), and 20% in other areas for the fiscal year ended March 31, 2023 (with net sales attributable to the country in which the product is manufactured, or service is provided).
We have a very balanced global manufacturing footprint with 40% of net sales in North America, 19% in China, 21% in Europe, the Middle East and Africa ("EMEA"), and 20% in other areas in our fiscal year ended March 31, 2024 (with net sales attributable to the country in which the product is manufactured, or service is provided).
We believe our long-term relationships with key customers are the result of our track record of meeting commitments and delivering value that increases customers' competitiveness. We serve a wide range of customers a cross six reporting units within the FAS and FRS segments in addition to our Nextracker business.
Long-Standing, Diverse Customer Relationships . We believe our long-term relationships with key customers are the result of our track record of meeting commitments and delivering value that increases customers' competitiveness. We serve a wide range of customers a cross six reporting units within the FAS and FRS segments.
Learn and adapt. 4. Honor commitments. Our leadership competency framework includes three key elements of leadership to help leaders guide and develop our teams and execute on our strategy: • People: Building and developing our people. • Strategy: Defining and driving our strategy. • Results: Executing and delivering results.
Honor commitments. Our leadership competency framework includes three key elements of leadership to help leaders guide and develop our teams and execute on our strategy: • People: Building and developing our people. 7 Table of Content s • Strategy: Defining and driving our strategy. • Results: Executing and delivering results.
Trusted Resilient Supply Chain . We offer one of the most trusted and resilient global supply chain services through a combination of digital supply chain capabilities, deep expertise, real time visibility and analytics, and collaborative supplier relationships to help customers navigate complex, global supply chains. Long-Standing, Diverse Customer Relationships .
We offer one of the most trusted and resilient global supply chain services through a combination of digital supply chain capabilities, deep expertise, real time visibility and analytics, and collaborative supplier relationships to 5 Table of Content s help customers navigate complex, global supply chains.
Approximately 22% of our executive team and approximately 32% of our U.S. leadership team (director level and above) are comprised of underrepresented minorities.
Approximately 23% of our executive team and approximately 33% of our U.S. leadership team (director level and above) are comprised of underrepresented minorities.
Our pay structures offer competitive salaries, bonuses, and equity awards in the countries where we operate. 9 Table of Contents In each of the countries where we have operations, our comprehensive benefit plans offer a locally competitive mix of some or all of the following: medical, dental and vision insurance, short and long-term disability, flexible spending accounts, various types of voluntary coverage, and other benefit programs.
In each of the countries where we have operations, our comprehensive benefit plans offer a locally competitive mix of some or all of the following: medical, dental and vision insurance, short and long-term disability, flexible spending accounts, various types of voluntary coverage, and other benefit programs.
Our values are intended to reflect and guide our behaviors and shape our culture. We endeavor for our values-driven culture to align us as we pursue our purpose, uphold our mission, live our values, advance toward our vision, and activate our strategy.
We endeavor for our values-driven culture to align us as we pursue our purpose, uphold our mission, live our values, advance toward our vision, and activate our strategy.
In partnership with McKinsey, we continued to offer leadership development opportunities through their Management Accelerator and Executive Leadership Program to 45 Asian, 42 Black and 37 LatinX employees.
In partnership with McKinsey, we continued to offer leadership development opportunities through their Management Accelerator and Executive Leadership Program to 24 Asian, 17 Black and 16 LatinX employees.
In fiscal year 2023, our ten largest customers accounted for approximately 34% of net sales. No customer accounted for greater than 10% of the Company's net sales in fiscal year 2023. Flex believes that growth in the contract manufacturing services industry will be driven by increased complexities in products, markets, and environmental, social, and governance ("ESG") requirements.
In fiscal year 2024, our ten largest customers accounted for approximately 37% of net sales. No customer accounted for greater than 10% of the Company's net sales in fiscal year 2024. Flex believes that growth in the contract manufacturing services industry will continue to be driven by increased complexities in products, markets, and sustainability requirements.
In 2022, we refreshed our leadership competencies to provide a common language and framework for our people leaders throughout the organization as it relates to leadership expectations, behaviors and skills necessary to lead the business and our people.
In 2023, we continued to drive awareness and education of our leadership competencies to provide a common language and framework for our people leaders throughout the organization as it relates to leadership expectations, behaviors and skills necessary to lead the business and our people.
This year, we continued our culture initiative to create common language, expectations and behaviors through rollouts of training on our Ways of Working to all sites globally. We supported our leaders globally through quarterly training and team discussions to continue to build an understanding of not only our Ways of Working but also important new leadership expectations and inclusion practices.
This year, we continued our culture initiative to create common language, expectations and behaviors through rollouts of training on our Ways of Working to all sites globally. We continued regular communications and supporting our leaders globally through quarterly training and team discussions to build an understanding of our Ways of Working, important leadership expectations and inclusion practices. Employees.
We provide manufacturing, customization, procurement, global logistics services and innovative supply chain solutions on a wide range of electronic components by utilizing the Flex global procurement and supply chain ecosystem to increase resiliency. COMPETITION The contract manufacturing services market is extremely competitive.
Through our component services, we provide manufacturing, customization, procurement, global logistics services and innovative supply chain solutions on a wide range of electronic components by utilizing the Flex global procurement and supply chain ecosystem to increase resiliency. Manufacturing Services .
We also continued SheLeads, our global leadership development program for women employees, offered leadership coaching and mentoring to over 100 gender and ethnically diverse leaders, and continued to implement on-demand inclusion training offerings.
We also continued SheLeads, 8 Table of Content s our global leadership development program for women employees, offered leadership coaching and peer-mentoring to 35 gender and ethnically diverse leaders, and continued to implement on-demand inclusion training offerings.
We have implemented appropriate policies and procedures (including both technological means and training programs for our employees) to identify and protect our intellectual property, as well as that of our customers and suppliers. As of March 31, 2023, and 2022, the carrying value of our intellectual property was not material.
We have implemented appropriate policies and procedures (including both technological means and training programs for our employees) to identify and protect our intellectual property, as well as that of our customers and suppliers.
As a consequence of these activities, our customers are sometimes requiring us to take responsibility for intellectual property to a greater extent than in our manufacturing and assembly businesses.
In addition, we provide design and engineering services to our customers and also design and make our own products. As a consequence of these activities, our customers are sometimes requiring us to take responsibility for intellectual property to a greater extent than in our manufacturing and assembly businesses.
Employees. As of March 31, 2023, our global workforce totaled approximately 172,000 employees including our contractor workforce. In certain international locations, our employees are represented by labor unions and by work councils. Region: Number of Employees Americas 69,755 Asia 68,454 Europe 33,899 Total 172,108 Well-being, Health, and Safety . Flex is committed to providing a safe and injury-free workplace.
As of March 31, 2024, our global workforce totaled approximately 148,000 employees including our contractor workforce. In certain international locations, our employees are represented by labor unions and by work councils. Region: Number of Employees Americas 58,251 Asia 60,091 Europe 29,773 Total 148,115 Well-being, Health, and Safety . Flex is committed to providing a safe and injury-free workplace.
In addition, the Company produced its first Task force on Climate-related Financial Disclosures (TCFD) report in 2022. 10 Table of Contents More detailed information can be found in the Flex annual sustainability report located at https://flex.com/company/our-sustainability.
In addition, the Company produced its first Task force on Climate-related Financial Disclosures (TCFD) report in 2022. More detailed information can be found in the Flex annual sustainability report located at https://flex.com/company/our-sustainability. The information in the sustainability report and on our sustainability webpage is not a part of this Annual Report on Form 10-K and is not incorporated by reference.
We support a wide range of product demand profiles, from low-volume, high-complexity programs, to high-volume production. Our systems assembly and manufacturing capabilities include enclosures, testing services, and materials procurement and inventory management. Power Solutions . We offer a full-service power supply business that provides a range of solutions from custom to highly scalable system solutions.
We support a wide range of product demand profiles, from low-volume, high-complexity programs, to high-volume production. Our manufacturing capabilities and systems assembly include enclosures, testing services, and materials procurement and inventory management. Post-production Services .
For Flex, customers come first, and we have a relentless focus on delivering distinctive products and services in a cost-effective manner with fast time to market. We are highly collaborative and leverage our global system and processes to operate with speed and responsiveness to provide customers a reliable and resilient supply chain and responsible manufacturing technology solutions and services.
We focus on delivering distinctive products and services in a cost-effective manner with fast time to market. We are highly collaborative and leverage our global system and processes to operate with speed and responsiveness to provide customers reliable and responsible solutions throughout the product lifecycle. Markets .
In 2022, we continued our progress on improving diversity, equity and inclusion through employee programs. Our employee resources groups ("ERGs") work to create a community that fosters belonging, builds cultural awareness, and develops a new generation of diverse leaders at Flex by establishing a sustainable structure with executive support that challenges bias and promotes unity.
Our employee resources groups ("ERGs") work to create a community that fosters belonging, build cultural awareness, and develop a new generation of diverse leaders at Flex by establishing a sustainable structure with executive support that challenges bias and promotes unity.
Our compensation philosophy is driven by the desire to attract and retain top talent, while ensuring that compensation aligns with our corporate financial objectives and the long-term interests of our shareholders.
Our compensation philosophy is driven by the desire to attract and retain top talent, while ensuring that compensation aligns with our corporate financial objectives and the long-term interests of our shareholders. Our pay structures offer competitive salaries, bonuses, and equity awards in the countries where we operate.
We also maintain trademark rights (including registrations) for our corporate name and several other trademarks and service marks that we use in our business in the United States and other countries throughout the world.
For certain of our proprietary processes, inventions, and works of authorship, we rely on trade secret or copyright protection. We also maintain trademark rights (including registrations) for our corporate name and several other trademarks and service marks that we use in our business in the United States and other countries throughout the world.
SUSTAINABILITY At Flex, our sustainability journey began in 2002 with the creation of the Flex Foundation. For 20 years, sustainability has been integrated into the fabric of our company, a key area of differentiation for Flex.
For more than 20 years, sustainability has been integrated into the fabric of our company, a key area of differentiation for Flex.
The information in the sustainability report and on our sustainability webpage is not a part of this Annual Report on Form 10-K and is not incorporated by reference.
The information in the sustainability report is not a part of this Annual Report on Form 10-K and is not incorporated by reference. 9 Table of Content s SUSTAINABILITY At Flex, our sustainability journey began in 2002 with the creation of the Flex Foundation.
Although we believe that our intellectual property assets and licenses are sufficient for the operation of our business as we currently conduct it, from time to time third parties assert patent infringement claims against us or our customers. In addition, we provide design and engineering services to our customers and also design and make our own products.
As of March 31, 2024, and 2023, the carrying value of our intellectual property was not material. 11 Table of Content s Although we believe that our intellectual property assets and licenses are sufficient for the operation of our business as we currently conduct it, from time to time third parties assert patent infringement claims against us or our customers.
Additional Human Capital Management Information . Additional information regarding human capital management will be included in our proxy statement filed in connection with our 2023 Annual General Meeting and our upcoming sustainability report. The information in the sustainability report is not a part of this Annual Report on Form 10-K and is not incorporated by reference.
Additional Human Capital Management Information . Additional information regarding human capital management will be included in our proxy statement filed in connection with our 2024 Annual General Meeting and our upcoming sustainability report.
STRATEGY Flex helps its customers responsibly design and build products that create value and improve people’s lives. We do this by providing our customers with product development lifecycle services, from innovation, design, and engineering, to manufacturing, supply chain solutions, component services, logistics, fulfillment and circular economy offerings.
We do this by providing our customers with full product lifecycle services, from design, engineering, supply chain, component services and manufacturing to forward logistics, value-added fulfillment, reverse logistics and circular economy offerings.
Our ERGs help to create a sense of community, and support retention and attraction. Each ERG has an executive sponsor and is supported by senior leaders across the Company.
With approximately 15,000 members, the Company maintains ERG chapters globally across seven identities: Asian and Pacific Islander, Black, LatinX, LGBTQ+, People with Disabilities, Women and Veterans. Our ERGs help to create a sense of community and support retention and attraction. Each ERG has an executive sponsor and is supported by senior leaders across the Company.
Our reverse logistics and repair solutions include returns management, exchange programs, complex repair, asset recovery, recycling and e-waste management. We provide repair expertise to multiple product lines such as consumer and midrange products, printers, smart phones, consumer medical devices, notebook personal computers, set-top boxes, game consoles and highly complex infrastructure products. Component Services.
Our post-sale services include returns management, spare parts logistics, asset recovery, repair, refurbishment, warranty services, recycling and e-waste management. We service multiple product lines such as consumer and midrange products, printers, smart phones, audio devices, consumer medical devices, notebook personal computers, floorcare products, and highly complex infrastructure products. Portfolio of Power Products .
As of March 31, 2023, Flex's three operating and reportable segments were as follows: • Flex Agility Solutions ("FAS"), which is comprised of the following end markets: ◦ Communications, Enterprise and Cloud ("CEC") , including data infrastructure, edge infrastructure and communications infrastructure ◦ Lifestyle , including appliances, consumer packaging, floorcare, micro mobility and audio ◦ Consumer Devices , including mobile and high velocity consumer devices. • Flex Reliability Solutions ("FRS"), which is comprised of the following end markets: ◦ Automotive , including next generation mobility, autonomous, connectivity, electrification, and smart technologies ◦ Health Solutions , including medical devices, medical equipment, and drug delivery ◦ Industrial , including capital equipment, industrial devices, and renewables and grid edge. • Nextracker, the leading provider of intelligent, integrated solar tracker and software solutions that are used in utility-scale and ground-mounted distributed generation solar projects around the world.
("Nextracker"), formerly our subsidiary and Nextracker segment, in the fourth quarter of fiscal year 2024, Flex now reports its financial performance based on two operating and reportable segments as follows: • Flex Agility Solutions ("FAS"), which is comprised of the following end markets: ◦ Communications, Enterprise and Cloud ("CEC") , including data infrastructure, edge infrastructure and communications infrastructure ◦ Lifestyle , including appliances, consumer packaging, floorcare, micro mobility and audio ◦ Consumer Devices , including mobile and high velocity consumer devices. • Flex Reliability Solutions ("FRS"), which is comprised of the following end markets: ◦ Automotive , including next generation mobility, autonomous, connectivity, electrification, and smart technologies ◦ Health Solutions , including medical devices, medical equipment, and drug delivery ◦ Industrial , including capital equipment, industrial devices, embedded and critical power offerings, and renewables and grid edge.
By delivering value-added fulfillment, logistics, repair, refurbishment, recycling services and circular economy solutions, Flex Global Services and Solutions empowers customers to find the optimal route to market, deliver a seamless customer experience and build a sustainable, scalable competitive advantage. Our customers are enabled to maximize operational resiliency thanks to the breadth of our global scale, strategic insights and extensive visibility.
Through forward logistics and value-added fulfillment, including warehousing and vendor managed inventory, omni-channel fulfillment, kitting, configuration and postponement, Flex empowers customers to find the optimal route to market and deliver a seamless customer experience. Our customers are enabled to maximize operational resiliency thanks to the breadth of our global scale, strategic insights and extensive visibility.
We believe we have the broadest worldwide product development lifecycle solutions in the industry, from concept design to manufacturing to aftermarket and end of life services.
We believe we have the broadest product lifecycle capabilities within every major region in the industry, from concept design to sourcing to manufacturing to delivery and servicing through end-of-life.
Nextracker provides solar tracker technologies that optimize and increase energy production while reducing costs for significant plant return on investment. Our customers include many of the world's leading technology, healthcare, automotive, and industrial companies. We are focused on establishing long-term relationships with our customers and have been successful in expanding relationships to incorporate additional product lines and services.
The FRS segment is optimized for longer product lifecycles requiring complex ramps with specialized production models and critical environments. Our customers include many of the world's leading technology, healthcare, automotive, and industrial companies. We are focused on establishing long-term relationships with our customers and have been successful in expanding relationships to incorporate additional product lines and services.
In calendar year 2022, the Flex Foundation partnered with several organizations, including the American Red Cross, Amity Foundation, and the Hispanic Foundation of Silicon Valley, among others, and provided nearly $771 thousand in grant support to 38 local projects in 16 countries, four regional projects to support well-known organizations, including Give2Asia and Save the Children, and several NGOs that support minorities and the environment, globally.
In calendar year 2023, the Flex Foundation partnered with several organizations, including the American Red Cross, Dress for Success, United Way of Chennai, WWF Romania, Silicon Valley Education Foundation, among others, and provided more than $1.4 million in grant support to 57 local projects in 14 countries, 10 disaster relief projects to support well-known organizations, including Give2Asia and Save the Children, and several NGOs that support minorities and the environment, globally.
Flex’s strategy is to continue investing in areas where we can differentiate and add value, whether through engineering and design services, product technologies or developing differentiated processes and business methods. We are strengthening our abilities in software, robotics, artificial intelligence, factory automation, simulation, digital twins, and other disruptive technologies.
Flex’s strategy is to continue investing in areas where we can differentiate and add value, whether through product lifecycle capabilities, manufacturing and product technologies or developing differentiated processes and business methods.
Diversity, equity and inclusion are key priorities and strengths at Flex and are embedded in the fabric of our culture. Our commitment to diversity is exemplified by the composition of our Board of which three of eleven directors are female and three of eleven directors are ethnically diverse.
Our commitment to diversity is exemplified by the composition of our Board of which three of ten directors are female and three of ten directors are ethnically diverse. In 2023, we continued our progress on improving diversity, equity and inclusion through employee programs.
Our U.S. corporate headquarters is located at 12455 Research Boulevard, Austin, TX 78759.
Our headquarters and principle executive offices are located at 12455 Research Boulevard, Austin, TX 78759.
Increasingly, customers are exploring transitioning to regional-based supply chains to enhance resiliency, take advantage of time to market and specific customization required to win in those markets. Our global expertise, footprint and diverse supply chain network provide customers with the ability to quickly adjust to changing regional, trade and manufacturing dynamics.
Our global expertise, footprint and diverse supply chain network provide customers with the ability to quickly adjust to changing regional, trade and manufacturing dynamics.
Flex continues to monitor developments related to product environmental compliance and is working with our customers and other technical organizations to anticipate and minimize impacts to our operations. 11 Table of Contents Refer to the discussion in "Risk Factors" for further details of the legal and regulatory initiatives related to environmental matters including climate change that could adversely affect our business, results of operations and financial condition.
Refer to the discussion in "Risk Factors" for further details of the legal and regulatory initiatives related to environmental matters including climate change that could adversely affect our business, results of operations and financial condition. INTELLECTUAL PROPERTY We own or license various United States and foreign patents relating to a variety of technologies.
No customer accounts for more than 10% of our annual revenue and the ten largest accounted for 34% of the Company’s net sales in fiscal year 2023. We believe we are well-positioned to grow faster than the industry average. Cross-Industry Synergies .
No customer accounts for more than 10% of our annual revenue and the ten largest accounted for 37% of our net sales in fiscal year 2024. Cross-Industry Synergies. One of our competitive strengths is our ability to leverage technology from one industry and apply it to a different application within another industry.
Through the collective strength of a global workforce across approximately 30 countries with responsible, sustainable operations, Flex supports the entire product lifecycle with advanced manufacturing solutions and operates one of the most trusted global supply chains.
Through the collective strength of a global workforce across approximately 30 countries with responsible, sustainable operations, Flex supports our customers' entire product lifecycle with a broad array of services in every major region. The Company's full suite of specialized capabilities includes design and engineering, supply chain, manufacturing, post-production and post-sale services.
These innovation hubs offer customers geographically-focused centers of design services, help customers de-risk technologies, develop products from concept to volume production and go to market in a rapid, cost effective and low risk manner.
Flex provides differentiated offerings and specialized capabilities in emerging technologies from edge AI and connectivity to sensors integration for specific industries and markets. The Company’s design and engineering services help customers de-risk technology adoption, develop products from concept to volume production and go to market in a rapid, cost effective and low risk manner.
These complexities are making it harder for companies to manage their own supply chains and manufacturing operations. They are looking for trusted partners to help them navigate this complex environment. We believe that only a few outsourcing providers have the right capabilities and scale to meet these challenges effectively and profitably. Flex is one of these partners.
Businesses are being held to a much higher standard for how and where their products are sourced and produced, and, increasingly, how they are serviced and disposed. These complexities are making it harder for companies to manage their own supply chains, manufacturing operations and products. They are looking for trusted partners to help them navigate this complex environment.
We have developed self-contained industrial parks that co-locate manufacturing and logistics operations with our suppliers in various cost-efficient locations. These sites enhance supply chain management efficiency, while providing multi-technology solution value for customers. Innovative and Reliable Tracker Solutions.
Industrial Parks; Cost-Efficient Manufacturing Services. We have developed self-contained industrial parks that co-locate manufacturing and logistics operations with our suppliers in various cost-efficient locations. We offer a range of manufacturing services and capabilities in close proximity to vertically integrate the manufacturing process and offer additional value to our customers.
The Flex company, Anord Mardix, offers an extensive product portfolio of critical power solutions including switchgear, busway, power distribution and modular power systems, along with monitoring solutions and services. This portfolio combined with our embedded power, server and storage products, racks and enclosures and full systems assembly capability provides the opportunity for growth in the data center market.
Our embedded and critical power offerings enable greater efficiency, reduced latency, space and risk, and faster time to market. Our power portfolio combined with our server and storage products, racks and enclosures and full systems assembly capability provides the opportunity for growth in the data center market. COMPETITION The contract manufacturing services market is extremely competitive.
We have a focused strategy on delivering value to customers through manufacturing technology, a trusted supply chain, a broad array of services, and domain expertise. Global Scale and Regional Strength . We believe our global scale and regional capabilities are a significant competitive advantage, as customers increasingly require a broad range of manufacturing and supply chain services and solutions globally.
We believe our global scale and regional capabilities are a significant competitive advantage, as customers increasingly require a broad range of product lifecycle services globally. Increasingly, customers are evaluating regional-based supply chains to enhance resiliency and to take advantage of time to market and specific customization required to win in those markets.
Companies are rethinking their entire production strategies. We are seeing a global rebalancing in sourcing and producing to maximize resiliency and decrease time to market. Sustainability is no longer an afterthought. Businesses are being held to a much higher standard for how and where their products are sourced and produced, and, increasingly, how they are disposed.
Additionally, rising global uncertainty over the past few years including trade and tariff issues, increasing geopolitical unrest, and severe labor shortages are creating further complexity. Companies are rethinking their entire production strategies. We are seeing a global rebalancing in sourcing and production locations to maximize resiliency and decrease time to market. Sustainability is no longer an afterthought.
During calendar year 2022, we received several awards and accolades for our sustainability program and efforts including Manufacturing Leadership Awards and Business Intelligence Group's Sustainability Initiative of the Year. In addition, we received Cisco's Excellence in Sustainability Award for distinguishing ourselves as visionaries and collaborators in the social and environmental space.
During calendar year 2023, we received several awards and accolades for our sustainability program and efforts from the Manufacturing Leadership Council and from the Sustainability Environmental Achievement and Leadership (SEAL) Award in the Sustainable Service category. In addition, Environment & Energy Leader Awards recognized the Flex Supplier Greenhouse Gas Emissions Reduction Program as a Top Project of the Year.
We continuously monitored site risks and calibrated practices and protocols accordingly such as personal protective equipment, sanitization measures, temperature checks, and 8 Table of Contents social distancing. These measures enabled us to continue to conduct operations throughout the pandemic and have been recognized by several governments as a role model for employee safety. Diversity, Equity and Inclusion .
This regional and local risk-based approach enabled us to continue to conduct operations throughout the pandemic and has been recognized by several governments as a role model for employee safety. Diversity, Equity and Inclusion . Diversity, equity and inclusion are key priorities and strengths at Flex and are embedded in the fabric of our culture.

… 35 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

117 edited+59 added−27 removed156 unchanged
Biggest changeSuch factors include but are not limited to: • Weak global economic conditions, including inflationary pressures, currency volatility, slower growth or recession, higher interest rates, geopolitical uncertainty (including the ongoing conflict between Russia and Ukraine) and instability in financial markets may adversely affect our business, results of operations, financial condition, and access to capital markets. • We depend on industries that continually produce technologically advanced products with short product lifecycles and our business would be adversely affected if our customers' products are not successful or if our customers lose market share. • Our customers may cancel their orders, change production quantities or locations, or delay production, and our current and potential customers may decide to manufacture some or all of their products internally, which could harm our business. • Our industry is extremely competitive; if we are not able to continue to provide competitive products and services, we may lose business. • A significant percentage of our sales comes from a small number of customers and a decline in sales to any of these customers could adversely affect our business. 12 Table of Contents • We have been and continue to be adversely affected by supply chain issues, including shortages of required electronic components, fluctuations in the pricing or availability of raw materials, and logistical constraints. • We conduct operations in a number of countries and are subject to the risks inherent in international operations. • Our components business is dependent on our ability to quickly launch world-class component products, and our investment in the development of our component capabilities, together with the start-up and integration costs necessary to achieve quick launches of world-class component products, has in the past, and may in the future, adversely affect our margins and profitability. • Our exposure to financially troubled customers or suppliers may adversely affect our financial results. • Our margins and profitability have in the past been, and may in the future be, adversely affected due to substantial investments, start-up and production ramp costs in our design services. • If we do not effectively manage changes in our operations, our business may be harmed; we have taken substantial restructuring charges in the past and we may need to take material restructuring charges in the future. • A breach of our IT or physical security systems, or violation of data privacy laws, may cause us to incur significant legal and financial exposure and disrupt our operations. • We are subject to the risk of increased income taxes. • We are subject to risks relating to litigation and regulatory investigations and proceedings, which may have a material adverse effect on our business. • We are subject to risks associated with changes in laws, regulations or policies that may adversely impact our business, including environmental protection laws and regulations, including those related to climate change. • Our strategic relationships with major customers create risks. • We may not achieve some or all of the intended or anticipated benefits of Nextracker being a separate, publicly-traded company, which could negatively impact our business, financial condition and results of operations. • The success of certain of our activities depends on our ability to protect our intellectual property rights; claims of infringement or misuse of intellectual property and/or breach of license agreement provisions against our customers or us could harm our business. • We may not meet regulatory quality standards applicable to our manufacturing and quality processes for medical devices, which could have an adverse effect on our business, financial condition or results of operations. • We are subject to physical and operational risks from natural disasters, severe weather events, and climate change. • If our products or components contain defects, demand for our services may decline, our reputation may be damaged, and we may be exposed to product liability and product warranty liability. • The COVID-19 pandemic has had, and may in the future again have, a material adverse effect on our business, results of operations and financial condition.
Biggest changeIn addition, our customers may decide to manufacture their products internally, which could harm our business. • We conduct operations in a number of countries and are subject to the risks inherent in international operations. • Our components business is dependent on our ability to quickly launch world-class component products, and our investment in the development of our component capabilities, together with start-up and integration costs, has in the past adversely affected, and may in the future adversely affect, our margins and profitability. • Our exposure to financially troubled customers or suppliers has in the past adversely affected, and may in the future adversely affect, our financial results. • Our margins and profitability have in the past been, and may in the future be, adversely affected due to substantial investments, start-up and production ramp costs in our design and engineering services. • If we do not effectively manage changes in our operations, our business may be harmed; we have taken substantial restructuring charges in the past and we may need to take material restructuring charges in the future. • A breach of our IT or physical security systems, or violation of data privacy laws, may cause us to incur significant legal and financial exposure and adversely affect our operations. • We may not achieve some or all of the intended or anticipated benefits of the separation of Nextracker, which could negatively impact our business, financial condition and results of operations. • If the Nextracker Spin-off fails to qualify for tax-free treatment, we, our subsidiaries and our former shareholders could incur significant tax liabilities. • In connection with the separation of Nextracker, Nextracker has agreed to retain and indemnify us for certain liabilities.
Business and Operational Risks Our customers may cancel their orders, change production quantities or locations, or delay production, any of which could harm our business; the short-term nature of our customers’ commitments and rapid changes in demand have in the past caused, and may in the future, cause supply chain and other issues which could adversely affect our operating results.
Business and Operational Risks Our customers have in the past and may in the future cancel their orders, change production quantities or locations, or delay production, any of which could harm our business; the short-term nature of our customers’ commitments and rapid changes in demand have in the past caused, and may in the future cause, supply chain and other issues which could adversely affect our operating results.
Our margins and profitability have in the past been, and may in the future be, adversely affected due to substantial investments, start-up and production ramp costs in our design services. As part of our strategy to enhance our end-to-end service offerings, we continue to expand our design and engineering capabilities.
Our margins and profitability have in the past been, and may in the future be, adversely affected due to substantial investments, start-up and production ramp costs in our design and engineering services. As part of our strategy to enhance our end-to-end service offerings, we continue to expand our design and engineering capabilities.
The costs of investing in the resources necessary to expand our design and engineering capabilities, and in particular to support our design services offerings, have historically adversely affected our profitability, and may continue to do so as we continue to make investments to grow these capabilities.
The costs of investing in the resources necessary to expand our design and engineering capabilities, and in particular to support our design and engineering services offerings, have historically adversely affected our profitability, and may continue to do so as we continue to make investments to grow these capabilities.
They may attempt to gain access to our networks, data centers or cloud resources - including those managed by third parties - or those of our customers, vendors or end users; steal proprietary information related to our business, products, employees, and customers; or interrupt our systems, operations or services or those of our customers or others.
They may attempt to gain access to our networks, data centers or cloud resources - including those managed by third parties - or those of our customers, vendors or end users; steal proprietary information related to our business, products, employees, and customers; or interrupt our systems, operations or services or those of our customers, vendors or others.
We are subject to extensive and changing federal, state, local and international environmental, health and safety laws and regulations, concerning, among other things, the health and safety of our employees, the generation, use, storage, transportation, discharge and disposal of certain materials (including chemicals and hazardous substances) used in or derived from our manufacturing processes.
We are subject to extensive and changing federal, state, local and international environmental, health and safety laws and regulations, concerning, among other things, the health and safety of our employees, and the generation, use, storage, transportation, discharge and disposal of certain materials (including chemicals and hazardous substances) used in or derived from our manufacturing processes.
Enforcement activity relating to these laws, particularly outside of the United States, can increase as a result of increased media attention due to violations by other companies, changes in law, political and other factors.
Enforcement activity relating to these laws, particularly outside of the United States, can increase as a result of increased media attention due to violations by other companies, changes in law, and political and other factors.
Providing these services can expose us to different or greater potential risks than those we face when providing our manufacturing services. Although we enter into contracts with our design services customers, we often design and develop products for these customers prior to receiving a purchase order or other firm commitment from them.
Providing these services can expose us to different or greater potential risks than those we face when providing our manufacturing services. Although we enter into contracts with our design and engineering services customers, we often design and develop products for these customers prior to receiving a purchase order or other firm commitment from them.
Even if we are successful in designing manufacturable products and our customers accept our designs, if our customers do not then purchase anticipated levels of products, we may not realize any profits. Our design activities often require that we purchase inventory for initial production runs before we have a purchase commitment from a customer.
Even if we are successful in designing manufacturable products and our customers accept our designs, if our customers do not then purchase anticipated levels of products, we may not realize any profits. Our design and engineering activities often require that we purchase inventory for initial production runs before we have a purchase commitment from a customer.
We may be required to take additional charges in the future to align our operations and cost structures with global economic conditions, market demands, cost competitiveness, and our geographic footprint as it relates to our customers' production requirements. We may consolidate certain manufacturing facilities or transfer certain of our operations to other geographies.
We may be required to take additional charges in the future to align our operations and cost structures with global economic conditions, market demands, cost competitiveness, and our geographic footprint as it relates to our customers' production requirements. We may consolidate or divest certain manufacturing facilities or transfer certain of our operations to other geographies.
Our design services offerings require significant investments in research and development, technology licensing, test and tooling equipment, patent applications, facility building and expansion, and recruitment. We may not be able to achieve a high enough level of sales for this business to be profitable.
Our design and engineering services offerings require significant investments in research and development, technology licensing, test and tooling equipment, patent applications, facility building and expansion, and recruitment. We may not be able to achieve a high enough level of sales for this business to be profitable.
If our products or components contain defects, demand for our services may decline, our reputation may be damaged, and we may be exposed to product liability and product warranty liability. Our customers' products and the manufacturing processes and design services that we use to produce them often are highly complex.
If our products or components contain defects, demand for our services may decline, our reputation may be damaged, and we may be exposed to product liability and product warranty liability. Our customers’ products and the manufacturing processes and design and engineering services that we use to produce them often are highly complex.
We are subject to, and at times have suffered from, breach or attempted breach of our security systems which have in the past and may in the future result in unauthorized access to our facilities and/or unauthorized acquisition, use or theft of the inventory or information we are trying to protect.
We are subject to, and at times have suffered from, breach or attempted breach of our security systems which have in the past and may in the future result in unauthorized access to our facilities and/or unauthorized acquisition, use or theft of the assets, inventory or information we are trying to protect.
These arrangements entered into with divesting customers typically involve many risks, including the following: • we may need to pay a purchase price to the divesting customers that exceeds the value we ultimately may realize from the future business of the customer; • the integration of the acquired assets and facilities into our business may be time-consuming and costly, including the incurrence of restructuring charges; • we, rather than the divesting customer, bear the risk of excess capacity at the facility; 17 Table of Contents • we may not achieve anticipated cost reductions and efficiencies at the facility; • we may be unable to meet the expectations of the customer as to volume, product quality, timeliness and cost reductions; • our supply agreements with the customers generally do not require any minimum volumes of purchase by the customers, and the actual volume of purchases may be less than anticipated; and • if demand for the customers' products declines, the customer may reduce its volume of purchases, and we may not be able to sufficiently reduce the expenses of operating the facility or use the facility to provide services to other customers.
These arrangements entered into with divesting customers typically involve many risks, including the following: • we may need to pay a purchase price to the divesting customers that exceeds the value we ultimately may realize from the future business of the customer; • the integration of the acquired assets and facilities into our business may be time-consuming and costly, including the incurrence of restructuring charges; • we, rather than the divesting customer, bear the risk of excess capacity at the facility; • we may not achieve anticipated cost reductions and efficiencies at the facility; • we may be unable to meet the expectations of the customer as to volume, product quality, timeliness and cost reductions; • our supply agreements with the customers generally do not require any minimum volumes of purchase by the customers, and the actual volume of purchases may be less than anticipated; and • if demand for the customers’ products declines, the customer may reduce its volume of purchases, and we may not be able to sufficiently reduce the expenses of operating the facility or use the facility to provide services to other customers.
Global Compact, voluntary initiatives for businesses to develop, implement and disclose sustainability policies and practices. These ESG practices, policies, provisions and initiatives are subject to change, can be unpredictable, and may be difficult and expensive for us to comply with.
Global Compact, voluntary initiatives for businesses to develop, implement and disclose sustainability policies and practices. These sustainability practices, policies, provisions and initiatives are subject to change, can be unpredictable, and may be difficult and expensive for us to comply with.
Failure to comply with domestic or international employment and related laws could result in the payment of significant damages, which would reduce our net income. We are subject to a variety of domestic and foreign employment laws, including those related to safety, wages and overtime, discrimination, whistle-blowing, classification of employees and severance payments.
Failure to comply with domestic or international employment and related laws could result in the payment of significant damages, which would reduce our net income. We are subject to a variety of domestic and foreign employment laws, including those related to safety, wages and overtime, discrimination, whistle-blowing, classification of employees and independent contractors, and severance payments.
Additionally, we could be required to alter our manufacturing and operations and incur substantial expense in order to comply with environmental regulations. Our failure to comply with environmental laws and regulations or adequately address contaminated sites could limit our ability to expand our facilities or could require us to incur significant expenses, which would harm our business.
Additionally, we could be required to alter our manufacturing and operations and incur substantial expense in order to comply with environmental regulations. Our failure to comply with environmental laws and regulations or adequately address contaminated sites could limit our ability to expand our facilities or could require us to incur significant expenses, which would harm our business. ITEM 1B.
If our ESG initiatives fail to satisfy investors, current or potential customers, consumers and our other stakeholders, our reputation, our ability to manufacture and sell products and services, our ability to attract or retain employees, and our attractiveness as an investment, business partner or acquirer could be negatively impacted.
If our sustainability initiatives fail to satisfy investors, current or potential customers, consumers and our other stakeholders, our reputation, our ability to manufacture and sell products and services, our ability to attract or retain employees, and our attractiveness as an investment, business partner or acquirer could be negatively impacted.
Also of note is China's Management Methods for Controlling Pollution Caused by Electronic Information Products regulation, commonly referred to as "China RoHS", which restricts the importation into and production within China of electrical equipment containing certain hazardous materials. Similar legislation has been or may be enacted in other jurisdictions, including in the United States.
Also of note is China’s Management Methods for Controlling Pollution Caused by Electronic Information Products regulation, commonly referred to as “China RoHS”, which restricts the importation into and production within China of electrical equipment containing certain hazardous materials. Similar legislation has been or may be enacted in other jurisdictions, including in the United States.
This increased focus on sustainability including ESG is present in our industry. This attention has resulted in a variety of required and voluntary reporting regimes that are not harmonized and continue to change.
This increased focus on sustainability is present in our industry. This attention has resulted in a variety of required and voluntary reporting regimes that are not harmonized and continue to change.
Failure to meet environmental, social and governance (ESG) expectations or standards, or to achieve our ESG goals, may have an adverse impact on our business, impose additional costs on us, and expose us to additional risks.
Failure to meet sustainability, including environmental, social and governance (ESG) expectations or standards, or to achieve our sustainability goals, may have an adverse impact on our business, impose additional costs on us, and expose us to additional risks.
In addition, new technical classifications of e-Waste were recently adopted in June 2022 by the Basel Convention regarding electronics repair and refurbishment which become effective January 1, 2025.
In addition, technical classifications of e-Waste were adopted in June 2022 by the Basel Convention regarding electronics repair and refurbishment which become effective January 1, 2025.
We have established sustainability and ESG programs aligned with sound ESG principles and have established and publicly announced certain goals, commitments, and targets, which we may refine in the future. These programs, goals, commitments and targets reflect our current initiatives, plans and aspirations, and are not guarantees that we will be able to achieve them.
We have established sustainability programs and practices aligned with sound principles and have established and publicly announced our strategy, certain goals, commitments, and targets, which we may refine in the future. These programs, goals, commitments and targets reflect our current initiatives, plans and aspirations, and are not guarantees that we will be able to achieve them.
In addition, we often agree to certain product price limitations and cost reduction targets in connection with these services. Inflationary and other increases in the costs of the raw materials and labor required to produce the products have occurred and 15 Table of Contents may recur from time to time.
In addition, we often agree to certain product price limitations and cost reduction targets in connection with these services. Inflationary and other increases in the costs of the raw materials and labor required to produce the products have occurred and may recur from time to time.
We are subject to taxes in numerous jurisdictions. Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory rates and changes in tax laws or their interpretation including changes related to tax holidays or tax incentives.
We are subject to the risk of increased income taxes. We are subject to taxes in numerous jurisdictions. Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory rates and changes in tax laws or their interpretation including changes related to tax holidays or tax incentives.
Rising interest rates could have a dampening effect on overall economic activity and/or the financial condition of our customers, either or both of which could negatively affect customer demand for our products and our customers’ ability to repay obligations to us.
Rising interest rates could have a dampening effect on overall economic activity and/or the financial condition of our customers, either or both of which could negatively affect customer demand for our manufacturing services and our customers’ ability to repay obligations to us.
We retain certain intellectual property rights to some of the technologies that we develop as part of our engineering, design, and manufacturing services and components offerings. The measures we have taken to prevent unauthorized use of our 27 Table of Contents technology may not be successful.
We retain certain intellectual property rights to some of the technologies that we develop as part of our engineering, design, and manufacturing services and components offerings. The measures we have taken to prevent unauthorized use of our technology may not be successful.
In the U.S., various proposals to raise corporate income taxes are under active consideration. On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted into law by the U.S. government, which includes a new corporate minimum tax, a stock repurchase excise tax, numerous green energy credits, and other tax provisions.
In the U.S., various proposals to raise corporate income taxes are under active consideration. On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the “IRA”), which includes a new corporate minimum tax, a stock repurchase excise tax, numerous green energy credits, and other tax provisions.
We are also required to comply with an increasing number of global and local product environmental compliance regulations focused on the restriction of certain hazardous substances. We are subject to the EU directives, including the Restrictions of Hazardous Substances in Electrical and Electrical Equipment ("RoHS"), the Waste Electrical and Electronic Equipment Directive ("WEEE") as well as the EU's REACH regulation.
We are also required to comply with an increasing number of global and local product environmental compliance regulations focused on the restriction of certain hazardous substances. We are subject to the EU directives, including the Restrictions of Hazardous Substances in Electrical and Electrical Equipment (“RoHS”), the Waste Electrical and Electronic Equipment Directive (“WEEE”) as well as the EU’s REACH regulation.
For example, governments around the world have enacted or are contemplating legislation and regulations that may impact how we conduct and/or report on our business by requiring the disclosure and tracking of certain GHG emissions and other climate and biodiversity information, and/or cyber security or human capital matters related to our business.
In addition, governments around the world have enacted or are contemplating legislation and regulations that may impact how we conduct and/or report on our business by requiring the disclosure and tracking of certain GHG emissions and other climate and biodiversity information, and/or cyber security or human capital matters related to our business.
Volatility in the functional and non-functional currencies of our entities and the United States dollar could seriously harm our business, operating results and financial condition. Legal and Regulatory Risks We are subject to risks relating to litigation and regulatory investigations and proceedings, which may have a material adverse effect on our business.
Volatility in the functional and non-functional currencies of our entities and the United States dollar could seriously harm our business, operating results and financial condition. 27 Table of Content s Legal and Regulatory Risks We are subject to risks relating to litigation and regulatory investigations and proceedings, which may have a material adverse effect on our business.
Any assessment of the potential impact of 30 Table of Contents future climate change legislation, regulations or industry standards, as well as any international treaties and accords, is uncertain given the scope of potential regulatory change in the countries in which we operate.
Any assessment of the potential impact of future climate change legislation, regulations or industry standards, as well as any international treaties and accords, is uncertain given the scope of potential regulatory change in the countries in which we operate.
Our exposure to financially troubled customers or suppliers may adversely affect our financial results. We provide manufacturing services to companies and industries that have in the past, and may in the future, experience financial difficulty.
Financial Risks Our exposure to financially troubled customers or suppliers has in the past adversely affected, and may in the future adversely affect, our financial results. We provide manufacturing services to companies and industries that have in the past, and may in the future, experience financial difficulty.
Stock price fluctuations could impact the value of our equity compensation, which could affect our ability to recruit and retain employees. Changes in our credit rating may make it more expensive for us to raise additional capital or to borrow additional funds. We are also exposed to interest rate fluctuations on our outstanding borrowings and investments.
Stock price fluctuations could impact the value of our equity compensation, which could affect our ability to recruit and retain employees. 23 Table of Content s Changes in our credit rating may make it more expensive for us to raise additional capital or to borrow additional funds. We are also exposed to interest rate fluctuations on our borrowings and investments.
Responding to such actions could be costly and time-consuming, may not align 29 Table of Contents with our business strategies and could divert the attention of our Board of Directors and senior management from the pursuit of our business strategies.
Responding to such actions could be costly and time-consuming, may not align with our business strategies and could divert the attention of our Board of Directors and senior management from the pursuit of our business strategies.
Such adverse effects have in the past included and could in the future include one or more of the following: an increase in our provision for 21 Table of Contents doubtful accounts, a charge for inventory write-offs, a reduction in revenue, and an increase in our working capital requirements due to higher inventory levels and increases in days our accounts receivables are outstanding.
Such adverse 22 Table of Content s effects have in the past included and could in the future include one or more of the following: an increase in our provision for doubtful accounts, a charge for inventory write-offs, a reduction in revenue, and an increase in our working capital requirements due to higher inventory levels and increases in days our accounts receivables are outstanding.
Food and Drug Administration ("FDA") and are subject to periodic inspection by the FDA for compliance with the FDA's Quality System Regulation ("QSR") requirements, which require manufacturers of medical devices to adhere to certain regulations, including testing, quality control and documentation procedures.
Food and Drug Administration ("FDA") and are subject to periodic inspection by the FDA for compliance with the FDA's Quality System Regulation ("QSR") requirements, which require manufacturers of medical devices to adhere to certain 29 Table of Content s regulations, including testing, quality control and documentation procedures.
Moreover, we could be subject to reputational harm if any of our customers, former customers or vendors were 25 Table of Contents subject to U.S. sanctions or if our customers,former customers or vendors did business with sanctioned countries.
Moreover, we could be subject to reputational harm if any of our customers, former customers or vendors were subject to U.S. sanctions or if our customers, former customers or vendors did business with sanctioned countries.
In addition, some of the products we design and develop must satisfy safety and regulatory standards and some must receive government certifications. If we fail to obtain these approvals or certifications on a timely basis, we would be unable to sell these products, which would harm our sales, profitability and reputation.
In addition, some of the products we design and develop, including in the automotive and health solutions industries, must satisfy safety and regulatory standards and some must receive government certifications. If we fail to obtain these approvals or certifications on a timely basis, we would be unable to sell these products, which would harm our sales, profitability and reputation.
A breach of our IT or physical security systems, or violation of data privacy laws, may cause us to incur significant legal and financial exposure.
A breach of our IT or physical security systems, or violation of data privacy laws, may cause us to incur significant legal and financial exposure and adversely affect our operations.
The expansion of our business, as well as business contractions and other changes in our customers' requirements, including as a result of COVID-19, have in the past, and may in the future, require that we adjust our business and cost structures by incurring restructuring charges. Restructuring activities involve reductions in our workforce at some locations and closure of certain facilities.
The expansion of our business, as well as business contractions and other changes in our customers' requirements, have in the past, and may in the future, require that we adjust our business and cost structures by incurring restructuring charges. Restructuring activities involve reductions in our workforce at some locations and closure of certain facilities.
Furthermore, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation. Any of the foregoing could result in a material adverse effect on our business, results of operations and financial condition. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Furthermore, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation. Any of the foregoing could result in a material adverse effect on our business, results of operations and financial condition.
Because our manufacturing operations are located in a number of countries throughout the Americas, Asia and Europe, we are subject to risks of changes in economic, social and political conditions in those countries, including: • fluctuations in the value of local currencies; • labor unrest, difficulties in staffing and geographic labor shortages; • longer payment cycles; • cultural differences; • increases in duties, tariffs, and taxation levied on our products including anti-dumping and countervailing duties; • trade restrictions including limitations on imports or exports of components or assembled products, unilaterally or bilaterally; • trade sanctions and related regulatory enforcement actions and other proceedings; • potential trade wars; • increased scrutiny by the media and other third parties of labor practices within our industry (including but not limited to forced labor and adverse working conditions) which may result in allegations of violations, more stringent and burdensome labor laws and regulations and inconsistency in the enforcement and interpretation of such laws and regulations, higher labor costs, increased risk of cross-border cargo being detained or seized and/or loss of revenues if our customers become dissatisfied with our labor practices and diminish or terminate their relationship with us; • inflationary pressures, such as those the market is currently experiencing, which may increase costs for materials, supplies, and services; • imposition of restrictions on currency conversion or the transfer of funds; • environmental protection laws and regulations, including those related to climate change; • expropriation of private enterprises; • ineffective legal protection of our intellectual property rights in certain countries; • natural disasters; • exposure to infectious disease, epidemics and pandemics, including the effects of the COVID-19 pandemic, on our business operations in geographic locations impacted by the outbreak and on the business operations of our customers and suppliers; • inability of international customers and suppliers to obtain financing resulting from tightening of credit in international financial markets; • ongoing global supply chain disruptions, slowing the ability of our facilities to import necessary materials and export our products; • political unrest; and • a potential reversal of current favorable policies encouraging foreign investment or foreign trade by our host countries.
Because our manufacturing operations are located in a number of countries throughout the Americas, Asia and Europe, we are subject to risks of changes in economic, social and political conditions in those countries, including: • fluctuations in the value of local currencies; • labor unrest, including labor strikes, difficulties in staffing and geographic labor shortages; • longer payment cycles; • cultural differences; • increases in duties, tariffs, and taxation levied on our products including anti-dumping and countervailing duties; • trade restrictions including limitations on imports or exports of components or assembled products, unilaterally or bilaterally; • trade sanctions and related regulatory enforcement actions and other proceedings; • potential trade wars; • increased scrutiny by the media and other third parties of labor practices within our industry (including but not limited to forced labor and adverse working conditions) which may result in allegations of violations, more stringent and burdensome labor laws and regulations and inconsistency in the enforcement and interpretation of such laws and regulations, higher labor costs, and/or loss of revenues if our customers become dissatisfied with our labor practices and diminish or terminate their relationship with us; • inflationary pressures, such as those the market is currently experiencing, which may increase costs for materials, supplies, and services; • imposition of restrictions on currency conversion or the transfer of funds; • environmental protection laws and regulations, including those related to climate change; • expropriation of private enterprises; • ineffective legal protection of our intellectual property rights in certain countries; • natural disasters; • exposure to infectious disease, epidemics and pandemics on our business operations in geographic locations impacted by the outbreak and on the business operations of our customers and suppliers; • inability of international customers and suppliers to obtain financing resulting from tightening of credit in international financial markets; 26 Table of Content s • ongoing global supply chain disruptions, including disruptions in international commerce as a result of attacks on shipping vessels in the Red Sea, which have slowed the ability of our facilities to import necessary materials and export our products and adversely affected our business; • political unrest; and • a potential reversal of current favorable policies encouraging foreign investment or foreign trade by our host countries.
Any violation or alleged violation by us of these laws or regulations could subject us to significant costs, fines or other penalties, the suspension of production, or prohibitions on sales of products we manufacture.
Any violation or alleged violation by us of these laws or regulations could subject us to significant costs, fines or other penalties, the suspension of production, or prohibitions on sales of products 31 Table of Content s we manufacture.
In addition, an increasing number of investors have adopted, or may adopt, ESG policies with which they expect their portfolio companies to comply. We currently align our sustainability program with the standards set forth by various voluntary sustainability initiatives and organizations, and we have joined the Science Based Targets Initiative and the U.N.
Moreover, an increasing number of investors have adopted, or may adopt, ESG policies with which they expect their portfolio companies to comply. 30 Table of Content s We currently align our sustainability program with the standards set forth by various voluntary sustainability initiatives and organizations, and we have joined the Science Based Targets Initiative and the U.N.
Significant reductions in sales to any of these customers, or the loss of major customers, would materially harm our business. If we are not able to replace expired, canceled or reduced contracts with new business in a timely manner, our revenues and profitability could be harmed.
Significant reductions in sales to any of our largest customers, or the loss of major customers, have in the past harmed, and could in the future materially harm, our business. If we are not able to replace expired, canceled or reduced contracts with new business in a timely manner, our revenues and profitability could be harmed.
These recent and potential additional regulations and avenues for enforcement could result in, among other things, government inquiries, which could result in significant penalties. Additionally, new privacy laws and regulations are under development at the U.S. Federal and state level and many international jurisdictions.
These recent and potential additional regulations and avenues for enforcement could result in, among other things, government inquiries, which could result in significant penalties. Additionally, new privacy and data protection laws and regulations are being considered, under development or are pending at the U.S. Federal and state level and many international jurisdictions.
These factors include: • rapid changes in technology, evolving industry standards, and requirements for continuous improvement in products and services that result in short product lifecycles; • demand for our customers' products may be seasonal; • our customers may fail to successfully market their products, and our customers' products may fail to gain widespread commercial acceptance; • our customers' products may have supply chain issues, including as a result of the COVID-19 pandemic; and • our customers may experience dramatic market share shifts in demand which may cause them to lose market share or exit businesses.
These factors include: • rapid changes in technology, including as a result of artificial intelligence, evolving industry standards, and requirements for continuous improvement in products and services that result in short product lifecycles; • demand for our customers' products may be seasonal; • our customers may fail to successfully market their products, and our customers' products may fail to gain widespread commercial acceptance; 21 Table of Content s • our customers' products may have supply chain issues; and • our customers may experience dramatic market share shifts in demand which may cause them to lose market share or exit businesses.
Increasing concerns over bank failures and bailouts and their potential broader effects and potential systemic risk on the banking sector generally may adversely affect our access to capital and our business and operations more generally.
Increasing concerns over bank 24 Table of Content s failures and bailouts and their potential broader effects and potential systemic risk on the banking sector generally may adversely affect our access to capital and our business and operations more generally.
Our operations and the execution of our business plans and strategies are subject to the effects of global economic trends, geopolitical risks and demand or supply shocks from events that could include political crises and conflict (including the Russian invasion of Ukraine), war, a major terrorist attack, natural disasters or actual or threatened public health emergencies (such as COVID-19).
Our operations and the execution of our business plans and strategies are subject to the effects of global economic trends, geopolitical risks and demand or supply shocks from events that could include political crises and conflict (including the Russian invasion of Ukraine, the Israel-Hamas war, the attacks on shipping vessels in the Red Sea), war, a major terrorist attack, natural disasters or actual or threatened public health emergencies (such as COVID-19).
These and other factors have harmed, and in the future could harm, our ability to achieve anticipated levels of profitability at acquired operations or realize other anticipated benefits of an acquisition or divestiture, and could adversely affect our business and operating results.
These and other factors have harmed, and in the future could harm, our ability to achieve anticipated levels of profitability at acquired operations or realize other anticipated benefits of an acquisition or divestiture, and could adversely affect our business and operating results. Our operating results may fluctuate significantly due to seasonal demand.
If we do not properly manage or maintain adequate financial and management controls, including internal controls over financial reporting, reporting systems and procedures to manage our employees, our business could be harmed.
If we do not 16 Table of Content s properly manage or maintain adequate financial and management controls, including internal controls over financial reporting, reporting systems and procedures to manage our employees, our business could be harmed.
If unauthorized parties gain physical access to our operations or inventory or if they gain electronic access to our information systems or if such operations, information or inventory is used in an unauthorized manner, misdirected, or lost or stolen during transmission or transport, any theft or misuse of such operations, information or inventory could result in, among other things, unfavorable publicity, loss of competitive advantage, governmental inquiry and oversight, difficulty in marketing our services, increased security and compliance costs, higher insurance premiums, allegations by our customers that we have not performed our contractual obligations, litigation by affected parties including our customers and possible financial obligations for damages related to the theft or misuse of such information or inventory, any of which could have a material adverse effect on our profitability and cash flow.
If unauthorized parties gain physical access to our facilities, operations, assets, inventory, or information or if they gain electronic access to our information systems or if such facilities, operations, assets, inventory or information are used in an unauthorized manner, misdirected, or lost or stolen during transmission or transport, any theft or misuse of such operations, assets, inventory or information could result in, among other things, unfavorable publicity, loss of competitive advantage, governmental inquiry and oversight, difficulty in marketing and selling our services, increased security and compliance costs, significant costs related to rebuilding internal systems, higher 17 Table of Content s insurance premiums, allegations by our customers that we have not performed our contractual obligations, litigation by affected parties including our customers and possible financial penalties, fines or obligations for damages related to the theft or misuse of such assets, inventory or information, any of which could have a material adverse effect on our profitability and cash flows.
In addition, in connection with expanding our design services offerings, we must attract and retain experienced design engineers. Our failure to recruit and retain experienced design 19 Table of Contents engineers could limit the growth of our design services offerings, which could adversely affect our business.
In addition, in connection with expanding our design and 20 Table of Content s engineering services offerings, we must attract and retain experienced design engineers. Our failure to recruit and retain experienced design engineers could limit the growth of our design and engineering services offerings, which could adversely affect our business.
In some instances, we, our customers, and the users of our products and services might be unaware of an incident or its magnitude and effects. We have implemented security systems with the intent of maintaining and protecting the physical security of our facilities and inventory and protecting our customers’ and our suppliers’ confidential information.
In some instances, we, our customers, vendors, or the users of our products and services might be unaware of an incident or its magnitude and effects. We have implemented and maintain security systems with the intent of protecting the physical security of our facilities and inventory and protecting our information systems including our customers’ and vendors’ information.
Our inability to make scheduled shipments has caused and will continue to cause us to experience a reduction in sales, increase in inventory levels and costs, and could adversely affect relationships with existing and prospective customers.
Our inability to make scheduled shipments has in the past caused, and may in the future cause us to experience a reduction in sales, increase in inventory levels and costs, and could adversely affect relationships with existing and prospective customers.
The market for our ordinary shares has been and may in the future be subject to similar volatility. Factors such as fluctuations in our operating results, announcements of technological innovations or events affecting other companies in the electronics industry, currency fluctuations, general market fluctuations, and macro-economic conditions may cause the market price of our ordinary shares to decline.
Factors such as fluctuations in our operating results, announcements of technological innovations or events affecting other companies in the electronics industry, currency fluctuations, general market fluctuations, and macro-economic conditions may cause the market price of our ordinary shares to decline.
The Chinese currency is the renminbi ("RMB"). A significant increase in the value of the RMB could adversely affect our financial results and cash flows by increasing both our manufacturing costs and the costs of our local supply base.
A significant increase in the value of the MXN or RMB could adversely affect our financial results and cash flows by increasing both our manufacturing costs and the costs of our local supply base.
Refer to the discussion in note 9 to the consolidated financial statements, "Bank Borrowings and Long-Term Debt" for further details of our debt obligations. We are also exposed to interest rate risk on our invested cash balances, our securitization facilities and our factoring activities. We are subject to the risk of increased income taxes.
Refer to the discussion in note 9 to the consolidated financial statements, "Bank Borrowings and Long-Term Debt" for further details of our debt obligations. We are also exposed to interest rate risk on our invested cash balances and our factoring activities. We are subject to risks associated with investments.
The market price of our ordinary shares is volatile. The stock market in recent years has experienced significant price and volume fluctuations that have affected the market prices of companies, including technology companies. These fluctuations have often been unrelated to or disproportionately impacted by the operating performance of these companies.
The stock market in recent years has experienced significant price and volume fluctuations that have affected the market prices of companies, including technology companies. These fluctuations have often been unrelated to or disproportionately impacted by the operating performance of these companies. The market for our ordinary shares has been and may in the future be subject to similar volatility.
From time to time, we are involved in various claims, suits, investigations and legal proceedings. Additional legal claims or regulatory matters may arise in the future and could involve matters relating to commercial disputes, government regulatory and compliance, intellectual property, antitrust, tax, employment or shareholder issues, product liability claims and other issues on a global basis.
Additional legal claims or regulatory matters may arise in the future and could involve matters relating to commercial disputes, government regulatory and compliance, intellectual property, antitrust, tax, employment or shareholder issues, product liability claims and other issues on a global basis.
These customers may experience dramatic declines in their market shares or competitive position, due to economic or other forces, that may cause them to reduce their purchases from us or, in some cases, result in the termination of their relationship with us.
Our principal customers have varied from year to year. These customers have in the past experienced, and may in the future experience, dramatic declines in their market shares or competitive position, due to economic or other forces, that may cause them to reduce their purchases from us or, in some cases, result in the termination of their relationship with us.
Our operating results may fluctuate significantly due to seasonal demand. Two of our significant end markets are the lifestyle market and the consumer devices market. These markets exhibit particular strength generally in the two quarters leading up to the end of the calendar year in connection with the holiday season.
Two of our significant end markets are the lifestyle market and the consumer devices market. These markets exhibit particular strength generally in the two quarters leading up to the end of the calendar year in connection with the holiday season.
Although we assess our banking relationships as we believe necessary or appropriate, our access to funding sources in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by factors that affect us, the financial institutions with which we have arrangements directly, or the financial services industry or economy in general. 23 Table of Contents Changes in financial accounting standards or policies have affected, and in the future may affect, our reported financial condition or results of operations.
Although we assess our banking relationships as we believe necessary or appropriate, our access to funding sources in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by factors that affect us, the financial institutions with which we have arrangements directly, or the financial services industry or economy in general.
Problems suffered by any of these common carriers, whether due to geopolitical issues, the COVID-19 pandemic, a natural disaster, labor problems, increased energy prices, criminal activity or some other issue, have in the past resulted, and may in the future result in shipping delays, increased costs, or other supply chain disruptions, and therefore have in the past had, and may in the future have. a material adverse effect on our operations.
Problems suffered by any of these common carriers, whether due to geopolitical issues due to the Russian invasion of Ukraine and the Israel-Hamas war, disruptions as a result of attacks on shipping vessels in the Red Sea, a natural disaster, labor problems, increased energy prices, criminal activity or some other issue, have in the past resulted, and may in the future result in shipping delays, increased costs, or other supply chain disruptions, and therefore have in the past had, and may in the future have, a material adverse effect on our operations.
Component shortages have in the past, and may in the future also increase our cost of goods sold because we may be required to pay higher prices for components in short supply and redesign or reconfigure products to accommodate substitute components. As a result, component shortages have adversely affected, and will continue to adversely affect, our operating results.
Component shortages have in the past and may in the future also increase our cost of goods sold because we may be required to pay higher prices for components in short supply and redesign or reconfigure products to accommodate substitute components.
The GDPR, the PIPL, U.S. state laws and other laws and self-regulatory codes may affect our ability to reach current and prospective customers, to understand how our solutions and services are being used, to respond to customer requests allowed under the laws, and to implement our business strategy effectively. These laws and regulations could similarly affect our customers.
The GDPR, the PIPL, U.S. state laws and other laws and self-regulatory codes may affect our ability to reach current and prospective customers, to understand how our solutions and services are being used, to respond to customer requests allowed under the laws, to transfer information among the Company and its international subsidiaries, and to implement our business strategy effectively.
We have been and continue to be adversely affected by supply chain issues, including shortages of required electronic components. From time to time, we have experienced shortages of some of the components, including electronic components, that we use. These shortages can result from strong demand for those components or from problems experienced by suppliers, such as shortages of raw materials.
From time to time, we have experienced shortages of some of the components, including electronic components, that we use. These shortages can result from strong demand for those components or from problems experienced by suppliers, such as shortages of raw materials.
Should additional taxes be assessed as a result of a current or future examination, there could be a material adverse effect on our tax provision, operating results, financial position and cash flows in the period or periods for which that determination is made. We are subject to risks associated with investments.
Should additional taxes be assessed as a result of a current or future examination, there could be a material adverse effect on our tax provision, operating results, financial position and cash flows in the period or periods for which that determination is made. Our debt level may create limitations.
International Risks Weak global economic conditions, including inflationary pressures, currency volatility, slower growth or recession, higher interest rates, geopolitical uncertainty and instability in financial markets may adversely affect our business, results of operations, financial condition, and access to capital markets.
International Risks Global economic conditions, including inflationary pressures, currency volatility, slower growth or recession, higher interest rates, geopolitical uncertainty (including arising from the ongoing conflict between Russia and Ukraine and the Israel-Hamas war) and instability in financial markets may adversely affect our business, results of operations, financial condition, and access to capital markets.
The laws of certain countries in which we operate may not protect intellectual property rights to the same extent as the laws of the United States, and the mechanisms to enforce intellectual property rights may be inadequate to protect our rights, which could harm our business.
The laws of certain countries in which we operate may not protect intellectual property rights to the same extent as the laws of the United States, and the mechanisms to enforce intellectual property rights may be inadequate to protect our rights, which could harm our business. If our compliance policies are breached, we may incur significant legal and financial exposure.
Our industry is extremely competitive; if we are not able to continue to provide competitive services, we may lose business. We compete with a number of different companies, depending on the type of service we provide or the location of our operations.
Our industry is extremely competitive; if we are not able to continue to provide competitive services, we may lose business. In addition, our customers may decide to manufacture their products internally, which could harm our business. We compete with a number of different companies, depending on the type of service we provide or the location of our operations.
If we fail to achieve some or all of the benefits expected to result from the IPO and Nextracker being a separate, publicly-traded company, or if such benefits are delayed, our businesses, operating results and financial condition could be materially and adversely affected.
If we fail to achieve some or all of the benefits expected to result from the separation of Nextracker, or if such benefits are delayed, our businesses, financial condition and results of operations could be materially and adversely affected.
We rely on our information systems, some of which are managed by third parties, to process, transmit and store electronic information (including sensitive data such as confidential business information and personally identifiable information relating to employees, customers, and other business partners), and to manage or support a variety of critical business processes and activities including financial reporting, inventory management, procurement, invoicing, and electronic communications.
We rely on our information systems, some of which are managed by third parties, to process, transmit and store electronic information (including sensitive data such as confidential business information and personally identifiable information in each case relating to employees, customers, vendors, consumers, and other business partners), and to manage or support a variety of critical business processes and activities including manufacturing, design and engineering services, financial reporting, recordkeeping, compliance and internal controls, human and capital asset and inventory management, procurement, invoicing, treasury activities, and electronic communications.
Due to the political uncertainty and military actions involving Russia, Ukraine and surrounding regions, we and the third parties upon which we rely may be vulnerable to a currently heightened risk of information technology breaches, computer malware, ransomware or other cyber attacks, including attacks that could materially disrupt our systems and operations, supply chain and ability to produce, sell and distribute our products.
Due to increasing global tensions and conflicts, including involving China, the ongoing Russia/Ukraine conflict, and the conflict in the Middle East, we and the third parties upon which we rely may be vulnerable to a currently heightened risk of information technology breaches, computer malware, ransomware or other cyber attacks, including attacks that could materially disrupt our systems and operations, supply chain and ability to produce, sell and distribute our products.
We prepare our financial statements in conformity with U.S. GAAP. These principles are subject to interpretation by the Financial Accounting Standards Board ("FASB"), the American Institute of Certified Public Accountants ("AICPA"), the SEC and various bodies formed to interpret and create accounting policies.
These principles are subject to interpretation by the Financial Accounting Standards Board ("FASB"), the American Institute of Certified Public Accountants ("AICPA"), the SEC and various bodies formed to interpret and create accounting policies.
We have significant operations located in China, which have been in the past, and could in the future be, adversely affected by evolving laws, regulations and policies, including with respect to COVID-19, import and export tariffs and restrictions, and information security and privacy, as well as changes in the political and geopolitical environment involving China.
We have significant operations located in China, which have been in the past, and could in the future be, adversely affected by evolving laws, regulations and policies, import and export tariffs and restrictions, and information security and privacy, as well as changes in the political and geopolitical environment involving China. U.S.-China bilateral trade relations remain uncertain.
Such events could make it difficult or impossible to manufacture or deliver products to our customers, receive production materials from our suppliers, or perform critical functions, which could adversely affect our revenue and require significant recovery time and expenditures to resume operations.
Climate change may exacerbate the frequency and intensity of natural disasters and adverse weather conditions. Such events could make it difficult or impossible to manufacture or deliver products to our customers, receive production materials from our suppliers, or perform critical functions, which could adversely affect our revenue and require significant recovery time and expenditures to resume operations.
In addition, we are exposed to interest rate risk under our variable rate terms loans, bilateral facilities and revolving credit facility for indebtedness we have incurred or may incur under such facilities.
In addition, we are exposed to interest rate risk under our variable rate, bilateral facilities, revolving credit facility and term loans that we may enter into from time to time for indebtedness we have incurred or may incur under such facilities to the extent they are used.
Financial Risks Our debt level may create limitations. As of March 31, 2023, our total debt was approximately $3.8 billion. This level of indebtedness could limit our flexibility as a result of debt service requirements and restrictive covenants, and may limit our ability to access additional capital or execute our business strategy.
As of March 31, 2024, our total debt was approximately $3.3 billion. This level of indebtedness could limit our flexibility as a result of debt service requirements and restrictive covenants, and may limit our ability to access additional capital or execute our business strategy. The market price of our ordinary shares is volatile.

… 123 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed0 unchanged
Biggest changeOur facilities are well maintained and suitable for the operations conducted. The productive capacity of our plants is adequate for current needs.
Biggest changeThe majority of the square footage is active manufacturing space used by the FRS and FAS operating segments, as both use these properties. 33 Table of Content s Our facilities are well maintained and suitable for the operations conducted. The productive capacity of our plants is adequate for current needs.
As of March 31, 2023, the square footage of our facilities by region is as follows: Approximate Square Footage (In millions) Asia 19.6 Americas 15.7 Europe 11.6 Total (1) 46.9 (1) Consists of 20.7 million square feet in facilities that we own with the remaining 26.2 million square feet in leased facilities.
As of March 31, 2024, the square footage of our facilities by region is as follows: Approximate Square Footage (In millions) Asia 19.7 Americas 15.8 Europe 11.2 Total (1) 46.7 (1) Consists of 21.6 million square feet in facilities that we own with the remaining 25.1 million square feet in leased facilities.
ITEM 2. PROPERTIES We own or lease facilities located primarily in the geographies listed below. Our facilities consist of a global network of industrial parks, regional manufacturing operations, and design, engineering and product introduction centers. The majority of the square footage is active manufacturing space used by the FRS and FAS operating segments, as both use these properties.
ITEM 2. PROPERTIES We own or lease facilities located primarily in the geographies listed below. Our facilities consist of a global network of industrial parks, regional manufacturing operations, and design, engineering and product introduction centers.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 3. LEGAL PROCEEDINGS For a description of our material legal proceedings, see note 14 "Commitments and Contingencies" to the consolidated financial statements included under Item 8, which is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable 31 Table of Contents PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS For a description of our material legal proceedings, see note 14 "Commitments and Contingencies" to the consolidated financial statements included under Item 8, which is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable 34 Table of Content s PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+0 added−0 removed11 unchanged
Biggest changePeriod (2) Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs January 1 - February 3, 2023 770,845 $ 23.33 770,845 $ 919,054,492 February 4 - March 3, 2023 — — — $ 919,054,492 March 4 - March 31, 2023 1,222,841 $ 21.25 1,222,841 $ 893,066,204 Total 1,993,686 1,993,686 (1) During the period from January 1, 2023 through March 31, 2023, all purchases were made pursuant to the program discussed below in open market transactions.
Biggest changePeriod (2) Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs January 1 - February 2, 2024 7,817,510 $ 23.58 7,817,510 $ 1,345,691,848 February 3 - March 1, 2024 6,306,583 $ 27.11 6,306,583 $ 1,174,692,742 March 2 - March 31, 2024 5,641,778 $ 28.71 5,641,778 $ 1,012,693,933 Total 19,765,871 19,765,871 (1) During the period from January 1, 2024 through March 31, 2024, all purchases were made pursuant to the program discussed below in open market transactions.
This does not include persons whose stock is in nominee or "street name" accounts through brokers. DIVIDENDS Since inception, we have not declared or paid any cash dividends on our ordinary shares. We currently do not have plans to pay any cash dividends in fiscal year 2024. CERTAIN TAXATION CONSIDERATIONS UNDER SINGAPORE LAW Dividends.
This does not include persons whose stock is in nominee or "street name" accounts through brokers. DIVIDENDS Since inception, we have not declared or paid any cash dividends on our ordinary shares. We currently do not have plans to pay any cash dividends in fiscal year 2025. CERTAIN TAXATION CONSIDERATIONS UNDER SINGAPORE LAW Dividends.
All purchases were made in accordance with Rule 10b-18 under the Securities Exchange Act of 1934. (2) On August 25, 2022, our Board of Directors authorized repurchases of our outstanding ordinary shares for up to $1.0 billion.
All purchases were made in accordance with Rule 10b-18 under the Securities Exchange Act of 1934. (2) On August 2, 2023, our Board of Directors authorized repurchases of our outstanding ordinary shares for up to $2.0 billion.
This is in accordance with the share purchase mandate whereby our shareholders approved a repurchase limit of 20% of our issued ordinary shares outstanding at the Annual General Meeting held on the same date as the Board authorization. As of March 31, 2023, shares in the aggregate amount of $893 million were available to be repurchased under the current plan.
This is in accordance with the share purchase mandate whereby our shareholders approved a repurchase limit of 20% of our issued ordinary shares outstanding at the Annual General Meeting held on the same date as the Board authorization. As of March 31, 2024, shares in the aggregate amount of $1.0 billion were available to be repurchased under the current plan.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET AND SHAREHOLDER INFORMATION Our ordinary shares are quoted on the Nasdaq Global Select Market under the symbol "FLEX." As of May 12, 2023, there were 2,847 holders of record of our ordinary shares.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET AND SHAREHOLDER INFORMATION Our ordinary shares are quoted on the Nasdaq Global Select Market under the symbol "FLEX." As of May 10, 2024, there were 2,821 holders of record of our ordinary shares.
Index Data: Copyright Standard and Poor's, Inc. Used with permission. All rights reserved. 33 Table of Contents Issuer Purchases of Equity Securities The following table provides information regarding purchases of our ordinary shares made by us for the period from January 1, 2023 through March 31, 2023.
Index Data: Copyright Standard and Poor's, Inc. Used with permission. All rights reserved. 36 Table of Content s Issuer Purchases of Equity Securities The following table provides information regarding purchases of our ordinary shares made by us for the period from January 1, 2024 through March 31, 2024.
The graph below compares the cumulative total shareholder return on our ordinary shares, the Standard & Poor's 500 Stock Index and a peer group comprised of Benchmark Electronics, Inc., Celestica Inc., Jabil Inc., and Sanmina Corporation. 32 Table of Contents The graph below assumes that $100 was invested in our ordinary shares, in the Standard & Poor's 500 Stock Index and in the peer group described above on March 31, 2018 and reflects the annual return through March 31, 2023, assuming dividend reinvestment.
The graph below compares the cumulative total shareholder return on our ordinary shares, the Standard & Poor's 500 Stock Index and a peer group comprised of Benchmark Electronics, Inc., Celestica Inc., Jabil Inc., and Sanmina Corporation. 35 Table of Content s The graph below assumes that $100 was invested in our ordinary shares, in the Standard & Poor's 500 Stock Index and in the peer group described above on March 31, 2019 and reflects the annual return through March 31, 2024, assuming dividend reinvestment.
RECENT SALES OF UNREGISTERED SECURITIES None. 34 Table of Contents ITEM 6. [ RESERVED ]
RECENT SALES OF UNREGISTERED SECURITIES None. 37 Table of Content s ITEM 6. [ RESERVED ]
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Flex, the S&P 500 Index, and Peer Group 3/18 3/19 3/20 3/21 3/22 3/23 Flex Ltd. 100.00 61.24 51.29 112.12 113.59 140.89 S&P 500 Index 100.00 109.50 101.86 159.25 184.17 169.94 Peer Group 100.00 94.41 79.94 154.03 174.45 240.74 Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2023.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Flex, the S&P 500 Index, and Peer Group 3/19 3/20 3/21 3/22 3/23 3/24 Flex Ltd. 100.00 83.75 183.10 185.50 230.10 379.54 S&P 500 Index 100.00 93.02 145.44 168.20 155.20 201.57 Peer Group 100.00 84.67 163.15 184.77 254.99 403.96 Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

92 edited+48 added−49 removed44 unchanged
Biggest changeOur operating results are affected by a number of factors, including the following: • weak global economic conditions, including inflationary pressures, currency volatility, slower growth or recession, higher interest rates, and geopolitical uncertainty (including the ongoing conflict between Russia and Ukraine); • the mix of the manufacturing services we are providing, the number, size, and complexity of new manufacturing programs, the degree to which we utilize our manufacturing capacity, seasonal demand, and other factors; • the effects on our business when our customers are not successful in marketing their products, or when their products do not gain widespread commercial acceptance; 37 Table of Contents • our ability to achieve commercially viable production yields and to manufacture components in commercial quantities to the performance specifications demanded by our customers; • the effects that current credit and market conditions (including as a result of the ongoing conflict between Russia and Ukraine) could have on the liquidity and financial condition of our customers and suppliers, including any impact on their ability to meet their contractual obligations; • the impacts on our business due to component shortages, disruptions in transportation or other supply chain related constraints including as a result of the COVID-19 global pandemic; • the remaining effects of the COVID-19 global pandemic on our business and results of operations; • the effects on our business due to certain customers' products having short product lifecycles; • our customers' ability to cancel or delay orders or change production quantities; • our customers' decisions to choose internal manufacturing instead of outsourcing for their product requirements; • integration of acquired businesses and facilities; • increased labor costs due to adverse labor conditions in the markets we operate; • changes in tax legislation; and • changes in trade regulations and treaties.
Biggest changeOur operating results are affected by a number of factors, including the following: • global economic conditions, including inflationary pressures, currency volatility, slower growth or recession, higher interest rates, and geopolitical uncertainty (including arising from the ongoing conflict between Russia and Ukraine and the Israel-Hamas war); • the mix of the manufacturing services we are providing, the number, size, and complexity of new manufacturing programs, the degree to which we utilize our manufacturing capacity, seasonal demand, and other factors; • the effects on our business when our customers are not successful in marketing their products, or when their products do not gain widespread commercial acceptance; 40 Table of Content s • our ability to achieve commercially viable production yields and to manufacture components in commercial quantities to the performance specifications demanded by our customers; • the effects on our business due to certain customers' products having short product lifecycles, our customers' ability to cancel or delay orders or change production quantities or locations, the short-term nature of our customers' commitments and rapid changes in demand; • the effects that current credit and market conditions (including as a result of the ongoing conflict between Russia and Ukraine and the Israel-Hamas war) could have on the liquidity and financial condition of our customers and suppliers, including any impact on their ability to meet their contractual obligations; • the impacts on our business due to supply chain issues, including component shortages, disruptions in transportation or other supply chain related constraints including disruptions in international commerce as a result of attacks on shipping vessels in the Red Sea; • integration of acquired businesses and facilities; • increased labor costs due to adverse labor conditions in the markets we operate; • changes in tax legislation; • changes in trade regulations and treaties; and • exposure to infectious disease, epidemics and pandemics on our business operations in geographic locations impacted by an outbreak and on the business operations of our customers and suppliers.
Some of the inherent estimates and assumptions used in determining fair value of the reporting units are outside the control of management, including interest rates, cost of capital, tax rates, market EBITDA comparables and credit ratings.
Some of the inherent estimates and assumptions used in determining fair value of the reporting units are outside the control of management, including interest rates, cost of capital, tax rates, market EBITDA market comparables and credit ratings.
Equity in earnings (losses) of unconsolidated affiliates During fiscal year 2023, we recorded $4 million of equity in losses of unconsolidated affiliates, compared to $61 million of equity in earnings of unconsolidated affiliates during fiscal year 2022.
During fiscal year 2023, we recorded $4 million of equity in losses of unconsolidated affiliates, compared to $61 million of equity in earnings of unconsolidated affiliates during fiscal year 2022.
We are regularly subject to tax return audits and examinations by various taxing jurisdictions around the world, and there can be no assurance that the final determination of any tax examinations will not be materially different than that which is reflected in our income tax provisions and accruals.
We are regularly subject to tax return audits and examinations by various taxing jurisdictions around the world, and there can be no assurance that the final determination of any tax examinations will not be materially different than that which is reflected in our income tax provisions and accruals.
Gross profit Gross profit is affected by a fluctuation in costs of sales elements as outlined above and further by a number of factors, including product lifecycles, unit volumes, product mix, pricing, competition, new product introductions, and the expansion or consolidation of manufacturing facilities, as well as specific restructuring activities initiated from time to time.
Gross profit Gross profit is affected by a fluctuation in cost of sales elements as outlined above and further by a number of factors, including product lifecycles, unit volumes, product mix, pricing, competition, new product introductions, and the expansion or consolidation of manufacturing facilities, as well as specific restructuring activities initiated from time to time.
During fiscal year 2023, we recognized approximately $27 million of restructuring charges, primarily related to employee severance. During fiscal year 2022, we recognized approximately $15 million of restructuring charges, primarily related to employee severance. Refer to note 16 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for further discussion of our restructuring activities.
During fiscal year 2022, we recognized approximately $15 million of restructuring charges, primarily related to employee severance. Refer to note 16 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for further discussion of our restructuring activities.
As of March 31, 2023 and 2022, the outstanding balance on receivables sold for cash was $0.8 billion and $0.6 billion, respectively, under our accounts receivable factoring programs, which were removed from accounts receivable balances in our consolidated balance sheets. Historically we have been successful in refinancing and extending the maturity dates on our term loans and credit facilities.
As of March 31, 2024 and 2023, the outstanding balance on receivables sold for cash was $0.8 billion and $0.8 billion, respectively, under our accounts receivable factoring programs, which were removed from accounts receivable balances in our consolidated balance sheets. Historically we have been successful in refinancing and extending the maturity dates on our term loans and credit facilities.
Net sales for our FAS s egment increased $1.7 billion, or 12%, from the prior year, mainly due to an increase in net sales of 30% in our CEC business and 2% in our Lifestyle business due to new ramps, customer expansion, along with some effect from inflation pass-through while overcoming challenges from supply constraints.
Net sales for our FAS segment increased $1.7 billion, or 12%, from the prior year, mainly due to an increase in net sales of 30% in our CEC business and 2% in our Lifestyle business due to new ramps, customer expansion, along with some effect from inflation pass-through while overcoming challenges from supply constraints.
The flexible design of our manufacturing processes allows us to manufacture a broad range of products in our facilities and better utilize our manufacturing capacity across our diverse geographic footprint and service customers from all segments.
The flexible design of our manufacturing processes allows us to manufacture a broad range of products in our facilities and better utilize our manufacturing capacity across our diverse geographic footprint and service customers from all markets.
Cash used in investing activities totaled $0.6 billion during fiscal year 2023. This was primarily driven by $0.6 billion of capital expenditures for property and equipment to continue expanding capabilities and capacity in support of our expanding CEC, Industrial, Health Solutions and Automotive businesses. Cash provided by financing activities was $2 million during fiscal year 2023.
This was primarily driven by $0.6 billion of capital expenditures for property and equipment to continue expanding capabilities and capacity in support of our expanding CEC, Industrial, Health Solutions and Automotive businesses. Cash provided by financing activities was $2 million during fiscal year 2023.
Segment income is defined as net sales less cost of sales, and segment selling, general and administrative expenses, and does not include amortization of intangibles, stock-based compensation, customer related asset recoveries, restructuring charges, legal and other, interest, net, other charges (income), net, and equity in earnings of unconsolidated affiliates.
Segment income is defined as net sales less cost of sales, and segment selling, general and administrative expenses, and does not include amortization of intangibles, stock-based compensation, restructuring charges, customer related asset impairment, legal and other, interest expense, interest income, other charges (income), net, and equity in earnings of unconsolidated affiliates.
The increase in gross profit during fiscal year 2023 primarily resulted from the overall stronger customer demand across various end markets which allowed for improved fixed cost absorption, despite continued pressure on margins from component shortages, logistics constraints and the pass-through effect of inflationary cost recoveries, compared to the prior year.
The increase in gross profit during fiscal year 2023 primarily resulted from the overall stronger customer demand across various end markets which allowed for improved fixed cost absorption, despite continued 45 Table of Content s pressure on margins from component shortages, logistics constraints and the pass-through effect of inflationary cost recoveries, compared to the prior year.
We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this report, including those set forth under Item 1A,“Risk Factors.” OVERVIEW We are the diversified manufacturing partner of choice that helps market-leading brands design, build and deliver innovative products that improve the world.
We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this report, including those set forth under Item 1A,“Risk Factors.” OVERVIEW We are the advanced, end-to-end manufacturing partner of choice that helps market-leading brands design, build, deliver and manage innovative products that improve the world.
The decrease during fiscal year 2023 was primarily due to lower investment fund gains versus fiscal year 2022, resulting from discrete market events such as initial public offerings and financing rounds completed by certain companies included in those funds. 43 Table of Contents Income taxes We work to ensure that we accrue and pay the appropriate amount of income taxes according to the laws and regulations of each jurisdiction in which we operate.
The decrease during fiscal year 2023 was primarily due to lower investment fund gains versus fiscal year 2022, resulting from discrete market events such as initial public offerings and financing rounds completed by certain companies included in those funds. 47 Table of Content s Income taxes We work to ensure that we accrue and pay the appropriate amount of income taxes according to the laws and regulations of each jurisdiction in which we operate.
The total cash provided by operating activities resulted primarily from $0.9 billion of net income for the period plus $0.6 billion of non-cash charges such as depreciation, amortization, non-cash lease expense, restructuring and impairment charges, provision for doubtful accounts, deferred income taxes and stock-based compensation. Depreciation expense was $0.4 billion and relatively consistent with prior years.
The total cash provided by operating activities resulted primarily from $1.0 billion of net income for the period plus $0.5 billion of non-cash charges such as depreciation, amortization, non-cash lease expense, restructuring and impairment charges, provision for doubtful accounts, deferred income taxes and stock-based compensation. Depreciation expense was $0.4 billion and relatively consistent with prior years.
Refer to note 9 to the consolidated financial statement in Item 8, "Financial Statements and Supplementary Data" for additional details. Fiscal Year 2022 Cash provided by operating activities was $1.0 billion during fiscal year 2022.
Refer to note 9 and note 20 to the consolidated financial statement in Item 8, "Financial Statements and Supplementary Data" for additional details. Fiscal Year 2023 Cash provided by operating activities was $1.0 billion during fiscal year 2023.
Our adjusted free cash flow is defined as cash from operations, less net purchases of property and equipment to present adjusted cash flows on a consistent basis for investor transparency. Our adjusted free cash flow was $0.3 billion and $0.6 billion for fiscal years 2023 and 2022, respectively.
Our adjusted free cash flow is defined as cash from operations, less net purchases of property and equipment to present adjusted cash flows on a consistent basis for investor transparency. Our adjusted free cash flow was $0.8 billion and $0.3 billion for fiscal years 2024 and 2023, respectively.
Refer to note 15 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for further discussion of our tax position. 40 Table of Contents RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, certain statements of operations data expressed as a percentage of net sales (amounts may not sum due to rounding).
Refer to note 15 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for further discussion of our tax position. 43 Table of Content s RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, certain statements of operations data expressed as a percentage of net sales (amounts may not sum due to rounding).
Fiscal Year 2023 Cash provided by operating activities was $1.0 billion during fiscal year 2023. The total cash provided by operating activities resulted primarily from $1.0 billion of net income for the period plus $0.5 billion of non-cash charges such as depreciation, amortization, non-cash lease expense, restructuring and impairment charges, provision for doubtful accounts, deferred income taxes and stock-based compensation.
Fiscal Year 2022 Cash provided by operating activities was $1.0 billion during fiscal year 2022. The total cash provided by operating activities resulted primarily from $0.9 billion of net income for the period plus $0.6 billion of non-cash charges such as depreciation, amortization, non-cash lease expense, restructuring and impairment charges, provision for doubtful accounts, deferred income taxes and stock-based compensation.
Under our current share repurchase program, our Board of Directors authorized repurchases of our outstanding ordinary shares for up to $1 billion in accordance with the share purchase mandate approved by our shareholders at the date of the most recent Annual General Meeting which was held on August 25, 2022.
Under our current share repurchase program, our Board of Directors authorized repurchases of our outstanding ordinary shares for up to $2 billion in accordance with the share purchase mandate approved by our shareholders at the date of the most recent Annual General Meeting which was held on August 2, 2023.
These increases in FAS were offset by a 19% decrease in net sales in our Consumer 41 Table of Contents Devices business due to relatively softer market demand and a planned project completion in the fiscal year ended 2022.
These increases in FAS were offset by a 19% decrease in net sales in our Consumer Devices business due to relatively softer market demand and a planned project completion in the fiscal year ended 2022.
Refer to the Liquidity and Capital Resources section for the adjusted free cash flows reconciliation to the most directly comparable GAAP financial measure of cash flows from 38 Table of Contents operations.
Refer to the Liquidity and Capital Resources section for the adjusted free cash flows reconciliation to the most directly comparable GAAP financial measure of cash flows from operations.
Repatriation could result in an additional income tax payment; however, for the majority of our foreign entities, our intent is to permanently reinvest these funds outside of Singapore and our current plans do not demonstrate a need to repatriate them to fund our operations in jurisdictions outside of where they are held.
Repatriation could result in an additional income tax payment; however, our intent is to permanently reinvest these funds outside of Singapore and our current plans do not demonstrate a need to repatriate them to fund our operations in jurisdictions outside of where they are held.
We intend to use our existing cash balances, together with anticipated cash flows from operations to fund our existing and future contractual obligations. RECENT ACCOUNTING PRONOUNCEMENTS Refer to note 2 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for recent accounting pronouncements. 48 Table of Contents
We intend to use our existing cash balances, together with anticipated cash flows from operations to fund our existing and future contractual obligations. RECENT ACCOUNTING PRONOUNCEMENTS Refer to note 2 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for recent accounting pronouncements. 52 Table of Content s
The full impact of the conflict on our business operations and financial performance remains uncertain and will depend on future developments, including the severity and duration of the conflict and its impact on regional and global economic conditions.
The full impact of the conflicts on our business operations and financial performance remains uncertain and will depend on future developments, including the severity and duration of the conflicts and their impact on regional and global economic conditions.
If actual market conditions or our customers' product demands are less favorable 39 Table of Contents than those projected, additional write downs may be required.
If actual market conditions or our customers' product demands are less favorable than those projected, additional write downs may be required.
We have made substantial efforts to diversify our portfolio which allows us to operate at scale in many different industries, and, as a result, no customer accounted for greater than 10% of net sales in fiscal years 2023 or 2022.
We have made substantial efforts to maintain a diverse portfolio which allows us to operate at scale in many different industries, and, as a result, no customer accounted for greater than 10% of net sales in fiscal year 2024, 2023 or 2022.
Intangible amortization Amortization of intangible assets in fiscal years 2023 and 2022 were $82 million and $68 million, respectively, representing an increase of $14 million, fro m fiscal year 2022, primarily due to amortization expense related to new intangible assets from the Anord Mardix acquisition completed in December 2021, partially offset by certain intangible assets being fully amortized during fiscal year 2023.
Amortization of intangible assets in fiscal years 2023 and 2022 were $81 million and $60 million, respectively, representing an increase of $21 million, from fiscal year 2022, primarily due to amortization expense related to new intangible assets from the Anord Mardix acquisition completed in December 2021, partially offset by certain intangible assets being fully amortized during fiscal year 2023.
We provide for tax liabilities on these amounts for financial statement purposes, except for certain of our foreign earnings that are considered indefinitely reinvested outside of Singapore (approximately $1.9 billion as of March 31, 2023).
We provide for tax liabilities on these amounts for financial statement purposes, except for certain of our foreign earnings that are considered indefinitely reinvested outside of Singapore (approximately $0.7 billion as of March 31, 2024).
We generally do not enter into non-cancelable purchase orders for materials until we receive a corresponding production forecast from our customers. Our purchase obligations can fluctuate significantly from period to period and can materially impact our future operating asset and liability balances, and our future working capital requirements.
The majority of the purchase obligations are generally short-term in nature. We generally do not enter into non-cancelable purchase orders for materials until we receive a corresponding production forecast from our customers. Our purchase obligations can fluctuate significantly from period to period and can materially impact our future operating asset and liability balances, and our future working capital requirements.
Other charges (income), net During fiscal year 2023, we recorded $5 million of other charges, net, compared to $164 million of other income, net, in fiscal year 2022, which was primarily driven by a $150 million gain related to a Brazilian tax credit recognized in fiscal year 2022 coupled with $25 million reduction in foreign exchange transaction gains compared to fiscal year 2022.
During fiscal year 2023, we recorded $6 million of other charges, net, compared to $165 million of other income, net, in fiscal year 2022, which was primarily driven by a $150 million gain related to a Brazilian tax credit recognized in fiscal year 2022 coupled with an approximately $26 million reduction in foreign exchange transaction gains compared to fiscal year 2022.
Our adjusted free cash flow is defined as cash from operations, less net purchases of property and equipment to present adjusted cash flows on a consistent basis for investors. Our adjusted free cash flow was $0.3 billion and $0.6 billion for fiscal years 2023 and 2022, respectively. Adjusted free cash flow is not a measure of liquidity under U.S.
Our adjusted free cash flow is defined as cash from operations, less net purchases of property and equipment to present adjusted cash flows on a consistent basis for investors. Our adjusted free cash flow was $0.8 billion, $0.3 billion and $0.6 billion for fiscal years 2024, 2023 and 2022, respectively.
The margin increase during the period was driven by strong execution against new project ramps and product mix, partially offset by elevated costs due to component shortages and logistics constraints and the effect of certain inflation pass-through recoveries. FRS segment margin decreased 30 basis points, to 4.8% for fiscal year 2023, from 5.1% for fiscal year 2022.
FAS segment margin increased 10 basis points, to 4.4% for fiscal year 2023, from 4.3% for fiscal year 2022. The margin increase during the period was driven by strong execution against new project ramps and product mix, partially offset by elevated costs due to component shortages and logistics constraints and the effect of certain inflation pass-through recoveries.
As our customers change the way they go to market, we have the capability to reorganize and rebalance our business portfolio in order to align with our customers' needs and requirements in an effort to optimize operating results.
We use a portfolio approach to manage our extensive service offerings. As our customers change the way they go to market, we have the capability to reorganize and rebalance our business portfolio in order to align with our customers' needs and requirements in an effort to optimize operating results.
Certain of our subsidiaries have, at various times, been granted tax relief in their respective countries, resulting in lower income taxes than would otherwise be the case under ordinary tax rates. The consolidated effective tax rates were (6.1)% and 10.0% for the fiscal years 2023 and 2022, respectively.
Certain of our subsidiaries have, at various times, been granted tax relief in their respective countries, resulting in lower income taxes than would otherwise be the case under ordinary tax rates. The consolidated effective tax rates were (30.9)%, 15.4% and 9.5% for the fiscal years 2024, 2023 and 2022 respectively.
Future liquidity needs will depend on fluctuations in levels of inventory, accounts receivable and accounts payable, the timing of capital expenditures for new equipment, the extent to which we utilize operating leases for new facilities and equipment, and the levels of shipments and changes in the volume of customer orders. We maintain global paying service agreements with several financial institutions.
Future liquidity needs will depend on fluctuations in levels of inventory, accounts receivable and accounts payable, the timing of capital expenditures for new equipment, the extent to which we utilize operating leases for new facilities and equipment, and the levels of shipments and changes in the volume of customer orders.
GAAP, and may not be defined and calculated by other companies in the same manner. Adjusted free cash flow should not be considered in isolation or as an alternative to net cash provided by operating activities.
Adjusted free cash flow is not a measure of liquidity under U.S. GAAP, and may not be defined and calculated by other companies in the same manner. Adjusted free cash flow should not be considered in isolation or as an alternative to net cash provided by operating activities.
We will continue to monitor the conflict and assess the related restrictions and other effects and pursue prudent decisions for our team members, customers, and business. Business Overview We are one of the world's largest providers of global supply chain solutions, with revenues of $30.3 billion in the fiscal year ended March 31, 2023.
We will continue to monitor the conflicts and assess the related restrictions and other effects and pursue prudent decisions for our team members, customers, and business. Business Overview We are one of the world's largest providers of global supply chain solutions, with revenues from continuing operations of $26.4 billion in the fiscal year ended March 31, 2024.
As a result of these various factors, our gross margin varies from period to period. Gross profit during fiscal year 2023 increased $0.3 billion to $2.3 billion, or 7.5% of net sales, from $1.9 billion, or 7.4% of net sales, during fiscal year 2022 .
As a result of these various factors, our gross margin varies from period to period. Gross profit during fiscal year 2024 decreased $0.1 billion to $1.9 billion, or 7.1% of net sales, from $2.0 billion, or 6.9% of net sales, during fiscal year 2023 .
A portion of depreciation is allocated to the respective segments, together with other general corporate, research and development and administrative expenses. The following table sets forth segment income and margins.
A portion of depreciation is allocated to the respective segments, together with other general corporate, research and development and administrative expenses. The following table sets forth segment income and margins. Segment margins in the table below may not recalculate exactly due to rounding.
We may enter into debt and equity financings, sales of accounts receivable and lease transactions to fund acquisitions and anticipated growth as needed. During fiscal year 2023, no accounts receivable had been sold under our ABS programs and we received approximately $3.5 billion from other sales of receivables under our factoring program.
We may enter into debt and equity financings, sales of accounts receivable and lease transactions to fund acquisitions and anticipated growth as needed. During fiscal year 2024, 2023 and 2022, we received approximately $3.6 billion, $3.5 billion, and $1.6 billion, respectively, from other sales of receivables under our factoring programs.
We have a $2.5 billion revolving credit facility that is due to mature in July 2027 (the "2027 Credit Facility"), under which we had no borrowings outstanding as of March 31, 2023.
As of March 31, 2024, we had cash and cash equivalents of approximately $2.5 billion and bank and other borrowings of approximately $3.3 billion. We have a $2.5 billion revolving credit facility that is due to mature in July 2027 (the "2027 Credit Facility"), under which we had no borrowings outstanding as of March 31, 2024.
The effective rate varies from the Singapore statutory rate of 17.0% in each year as a result of the following items: Fiscal Year Ended March 31, 2023 2022 Income taxes based on domestic statutory rates 17.0 % 17.0 % Effect of jurisdictional tax rate differential 0.5 (10.9) Change in unrecognized tax benefit (0.7) 1.1 Change in valuation allowance (4.8) 1.1 Foreign exchange movement on prior year taxes recoverable 0.4 (0.9) Tax impacts related to sale of Nextracker 1.6 1.2 APB 23 tax liability — 0.1 Restructuring of Nextracker LLC interest (20.0) — Other (0.1) 1.3 Provision for (benefit from) income taxes (6.1) % 10.0 % The variation in our effective tax rate each year is primarily a result of recognition of earnings in foreign jurisdictions which are taxed at rates lower than the Singapore statutory rate including the effect of tax holidays and tax incentives we received primarily for our subsidiaries in China, Malaysia, Costa Rica, Netherlands and Israel of $14 million and $23 million in fiscal years 2023 and 2022, respectively.
The effective rate varies from the Singapore statutory rate of 17.0% in each year as a result of the following items: Fiscal Year Ended March 31, 2024 2023 2022 Income taxes based on domestic statutory rates 17.0 % 17.0 % 17.0 % Effect of jurisdictional tax rate differential 10.3 % 6.4 % (10.1) % Change in unrecognized tax benefit (1.4) % (0.8) % 1.2 % Change in valuation allowance (102.9) % (35.9) % (14.0) % Foreign exchange movement on prior year taxes recoverable (0.2) % 0.5 % (0.9) % Liability for undistributed earnings 20.3 % — % 0.1 % Global intangible low-taxes income (GILTI) / Subpart F income 1.9 % 2.2 % 3.1 % Nextracker related transactions gains 17.2 % 19.5 % 11.5 % Earnings from partnership 7.0 % 4.8 % — % U.S. state taxes 1.5 % 0.2 % 0.5 % Excess compensation (Section 162(m)) 2.3 % 1.2 % 0.5 % Other (3.9) % 0.3 % 0.6 % (Benefit from) provision for income taxes (30.9) % 15.4 % 9.5 % The variation in our effective tax rate each year to the statutory rate is primarily a result of recognition of earnings in foreign jurisdictions which are taxed at rates lower than the Singapore statutory rate including the effect of tax holidays and tax incentives we received primarily for our subsidiaries in China, Malaysia, Netherlands, Costa Rica, and Israel of $20 million, $14 million and $23 million in fiscal years 2024, 2023 and 2022, respectively.
The margin decrease in the FRS segment was primarily driven by component shortage-related production disruptions, inflationary cost pressures as well as program investments impacting our Automotive and Health Solutions businesses during fiscal year 2023.
FRS segment margin decreased 30 basis points, to 4.8% for fiscal year 2023, from 5.1% for fiscal year 2022. The margin decrease in the FRS segment was primarily driven by component shortage-related production disruptions, inflationary cost pressures as well as program investments impacting our Automotive and Health Solutions businesses during fiscal year 2023.
Cash used in investing activities decreased by approximately $0.3 billion to a cash outflow of $0.6 billion for fiscal year 2023, compared with a cash outflow of $1.0 billion for fiscal year 2022, primarily due to $0.5 billion of cash paid for the acquisition of Anord Mardix in fiscal year 2022 offset by an increase of approximately $0.2 billion of cash paid for purchases of property and equipment in fiscal year 2023.
Cash used in investing activities decreased by approximately $0.1 billion to a cash outflow of $0.5 billion for fiscal year 2024, compared with a cash outflow of $0.6 billion for fiscal year 2023, primarily due to a decrease of approximately $0.1 billion cash paid for purchases of property and equipment in fiscal year 2024.
Russian Invasion of Ukraine We are monitoring and responding to the conflict in Ukraine and the associated sanctions and other restrictions. As of the date of this report, there is no material impact to our business operations and financial performance in Ukraine.
We also are monitoring and responding to the Israel-Hamas war. As of the date of this report, there is no material impact to our business operations and financial performance in Ukraine and Israel.
We do not currently expect such regulations and restrictions to impact our ability to pay vendors and conduct operations throughout the global organization. We believe that our existing cash balances, together with anticipated cash flows from operations and borrowings available under our credit facilities, will be sufficient to fund our operations through at least the next twelve months and beyond.
We believe that our existing cash balances, together with anticipated cash flows from operations and borrowings available under our credit facilities, will be sufficient to fund our operations through at least the next twelve months and beyond.
Our judgments regarding projected cash flows for an extended period of time and the fair value of assets may be impacted by changes in market conditions, the general business environment and other factors including future developments of the remaining effects of the COVID-19 pandemic and the ongoing conflict between Russia and Ukraine, which remain highly uncertain and unpredictable.
Our judgments regarding projected cash flows for an extended period of time and the fair value of assets may be impacted by changes in market conditions, the general business environment and other factors including geopolitical conflicts (including the Russian invasion of Ukraine and the Israel-Hamas war), which remain highly uncertain and unpredictable.
We believe the following critical accounting estimates affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period they occur. We believe the following critical accounting estimates affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
Recoverability of property and equipment and acquired amortizable intangible assets are measured by comparing their carrying amount to the projected cash flows the assets are expected to generate.
An impairment loss is recognized when the carrying amount of the asset group exceeds its fair value. Recoverability of property and equipment and acquired amortizable intangible assets are measured by comparing their carrying amount to the projected cash flows the assets are expected to generate.
Adjusted free cash flows reconcile to the most directly comparable GAAP financial measure of cash flows from operations as follows: Fiscal Year Ended March 31, 2023 2022 (In millions) Net cash provided by operating activities $ 950 $ 1,024 Purchases of property and equipment (635) (443) Proceeds from the disposition of property and equipment 20 11 Adjusted free cash flow $ 335 $ 593 46 Table of Contents Our cash balances are generated and held in numerous locations throughout the world.
Adjusted free cash flows reconcile to the most directly comparable GAAP financial measure of cash flows from operations as follows: 50 Table of Content s Fiscal Year Ended March 31, 2024 2023 2022 (In millions) Net cash provided by operating activities $ 1,326 $ 950 $ 1,024 Purchases of property and equipment (530) (635) (443) Proceeds from the disposition of property and equipment 25 20 11 Adjusted free cash flow (1) $ 821 $ 335 $ 593 (1) Fiscal year 2022 figures in the table may not foot exactly due to rounding.
These additions were offset by a net change in our operating assets and liabilities of $0.5 billion primarily driven by changes in net working capital, partially offset by an increase in cash from other current liabilities of $1.1 billion primarily attributed to customer advances received. Cash used in investing activities totaled $1.0 billion during fiscal year 2022.
These additions were offset by a net change in our operating assets and liabilities of $0.6 billion primarily driven by changes in net working capital. Cash used in investing activities totaled $0.6 billion during fiscal year 2023.
Fiscal Year Ended March 31, 2023 2022 Net sales 100.0 % 100.0 % Cost of sales 92.4 92.5 Restructuring charges 0.1 0.1 Gross profit 7.5 7.4 Selling, general and administrative expenses 3.3 3.4 Intangible amortization 0.3 0.3 Restructuring charges — — Operating income 3.9 3.7 Interest, net 0.7 0.6 Other charges (income), net — (0.7) Equity in earnings (losses) of unconsolidated affiliates — (0.2) Income before income taxes 3.2 4.0 Provision for (benefit from) income taxes (0.2) 0.4 Net income 3.4 % 3.6 % Net income attributable to noncontrolling interest and redeemable noncontrolling interest 0.8 — Net income attributable to Flex Ltd. 2.6 % 3.6 % Net sales The following table sets forth our net sales by segment, and their relative percentages: Fiscal Year Ended March 31, 2023 2022 Net sales: (In millions) Flex Agility Solutions $ 15,769 52 % $ 14,027 54 % Flex Reliability Solutions 12,733 42 % 10,603 41 % Nextracker 1,903 6 % 1,458 6 % Intersegment eliminations (59) — % (47) — % $ 30,346 $ 26,041 Net sales for the fiscal year ended March 31, 2023 totaled $30.3 billion, representing an increase of approximately $4.3 billion, or 17%, from $26.0 billion for the fiscal year ended March 31, 2022.
Fiscal Year Ended March 31, 2024 2023 2022 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 92.4 93.0 92.7 Restructuring charges 0.5 0.1 0.1 Gross profit 7.1 6.9 7.2 Selling, general and administrative expenses 3.5 3.1 3.4 Intangible amortization 0.3 0.2 0.2 Restructuring charges 0.1 — — Operating income 3.2 3.6 3.6 Interest expense 0.8 0.8 0.7 Interest income 0.2 — 0.1 Other charges (income), net 0.2 — (0.7) Equity in earnings (losses) of unconsolidated affiliates 0.1 — 0.2 Income from continuing operations before income taxes 2.5 2.8 3.9 (Benefit from) provision for income taxes (0.8) 0.4 0.4 Net income from continuing operations 3.3 2.4 3.5 Net income from discontinued operations, net of tax 1.4 1.2 0.3 Net income 4.7 3.6 3.8 Net income attributable to noncontrolling interest and redeemable noncontrolling interest 0.9 0.8 — Net income attributable to Flex Ltd. 3.8 % 2.8 % 3.8 % Net sales The following table sets forth our net sales by segment, and their relative percentages: Fiscal Year Ended March 31, 2024 2023 2022 Net sales: (In millions) Flex Agility Solutions $ 13,923 53 % $ 15,769 55 % $ 14,027 57 % Flex Reliability Solutions 12,492 47 % 12,733 45 % 10,606 43 % $ 26,415 $ 28,502 $ 24,633 Net sales for the fiscal year ended March 31, 2024 totaled $26.4 billion, representing a decrease of approximately $2.1 billion, o r 7%, fr om $28.5 billion for the fiscal year ended March 31, 2023.
Should additional taxes be assessed as a result of a current or future examination, there could be a material adverse effect on our effective tax rate, tax position, operating results, financial position and cash flows. We provide a valuation allowance against deferred tax assets that in our estimation are not more likely than not to be realized.
Should additional taxes be assessed as a result of a current or future examination, there could be a material adverse effect on our effective tax rate, tax position, operating results, financial position and cash flows.
Net sales increased across all regions with a $2.9 billion increase to $13.8 billion in the Americas, a $0.8 billion increase to $10.4 billion in Asia, and a $0.6 billion increase to $6.2 billion in Europe. Our ten largest customers during fiscal years 2023 and 2022 accounted for approximately 34% of net sales.
Net sales for the fiscal year ended March 31, 2023 increased $2.5 billion to $11.9 billion in the Americas, increased $0.8 billion to $10.4 billion in Asia, and increased $0.6 billion to $6.2 billion in Europe. Our ten largest customers during fiscal years 2024, 2023 and 2022 accounted for approximately 37%, 37% and 36% of net sales, respectively.
We have made estimates and assumptions taking into consideration certain possible impacts due to the COVID-19 pandemic and the Russian invasion of Ukraine. These estimates may change, as new events occur, and additional information is obtained. Actual results may differ from those estimates and assumptions.
We have made estimates and assumptions taking into consideration certain possible impacts due to the Russian invasion of Ukraine, the Israel-Hamas war, and other geopolitical conflicts. These estimates may change, as new events occur, and additional information is obtained. Actual results may differ from previously estimated amounts, and such differences may be material to the consolidated financial statements.
The objective of our business model is to allow us to be flexible and redeploy and reposition our assets and resources as necessary to meet specific customers' supply chain solution needs across all the markets we serve and earn a return on our invested capital above the weighted average cost of that capital. 35 Table of Contents We believe that our continued business transformation is strategically positioning us to take advantage of the long-term, future growth prospects for outsourcing of advanced manufacturing capabilities, design and engineering services and after-market services.
The objective of our business model is to allow us to be flexible and redeploy and reposition our assets and resources as necessary to meet specific customers' supply chain solution needs across all the markets we serve and earn a return on our invested capital above the weighted average cost of that capital.
Although substantially all of the amounts held outside of Singapore could be repatriated, under current laws, a significant amount could be subject to income tax withholdings.
As of March 31, 2024, approximately 55% of our cash and cash equivalents were held by foreign subsidiaries outside of Singapore. Although substantially all of the amounts held outside of Singapore could be repatriated, under current laws, a significant amount could be subject to income tax withholdings.
We also are subject to other risks as outlined in Item 1A, "Risk Factors". Net sales for fiscal year 2023 increased approximately 17%, or $4.3 billion, to $30.3 billion from the prior year. The increase in sales was notable in all three segments.
We also are subject to other risks as outlined in Item 1A, "Risk Factors". Net sales for fiscal year 2024 decreased approximately 7%, or $2.1 billion, to $26.4 billion from the prior year.
Nextracker's products enable solar panels to follow the sun’s movement across the sky and optimize plant performance. Our strategy is to provide customers with a full range of cost competitive, vertically-integrated global supply chain solutions through which we can design, build, ship and service a complete packaged product for our customers.
Our strategy is to provide customers with a full range of cost competitive, vertically-integrated global supply chain solutions through which we can design, build, ship and service a complete packaged product for our customers. This enables our customers to leverage our supply chain solutions to meet their product requirements throughout the entire product lifecycle.
Where local restrictions prevent an efficient intercompany transfer of funds, our intent is that cash balances would remain outside of Singapore and we would meet our liquidity needs through ongoing cash flows, external borrowings, or both. The following is a discussion of our cash flows for the fiscal years ended March 31, 2023 and March 31, 2022.
Where local restrictions prevent an efficient intercompany transfer of funds, our intent is that cash balances would remain outside of Singapore and we would meet our liquidity needs through ongoing cash flows, external borrowings, or both. Fiscal Year 2024 Cash provided by operating activities was $1.3 billion during fiscal year 2024.
The following tables set forth the relative percentages and dollar amounts of net sales by region and by country, and net property and equipment, by country, based on the location of our manufacturing sites (amounts may not sum due to rounding): 36 Table of Contents Fiscal Year Ended March 31, 2023 2022 (In millions) Net sales by region: Americas $ 13,773 45 % $ 10,839 42 % Asia 10,361 34 % 9,601 37 % Europe 6,212 21 % 5,601 21 % $ 30,346 $ 26,041 Net sales by country: Mexico $ 6,589 22 % $ 5,059 19 % China 6,539 22 % 6,146 24 % U.S. 5,020 17 % 3,690 14 % Malaysia 2,448 8 % 1,866 7 % Brazil 2,046 7 % 2,022 8 % Hungary 1,310 4 % 1,230 5 % Other 6,394 20 % 6,028 23 % $ 30,346 $ 26,041 Fiscal Year Ended March 31, 2023 2022 (In millions) Property and equipment, net: Mexico $ 763 32 % $ 626 29 % U.S. 365 16 % 354 17 % China 338 14 % 299 14 % Malaysia 152 6 % 110 5 % Hungary 140 6 % 118 6 % India 96 4 % 129 6 % Other 495 22 % 489 23 % $ 2,349 $ 2,125 We believe that the combination of our extensive open innovation platform solutions, design and engineering services, advanced supply chain management solutions and services, significant scale and global presence, and manufacturing campuses in low-cost geographic areas provide us with a competitive advantage and strong differentiation in the market for designing, manufacturing and servicing consumer and enterprise products for leading multinational and regional customers.
The following tables set forth the relative percentages and dollar amounts of net sales by region and by country, and net property and equipment, by country, based on the location of our manufacturing sites (amounts may not sum due to rounding): 39 Table of Content s Fiscal Year Ended March 31, 2024 2023 2022 (In millions) Net sales by region: Americas $ 12,232 46 % $ 11,906 42 % $ 9,414 38 % Asia 8,540 32 % 10,384 36 % 9,615 39 % Europe 5,643 22 % 6,212 22 % 5,604 23 % $ 26,415 $ 28,502 $ 24,633 Net sales by country: Mexico $ 6,935 26 % $ 6,626 23 % $ 5,092 21 % China 5,117 19 % 6,562 23 % 6,160 25 % U.S. 3,598 14 % 3,394 12 % 2,414 10 % Malaysia 2,122 8 % 2,448 9 % 1,866 8 % Brazil 1,529 6 % 1,769 6 % 1,842 7 % Hungary 1,368 5 % 1,310 5 % 1,230 5 % Other 5,746 22 % 6,393 22 % 6,029 24 % $ 26,415 $ 28,502 $ 24,633 Fiscal Year Ended March 31, 2024 2023 (In millions) Property and equipment, net: Mexico $ 793 35 % $ 763 33 % U.S. 334 15 % 358 15 % China 307 14 % 338 14 % Malaysia 142 6 % 152 6 % Hungary 124 5 % 140 6 % Brazil 88 4 % 89 4 % Other 481 21 % 502 22 % $ 2,269 $ 2,342 We believe that the combination of our extensive open innovation platform solutions, design and engineering services, advanced supply chain management solutions and services, significant scale and global presence, and manufacturing campuses in low-cost geographic areas provide us with a competitive advantage and strong differentiation in the market for designing, manufacturing and servicing consumer and enterprise products for leading multinational and regional customers.
As of March 31, 2023, our three operating and reportable segments were as follows: • Flex Agility Sol utions ("FAS"), which is comprised of the following end markets: ◦ Communications, Enterprise and Cloud ("CEC") , including data infrastructure, edge infrastructure and communications infrastructure ◦ Lifestyle , including appliances, consumer packaging, floorcare, micro mobility and audio ◦ Consumer Devices , including mobile and high velocity consumer devices. • Flex Reliability Solutions ("FRS"), which is comprised of the following end markets: ◦ Automotive , including next generation mobility, autonomous, connectivity, electrification, and smart technologies ◦ Health Solutions , including medical devices, medical equipment, and drug delivery ◦ Industrial , including capital equipment, industrial devices, and renewables and grid edge. • Nextracker, the leading provider of intelligent, integrated solar tracker and software solutions that are used in utility-scale and ground-mounted distributed generation solar projects around the world.
As of March 31, 2024, as a result of the Spin-off in the fourth quarter of fiscal year 2024, we now report our financial performance based on two operating and reportable segments as follows: • Flex Agility Sol utions ("FAS"), which is comprised of the following end markets: ◦ Communications, Enterprise and Cloud ("CEC") , including data infrastructure, edge infrastructure and communications infrastructure ◦ Lifestyle , including appliances, consumer packaging, floorcare, micro mobility and audio ◦ Consumer Devices , including mobile and high velocity consumer devices. • Flex Reliability Solutions ("FRS"), which is comprised of the following end markets: ◦ Automotive , including next generation mobility, autonomous, connectivity, electrification, and smart technologies ◦ Health Solutions , including medical devices, medical equipment, and drug delivery ◦ Industrial , including capital equipment, industrial devices, embedded and critical power offerings, and renewables and grid edge.
Interest, net Interest, net was $201 million during fiscal year 2023, compared to $152 million during fiscal year 2022, increasing $49 million primarily due to higher variable interest expense during fiscal year 2023.
Interest expense was $230 million during fiscal year 2023, compared to $166 million during fiscal year 2022, increasing $64 million primarily due to new bank borrowings and higher variable interest expense during fiscal year 2023.
Refer to note 9 to the consolidated financial statement in Item 8, "Financial Statements and Supplementary Data" for additional details.
Refer to note 2 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for further detail on our goodwill.
Some companies that have historically identified themselves as software providers, Internet service providers or e-commerce retailers have entered the highly competitive and rapidly evolving technology hardware markets, such as mobile devices, home entertainment and wearable devices. This trend has resulted in a significant change in the manufacturing and supply chain solution requirements of such companies.
Over the past few years, we have seen an increased level of diversification by many companies, primarily in the technology sector. Some companies that have historically identified themselves as software providers, Internet service providers or e-commerce retailers have entered the highly competitive and rapidly evolving technology hardware markets, such as mobile devices, home entertainment and wearable devices.
Depreciation expense was $0.4 billion and relatively consistent with prior years. These additions were offset by a net change in our operating assets and liabilities of $0.6 billion primarily driven by changes in net working capital as discussed below. 45 Table of Contents We believe net working capital is a key metric that measures our liquidity.
These additions were offset by a net change in our operating assets and liabilities of $0.3 billion. We believe net working capital is a key metric that measures our liquidity. Net working capital is calculated as current assets less current liabilities.
While the products have become more complex, the supply chain solutions required by such companies have become more customized and demanding, and it has changed the manufacturing and supply chain landscape significantly. We use a portfolio approach to manage our extensive service offerings.
This trend has resulted in a significant change in the manufacturing and supply chain solution requirements of such companies. While the products have become more complex, the supply chain solutions required by such companies have become more customized and demanding, and it has changed the manufacturing and supply chain landscape significantly.
As of March 31, 2023, we were in compliance with the covenants under all of our credit facilities and indentures, we also expect to remain in compliance with the covenants in the upcoming 12 months for our credit facilities and indentures.
As of March 31, 2024, we were in compliance with the covenants under all of our credit facilities and indentures and expect to remain in compliance with the covenants in the upcoming 12 months for our credit facilities and indentures. In fiscal year 2024, we implemented a 10b5-1 bond buyback program, aiming to repurchase certain outstanding bonds issued by us.
Refer to “Risk Factors - The COVID-19 pandemic has had, and may in the future again have, a material adverse effect on our business, results of operations and financial condition.” and "— Supply chain disruptions, manufacturing interruptions or delays, or the failure to accurately forecast customer demand, have in the past affected, and may in the future, affect our ability to meet customer demand, lead to higher costs, or result in excess or obsolete inventory.
Refer to “Risk Factors - Supply chain disruptions, manufacturing interruptions or delays, or the failure to accurately forecast customer demand, have in the past affected, and may in the future affect, our ability to meet customer demand, lead to higher costs, or result in excess or obsolete inventory.” Russian Invasion of Ukraine and Israel-Hamas War We continue to monitor and respond to the conflict in Ukraine and the associated sanctions and other restrictions.
The data below, and discussion that follows, represents our results from operations, and relative percentages.
For comparability purposes, the prior periods have been recast to conform to the current presentation. The data below, and discussion that follows, represents our results from operations, and relative percentages.
In addition, unanticipated changes in the liquidity or financial position of our customers and/or changes in economic conditions may require additional write downs for inventories due to our customers' inability to fulfill their contractual obligations with regards to inventory procured to fulfill customer demand.
In addition, unanticipated changes in the liquidity or financial position of our customers and/or changes in economic conditions may require additional write downs for inventories due to our customers' inability to fulfill their contractual obligations with regards to inventory procured to fulfill customer demand. 42 Table of Content s Carrying Value of Long-Lived Assets We review property and equipment and acquired amortizable intangible assets for impairment at least annually and whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable.
Liquidity is affected by many factors, some of which are based on normal ongoing operations of the business and some of which arise from fluctuations related to global economics and markets. Local government regulations may restrict our ability to move cash balances to meet cash needs under certain circumstances; however, any current restrictions are not material.
Our cash balances are generated and held in numerous locations throughout the world. Liquidity is affected by many factors, some of which are based on normal ongoing operations of the business and some of which arise from fluctuations related to global economics and markets.
Segment margins in the table below may not recalculate exactly due to rounding. 42 Table of Contents Fiscal Year Ended March 31, 2023 2022 (In millions) Segment income: Flex Agility Solutions $ 694 4.4 % $ 605 4.3 % Flex Reliability Solutions 607 4.8 % 546 5.1 % Nextracker 203 10.7 % 90 6.2 % FAS segment mar gin increased 10 basis points, to 4.4% for fiscal year 2023, from 4.3% for fiscal year 2022.
Fiscal Year Ended March 31, 2024 2023 2022 (In millions) Segment income: Flex Agility Solutions $ 669 4.8 % $ 694 4.4 % $ 605 4.3 % Flex Reliability Solutions 666 5.3 % 607 4.8 % 546 5.1 % FAS segment margin increased 40 basis points, to 4.8% for fiscal year 2024, from 4.4% for fiscal year 2023.
Selling, general and administrative expenses Selling, general and administrative expenses ("SG&A") totaled $1.0 billion, or 3.3% of net sales, during fiscal year 2023, compared to $0.9 billion, or 3.4% of net sales, during fiscal year 2022, increasing by $103 million or 12%, which reflects our enhanced cost control efforts to support higher revenue growth while keeping our SG&A expenses relatively flat.
SG&A totaled $0.9 billion , or 3.1% of net sales, during fiscal year 2023, compared to $0.8 billion, or 3.4% of net sales, during fiscal year 2022, increasing by $44 million or 5%, which reflects our enhanced cost control efforts to support higher revenue growth while keeping our SG&A expenses relatively flat. 46 Table of Content s Intangible amortization Amortizat ion of intangible assets in fiscal years 2024 and 2023 were $70 million and $81 million, respectively, representing a decrease of $11 million, from fiscal year 2023, primarily due to certain intangibles being fully amortized during fiscal year 2024.
Cost of sales during fiscal year 2023 totaled $28.1 billion, representin g an increase of ap proximately $4.0 billion, or 16% from $24.1 billion during fiscal year 2022. Th e increase in cost of sales is most notable in our FRS segment.
Cost of sales during fiscal year 2023 totaled $26.5 billion, representing an increase of approximately $3.7 billion or 16% from $22.8 billion during fiscal year 2022. The increase in cost of sales is most notable in our FRS segment.
Net sales for our FRS segment increased $2.1 billion, or 20%, from the prior year, primarily driven by strong increases in sales from our Industrial and Automotive businesses and, to a lesser extent, an increase in our Health Solutions business due to strong customer demand and ramps across various end markets coupled with incremental revenues from our Anord Mardix acquisition and the recovery of inflationary costs, despite continued supply constraints.
Net sales for our FRS segment decreased $0.2 billion, or 2%, from the prior year, primarily driven by a decrease in net sales of 8% in our Industrial business due to lower customer demand, partially offset by a 6% increase in our Automotive business and a 3% increase in our Health Solutions business which benefited from ramps across various end markets.
Net sales for our FAS segment increased $1.7 billion, or 12%, from the prior year, driven by strong growth in our CEC business and, to a lesser extent, an increase in our Lifestyle business.
Net sales for our FAS segment decreased $1.8 billion, or 12%, from the prior year, primarily driven by a decrease in net sales of 24% in our Consumer Devices business, a 17% decrease in our Lifestyle business and a 7% decrease in our CEC business due to softer demand in consumer end markets and difficult year-over-year comparisons in CEC.
Due to the COVID-19 pandemic and its long-term impacts and the ongoing conflict between Russia and Ukraine, there has been and we expect there will continue to be uncertainty and disruption in the global economy and financial markets.
Due to geopolitical conflicts (including the Russian invasion of Ukraine and the Israel-Hamas war), there has been and we expect there will continue to be uncertainty and disruption in the global economy and financial markets.
In addition. we have leased certain of our property and equipment under finance lease commitments, and certain of our facilities and equipment under operating lease commitments.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS Refer to the note 9 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for details of our debt obligations. In addition. we have leased certain of our property and equipment under finance lease commitments, and certain of our facilities and equipment under operating lease commitments.

… 109 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−6 removed9 unchanged
Biggest changeThey will settle primarily in the Brazilian real, British pound, China renminbi, Euro, Indian rupee, Malaysian ringgit, Mexican peso, and U.S. dollar. 49 Table of Contents Based on our overall currency rate exposures as of March 31, 2023, including the derivative financial instruments intended to hedge the nonfunctional currency-denominated monetary assets, liabilities and cash flows, and other factors, a 10% appreciation or depreciation of the U.S. dollar from its cross-functional rates would not be expected, in the aggregate, to have a material effect on our financial position, results of operations and cash flows in the near-term. 50 Table of Contents
Biggest changeBased on our overall currency rate exposures as of March 31, 2024, including the derivative financial instruments intended to hedge the nonfunctional currency-denominated monetary assets, liabilities and cash flows, and other factors, a 10% appreciation or depreciation of the U.S. dollar from its cross-functional rates would not be expected, in the aggregate, to have a material effect on our financial position, results of operations and cash flows in the near-term. 53 Table of Content s
As of March 31, 2023, the approximate average fair value of our debt outstanding under our Notes due June 2025, February 2026, January 2028, June 2029, and May 2030 was 97.1% of the face value of the debt obligations based on broker trading prices in active markets.
As of March 31, 2024, the approximate average fair value of our debt outstanding under our Notes due June 2025, February 2026, January 2028, June 2029, and May 2030 was 98.3% of the face value of the debt obligations based on broker trading prices in active markets.
The fair value of currency derivative contracts is reported on the balance sheet. The aggregate notional amount of outstanding contracts as of March 31, 2023 amounted to $11.1 billion and the recorded fair values of the associated assets and liabilities were not material to the Company's consolidated financial position.
The fair value of currency derivative contracts is reported on the balance sheet. The aggregate notional amount of outstanding contracts as of March 31, 2024 amounted to $8.6 billion and the recorded fair values of the associated assets and liabilities were not material to the Company's consolidated financial position.
As of March 31, 2023, the outstanding amount in the highly liquid investment portfolio was $2.3 billion, the largest components of which were U.S. dollar, Indian rupee, Brazilian real and China renminbi denominated money market accounts with an average return of 6.0%.
As of March 31, 2024, the outstanding amount in the highly liquid investment portfolio was $0.8 billion, the largest components of which were U.S. dollar, Indian rupee, Brazilian real and Israeli shekel denominated money market accounts with an average return of 4.0%.
The majority of these foreign exchange contracts expire in less than three months.
The majority of these foreign exchange contracts expire in less than three months. They will settle primarily in the Brazilian real, British pound, China renminbi, Euro, Malaysian ringgit, Mexican peso, and U.S. dollar.
Removed
A hypothetical 10% change in interest rates would not be expected to have a material effect on our financial position, results of operations and cash flows over the next fiscal year. We had variable rate debt outstanding of approximately $0.6 billion as of March 31, 2023. Variable rate debt obligations consisted of borrowings under our term loans.
Removed
Interest on these obligations is discussed in note 9 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data". Our variable rate debt instruments create exposures for us related to interest rate risk.
Removed
In July 2017, the U.K.'s Financial Conduct Authority (“FCA”), which regulates LIBOR, announced the publication cessation dates for all U.S. Dollar and non-U.S. Dollar LIBOR settings. Most settings ceased at the end of December 2021 and the remaining U.S. Dollar settings (overnight and one-, three-, six- and twelve-month U.S. Dollar LIBOR) will cease at the end of June 2023.
Removed
Although significant progress has been made by regulators, industry bodies, and market participants to introduce and implement the Secured Overnight Financing Rate (“SOFR”) as a replacement rate for U.S. dollar LIBOR, there is no assurance that an alternative reference rate such as SOFR will achieve sufficient market acceptance when the publication of the principal tenors of U.S.
Removed
Dollar LIBOR is discontinued, or that market participants will otherwise implement effective transitional arrangements to address that discontinuation. Such failure to implement an alternative reference rate could result in widespread dislocation in the financial markets and volatility in the pricing of debt facilities negatively affecting our access to the borrowing of additional funds.
Removed
Furthermore, while contractual arrangements in connection with certain of our debt facilities contemplate the transition from LIBOR to an alternative reference rate (including SOFR), the consequences of such transition cannot be entirely predicted and could result in an increase in the cost of our borrowings on our variable rate debt, which could adversely impact our interest expense, results of operations, and cash flows.

Other FLEX 10-K year-over-year comparisons