10q10k10q10k.net

What changed in FLEX LTD.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of FLEX LTD.'s 2022 and 2023 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 2023 report.

+425 added−439 removedSource: 10-K (2023-05-19) vs 10-K (2022-05-20)

Top changes in FLEX LTD.'s 2023 10-K

425 paragraphs added · 439 removed · 321 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

81 edited+23 added−17 removed36 unchanged
Biggest changeWe 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 have a focused strategy on delivering value to customers through manufacturing technology, a trusted supply chain, innovation and design services, and domain expertise. Significant Scope and Global Scale .
Biggest changeWe 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.
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 boards and complex electromechanical components. We assemble electronic products with custom electronic enclosures on 5 Table of Contents either a build-to-order or configure-to-order basis.
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.
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 .
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 .
In recent years, we have seen an increased level of diversification by many companies in the technology, automotive and healthcare industries along with the convergence of many industries being transformed by technology advances. Increasingly complex products require highly customized solutions, in turn resulting in significant changes to the overall manufacturing and supply chain landscape.
In recent years, we have seen an increased level of diversification by many companies in the technology, automotive and healthcare industries along with the convergence of many industries being transformed by technology advances. Digitization and increasingly complex products require highly customized solutions, in turn resulting in significant changes to the overall manufacturing and supply chain landscape.
Our solar trackers provide high levels of performance and operability and improve over time through software enhancements when coupled with our software solutions. The benefits of our solutions include increased energy yield performance, superior constructability, reliability, ease of maintenance, and advanced software and sensor capabilities. HUMAN CAPITAL MANAGEMENT Culture underlies our stakeholder experience.
Nextracker's solar trackers provide high levels of performance and operability and improve over time through software enhancements when coupled with our software solutions. The benefits of Nextracker's solutions include increased energy yield performance, superior constructability, reliability, ease of maintenance, and advanced software and sensor capabilities. HUMAN CAPITAL MANAGEMENT Culture underlies our stakeholder experience.
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 business units within the FAS and FRS segments in addition to our Nextracker business.
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.
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) in order to serve the supply chain needs of both multinational and regional companies.
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 believe the principal competitive factors in the contract manufacturing services market are quality and range of services; design and technological capabilities; cost; location of sites; and responsiveness and flexibility. We believe we are extremely competitive with regard to all of these factors.
We believe the principal competitive factors in the contract manufacturing services market are quality and range of services; design and technological capabilities; cost; location of sites; sustainability; and responsiveness and flexibility. We believe we are extremely competitive with regard to all of these factors.
Our values are intended to reflect and guide our behaviors and shape our culture. We endeavor for our value-driven culture to align us as we pursue our purpose, uphold our mission, live our values, advance toward our vision, and activate our strategy.
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.
SUSTAINABILITY At Flex, our sustainability journey began in 2002 with the creation of the Flex Foundation. For nearly 20 years, sustainability has been integrated into the fabric of our company, a key area of differentiation for Flex.
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.
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 RoHS entitled, Management Methods for 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 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.
Circular Economy Solutions . 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 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.
Additional Human Capital Management Information . Additional information regarding human capital management will be included in our proxy statement filed in connection with our 2022 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 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.
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, 2022, and 2021, 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 of March 31, 2023, and 2022, the carrying value of our intellectual property was not material.
Our experience with new product introductions and manufacturing ramps provides customers with a time to market advantage. • Broad range of services : Our full range of services include innovation and design, engineering, manufacturing, supply chain management, forward and reverse logistics, and circular economy solutions.
Our experience with new product introductions and manufacturing ramps provides customers with a time to market advantage. • Broad range of services : Our full range of services include innovation and design, engineering, manufacturing, supply chain management, component services, forward and reverse logistics, fulfillment, and circular economy solutions.
We make available through our Internet website the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”).
We make available, free of charge, through our Internet website the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”).
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. 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 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.
The Compensation and People Committee of our Board of Directors is responsible for assisting the Board in oversight of our human capital management, including among other aspects, receiving periodic updates (not less than twice annually) regarding, and overseeing any significant change to, our human capital 9 Table of Contents management strategy including corporate culture, inclusion, pay and opportunity equity, diversity, social initiatives and results, and talent training, development and retention programs.
The Compensation and People Committee of our Board of Directors is responsible for assisting the Board in oversight of our human capital management, including among other aspects, receiving periodic updates (not less than twice annually) regarding, and overseeing any significant change to our human capital management strategy including, corporate culture, diversity and inclusion, pay and opportunity equity, social initiatives and results, talent attraction training, development and retention programs.
We believe we have the broadest worldwide product development lifecycle capabilities in the industry, from concept design to manufacturing to aftermarket and end of life services.
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.
Flex's three operating and reportable segments are: • 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; and ◦ 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; and ◦ Industrial , including capital equipment, industrial devices, and renewables and grid edge. • Nextracker, the leading provider of intelligent, integrated solar tracker and software solutions used in utility-scale and ground-mounted distributed generation solar projects around the world.
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.
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 4 Table of Contents methodologies.
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.
In 2021, we improved our rating from Morgan Stanley Capital International ("MSCI"), earning an AA, and maintained 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 last sustainability report to the Sustainability Accounting Standards Board framework.
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.
Furthermore, we leveraged external community partnerships with organizations such as Catalyst, the Business Roundtable, the National Society of Black Engineers (“NSBE”) and The Valuable 500, to amplify our impact in recruiting and retaining diverse talent.
Furthermore, we leveraged external community partnerships with organizations such as Catalyst, the Business Roundtable, the National Society of Black Engineers (“NSBE”) and Women in Electronics to amplify our impact in recruiting and retaining diverse talent.
We also compete in the solar industry with our specialized tracker solutions and we believe the principle factors that drive competition in this market include established track record of product performance; system energy yield; software capabilities; product features; total cost of ownership and return on investment; reliability; customer support; product warranty terms; services; supply chain and logistics capabilities; and vendor financial strength and stability.
We also compete in the solar industry with Nextracker's specialized tracker solutions and we believe the principal factors that drive competition in this market include established track record of product performance; system energy yield; software 6 Table of Contents capabilities; product features; total cost of ownership and return on investment; reliability; customer support; product warranty terms; services; supply chain and logistics capabilities; and vendor financial strength and stability.
In response to the ongoing COVID-19 pandemic, we continued our contingency and resiliency plans that are encompassed in our business continuity programs. We continued enhanced health and safety measures across all facilities, as our foremost focus remains the health and safety of our employees.
In response to the remaining effects of the COVID-19 pandemic, we continued our contingency and resiliency plans that are encompassed in our business continuity programs. We continued to enhance health and safety measures across all facilities, as our foremost focus remains the health and safety of our employees.
We compete against numerous domestic and foreign manufacturing service providers, as well as current and prospective customers, who evaluate our capabilities in light of their own capabilities and cost structures.
Flex competes against numerous domestic and foreign manufacturing service providers, as well as current and prospective customers, who evaluate our capabilities in light of their own capabilities and cost structures.
Our deep cross-industry knowledge and multi-domain expertise accelerate the production of increasingly complex products for increasingly interconnected industries. • Global scale : Flex’s physical infrastructure includes over 100 facilities in approximately 30 countries, staffed by approximately 170,000 employees, providing customers with truly global scale and strategic geographic distribution capabilities.
Our 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.
We have a very balanced global manufacturing footprint with 34% of net sales in North America, 24% in China, 22% in Europe, the Middle East and Africa ("EMEA"), and 20% in other areas for fiscal year ended March 31, 2022 (with net sales attributable to the country in which the product is manufactured, or service is provided). Cross-industry synergies .
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).
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. COMPETITION Flex’s contract manufacturing services market is extremely competitive.
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 leadership uses the results of the survey to continue developing our strengths and measure opportunities for improvement. This year 85% 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 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.
Through our 2030 goals, we are committed to reducing our environmental impact in partnership with customers and suppliers, advancing a safe, inclusive and respectful work environment for our employees, investing in our communities, 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 ESG-focused practices with transparency.
As of March 31, 2022, women represent 43% of our global employees, and underrepresented minorities (those who identify as Black/African American, Hispanic/Latinx, Native American, Pacific Islander and/or two or more races) represent 47% of our U.S. employees. Approximately 19% of our executive team and approximately 22% of our leadership team (director level and above) are female.
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.
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 2022. We believe we are well-positioned to grow faster than the industry average. Extensive Design and Engineering Capabilities .
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 .
In support of cultivating an inclusive, high-performing culture, we adopted four specific behaviors that support our values and continued progress on our Flex Forward strategy. These behaviors, called our Ways of Working, bring our values to life through actions and are intended to provide a framework for how we make decisions.
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 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 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.
We leverage both formal and informal programs, including in-person (as health and safety allows), 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 2021, 36,894 of our employees completed 1 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 plat form , Flex Learn. In 2022, our employees completed more than five million hours of training programs.
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. 10 Table of Contents ENVIRONMENTAL RISKS AND CLIMATE CHANGE Our operations, including past and present business operations as well as past and present ownership of real property, 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 materials) used in or derived from our operations, emissions or discharge of substances including pollutants into the air and water, and the investigation and remediation of contaminated sites.
ENVIRONMENTAL RISKS AND CLIMATE CHANGE Our operations, including past and present business operations as well as past and present ownership of real property, 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 materials) used in or derived from our operations, emissions or discharge of substances including pollutants into the air and water, and the investigation and remediation of contaminated sites.
To support the advancement of our employees, we provide training and development programs and opportunities encouraging advancement from within as well as continue to fill our team with strong and experienced external talent.
Talent attraction, development, and retention are critical to our success and core to our mission as a company. To support the advancement of our employees, we provide training and development programs and opportunities encouraging advancement from within as well as continue to fill our team with strong and experienced external talent.
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.
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.
We modified practices at our manufacturing locations and offices to require personal protective equipment, sanitization measures, temperature checks, and 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 .
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 .
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.
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.
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.
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.
In calendar year 2021, the Flex Foundation partnered with several organizations, including the American Red Cross, World Wildlife Foundation, and Silicon Valley Education Foundation, among others, and provided nearly $1.5 million in grant support to 48 local projects in 15 countries, four regional projects to support well-known organizations, including Give2Asia and Global Giving, and several NGOs that support minorities and the environment, globally.
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.
Our employee resources groups ("ERGs") work to create a community that fosters freedom of self, 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.
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.
Nextracker's products enable solar panels to follow the sun’s movement across the sky and optimize plant performance. The FAS segment is optimized for speed to market based on a highly flexible supply and manufacturing system. The FRS segment is optimized for longer product lifecycles requiring complex ramps with specialized production models and critical 3 Table of Contents environments.
We continue to consolidate and present Nextracker as a segment subsequent to the IPO. 3 Table of Contents The FAS segment is optimized for speed to market, based on a highly flexible supply and manufacturing system. The FRS segment is optimized for longer product lifecycles requiring complex ramps with specialized production models and critical environments.
Our in-depth talent reviews serve to identify high potential talent to advance in roles with greater responsibility, assess learning and development needs, and establish and refresh succession plans for critical leadership roles across the enterprise. Our performance review process promotes transparent communication of team member performance, which we believe is a key factor in our success.
We are also focused on completing talent and performance reviews. Our in-depth talent reviews serve to identify high potential talent to advance in roles with greater responsibility, assess learning and development needs, and establish and refresh succession plans for critical leadership roles across the enterprise.
The purpose of these behaviors is to enable us to put our culture into practice and provide an accountability system through training and development as well as performance management systems to ensure our desired behaviors become a part of our everyday working norms. 7 Table of Contents How we live our values define 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.
The purpose of these behaviors is to enable us to put our culture into practice and provide an accountability system through training and development as well as performance management systems to ensure our desired behaviors become a part of our everyday working norms.
One of our competitive strengths is our ability to leverage technology from one industry and apply it to a different application within another industry. Examples include high-end computing, human machine interface, and internet of things ("IoT"). This cross-industry synergy gives our customers access to technology they would not otherwise have. Customer and Product Innovation Hubs.
One of our competitive strengths is our ability to leverage technology from one industry and apply it to a different application within another industry. Examples include hyperscale datacenters, electrification and next generation mobility, human machine interface, and internet of things ("IoT"). These cross-industry synergies give our customers access to technology they would not otherwise have. Industrial Parks; Cost-Efficient Manufacturing Services.
Our strategy and global efforts, through our sustainability programs and multi-year objectives, are aligned with the principles set forth in the 2030 Sustainable Development Goals ("SDGs").
In 2022, we announced our commitment to reach net zero greenhouse gas (GHG) emissions by 2040, strengthening our climate action efforts. Our strategy and global efforts, through our sustainability programs and multi-year objectives, are aligned with the principles set forth in the 2030 Sustainable Development Goals ("SDGs").
Through the collective strength of a global workforce across approximately 30 countries with responsible, sustainable operations, Flex delivers advanced manufacturing solutions and operates one of the most trusted global supply chains, supporting the entire product lifecycle with fulfillment, after-market, and circular economy solutions for diverse industries including cloud, communications, enterprise, automotive, industrial, consumer devices, lifestyle, healthcare, and energy.
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.
We are strengthening our abilities in software, robotics, artificial intelligence, factory automation, and other disruptive technologies. We select ethical partners and integrate the supply chain so that our customers can operate efficiently and responsibly. We are committed to investing in our employees and communities, which includes addressing critical environmental issues. People .
We select ethical partners and integrate the supply chain so that our customers can operate efficiently and responsibly. We are committed to investing in our employees and communities, which includes addressing critical environmental issues. People . To maintain competitiveness and world-class capabilities, we focus on hiring and retaining the world's best talent.
In fiscal year 2022, Flex acquired Anord Mardix to expand our power solutions for the rapidly growing data center market. 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.
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.
The Company also held cultural awareness activities throughout the year to highlight specific groups including People with Disabilities, Black History Month, Asian Pacific Heritage Month, PRIDE Month, LatinX Heritage Month, and Women’s History Month. In partnership with McKinsey, we offered leadership development opportunities through their Management Accelerator and Executive Leadership Program to 45 Asian, 16 Black and 36 LatinX employees.
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.
Diversity, equity and inclusion are key priorities and strengths at Flex and are embedded in the fabric of our culture.
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.
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. 11 Table of Contents INTELLECTUAL PROPERTY We own or license various United States and foreign patents relating to a variety of technologies.
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.
We have an industry-leading global design service offering, with extensive product design engineering resources that provides design services, product development, and solutions to satisfy a wide array of customer requirements across all of the key industries and markets in which we do business. Balanced geographic footprint .
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.
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. 10 Table of Contents More detailed information can be found in the Flex annual sustainability report located at https://flex.com/company/our-sustainability.
We have established state-of-the art innovation hubs in the Americas, Asia and Europe, with differentiated offerings and specialized services for specific industries and markets. These innovation hubs offer customers geographically focused centers of design services, taking their products from concept to volume production and go-to-market in a rapid, cost effective and low risk manner. Industrial Parks; Cost-Efficient Manufacturing 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.
We are highly collaborative and leverage our global system and processes to operate with speed and responsiveness to provide customers a reliant and resilient supply chain and manufacturing technology solutions and services. Markets . We focus on companies that are leaders in their industry and value our superior capabilities in design, manufacturing, and supply chain 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 bring our values to life through four behaviors: 1. Respect and Value Others. 2. Collaborate and Share Openly. 3. Learn and Adapt. 4. Honor Commitments. We believe that the performance of our Company is impacted by our human capital management, and as a result we consistently work to attract, select, develop, engage and retain strong, diverse talent.
We believe that the performance of our Company is impacted by our human capital management, and as a result we consistently work to attract, select, develop, engage and retain strong, diverse talent. Our policies, philosophy and strategies support the inclusion of all people in our working environment.
To maintain competitiveness and world-class capabilities, we focus on hiring and retaining the world's best talent. 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 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 do this by providing our customers with product development lifecycle services, from innovation, design, and engineering, to manufacturing, supply chain solutions, logistics, and circularity offerings. 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.
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.
We believe our global scale and regional capability are a significant competitive advantage, as customers increasingly require a broad range of manufacturing and supply chain services and solutions globally. Increasingly, customers are exploring transitioning to regional-based supply chains to take advantage of time to market and specific customization required to win in those markets.
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.
We believe we are extremely competitive with regard to all of these factors. 6 Table of Contents COMPETITIVE STRENGTHS We continuously enhance our business through the development and expansion of our product and service offerings.
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.
In 2020, the Company introduced new vision, mission, purpose, and value statements in support of cultivating an inclusive, high-performing culture where employees are empowered and given opportunities to reach their full potential. We are committed to providing a positive and safe workplace for Flex employees, respecting their dignity, creating an inclusive environment, and ensuring access to opportunity.
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.
With over 10,000 members, the Company maintains ERG chapters worldwide across eight identities: Asian and Pacific Islander, Black, LatinX, LGBTQ+, People with Disabilities, Women, Women in Tech, and Veterans. These groups help to create a sense of belonging and support retention and attraction. Each ERG has an executive sponsor and is supported by senior leaders across the Company.
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.
Single axis solar trackers generate up to 25% more energy than projects that use fixed-tilt systems that do not track the sun. We have developed an intelligent independent row tracking system with proprietary technology that we believe produces more energy, lowers operating costs, and is easier to deploy compared to other tracker products.
Nextracker has developed an intelligent independent row tracking system with proprietary technology that we believe produces more energy, lowers operating costs, and is easier to deploy compared to other tracker products. Nextracker's tightly-integrated software solutions use advanced algorithms and artificial intelligence technologies to optimize the performance and capabilities of its tracker products. Global Services and Solutions.
Our programs give access to a variety of innovative, flexible, and convenient health and wellness programs for our global employees, including on-site health centers in some of our major factories, which were increasingly critical this year for our essential workers who have worked on site since the start of the COVID-19 pandemic.
We provide programs and tools to improve physical, mental, financial, and social well-being. Our programs give access to a variety of innovative, flexible, and convenient health and wellness programs for our global employees, including on-site health centers in some of our major factories and providing 100% of employees access to emotional and mental health programs.
We also enhanced SheLeads, our global leadership development program for women employees, offered leadership coaching to 20 of our top gender and ethnically diverse leaders, and continued to implement inclusive leadership training for people managers to, among other things, provide tools to help managers lead more inclusively and improve diversity in recruiting.
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.
Approximately 23% of our executive team and approximately 32% of our U.S. leadership team (director level and above) are comprised of underrepresented minorities. We established corporate goals to increase the number of employees and leaders from underrepresented groups and will continue to evolve these goals over time to improve representation.
Approximately 22% of our executive team and approximately 32% of our U.S. leadership team (director level and above) are comprised of underrepresented minorities.
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. These complexities are making it harder for companies to manage their own supply chain and manufacturing operations. They are looking for trusted partners to help them navigate this complex environment.
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.
Our products enable solar panels in utility-scale power plants to follow the sun’s movement across the sky and optimize plant performance. By optimizing and increasing energy production and reducing costs, our tracker products and software solutions offer significant return on investment (“ROI”).
Solar Tracker and Software Solutions. Nextracker is the leading provider of intelligent, integrated solar tracker and software solutions used in utility-scale and ground-mounted distributed generation solar projects around the world. Nextracker's products enable solar panels in utility-scale power plants to follow the sun’s movement across the sky and optimize plant performance.
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. The “Digitization of Everything” is the mega-trend that is driving products—and even whole industries—to be smarter, more data-driven, and more connected.
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.
To make these next generation products, companies must integrate increasingly advanced technologies and build them at scale. Additionally, with regards to our solar business, we believe that both the attractive cost of solar generation and increasing demand for renewable energy will drive continued growth in the utility-scale solar market.
Additionally, with regards to Nextracker, we believe that both the attractive cost of solar generation and increasing demand for renewable energy will drive continued growth in the utility-scale solar market. In addition to the pandemic, rising global uncertainty over the past few years including trade and tariff issues, increasing geopolitical unrest, and severe labor shortages are creating further complexity.
We recognize that we have an opportunity to promote and support a culture of inclusion and diversity, wellness, and health and safety among our employees. Employees. As of March 31, 2022, our global workforce totaled approximately 172,648 employees including our contractor workforce. In certain international locations, our employees are represented by labor unions and by work councils.
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.
During calendar year 2021, we received several awards and accolades for our sustainability program and efforts including the RBA’s Compass Award and Supply & Demand Chain Executive’s Green Supply Chain Award. In addition, we received Ericsson’s 2021 supplier award for our leadership in climate action.
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.
In developing these goals, we focused on hiring, retaining and promoting diversity across the organization. Additionally, we remain committed to parity in pay and opportunity. Talent Attraction, Development, and Retention . Talent attraction, development, and retention are critical to our success and core to our mission as a company.
We continued efforts in support of our corporate goals to increase the number of employees and leaders from underrepresented groups and are focused on evolving strategies and programs to help improve representation and better hire, retain and promote diversity across the organization. Additionally, we remain committed to parity in pay and opportunity. Talent Attraction, Development, and Retention .
Our tightly-integrated software solutions use advanced algorithms and artificial intelligence technologies to optimize the performance and capabilities of our tracker products. Logistics . The Flex Global Services business provides after-market and forward supply chain logistics services. Our suite of services is tailored to customers operating in the computing, consumer digital, infrastructure, industrial, mobile, automotive and medical industries.
The Company's suite of services is tailored to customers operating in the computing, consumer digital, infrastructure, industrial, mobile, automotive and healthcare industries. Circular Economy Solutions .
Nextracker provides solar tracker technologies that optimize and increase energy production while reducing costs for significant plant return on investment.
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.
In addition to the pandemic, rising global uncertainty over the past few years including trade and tariff issues, increasing geopolitical conflict, and severe labor shortages are creating further complexity. Companies are rethinking their entire production strategies, and we are seeing a global rebalancing in sourcing and producing to maximize resiliency. Sustainability is no longer an afterthought.
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.

… 41 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

121 edited+48 added−35 removed131 unchanged
Biggest changeThe duration and extent to which it will continue to adversely impact our business and results of operations remains uncertain and could be material. • 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, may adversely affect our margins and profitability. • Our exposure to financially troubled customers or suppliers may adversely affect our financial results. • Our margins and profitability may be adversely affected due to substantial investments, start-up and production ramp costs in our design services. • 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 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. • 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. • Our strategic relationships with major customers create risks. • 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 and we may be exposed to product liability and product warranty liability.
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.
In addition, some countries in which we operate, such as Brazil, Hungary, India, Mexico, Malaysia and Poland, have experienced periods of slow or negative growth, high inflation, significant currency devaluations or limited availability of foreign exchange.
In addition, some countries in which we operate, such as Brazil, Hungary, India, Malaysia, Mexico and Poland, have experienced periods of slow or negative growth, high inflation, significant currency devaluations or limited availability of foreign exchange.
Furthermore, in countries such as China, Brazil, India and Mexico, governmental authorities exercise significant influence over many aspects of the economy, and their actions could have a significant effect on us. Demand for Nextracker solar trackers could be indirectly depressed as a result of existing and/or increased tariffs, duties or taxation of imported solar panels and cells.
Furthermore, in countries such as Brazil, China, India and Mexico, governmental authorities exercise significant influence over many aspects of the economy, and their actions could have a significant effect on us. Demand for Nextracker solar trackers could be indirectly depressed as a result of existing and/or increased tariffs, duties or taxation of imported solar panels and cells.
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 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 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.
Also of note is China's Management Methods for Controlling Pollution Caused by electrical 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.
The GDPR, 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, and to implement our business strategy effectively. These laws and regulations could similarly affect our customers.
In that regard, we must make significant decisions, including determining the levels of business that we will seek and accept, setting production schedules, making component procurement commitments, and allocating personnel and other resources based on our estimates of our customers' requirements.
In that regard, we must make significant decisions, including determining the levels of business that we will seek and accept, setting production schedules and locations, making component procurement commitments, and allocating personnel and other resources based on our estimates of our customers' requirements.
Even after we have a contract with a customer with respect to a product, these contracts may allow the customer to delay or cancel deliveries and may not obligate the customer to any particular volume of purchases. These contracts can generally be terminated on short notice.
Even after we have a contract with a customer with respect to a product, these contracts sometimes allow the customer to delay or cancel deliveries and may not obligate the customer to any particular volume of purchases. These contracts can generally be terminated on short notice.
The effects of the GDPR, the CPRA and other state laws and other data privacy laws and regulations, including the many international privacy laws, may be significant, and may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply.
The effects of the GDPR, the PIPL, the CPRA and other state laws and other data privacy laws and regulations, including the many international privacy laws, may be significant, and may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply.
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.
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 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; • our customers may experience dramatic market share shifts in demand which may cause them to lose market share or exit businesses; and • a negative impact of the COVID-19 pandemic on our customers or on the demand for our customers’ products.
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.
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 may 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 services customers, we often design and develop products for these customers prior to receiving a purchase order or other firm commitment from them.
In recent years, including fiscal years 2022, 2021, and 2020, we initiated targeted restructuring activities focused on optimizing our portfolio, in particular customers and products in our consumer devices business, optimizing our cost structure in lower growth areas and, more importantly, streamlining certain corporate and segment functions.
In recent years, including fiscal years 2023, 2022, and 2021, we initiated targeted restructuring activities focused on optimizing our portfolio, in particular customers and products in our consumer devices business, optimizing our cost structure in lower growth areas and, more importantly, streamlining certain corporate and segment functions.
These potential new 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 laws and regulations are under development at the U.S. Federal and state level and many international jurisdictions.
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; 23 Table of Contents • 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; • government shutdowns, lockdowns and quarantines due to COVID-19, which may result in temporary closure of facilities or slowdowns in production; • 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, 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.
We also do business in many emerging market jurisdictions where economic, political and legal risks are heightened. Further, an increase in inflation rates, such as those the market is currently experiencing, could affect our profitability and cash flows, due to higher wages, higher operating costs, higher financing costs, and/or higher supplier prices. Inflation may also adversely affect foreign exchange rates.
We also do business in many emerging market jurisdictions where economic, political and legal risks are heightened. Further, an increase in inflation pressures, such as what the market is currently experiencing, could affect our profitability and cash flows, due to higher wages, higher operating costs, higher financing costs, and/or higher supplier prices. Inflation may also adversely affect foreign exchange rates.
Stock price fluctuations could impact the value of our equity compensation, which could affect our ability to recruit and retain employees. 21 Table of Contents 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. 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.
As a result of the foregoing, we also may not be able to complete acquisitions or strategic customer transactions in the future to the same extent as in the past, or at all. 18 Table of Contents To integrate acquired businesses, we must implement our management information systems, operating systems and internal controls, and assimilate and manage the personnel of the acquired operations.
As a result of the foregoing, we also may not be able to complete acquisitions or strategic customer transactions in the future to the same extent as in the past, or at all. To integrate acquired businesses, we must implement our management information systems, operating systems and internal controls, and assimilate and manage the personnel of the acquired operations.
Component shortages may 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. As a result, component shortages have adversely affected, and will continue to adversely affect, our operating results.
Refer to note 2 to the consolidated financial statements and "Critical Accounting Policies" in "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further discussion of the impairment testing of goodwill and identifiable intangible assets.
Refer to note 2 to the consolidated financial statements and "Critical Accounting Estimates" in "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further discussion of the impairment testing of goodwill and identifiable intangible assets.
In the past, some of our customers moved a portion of their manufacturing from us in order to more fully utilize their excess internal manufacturing capacity. Any of these developments could cause a decline in our sales, loss of market 20 Table of Contents acceptance of our products or services, decreases of our profits or loss of our market share.
In the past, some of our customers moved a portion of their manufacturing from us in order to more fully utilize their excess internal manufacturing capacity. Any of these developments could cause a decline in our sales, loss of market acceptance of our products or services, decreases of our profits or loss of our market share.
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.
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.
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.
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.
The CCPA and CPRA, among other requirements, require covered companies to provide new rights and disclosures to California consumers, and allow such consumers abilities to opt-out of certain sales of personal information and other activities and will create a new regulatory enforcement body.
The CCPA and CPRA, among other requirements, require covered companies to provide new rights and disclosures to California consumers, and allow such consumers abilities to opt-out of certain sales of personal information and other activities, and creates a new regulatory enforcement body.
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 may cause supply chain and other issues which could adversely affect our operating results.
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.
Our ten largest customers accounted for approximately 34%, 36% and 39% of net sales in fiscal years 2022, 2021 and 2020, respectively. No customer accounted for more than 10% of net sales in fiscal year 2022, 2021 and 2020. Our principal customers have varied from year to year.
Our ten largest customers accounted for approximately 34%, 34% and 36% of net sales in fiscal years 2023, 2022 and 2021, respectively. No customer accounted for more than 10% of net sales in fiscal year 2023, 2022 and 2021. Our principal customers have varied from year to year.
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.
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.
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.
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.
Our 5.000% Notes due 2023, our 4.750% Notes due 2025, our 3.750% Notes due 2026, our 4.875% Notes due 2029 and our 4.875% Notes due 2030 are currently rated BBB- by Standard and Poor's ("S&P") which is considered to be “investment grade” by S&P, rated Baa3 by Moody’s which is considered to be “investment grade” by Moody's, and rated BBB- by Fitch which is considered to be "investment grade" by Fitch.
Our 4.750% Notes due 2025, our 3.750% Notes due 2026, our 6.000% Notes due 2028, our 4.875% Notes due 2029 and our 4.875% Notes due 2030 are currently rated BBB- by Standard and Poor's ("S&P") which is considered to be “investment grade” by S&P, rated Baa3 by Moody’s which is considered to be “investment grade” by Moody's, and rated BBB- by Fitch which is considered to be "investment grade" by Fitch.
In the event of such a claim, we may be required to spend a significant amount of money to develop alternatives or 29 Table of Contents obtain licenses or to resolve the issue through litigation.
In the event of such a claim, we may be required to spend a significant amount of money to develop alternatives or obtain licenses or to resolve the issue through litigation.
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, could result in shipping delays, increased costs, or other supply chain disruptions, and could therefore have a material adverse effect on our operations.
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.
We are subject to risks associated with investments. We invest in private funds and companies for strategic reasons and may not realize a return on our investments. We make investments in private funds and companies to further our strategic objectives, support key business initiatives, and develop business relationships with related portfolio companies.
We invest in private funds and companies for strategic reasons and may not realize a return on our investments. We make investments in private funds and companies to further our strategic objectives, support key business initiatives, and develop business relationships with related portfolio companies.
Similarly, our failure or perceived failure to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards within the timelines we announce, or at all, could also have similar negative impacts and expose us to government enforcement actions and private litigation.
Similarly, our failure or perceived failure to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards within the timelines we announce or otherwise as may be required, or at all, could also have similar negative impacts and expose us to government enforcement actions and private litigation.
If our ESG initiatives fail to satisfy investors, current or potential customers, consumers and our other stakeholders, our reputation, our ability to sell 28 Table of Contents products and services to customers, our ability to attract or retain employees, and our attractiveness as an investment, business partner or acquirer could be negatively impacted.
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.
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.
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.
We cannot at this time quantify or forecast the business impact of 15 Table of Contents COVID-19, and there can be no assurance that the COVID-19 pandemic will not have a material and adverse effect on our business, financial results and financial condition.
We cannot at this time quantify or forecast the business impact of the remaining effects of the COVID-19, and there can be no assurance that the remaining effects of the COVID-19 pandemic will not have a material and adverse effect on our business, financial results and financial condition.
Our margins and profitability may 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 services. As part of our strategy to enhance our end-to-end service offerings, we continue to expand our design and engineering capabilities.
If unauthorized parties gain physical access to our inventory or if they gain electronic access to our information systems or if such information or inventory is used in an unauthorized manner, misdirected, or lost or stolen during transmission or transport, any theft or misuse of such information or inventory could result in, among other things, unfavorable publicity, governmental inquiry and oversight, difficulty in marketing our services, 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 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.
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 on RoHS, the 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.
We regularly face attempts by sophisticated actors to gain unauthorized access through the Internet or to introduce malicious software to our information systems, including those using techniques that change frequently or may be disguised or difficult to remain dormant until a triggering event or that may continue undetected for an extended period of time.
We regularly face attempts by sophisticated and malicious actors to gain unauthorized access to our information systems, including those using techniques that change frequently or may be disguised or difficult to detect and remain dormant until a triggering event or that may continue undetected for an extended period of time.
There is increasing concern that a gradual increase in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere will cause significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters.
There continues to be increasing concern that a gradual increase in global average temperatures due to increased concentration of carbon dioxide and other GHGs in the atmosphere will cause significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters.
Global Compact, a voluntary initiative for businesses to develop, implement and disclose sustainability policies and practices. These social and environmental responsibility and 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 ESG practices, policies, provisions and initiatives are subject to change, can be unpredictable, and may be difficult and expensive for us to comply with.
Such adverse effects could 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.
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.
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 comply with the sustainability standards set forth by various voluntary sustainability initiatives and organizations, and we have joined the U.N.
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.
In addition, data privacy laws and regulations, including the European Union General Data Protection Regulation (“GDPR”), the UK GDPR, ePrivacy Directive, Singapore’s Personal Data Protection Act, and other privacy and data security 17 Table of Contents laws throughout the Asia Pacific region and across the globe pose increasingly complex compliance challenges, which may increase compliance costs, and any failure to comply with data privacy laws and regulations could result in significant penalties.
In addition, data privacy laws and regulations, including the European Union General Data Protection Regulation (“GDPR”), the UK GDPR, the EU ePrivacy Directive, Singapore’s Personal Data Protection Act, China's Personal Information Protection Law ("PIPL"), and other privacy and data security laws throughout the Asia Pacific region and across the globe pose increasingly complex compliance challenges, which may increase compliance costs, and any failure to comply with data privacy laws and regulations could result in significant penalties.
Continued noncompliance to the EU regulations could stop the flow of products into the EU from us or from our customers. In China, the Safe Food and Drug Administration controls and regulates the manufacture and commerce of healthcare products.
Continued noncompliance to the EU regulations could stop the flow of products into the EU from us or from our customers. In China, the National Medical Products Administration controls and regulates the manufacture and commerce of healthcare products.
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. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
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.
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.
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.
Our operations or systems could be disrupted by natural disasters, terrorist activity, public health issues (including the COVID-19 pandemic), cybersecurity incidents, interruptions of service from utilities, political crises and conflicts (including the Russian invasion of Ukraine), transportation or telecommunications providers, or other catastrophic events.
Our operations or systems could be disrupted by natural disasters, terrorist activity, public health issues (including the COVID-19 pandemic), cybersecurity incidents, interruptions of service from utilities, political crises and conflicts (including the Russian invasion of Ukraine), transportation or telecommunications providers, or other catastrophic events. Climate change may exacerbate the frequency and intensity of natural disasters and adverse weather conditions.
Any actual or perceived failures to comply with these laws or regulations, or related contractual or other obligations, or any perceived privacy rights violation, could lead to investigations, claims, and proceedings by governmental entities and private parties, damages for contract breach, and other significant costs, penalties, and other liabilities, as well as harm to our reputation and market position.
Any actual or perceived failures to comply with these laws or regulations, or related contractual or other obligations, or any perceived privacy rights violation, whether by us, one of our third-party service providers or vendors or another third party, could lead to investigations, claims, and proceedings by governmental entities and private parties, damages for contract breach, and other significant costs, penalties, and other liabilities, as well as harm to our reputation and market position.
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 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.
Cancellations, reductions, or delays by a significant customer or by a group of customers have harmed, and may in the future harm, our results of operations by reducing the volumes of products we manufacture and deliver for those customers, by causing a delay in the repayment of our expenditures for inventory in preparation for customer orders and/or an impairment loss for inventory, and by lowering our asset utilization and overhead absorption resulting in lower gross margins and earnings.
Cancellations, reductions, or delays by a significant customer or by a group of customers have harmed, and may in the future harm, our results of operations by reducing the volumes of products we manufacture and deliver for those customers, by causing a delay in the repayment of our expenditures for inventory in preparation for customer orders and/or our possession of excess or obsolete inventory that we may not be able to sell to customers or third parties which may result in an impairment loss for inventory, and by lowering our asset utilization and overhead absorption resulting in lower gross margins and earnings.
A successful product liability or product warranty claim in excess of our insurance coverage or any material claim for which insurance coverage is denied, limited or is not available could have a material adverse effect on our business, results of operations and financial condition. We are subject to the risk of increased income taxes.
A successful product liability or product warranty claim in excess of our insurance coverage or any material claim for which insurance coverage is denied, limited or is not available could have a material adverse effect on our business, results of operations and financial condition.
The interest rates on our borrowings under our revolving credit facility may be based on either (i) a margin over LIBOR or (ii) the base rate (the greatest of the agent's prime rate, the federal funds rate plus 0.50% and LIBOR for a one-month interest period plus 1.00%) plus an applicable margin, in each case depending on our credit rating, and other borrowings also may be based on LIBOR.
The interest rates on our borrowings under our revolving credit facility may be based on either (i) the Term Secured Overnight Financing Rate ("Term SOFR") or (ii) the base rate (the greatest of the agent's prime rate, the federal funds rate plus 0.50%, and the Term SOFR plus 1.00%) plus an applicable margin, in each case depending on our credit rating, and other borrowings also may be based on Term SOFR.
If the financial performance of our businesses were to decline significantly as a result of the COVID-19 pandemic, we could incur a material non-cash charge to our income statement for the impairment of goodwill and other intangible assets.
If the financial performance of our businesses were to decline significantly, we could incur a material non-cash charge in our statement of operations for the impairment of goodwill and other intangible assets.
If we do not properly manage our financial and management controls, reporting systems and procedures to manage our employees, our business could be harmed.
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 one or more of our customers were to become insolvent or otherwise were unable to pay for the services provided by us on a timely basis, or at all, our operating results and financial condition could be adversely affected.
When one or more of our customers becomes insolvent or otherwise is unable to pay for the services provided by us on a timely basis, or at all, our operating results and financial condition are adversely affected.
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.
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 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. Additionally, the recent COVID-19 pandemic could contribute to foreign currency volatility.
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.
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 22 Table of Contents Russian invasion of Ukraine), war, a major terrorist attack, natural disasters or actual or threatened public health emergencies (such as COVID-19, including virus variants and resurgences and responses to those developments such as continued or new government-imposed lockdowns and travel restrictions).
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 failure or inability to accurately forecast demand and volatility in the availability of materials, equipment, components, and services, including rising prices due to inflation or scarcity of availability may adversely impact our business and results of operations.
Inflationary pressures have increased and may continue to increase pricing of components. Our failure or inability to accurately forecast demand and volatility in the availability of materials, equipment, components, and services, including rising prices due to inflation or scarcity of availability, have in the past adversely impacted, and may in the future, adversely impact our business and results of operations.
Our customers also may experience component shortages which may adversely affect customer demand for our products and services. Our end markets have been and continue to be impacted by logistical constraints, with COVID-19 related restrictions contributing to a declining workforce, including at ports and warehouses, as well as driver shortages and increased freight and logistics costs around the world.
Our customers also may experience component shortages which may adversely affect customer demand for our products and services. Our end markets have been and continue to be impacted by logistical constraints, as well as driver shortages and increased freight and logistics costs around the world.
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 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 programs may include collecting compliance data from our suppliers, full laboratory testing and public reporting of other environmental metrics such as carbon emissions, electronic waste and water, and we also require our supply chain to comply.
We have developed rigorous risk mitigating compliance programs designed to meet the needs of our customers as well as applicable regulations. These programs may include collecting compliance data from our suppliers, full laboratory testing and public reporting of other environmental metrics such as carbon emissions, electronic waste and water, and we also require our supply chain to comply.
Most recently, we have experienced shortages of semiconductor components which has impacted our end markets. These unanticipated component shortages have and will continue to result in curtailed production or delays in production, which prevent us from making scheduled shipments to customers.
We have also experienced, and continue to experience, such shortages due to the effects of the COVID-19 pandemic. Most recently, we have experienced shortages of semiconductor components which have impacted our business. These component shortages have and will continue to result in curtailed production or delays in production, which prevent us from making scheduled shipments to customers.
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 and in response to the economic challenges in light of recent events with COVID-19.
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 are increasingly reliant on our information systems 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.
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.
These challenges include managing operations across multiple time zones, directing the manufacture and delivery of products across long distances, coordinating procurement of components and raw materials and their delivery to multiple locations, and coordinating the activities and decisions of the core management team, which is based in a number of different countries.
These challenges include managing operations across multiple time zones, directing the manufacture and delivery of products across long distances, coordinating procurement of components and raw materials and their delivery to multiple locations, and coordinating the activities and decisions of the core management team, which is based in a number of different countries. 24 Table of Contents Facilities in several different locations may be involved at different stages of the production process of a single product, leading to additional logistical difficulties.
Restructuring activities involve reductions in our workforce at some locations and 16 Table of Contents closure of certain facilities. All of these changes have in the past placed, and may in the future place, considerable strain on our financial and management control systems and resources, including decision support, accounting management, information systems and facilities.
All of these changes have in the past placed, and may in the future place, considerable strain on our financial and management control systems and resources, including decision support, accounting management, information systems and facilities.
We may not have sufficient capacity at any given time to meet 13 Table of Contents our customers' demands, and transfers from one facility to another can result in inefficiencies and costs due to excess capacity in one facility and corresponding capacity constraints at another.
These demands may stress our resources, cause supply chain management issues, and reduce our margins. We may not have sufficient capacity at any given time to meet our customers' demands, and transfers from one facility to another can result in inefficiencies and costs due to excess capacity in one facility and corresponding capacity constraints at another.
Inconsistency of legislation and regulations among jurisdictions may also affect the costs of compliance with such laws and regulations. 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.
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.
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. We have also experienced, and continue to experience, such shortages due to the effects of the COVID-19 pandemic.
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.
If we are required to recognize an impairment charge in the future, the charge would not impact our consolidated cash flows, liquidity, capital resources, and covenants under our existing credit facilities, asset securitization program, and other outstanding borrowings. Our debt level may create limitations. As of March 31, 2022, our total debt was approximately $4.2 billion.
If we are required to recognize an impairment charge in the future, the charge would not impact our consolidated cash flows, liquidity, capital resources, and covenants under our existing credit facilities, asset securitization program, and other outstanding borrowings.
The attractiveness of our services to customers and our ability to conduct business with certain customers can be affected by changes in U.S. and other countries' trade policies. In 2018, the U.S. imposed tariffs on a large variety of products of Chinese origin.
The attractiveness of our services to customers and our ability to conduct business with certain customers can be affected by changes in U.S. and other countries' policies, including regarding trade.
We may consolidate certain manufacturing facilities or transfer certain of our operations to lower cost geographies. If we are required to take additional restructuring charges in the future, our operating results, financial condition, and cash flows could be adversely impacted.
If we are required to take additional restructuring charges in the future, our operating results, financial condition, and cash flows could be adversely impacted.
The defense and ultimate outcome of any lawsuits or other legal proceedings may 25 Table of Contents result in higher operating expenses and a decrease in operating margin, which could have a material adverse effect on our business, financial condition, or results of operations.
The defense and ultimate outcome of any lawsuits or other legal proceedings may result in higher operating expenses and a decrease in operating margin, which could have a material adverse effect on our business, financial condition, or results of operations. 26 Table of Contents Any existing or future lawsuits could be time-consuming, result in significant expense and divert the attention and resources of our management and other key employees, as well as harm our reputation, business, financial condition or results of operations.
Our business could be adversely affected by any delays, or increased costs, resulting from issues that our common carriers are dealing with in transporting our materials, our products, or both.
Our business has in the past been, and may in the future be, adversely affected by delays and increased costs resulting from issues that our common carriers deal with in transporting our materials, our products, or both.
Our ability to successfully execute these initiatives and accurately report our progress presents numerous operational, financial, legal, reputational and other risks, many of which are outside our control, and all of which could have a material negative impact on our business. Additionally, the implementation of these initiatives imposes additional costs on us.
Evolving stakeholder expectations, and our ability to successfully execute these initiatives and accurately report our progress and accomplish our goals present numerous operational, financial, legal, regulatory, reputational and other risks and uncertainties, many of which are outside our control, and all of which could have a material adverse impact on our business.
The extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments such as the length and severity of the crisis, the potential resurgence of COVID-19 in the future including the emergence of more contagious or vaccine-resistant variants of the virus, the availability and distribution of effective treatments and vaccines, and public health measures and actions taken throughout the world to contain COVID-19, and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable.
The COVID-19 pandemic also created significant macroeconomic uncertainty, volatility and disruption, which may continue to adversely affect our and our customers’ and suppliers’ liquidity, cost of capital and ability to access the capital markets and cause further disruptions in our supply chain and customer demand. 20 Table of Contents The extent to which the remaining effects of the COVID-19 pandemic could continue to impact our business and financial results going forward will be dependent on future developments such as its length and severity, its potential resurgence in the future including the emergence of more contagious or vaccine-resistant variants, the availability and distribution of effective treatments and vaccines, and public health measures and actions taken to contain COVID-19, and the overall impact of the remaining effects of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain uncertain and unpredictable.
Our supply chain has been and will continue to be impacted by the COVID-19 pandemic, and may be impacted by other events outside our control, including macro-economic events, trade restrictions, political crises, social unrest, terrorism, and conflicts (including the Russian invasion of Ukraine), other public health emergencies, trade restrictions, or natural or environmental occurrences in locations where we or our customers and suppliers have manufacturing, research, engineering and other operations.
Purchasing components early has in the past caused, and may in the future, cause us to incur additional inventory carrying costs and cause us to experience inventory obsolescence, both of which may not be recoverable from our customers and adversely affect our gross profit margins and results of operations. 14 Table of Contents Our supply chain has been and may continue to be impacted by the COVID-19 pandemic, and may be impacted by other events outside our control, including macro-economic events, trade restrictions, political crises, social unrest, terrorism, and conflicts (including the Russian invasion of Ukraine), other public health emergencies, or natural or environmental occurrences in locations where we or our customers and suppliers have manufacturing, research, engineering and other operations.

… 124 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−1 removed0 unchanged
Biggest changeThe composition of the square footage of our facilities, by region, is as follows: Leased (Manufacturing) Owned (Manufacturing) Total (Manufacturing) Non-manufacturing Total (In million square feet) Asia 6.2 5.9 12.1 6.9 19.0 Americas 3.8 5.5 9.3 8.6 17.9 Europe 2.5 2.8 5.3 5.8 11.1 Total 12.5 14.2 26.7 21.3 48.0 Our facilities include large industrial parks, ranging in size from approximately 100,000 to 4.3 million square feet in Brazil, China, India, and Mexico.
Biggest changeAs 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.
We also have smaller design and engineering centers, innovation centers and product introduction centers at a number of locations in the world's major industrial and electronics markets. Our facilities are well maintained and suitable for the operations conducted. The productive capacity of our plants is adequate for current needs.
Our facilities are well maintained and suitable for the operations conducted. The productive capacity of our plants is adequate for current needs.
ITEM 2. PROPERTIES Our facilities consist of a global network of industrial parks, regional manufacturing operations, and design, engineering and product introduction centers, providing approximately 26.7 million square feet of productive capacity as of March 31, 2022.
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.
Removed
We also have regional manufacturing operations, generally ranging in size from under 100,000 to approximately 2.7 million square feet in Austria, Brazil, Canada, China, Czech Republic, Denmark, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Malaysia, Mexico, the Netherlands, Poland, Romania, Singapore, Spain, Switzerland, Ukraine, the United Kingdom, and the United States.

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 30 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 31 Table of Contents 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 4, 2022 2,900,386 $ 17.07 2,900,386 $ 551,406,982 February 5 - March 4, 2022 3,263,494 17.07 3,263,494 495,708,750 March 5 - March 31, 2022 7,900 15.43 7,900 495,586,831 Total 6,171,780 6,171,780 (1) During the period from January 1, 2022 through March 31, 2022, 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 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.
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 2023. 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 2024. CERTAIN TAXATION CONSIDERATIONS UNDER SINGAPORE LAW Dividends.
Index Data: Copyright Standard and Poor's, Inc. Used with permission. All rights reserved. 32 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, 2022 through March 31, 2022.
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.
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. 31 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, 2017 and reflects the annual return through March 31, 2022, 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. 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.
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, 2022, shares in the aggregate amount of $495.6 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, 2023, shares in the aggregate amount of $893 million were available to be repurchased under the current plan.
All purchases were made in accordance with Rule 10b-18 under the Securities Exchange Act of 1934. (2) On August 4, 2021, 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 25, 2022, our Board of Directors authorized repurchases of our outstanding ordinary shares for up to $1.0 billion.
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 16, 2022, there were 2,890 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 12, 2023, there were 2,847 holders of record of our ordinary shares.
RECENT SALES OF UNREGISTERED SECURITIES None. 33 Table of Contents ITEM 6. [ RESERVED ]
RECENT SALES OF UNREGISTERED SECURITIES None. 34 Table of Contents ITEM 6. [ RESERVED ]
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Flex, the S&P 500 Index, and Peer Group 3/17 3/18 3/19 3/20 3/21 3/22 Flex Ltd. 100.00 97.20 59.52 49.85 108.99 110.42 S&P 500 Index 100.00 113.99 124.82 116.11 181.54 209.94 Peer Group 100.00 85.36 80.59 68.24 131.48 148.91 Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2022.
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.

Item 7. Management's Discussion & Analysis

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

100 edited+32 added−63 removed53 unchanged
Biggest changeAs of March 31, 2022, shares in the aggregate amount of $496 million were available to be repurchased under the current plan. 47 Table of Contents CONTRACTUAL OBLIGATIONS AND COMMITMENTS Bank borrowings and long-term debt are as follows: As of March 31, 2022 2021 (In millions) 5.000% Notes due February 2023 $ 500 $ 500 Term Loan due April 2024 - three-month TIBOR plus 0.43% 273 305 4.750% Notes due June 2025 598 598 3.750% Notes due February 2026 690 694 4.875% Notes due June 2029 659 661 4.875% Notes due May 2030 690 694 Euro Term Loans 389 168 3.600% HUF Bonds due December 2031 301 — India Facilities 84 133 Other 31 51 Debt issuance costs (18) (21) 4,197 3,783 Current portion, net of debt issuance costs (949) (268) Non-current portion $ 3,248 $ 3,515 Refer to the discussion in note 9 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for further details of our debt obligations.
Biggest changeAs of March 31, 2023, shares in the aggregate amount of $893 million were available to be repurchased under the current plan. 47 Table of Contents 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.
We are regularly subject to tax return audits and examinations by various taxing jurisdictions and 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.
This was primarily driven by $0.5 billion of cash paid for the acquisition of Anord Mardix in December 2021, net of cash acquired, and approximately $0.4 billion of capital expenditures for property and equipment to continue expanding capabilities and capacity in support of our expanding Lifestyle, Automotive, and Industrial businesses.
This was primarily driven by approximately $0.5 billion of cash paid for the acquisition of Anord Mardix in December 2021, net of cash acquired, and approximately $0.4 billion of capital expenditures for property and equipment to continue expanding capabilities and capacity in support of our expanding Lifestyle, Automotive, and Industrial businesses.
The total cash provided by operating activities resulted primarily from $0.6 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 $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.
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 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 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.
In the cases of new programs, profitability normally lags revenue growth due to product start-up costs, lower manufacturing program volumes in the start-up phase, operational inefficiencies, and under-absorbed overhead. Gross margin for these programs often improves over time as manufacturing volumes increase, as our utilization rates and overhead absorption improve, and as we increase the level of manufacturing services content.
In the case of new programs, profitability normally lags revenue growth due to product start-up costs, lower manufacturing program volumes in the start-up phase, operational inefficiencies, and under-absorbed overhead. Gross margin for these programs often improves over time as manufacturing volumes increase, as our utilization rates and overhead absorption improve, and as we increase the level of manufacturing services content.
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 solutions requirements of such companies.
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.
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, 2022 and March 31, 2021.
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.
In addition, we maintain various uncommitted short-term financing facilities including but not limited to a commercial paper program, and a revolving sale and repurchase of subordinated notes established under the securitization facility, under which there were no borrowings outstanding as of March 31, 2022.
In addition, we maintain various uncommitted short-term financing facilities including but not limited to a commercial paper program, and a revolving sale and repurchase of subordinated notes established under the securitization facility, under which there were no borrowings outstanding as of March 31, 2023.
For a discussion of our cash flows for the fiscal years ended March 31, 2021 and March 31, 2020, please refer to Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.
For a discussion of our cash flows for the fiscal years ended March 31, 2022 and March 31, 2021, please refer to Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022.
For a discussion of our results of operations for the fiscal year ended March 31, 2021 compared to the fiscal year ended March 31, 2020, refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.
For a discussion of our results of operations for the fiscal year ended March 31, 2022 compared to the fiscal year ended March 31, 2021, refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022.
Refer to note 9 to the consolidated financial statement in Item 8, "Financial Statements and Supplementary Data" for additional details. Fiscal Year 2021 Cash provided by operating activities was $0.1 billion during fiscal year 2021.
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.
These price adjustments include, but are not limited to, sharing of cost savings, committed price reductions, material margins earned over the period that are contractually required to be paid to the customers, rebates, refunds tied to performance metrics such as 38 Table of Contents on-time delivery, and other periodic pricing resets that may be refundable to customers.
These price adjustments include, but are not limited to, sharing of cost savings, committed price reductions, material margins earned over the period that are contractually required to be paid to the customers, rebates, refunds tied to performance metrics such as on-time delivery, and other periodic pricing resets that may be refundable to customers.
As of March 31, 2022 and 2021, the outstanding balance on receivables sold for cash was $0.6 billion and $0.2 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, 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.
Our three operating and reportable segments are: • 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; and ◦ 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; and ◦ Industrial , including capital equipment, industrial devices, and renewables and grid edge. • Nextracker, the leading provider of intelligent, integrated solar tracker and software solutions used in utility-scale and ground-mounted distributed generation solar projects around the world.
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.
Our obligations to our suppliers, including the amounts due and scheduled payment dates, are not impacted by our suppliers’ decisions to sell their receivables under this program. During fiscal years ended March 31, 2022 and 2021, the cumulative payments due to suppliers participating in the programs amounted to approximately $1.3 billion and $1.0 billion, respectively.
Our obligations to our suppliers, including the amounts due and scheduled payment dates, are not impacted by our suppliers’ decisions to sell their receivables under this program. During fiscal years ended March 31, 2023 and 2022, the cumulative payments due to suppliers participating in the programs amounted to approximately $1.4 billion and $1.3 billion, 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 10.0% and 14.1% for the fiscal years 2022 and 2021, 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 (6.1)% and 10.0% for the fiscal years 2023 and 2022, respectively.
If such asset groups are determined to be impaired, the impairment loss 39 Table of Contents recognized, if any, is the amount by which the carrying amount of the property and equipment and acquired amortizable intangible assets exceeds fair value.
If such asset groups are determined to be impaired, the impairment loss recognized, if any, is the amount by which the carrying amount of the property and equipment and acquired amortizable intangible assets exceeds fair value.
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 4, 2021.
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.
We have established an extensive network of manufacturing facilities in the world's major 35 Table of Contents consumer and enterprise markets (Asia, the Americas, and Europe) to serve the growing outsourcing needs of both multinational and regional customers.
We have established an extensive network of manufacturing facilities in the world's major consumer and enterprise markets (Asia, the Americas, and Europe) to serve the growing outsourcing needs of both multinational and regional customers.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S.
CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S.
We purchase our inventory based on forecasted demand, and we estimate write downs for excess and obsolete inventory based on our regular reviews of inventory quantities on hand, and the latest forecasts of product demand and production requirements from our customers.
We purchase our inventory based on forecasted demand and anticipated component shortages, and we estimate write downs for excess and obsolete inventory based on our regular reviews of inventory quantities on hand, and the latest forecasts of product demand and production requirements from our customers.
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.
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.
Refer to note 16 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for further discussion of our restructuring activities. Inventory Valuation Our inventories are stated at the lower of cost (on a first-in, first-out basis) or net realizable value. Our industry is characterized by rapid technological change, short-term customer commitments and rapid changes in demand.
Refer to note 4 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for further details. Inventory Valuation Our inventories are stated at the lower of cost (on a first-in, first-out basis) or net realizable value. Our industry is characterized by rapid technological change, short-term customer commitments and rapid changes in demand.
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, 2022 2021 Income taxes based on domestic statutory rates 17.0 % 17.0 % Effect of jurisdictional tax rate differential (10.9) (11.6) Change in unrecognized tax benefit 1.1 1.5 Change in valuation allowance 1.1 4.9 Foreign exchange movement on prior year taxes recoverable (0.9) 0.7 Tax impacts related to sale of Nextracker Series A Preferred Units 1.2 — APB 23 tax liability 0.1 0.1 Other 1.3 1.5 Provision for income taxes 10.0 % 14.1 % 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 $23 million and $21 million in fiscal years 2022 and 2021, 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, 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.
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.
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.
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 $1.6 billion as of March 31, 2022).
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).
Our operating results are affected by a number of factors, including the following: • 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; 36 Table of Contents • the effects of the COVID-19 global pandemic on our business and results of operations; • changes in the macro-economic environment and related changes in consumer demand; • 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; • 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 COVID-19 global pandemic and 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 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.
Our 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.
As of March 31, 2022, our total manufacturing capacity was approximately 27 million square feet.
As of March 31, 2023, our total manufacturing capacity was approximately 27 million square feet.
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 year 2022 and 2021.
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.
The data below, and discussion that follows, represents our results from operations.
The data below, and discussion that follows, represents our results from operations, and relative percentages.
Additionally, our effective tax rate is impacted by changes in our liabilities for uncertain tax positions of $12 million, and $11 million and changes in our valuation allowances on deferred tax assets of $12 million and $35 million in fiscal years 2022 and 2021, respectively. We generate most of our revenues and profits from operations outside of Singapore.
Additionally, our effective tax rate is impacted by changes in our liabilities for uncertain tax positions of ($7) million, and $12 million and changes in our valuation allowances on deferred tax assets of ($47) million and $12 million in fiscal years 2023 and 2022, respectively. We generate most of our revenues and profits from operations outside of Singapore.
Selling, general and administrative expenses Selling, general and administrative expenses ("SG&A") totaled $0.9 billion, or 3.4% of net sales, during fiscal year 2022, compared to $0.8 billion, or 3.4% of net sales, during fiscal year 2021, increasing by $75 million or 9%, which reflects our enhanced cost control efforts to support higher revenue growth while keeping our SG&A expenses relatively flat.
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.
During fiscal year 2022, no accounts receivable had been sold under our ABS programs and we received approximately $1.6 billion from other sales of receivables under our factoring program. During fiscal years 2021, we received approximately $0.6 billion from transfers of receivables under our ABS programs, and $0.8 billion from other sales of receivables.
During fiscal year 2022, no accounts receivable had been sold under our ABS programs and we received approximately $1.6 billion from other sales of receivables under our factoring program.
As a result, we expect that our current financial condition, including our liquidity sources are adequate to fund current and future commitments. As of March 31, 2022, we had cash and cash equivalents of approximately $3.0 billion and bank and other borrowings of approximately $4.2 billion.
As a result, we expect that our current financial condition, including our liquidity sources, are adequate to fund current and future commitments. As of March 31, 2023, we had cash and cash equivalents of approximately $3.3 billion and bank and other borrowings of approximately $3.8 billion.
If actual market conditions or our customers' product demands are less favorable than those projected, additional write downs may be required.
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.
Cost of sales in FRS for fiscal year 2022 increased $1.0 billion or approximately 12% from fiscal year 2021, which is in line with the 12% increase in revenue, primarily as a result of higher revenue in our Industrial and Automotive businesses.
Cost of sales in FRS for fiscal year 2023 increased $2.0 billion, or approximately 21% from fiscal year 2022, which is in line with the 20% increase in revenue, primarily as a result of higher revenue in our Industrial and Automotive businesses.
During fiscal year 2022, we released valuation allowances totaling $26 million, $8 million of which related primarily to certain operations in Canada and Hungary, as these amounts were deemed to be more likely than not to be realized due to the sustained profitability during the past three fiscal years as well as continued forecasted profitability of those operations.
During fiscal year 2023, we released valuation allowances totaling $12 million, which related primarily to certain operations in Australia, and the Netherlands, as these amounts were deemed to be more likely than not to be realized due to the sustained profitability during the past three fiscal years as well as continued forecasted profitability of those operations.
Net sales increased across all regions with a $1.2 billion increase to $10.8 billion in the Americas, a $0.5 billion increase to $5.6 billion in Europe, and a $0.3 billion increase to $9.6 billion in Asia. Our ten largest customers during fiscal years 2022 and 2021 accounted for approximately 34% and 36% of net sales, respectively.
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.
During fiscal year 2022, we paid $686 million to repurchase shares under the current and prior repurchase plans at an average price of $17.97 per share.
During fiscal year 2023, we paid $337 million to repurchase shares under the current and prior repurchase plans at an average price of $17.06 per share.
Cost of sales in FAS increased $0.4 billion, or approximately 3%, from fiscal year 2021, which is relatively consistent the 4% increase in revenue, primarily as a result of higher revenue in our Lifestyle and CEC businesses, and partially offset by improved efficiencies.
Cost of sales in FAS increased $1.6 billion, or approximately 12%, from fiscal year 2022, which is relatively consistent with the 12% increase in revenue, primarily as a result of higher revenue in our CEC and Lifestyle businesses, and partially offset by improved efficiencies.
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.
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.
See additional discussion in the Liquidity and Capital Resources section below. Russian Invasion of Ukraine We are monitoring and responding to the escalating 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.
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.
As a result of these various factors, our gross margin varies from period to period. Gross profit during fiscal year 2022 increased $0.2 billion to $1.9 billion, or 7.4% of net sales, from $1.7 billion, or 7.0% of net sales, during fiscal year 2021, an improvement of 40 basis points.
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 .
Various other valuation allowance positions were also reduced due to varying factors such as recognition of uncertain tax positions impacting deferred tax assets, one-time income recognition in loss entities, and foreign exchange impacts on deferred tax balances.
Various other valuation allowance positions were also reduced due to varying factors such as recognition of uncertain tax positions impacting deferred tax assets, one-time income recognition in loss entities, and foreign exchange impacts on deferred tax balances, and increased deferred tax assets as a result of current period losses in legal entities with existing full valuation allowance positions.
Fiscal Year Ended March 31, 2022 2021 Net sales 100.0 % 100.0 % Cost of sales 92.5 92.6 Restructuring charges 0.1 0.4 Gross profit 7.4 7.0 Selling, general and administrative expenses 3.4 3.4 Intangible amortization 0.3 0.3 Restructuring charges — 0.1 Operating income 3.7 3.2 Interest, net 0.6 0.6 Other charges (income), net (0.9) (0.3) Income before income taxes 4.0 2.9 Provision for income taxes 0.4 0.4 Net income 3.6 % 2.5 % Net income attributable to redeemable noncontrolling interest — — Net income attributable to Flex Ltd. 3.6 % 2.5 % Net sales The following table sets forth our net sales by segment, and their relative percentages: Fiscal Year Ended March 31, 2022 2021 Net sales: (In millions) Flex Agility Solutions $ 14,027 54 % $ 13,493 56 % Flex Reliability Solutions 10,603 41 % 9,495 39 % Nextracker 1,458 6 % 1,195 5 % Intersegment eliminations (47) — % (59) — % $ 26,041 $ 24,124 Net sales for the fiscal year ended 2022 totaled $26.0 billion, representing an increase of $1.9 billion, or approximately 8%, from $24.1 billion for the fiscal year ended 2021.
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.
Net sales for our FAS segment increased $0.5 billion, or 4.0%, from the prior year, driven by an increase in our Lifestyle business, and to a lesser extent, an increase in our CEC business.
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.
We have a $2.0 billion revolving credit facility, that is due to mature in January 2026 (the "2026 Credit Facility"), under which we had no borrowings outstanding as of March 31, 2022.
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.
We also are subject to other risks as outlined in Item 1A, "Risk Factors". Net sales for fiscal year 2022 increased approximately 8%, or $1.9 billion, to $26.0 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 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.
The increases noted in FAS during fiscal year 2022 were partially offset by a decrease in our Consumer Devices business primarily due to component shortages and planned contract completions.
The increases noted in FAS during fiscal year 2023 were partially offset by a decrease in our Consumer Devices business primarily due to relatively softer market demand and planned project completions in fiscal year 2022.
Intangible amortization Amortization of intangible assets in fiscal years 2022 and 2021 were $68 million and $62 million, respectively, representing an increase of $6 million, fro m fiscal year 2021 as a result of four months of amortization expense related to new intangible assets from the Anord Mardix acquisition in December 2021 offset by certain intangible assets being fully amortized during fiscal year 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.
In January 2021, we entered into a $2.0 billion credit agreement which matures in January 2026 and consists of a $2.0 billion revolving credit facility with a sub-limit of $360 million available for swing line loans, and a sub-limit of $175 million available for the issuance of letters of credit.
In July 2022, the Company entered into a new $2.5 billion credit agreement which matures in July 2027 and consists of a $2.5 billion revolving credit facility with a sub-limit of $360 million available for swing line loans, and a sub-limit of $175 million available for the issuance of letters of credit.
Refer to note 7 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for further discussion of our RNCI.
Refer to note 17 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for further discussion of our other charges (income), net.
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): Fiscal Year Ended March 31, 2022 2021 (In millions) Net sales by region: Americas $ 10,839 42 % $ 9,672 40 % Asia 9,601 37 % 9,326 39 % Europe 5,601 21 % 5,126 21 % $ 26,041 $ 24,124 Net sales by country: China $ 6,146 24 % $ 6,147 25 % Mexico 5,059 19 % 4,413 18 % U.S. 3,690 14 % 3,648 15 % Brazil 2,022 8 % 1,554 6 % Malaysia 1,866 7 % 1,563 6 % Hungary 1,230 5 % 1,313 5 % Other 6,028 23 % 5,486 25 % $ 26,041 $ 24,124 Fiscal Year Ended March 31, 2022 2021 (In millions) Property and equipment, net: Mexico $ 626 29 % $ 553 26 % U.S. 354 17 % 361 17 % China 299 14 % 331 16 % India 129 6 % 166 8 % Hungary 118 6 % 105 5 % Malaysia 110 5 % 106 5 % Other 489 23 % 475 23 % $ 2,125 $ 2,097 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): 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.
Refer to note 14 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for further discussion of our contingent liabilities. Redeemable Noncontrolling Interest Interest held by a third party in a consolidated majority-owned subsidiary is presented as noncontrolling interest, which represents the noncontrolling equity holder’s interest in the underlying net assets of our consolidated majority-owned subsidiary.
Refer to note 2 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for further detail on our goodwill. Noncontrolling Interest Interests held by third parties in a consolidated majority-owned subsidiary are presented as noncontrolling interest, which represents the noncontrolling equity holders' interest in the underlying net assets of our consolidated majority-owned subsidiary.
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.
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 also elected to include operating income as a subtotal in the consolidated statements of operations. For comparability purposes, the prior periods have been recast to conform to the current presentation. The reclassifications had no effect on the previously reported results of operations.
For comparability purposes, the prior periods have been recast to conform to the current presentation. The reclassifications had no effect on the previously reported results of operations.
Due to the COVID-19 pandemic 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. We have made estimates and assumptions taking into consideration certain possible impacts due to the COVID-19 pandemic and the Russian invasion of Ukraine.
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.
Segment income An operating segment's performance is evaluated based on its pre-tax operating contribution, or segment income. 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 impairments (recoveries), restructuring charges, legal and other.
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.
Cash used in investing activities increased by approximately $0.7 billion to a cash outflow of $1.0 billion for fiscal year 2022, compared with a cash outflow of $0.2 billion for fiscal year 2021, primarily due to $0.5 billion of cash paid for the acquisition of Anord Mardix in December 2021, net of cash acquired.
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.
Update on the Impact of COVID-19 on our Business With the second wave of the global pandemic including follow-on variants of COVID-19, there have bee n renewed disease control measures being taken to limit the spread including movement bans and shelter-in-place orders.
Update on the Impact of COVID-19, Component Shortages and Logistical Constraints on our Business With the series of waves of the global pandemic including follow-on variants of COVID-19, renewed disease control measures were taken during fiscal year 2023 to limit the spread including movement bans and shelter-in-place orders.
As of March 31, 2022, approximately 34% 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.
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.
Future payments due under our debt including finance leases and related interest obligations and operating leases are as follows (amounts may not sum due to rounding): Total Less Than 1 Year 1 - 3 Years 4 - 5 Years Greater Than 5 Years (In millions) Contractual Obligations: Bank borrowings, long-term debt and finance lease obligations: Bank borrowings and long-term debt $ 4,215 $ 950 $ 326 $ 1,288 $ 1,651 Finance leases 4 2 2 — — Interest on long-term debt obligations 744 153 264 154 173 Operating leases, net of subleases 765 148 232 156 229 Restructuring costs 43 42 1 — — Total contractual obligations $ 5,771 $ 1,295 $ 825 $ 1,598 $ 2,053 We have excluded $282 million of liabilities for unrecognized tax benefits from the contractual obligations table as we cannot make a reasonably reliable estimate of the periodic settlements with the respective taxing authorities.
Future payments due under our debt including finance leases and related interest obligations and operating leases are as follows (amounts may not sum due to rounding): Total Less Than 1 Year 1 - 3 Years 4 - 5 Years Greater Than 5 Years (In millions) Contractual Obligations: Bank borrowings, long-term debt and finance lease obligations: Bank borrowings and long-term debt $ 3,862 $ 150 $ 1,538 $ 546 $ 1,628 Finance leases 2 1 1 — — Interest on long-term debt obligations 736 149 366 169 52 Operating leases, net of subleases 719 147 234 160 178 Restructuring costs 50 50 — — — Total contractual obligations $ 5,369 $ 497 $ 2,139 $ 875 $ 1,858 We have excluded $268 million of liabilities for unrecognized tax benefits from the contractual obligations table as we cannot make a reasonably reliable estimate of the periodic settlements with the respective taxing authorities.
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, 2022 2021 (In millions) Net cash provided by operating activities $ 1,024 $ 144 Reduction in ABS levels and other — 799 Purchases of property and equipment (443) (351) Proceeds from the disposition of property and equipment 11 85 Adjusted free cash flow (1) $ 593 $ 677 46 Table of Contents (1) Figures in the table may not foot exactly due to rounding.
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.
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 $0.5 billion primarily driven by changes in NWC as discussed below, partially offset by an increase in cash from other current liabilities of $1.1 billion primarily attributed to customer advances received.
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.
We also have the ability to sell a designated pool of trade receivables under ABS programs and sell certain trade receivables, which are in addition to the trade receivables sold in connection with these securitization agreements. We may enter into debt and equity financings, sales of accounts receivable and lease transactions to fund acquisitions and anticipated growth as needed.
We also have the ability to sell a designated pool of trade receivables under asset-backed securitization programs (the "ABS programs") and sell certain trade receivables, which are in addition to the trade receivables sold in connection with these securitization agreements.
Through the collective strength of a global workforce across approximately 30 countries with responsible, sustainable operations, we deliver advanced manufacturing solutions and operate one of the most trusted global supply chains, supporting the entire product lifecycle with fulfillment, after-market, and circular economy solutions for diverse industries including cloud, communications, enterprise, automotive, industrial, consumer devices, lifestyle, healthcare, and energy .
Through the collective strength of a global workforce across approximately 30 countries with responsible, sustainable operations, we support the entire product lifecycle with advanced manufacturing solutions and operate one of the most trusted global supply chains.
Refer to note 9 to the consolidated financial statement in Item 8, "Financial Statements and Supplementary Data" for additional details on the 2026 Credit Facility and the new notes. Our cash balances are held in numerous locations throughout the world.
Refer to note 9 to the consolidated financial statement in Item 8, "Financial Statements and Supplementary Data" for additional details.
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. We also excluded the impact to cash flows related to certain vendor programs that is required for 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 investor transparency. Our adjusted free cash flow was $0.3 billion and $0.6 billion for fiscal years 2023 and 2022, respectively.
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.
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.
These estimates may change, as new events occur, and additional information is obtained. Actual results may differ from those estimates and assumptions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
We believe the following critical accounting estimates affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
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.
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.
RECENT ACCOUNTING PRONOUNCEMENTS Refer to note 2 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for recent accounting pronouncements. 49 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. 48 Table of Contents
Net sales in our FRS segment increased $1.1 billion, or 12%, driven primarily by an increase of 17% in net sales from prior year in our Industrial business as a result of customer ramps and strong demand in EV charging and renewables, semicap, and robotics, coupled with incremental revenues from our Anord Mardix acquisition.
Net sales in our FRS segment increased $2.1 billion, or 20%, driven primarily by an increase of 24% in net sales in our Industrial business, a 22% increase in our Automotive business, and a 9% increase in our Health Solutions business from the prior year 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 increased $1.1 billion, or 12%, from the prior year, primarily driven by an increase in sales from our Industrial business, as a result of customer ramps and strong demand in EV charging and renewables, semicap, and robotics, coupled with incremental revenue from the Anord Mardix acquisition.
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.
Cost of sales during fiscal year 2022 totaled $24.1 billion, representing an increase of approximately $1.7 billion, or 8% from $22.3 billion during fiscal year 2021. The inc rease in cost of sales is most notable in our FRS segment.
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.
Our net income totaled $0.9 billion, representing an increase of $0.3 billion, or 53%, compared to fiscal year 2021, due to the factors explained above along with an approximately $150 million non-cash gain recorded in fiscal year 2022 related to certain tax credits in Brazil (See note 14 to the consolidated financial statements for further information). 37 Table of Contents Cash provided by operations in creased by approximately $0.9 billion to a cash inflow of $1.0 billion for fiscal year 2022 compared with a cash inflow of $0.1 billion for fiscal year 2021 primarily driven by the $0.3 billion increase in net income and $0.6 billion increase in cash provided by operating assets and liabilities.
Our net income totaled $1.0 billion, representing an increase of $0.1 billion, or 10%, compared to fiscal year 2022, due to the factors explained above along with lower income taxes in fiscal year 2023, offset by the absence of an approximate $150 million non-cash gain recorded in fiscal year 2022 related to certain tax credits in Brazil and higher interest expense in 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 investors. During fiscal year 2021, we proactively and strategically reduced the outstanding balance of our ABS programs.
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.
Cost of sales in our Nextracker segment increased $0.4 billion or approximately 37% from fiscal year 2021, primarily due to the increase in steel and freight costs due to container shortages and other logistics challenges resulting from the COVID-19 pandemic, coupled with the increase in sales noted above.
Cost of sales in our Nextracker segment increased $0.3 billion, or approximately 23% from fiscal year 2022, primarily due to the 31% increase in sales noted above, partially offset by improved recovery on freight and logistics cost increases.
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.
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.

… 115 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+1 added−2 removed13 unchanged
Biggest changeBased on our overall currency rate exposures as of March 31, 2022, 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. 51 Table of Contents
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
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 $0.4 billion as of March 31, 2022. Variable rate debt obligations consisted of borrowings under our term loans.
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.
As of March 31, 2022, 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, Israeli new shekel and China renminbi denominated money market accounts with an average return of 1%.
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, 2022, the approximate average fair value of our debt outstanding under our Notes due February 2023, June 2025, February 2026, June 2029, and May 2030 was 102.6% of the face value of the debt obligations based on broker trading prices.
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.
We are also exposed to interest rate fluctuations on our outstanding borrowings and investments. ” FOREIGN CURRENCY EXCHANGE RISK We transact business in various foreign countries and are, therefore, subject to risk of foreign currency exchange rate fluctuations. We have established a foreign currency risk management policy to manage this risk.
FOREIGN CURRENCY EXCHANGE RISK We transact business in various foreign countries and are, therefore, subject to risk of foreign currency exchange rate fluctuations. We have established a foreign currency risk management policy to manage this risk.
The fair value of currency derivative contracts is reported on the balance sheet. The aggregate notional amount of outstanding contracts as of March 31, 2022 amounted to $11.6 billion and 50 Table of Contents the recorded fair values of the associated assets and liabilities were not material. The majority of these foreign exchange contracts expire in less than three months.
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.
Removed
For risks related to the discontinuation of LIBOR, see the following risk factor in Item IA: “ Changes in our credit rating may make it more expensive for us to raise additional capital or to borrow additional funds.
Added
The majority of these foreign exchange contracts expire in less than three months.
Removed
They will settle primarily in the Brazilian real, British pound, China renminbi, Euro, Hungarian forint, Indian rupee, Israeli shekel, Malaysian ringgit, Mexican peso, and U.S. dollar.

Other FLEX 10-K year-over-year comparisons