UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December 31, 2017~~June 30, 2023

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-23354

FLEX LTD.

(Exact name of registrant as specified in its charter)



Singapore						Not Applicable
(State or other jurisdiction of						(I.R.S. Employer
incorporation or organization)						Identification No.)



2 Changi South Lane,
Singapore						486123
(Address of registrant’s principal executive offices)						(Zip Code)

~~Registrant’s~~(65) 6876-9899

(Registrant’s telephone number, including area ~~code~~

~~(65) 6876-9899~~code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Ordinary Shares, No Par Value

FLEX

The Nasdaq Stock Market LLC

Indicate by check mark whether the ~~Registrant:~~registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the ~~Registrant~~registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the ~~Registrant~~registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”,~~filer,” “smaller reporting ~~company”~~company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:

Large accelerated filerx

☒

Accelerated filero

☐

Non-accelerated filero

~~(Do not check if a smaller reporting company)~~

☐

Smaller reporting companyo

☐

Emerging growth companyo

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the ~~Registrant~~registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

~~Indicate the~~The number of shares ~~outstanding of each~~ of the registrant’s ~~classes of common stock,~~ordinary shares outstanding as of ~~the latest practicable date.~~

July 21, 2023 was 446,626,960.



~~Class~~		~~Outstanding at January 24, 2018~~
~~Ordinary Shares, No Par Value~~	~~527,665,321~~

Table of Contents

FLEX LTD.

INDEX



		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	43
	Report of Independent Registered Public Accounting Firm	43
	Condensed Consolidated Balance Sheets (unaudited) — ~~December 31, 2017~~June 30, 2023 and March 31, ~~2017~~2023	54
	Condensed Consolidated Statements of Operations (unaudited) — Three-Month ~~and Nine-Month~~ Periods Ended ~~December 31, 2017~~June 3 0 , 202 3 and ~~December 31, 2016~~July 1, 20 2 2	65
	Condensed Consolidated Statements of Comprehensive Income (unaudited) — Three-Month ~~and Nine-Month~~ Periods Ended ~~December 31, 2017~~June 3 0 , 202 3 and ~~December 31, 2016~~July 1, 202 2	76
	Condensed Consolidated Statements of Noncontrolling Interest and Shareholders' Equity (unaudited) — Three-Month Periods Ended June 3 0 , 202 3 and July 1 , 20 2 2	7
	Condensed Consolidated Statements of Cash Flows (unaudited) — ~~Nine-Month~~Three -Month Periods Ended ~~December 31, 2017~~June 3 0 , 202 3 and ~~December 31, 2016~~July 1, 20 2 2	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3634
Item 4.	Controls and Procedures	3634

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	3735
Item 1A.	Risk Factors	3735
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3836
Item 3.	Defaults Upon Senior Securities	3937
Item 4.	Mine Safety Disclosures	3937
Item 5.	Other Information	3937
Item 6.	Exhibits	4038
Signatures		4139

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Flex Ltd., Singapore

~~Singapore~~

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated balance sheet of Flex Ltd. and its subsidiaries (the “Company”) as of ~~December 31, 2017,~~June 30, 2023, the related condensed consolidated statements of operations, ~~and~~ comprehensive income, ~~for the three-month~~redeemable noncontrolling interest and ~~nine-month periods ended December 31, 2017~~shareholders’ equity, and ~~December 31, 2016, and the related condensed consolidated statements of~~ cash flows for the ~~nine-month~~three-month periods ended ~~December 31, 2017~~June 30, 2023 and ~~December 31, 2016. These~~July 1, 2022, and the related notes (collectively referred to as the “interim financial information”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial ~~statements are~~information for it to be in conformity with accounting principles generally accepted in the ~~responsibility~~United States of ~~the Company’s management.~~America.

We ~~conducted our reviews~~have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States). (PCAOB), the consolidated balance sheet of Flex Ltd. and its subsidiaries as of March 31, 2023 and the related consolidated statements of operations, comprehensive income, redeemable noncontrolling interest and shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated May 19, 2023, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 31, 2023 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

The interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States),~~PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Flex Ltd. and subsidiaries as of March 31, 2017, and the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated May 16, 2017, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 31, 2017 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.



/s/ DELOITTE & TOUCHE LLP
San Jose, California
~~January 26, 2018~~July 28, 2023

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FLEX LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS


	As of June 30, 2023		As of March 31, 2023
	(In millions, except share amounts) (Unaudited)


ASSETS
Current assets:
Cash and cash equivalents	$	2,660	$	3,294
Accounts receivable, net of allowance of $9 and $8, respectively	3,764		3,739
Contract assets	588		541
Inventories	7,526		7,530
Other current assets	1,002		917
Total current assets	15,540		16,021
Property and equipment, net	2,363		2,349
Operating lease right-of-use assets, net	624		608
Goodwill	1,344		1,343
Other intangible assets, net	299		316
Other assets	766		758
Total assets	$	20,936	$	21,395

LIABILITIES, NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank borrowings and current portion of long-term debt	$	151	$	150
Accounts payable	5,890		5,930
Accrued payroll	474		522
Deferred revenue and customer working capital advances	3,038		3,143
Other current liabilities	1,085		1,110
Total current liabilities	10,638		10,855
Long-term debt, net of current portion	3,444		3,691
Operating lease liabilities, non-current	514		506
Other liabilities	554		637
Total liabilities	15,150		15,689


Shareholders’ equity
Flex Ltd. shareholders’ equity
Ordinary shares, no par value; 1,500,000,000 authorized, 499,276,711 and 500,362,046 issued, and 449,037,356 and 450,122,691 outstanding as of June 30, 2023 and March 31, 2023, respectively	6,337		6,493
Treasury stock, at cost; 50,239,355 shares as of June 30, 2023 and March 31, 2023, respectively	(388)		(388)
Accumulated deficit	(374)		(560)
Accumulated other comprehensive loss	(169)		(194)
Total Flex Ltd. shareholders’ equity	5,406		5,351
Noncontrolling interest	380		355
Total shareholders’ equity	5,786		5,706
Total liabilities, noncontrolling interest, and shareholders' equity	$	20,936	$	21,395

As of December 31, 2017 As of March 31, 2017
(In thousands, except share amounts)
(Unaudited)
ASSETS
Current assets:

Cash and cash equivalents $ 1,291,183
$ 1,830,675
Accounts receivable, net of allowance for doubtful accounts of $60,113 and $57,302 as of December 31, 2017 and March 31, 2017, respectively 3,100,808
2,192,704
Inventories 3,725,643
3,396,462
Other current assets 965,470
967,935
Total current assets 9,083,104
8,387,776
Property and equipment, net 2,443,050
2,317,026
Goodwill 1,104,770
984,867
Other intangible assets, net 438,552
362,181
Other assets 770,834
541,513
Total assets $ 13,840,310
$ 12,593,363

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:

Bank borrowings and current portion of long-term debt $ 42,954
$ 61,534
Accounts payable 5,406,512
4,484,908
Accrued payroll 385,985
344,245
Other current liabilities 1,580,618
1,613,940
Total current liabilities 7,416,069
6,504,627
Long-term debt, net of current portion 2,901,720
2,890,609
Other liabilities 542,541
519,851
Shareholders’ equity

Flex Ltd. shareholders’ equity

Ordinary shares, no par value; 577,829,371 and 581,534,129 issued, and 527,590,016 and 531,294,774 outstanding as of December 31, 2017 and March 31, 2017, respectively 6,613,812
6,733,539
Treasury stock, at cost; 50,239,355 shares as of December 31, 2017 and March 31, 2017 (388,215 ) (388,215 )
Accumulated deficit (3,124,519 ) (3,572,648 )
Accumulated other comprehensive loss (121,098 ) (128,143 )
Total Flex Ltd. shareholders’ equity 2,979,980
2,644,533
Noncontrolling interests —
33,743
Total shareholders’ equity 2,979,980
2,678,276
Total liabilities and shareholders’ equity $ 13,840,310
$ 12,593,363

The accompanying notes are an integral part of these condensed consolidated financial statements.

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FLEX LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


	Three-Month Periods Ended				Nine-Month Periods Ended						Three-Month Periods Ended
	December 31, 2017		December 31, 2016		December 31, 2017			December 31, 2016			June 30, 2023		July 1, 2022
	(In thousands, except per share amounts) (Unaudited)										(In millions, except per share amounts) (Unaudited)
Net sales	$	6,751,552	$	6,114,999	$	19,030,244		$	18,000,337	Net sales	$	7,336	$	7,347
Cost of sales	6,305,224		5,698,544		17,783,659			16,864,196		Cost of sales	6,732		6,812
Restructuring charges										Restructuring charges	17		—
Gross profit	446,328		416,455		1,246,585			1,136,141		Gross profit	587		535
Selling, general and administrative expenses	247,365		231,551		772,325			715,040		Selling, general and administrative expenses	270		241
Restructuring charges										Restructuring charges	6		—
Intangible amortization	19,588		18,734		55,865			62,318		Intangible amortization	20		22
Interest and other, net	31,350		22,838		85,780			71,869
Operating income										Operating income	291		272
Interest, net										Interest, net	41		49
Other charges (income), net	6,865		3,090		(172,467		)	15,007		Other charges (income), net	11		(9)

Income before income taxes	141,160		140,242		505,082			271,907		Income before income taxes	239		232
Provision for income taxes	22,827		10,773		56,953			39,217		Provision for income taxes	28		37
Net income	$	118,333	$	129,469	$	448,129		$	232,690	Net income	211		195
Net income attributable to noncontrolling interest and redeemable noncontrolling interest										Net income attributable to noncontrolling interest and redeemable noncontrolling interest	25		6
Net income attributable to Flex Ltd.										Net income attributable to Flex Ltd.	$	186	$	189

Earnings per share:
Earnings per share attributable to the shareholders of Flex Ltd.:										Earnings per share attributable to the shareholders of Flex Ltd.:
Basic	$	0.22	$	0.24	$	0.85		$	0.43	Basic	$	0.42	$	0.41
Diluted	$	0.22	$	0.24	$	0.84		$	0.42	Diluted	$	0.41	$	0.40
Weighted-average shares used in computing per share amounts:										Weighted-average shares used in computing per share amounts:
Basic	528,405		539,638		529,984			542,780		Basic	447		458
Diluted	534,352		545,022		535,972			548,372		Diluted	455		468

The accompanying notes are an integral part of these condensed consolidated financial statements.

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FLEX LTD.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Three-Month Periods Ended
	June 30, 2023		July 1, 2022
	(In millions) (Unaudited)
Net income	$	211	$	195
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(9)		(71)
Unrealized gain (loss) on derivative instruments and other	34		(1)
Comprehensive income	$	236	$	123
Comprehensive income attributable to noncontrolling interest and redeemable noncontrolling interest	25		6
Comprehensive income attributable to Flex Ltd.	$	211	$	117

The accompanying notes are an integral part of these condensed consolidated financial statements.

Three-Month Periods Ended Nine-Month Periods Ended
December 31, 2017 December 31, 2016 December 31, 2017 December 31, 2016

(In thousands)
(Unaudited)
Net income $ 118,333
$ 129,469
$ 448,129
$ 232,690
Other comprehensive income (loss):

Foreign currency translation adjustments, net of zero tax 7,492
(36,412 ) 27,806
(22,338 )
Unrealized loss on derivative instruments and other, net of zero tax (4,717 ) (201 ) (20,761 ) (912 )
Comprehensive income $ 121,108
$ 92,856
$ 455,174
$ 209,440

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FLEX LTD.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY


	Redeemable Noncontrolling Interest		Ordinary Shares					Accumulated Other Comprehensive Loss										Total
Three Months Ended June 30, 2023	Amount		Shares Outstanding	Amount		Accumulated Deficit		Unrealized Gain (Loss) on Derivative Instruments and Other		Foreign Currency Translation Adjustments		Total Accumulated Other Comprehensive Loss		Total Flex Ltd. Shareholders' Equity		Noncontrolling Interest		Shareholders' Equity
			(In millions) Unaudited
BALANCE AT MARCH 31, 2023	$	—	450	$	6,105	$	(560)	$	(14)	$	(180)	$	(194)	$	5,351	$	355	$	5,706
Repurchase of Flex Ltd. ordinary shares at cost	—		(9)	(197)		—		—		—		—		(197)		—		(197)

Issuance of Flex Ltd. vested shares under restricted share unit awards	—		8	—		—		—		—		—		—		—		—
Net income	—		—	—		186		—		—		—		186		25		211
Stock-based compensation	—		—	41		—		—		—		—		41		—		41
Total other comprehensive income	—		—	—		—		34		(9)		25		25		—		25
BALANCE AT JUNE 30, 2023	$	—	449	$	5,949	$	(374)	$	20	$	(189)	$	(169)	$	5,406	$	380	$	5,786


	Redeemable Noncontrolling Interest		Ordinary Shares					Accumulated Other Comprehensive Loss										Total
Three Months Ended July 1, 2022	Amount		Shares Outstanding	Amount		Accumulated Deficit		Unrealized Loss on Derivative Instruments and Other		Foreign Currency Translation Adjustments		Total Accumulated Other Comprehensive Loss		Total Flex Ltd. Shareholders' Equity		Noncontrolling Interest		Shareholders' Equity
			(In millions) Unaudited
BALANCE AT MARCH 31, 2022	$	78	461	$	5,664	$	(1,353)	$	(66)	$	(116)	$	(182)	$	4,129	$	—	$	4,129
Repurchase of Flex Ltd. ordinary shares at cost	—		(11)	(181)		—		—		—		—		(181)		—		(181)

Issuance of Flex Ltd. vested shares under restricted share unit awards	—		8	—		—		—		—		—		—		—		—
Net income	6		—	—		189		—		—		—		189		—		189
Stock-based compensation	—		—	26		—		—		—		—		26		—		26

Total other comprehensive loss	—		—	—		—		(1)		(71)		(72)		(72)		—		(72)
BALANCE AT JULY 1, 2022	$	84	458	$	5,509	$	(1,164)	$	(67)	$	(187)	$	(254)	$	4,091	$	—	$	4,091

The accompanying notes are an integral part of these condensed consolidated financial statements.

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FLEX LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Three-Month Periods Ended
	June 30, 2023		July 1, 2022
	(In millions) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	211	$	195
Depreciation, amortization and other impairment charges	133		124
Changes in working capital and other, net	(338)		(281)
Net cash provided by operating activities	6		38
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(167)		(107)
Proceeds from the disposition of property and equipment	11		16



Other investing activities, net	1		2
Net cash used in investing activities	(155)		(89)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank borrowings and long-term debt	2		—
Repayments of bank borrowings and long-term debt	(243)		(35)

Payments for repurchases of ordinary shares	(197)		(181)

Other financing activities, net	(48)		6
Net cash used in financing activities	(486)		(210)
Effect of exchange rates on cash and cash equivalents	1		(56)
Net decrease in cash and cash equivalents	(634)		(317)
Cash and cash equivalents, beginning of period	3,294		2,964
Cash and cash equivalents, end of period	$	2,660	$	2,647

Non-cash investing activities:
Unpaid purchases of property and equipment	$	158	$	172
Right-of-use assets obtained in exchange of operating lease liabilities	37		22

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~FLEX LTD.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

Nine-Month Periods Ended
December 31, 2017 December 31, 2016

(In thousands)
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 448,129

$ 232,690
Depreciation, amortization and other impairment charges 400,015

466,813
Gain from deconsolidation of a subsidiary entity (151,574 ) —
Changes in working capital and other (265,552 )
313,685
Net cash provided by operating activities 431,018

1,013,188
CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment (432,897 )
(413,596 )
Proceeds from the disposition of property and equipment 43,653

28,056
Acquisition of businesses, net of cash acquired (269,724 )
(180,259 )
Other investing activities, net (123,883 )
(13,631 )
Net cash used in investing activities (782,851 )
(579,430 )
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from bank borrowings and long-term debt 866,000

205,518
Repayments of bank borrowings and long-term debt (907,930 )
(115,089 )
Payments for repurchases of ordinary shares (180,050 )
(259,658 )
Net proceeds from issuance of ordinary shares 2,063

11,978
Other financing activities, net 46,482

(47,302 )
Net cash used in financing activities (173,435 )
(204,553 )
Effect of exchange rates on cash and cash equivalents (14,224 )
20,321
Net increase (decrease) in cash and cash equivalents (539,492 )
249,526
Cash and cash equivalents, beginning of period 1,830,675

1,607,570
Cash and cash equivalents, end of period $ 1,291,183

$ 1,857,096

Non-cash investing activities:

Unpaid purchases of property and equipment $ 87,772

$ 70,092
Customer-related third party banking institution financing net settlement
$ —
$ 90,576
Non-cash investment in Elementum (Note 5) $ 132,679

$ —
Non-cash proceeds from sale of Wink (Note 2) $ 59,000
$ —

~~The accompanying notes are an integral part~~Table of ~~these condensed consolidated financial statements.~~Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. ORGANIZATION OF THE COMPANY AND BASIS OF PRESENTATION

Organization of the Company

Flex Ltd. ("Flex" or the "Company") ~~was incorporated in~~is the ~~Republic~~diversified manufacturing partner of ~~Singapore in May 1990.~~choice that helps market-leading brands design, build and deliver innovative products that improve the world. 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. The ~~Company's operations have expanded over the years~~Company also provides additional value to customers through a ~~combination~~broad array of ~~organic growth~~services, including design and ~~acquisitions. The Company is~~engineering, component services, rapid prototyping, fulfillment, and circular economy solutions. Flex supports a ~~globally-recognized, provider~~diverse set of ~~Sketch-to-Scale~~^tm ~~services - innovative design, engineering, manufacturing,~~industries including cloud, communications, enterprise, automotive, industrial, consumer devices, lifestyle, healthcare, and ~~supply chain services~~energy. As of June 30, 2023, Flex's three operating and solutions - from conceptual sketch to full-scale production. The Company designs, builds, ships and services complete packaged consumer and industrial products, from athletic shoes to electronics, for companies of all sizes in various industries and end-markets, through its activities in the following segments:reportable segments were as follows:

~~Communications & Enterprise Compute~~•Flex Agility Solutions ("CEC"), which includes telecom business of radio access base stations, remote radio heads, and small cells for wireless infrastructure; networking business which includes optical, routing, broadcasting, and switching products for the data and video networks; server and storage platforms for both enterprise and cloud-based deployments; next generation storage and security appliance products; and rack level solutions, converged infrastructure and software-defined product solutions;

Consumer Technologies Group ("CTG"), which includes consumer-related businesses in connected living, wearables, gaming, augmented and virtual reality, fashion, and mobile devices; and including various supply chain solutions for notebook personal computers ("PC"), tablets, and printers; in addition, CTG is expanding its business relationships to include supply chain optimization for non-electronics products such as footwear and clothing;

~~Industrial and Emerging Industries ("IEI"~~FAS"), which is comprised of ~~energy~~the following end markets:

◦Communications, Enterprise and ~~metering, semiconductor~~Cloud, including data infrastructure, edge infrastructure and ~~capital equipment, office solutions, industrial, home~~communications infrastructure

◦Lifestyle, including appliances, consumer packaging, floorcare, micro mobility and ~~lifestyle, industrial automation~~audio

◦Consumer Devices, including mobile and ~~kiosks, and lighting; and~~high velocity consumer devices.

~~High~~•Flex Reliability Solutions ("~~HRS"~~FRS"), which is comprised of the following end markets:

◦Automotive, including next generation mobility, autonomous, connectivity, electrification, and smart technologies

◦Health Solutions, including medical ~~business, including consumer health, digital health, disposables, precision plastics,~~devices, medical equipment and drug delivery ~~diagnostics, life sciences~~

◦Industrial, including capital equipment, industrial devices, and ~~imaging equipment; automotive business, including vehicle electrification, connectivity, autonomous vehicles,~~renewables and ~~clean technologies.~~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. Nextracker's products enable solar panels to follow the sun’s movement across the sky and optimize plant performance.

The Company's service offerings include a comprehensive range of value-added design and engineering services that are tailored to the various markets and needs of its customers. Other focused service offerings relate to manufacturing (including enclosures, metals, plastic injection molding, precision plastics, machining, and mechanicals), system integration and assembly and test services, materials procurement, inventory management, logistics and after-sales services (including product repair, warranty services, re-manufacturing and maintenance) ~~and~~, supply chain management software solutions, and component product offerings (including ~~rigid and~~ flexible printed circuit boards and power adapters and chargers).

The Company also provides intelligent, integrated solar tracker and software solutions used in utility-scale and ground-mounted distributed generation solar projects around the world.

Basis of Presentation

and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”) for interim financial information and in accordance with the requirements of Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements, and should be read in conjunction with the Company’s audited consolidated financial statements as of and for the fiscal year ended March 31, ~~2017~~2023 contained in the Company’s Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair ~~presentation~~statement have been included. Operating results for the ~~three and nine-month periods~~three-month period ended ~~December 31, 2017~~June 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, ~~2018.~~

2024. Certain prior period amounts in the condensed consolidated financial statements, as well as in the Notes thereto, have been reclassified to conform to the current presentation.

The first quarters for fiscal ~~year 2018~~years 2024 and ~~fiscal year 2017~~2023 ended on June 30, ~~2017,~~2023, which is comprised of 91 days in the period, and July 1, ~~2016,~~2022, which is comprised of 92 days, ~~in the period,~~ respectively. The second quarters for fiscal year 2018 and fiscal year 2017 ended on September 29, 2017 and September 30, 2016, which are comprised of 91 days in both periods. The Company's third quarters end on December 31 of each year, which are comprised of 93 days and 92 days for fiscal years 2018 and 2017, respectively.

The accompanying unaudited condensed consolidated financial statements include the accounts of Flex and its majority-owned subsidiaries, after elimination of intercompany accounts and transactions. The Company consolidates its majority-owned subsidiaries and investments in entities in which the Company has a controlling interest. A controlling financial interest may also exist in variable interest entities (“VIEs”), through governance provisions and arrangements to provide services to VIEs.

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The Company is required to consolidate a VIE of which it is the primary beneficiary. To determine if the Company is the primary beneficiary, the Company evaluates whether it has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb the losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company evaluates its relationships with its VIEs on an ongoing basis to determine whether it continues to be the primary beneficiary. The condensed consolidated financial statements reflect the assets and liabilities of VIEs that are consolidated. For the consolidated majority-owned subsidiaries in which the Company owns less than 100%, the Company recognizes a noncontrolling interest for the ownership of the noncontrolling owners. ~~Noncontrolling interests are immaterial for all~~As of June 30, 2023, we presented noncontrolling interest as permanent equity in the ~~periods presented,~~condensed balance sheets, reflecting the equity held by other parties. The amount of consolidated net income attributable to Flex Ltd. and ~~are included in~~the noncontrolling interest and ~~other, net~~redeemable noncontrolling interest are presented in the condensed consolidated statements of operations.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates are used in accounting for, among other things: allowances for doubtful accounts; inventory write-downs; valuation allowances for deferred tax assets; uncertain tax positions; valuation and useful lives of long-lived assets including property, equipment, and intangible assets; valuation of goodwill; valuation of investments in privately-held companies; asset impairments; fair values of financial instruments, notes receivable and derivative instruments; restructuring charges; contingencies; warranty provisions; incremental borrowing rates in determining the present value of lease payments; accruals for potential price adjustments arising from customer contracts; fair values of assets obtained and liabilities assumed in business combinations; and the fair values of stock options and restricted share unit awards granted under the Company's stock-based compensation plans. Due to geopolitical conflicts (including the Russian invasion of Ukraine), there has been and will continue to be uncertainty and disruption in the global economy and financial markets. The Company has made estimates and assumptions taking into consideration certain ~~non-majority-owned equity investments in non-publicly traded companies that are accounted for using~~possible impacts due to the ~~equity method~~Russian invasion of ~~accounting. The equity method of accounting~~Ukraine. These estimates may change, as new events occur, and additional information is ~~used when the Company has the ability~~obtained. Actual results may differ from previously estimated amounts, and such differences may be material to significantly influence the operating decisions of the issuer, or if the Company has a voting percentage of a corporation equal to or generally greater than 20% but less than 50%, and for non-majority-owned investments in partnerships when generally greater than 5%. The equity in earnings (losses) of equity method investees are immaterial for all periods presented, and are included in interest and other, net in the condensed consolidated ~~statements~~financial statements. Estimates and assumptions are reviewed periodically, and the effects of ~~operations.~~

revisions are reflected in the period they occur.

Recently Adopted Accounting ~~Pronouncement~~

Pronouncements

In ~~July 2015,~~September 2022, the FASB issued ~~new guidance~~ASU 2022-04 "Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations", which requires a buyer in a supplier finance program to ~~simplify~~disclose sufficient information about the program to allow a user of financial statements to understand the program's nature, activity during the period, changes from period to period, and potential magnitude. To achieve that objective, the buyer should disclose qualitative and quantitative information about its supplier finance programs. The amendments in this update do not affect the recognition, measurement, or financial statement presentation of ~~inventory,~~obligations covered by requiring that inventory be measured at the lower of cost and net realizable value. Prior to the issuance of the new guidance, inventory was measured at the lower of cost or market. The Company adopted the guidance effective April 1, 2017 and it did not have a material impact on its condensed consolidated financial statements.

In October 2016, the FASB issued new guidance intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. This guidance is effective for the Company beginning in the first quarter of fiscal year 2019, with early adoption permitted in the first interim period of fiscal year 2018. The Company adopted the guidance effective April 1, 2017 and it did not have a material impact on its condensed consolidated financial statements.

~~Recently Issued Accounting Pronouncements~~

In August 2017, the FASB issued new guidance with the objective of improving the financial reporting of hedging relationships and simplifying the application of the hedge accounting guidance in current GAAP.supplier finance program. The guidance is effective for the Company beginning in the first quarter of fiscal year ~~2020~~2024, except for the amendment on rollforward information which is effective in fiscal year 2025, with early adoption permitted. The Company ~~expects the new guidance will have an immaterial impact on its consolidated financial statements, and it intends to adopt~~adopted the guidance ~~when it becomes effective in~~retrospectively during the first quarter of fiscal year ~~2020.~~2024, including a rollforward of changes in those obligations, with immaterial impacts on its condensed consolidated financial statements.

~~In August 2016,~~The Company has four supplier finance programs, all of which have substantially similar characteristics, with various financial institutions that act as the ~~FASB issued Accounting Standard Update (ASU) No. 2016-15, "Statement~~paying agent for certain payables of ~~Cash Flows (Topic 2030): Classification of Certain Cash Receipts and Cash Payments."~~the Company. The ~~standard is intended to address specific cash flow issues~~Company established these programs through agreements with the ~~objective~~financial institutions to enable more efficient payment processing to our suppliers while also providing our suppliers a potential source of ~~reducing~~liquidity to the ~~existing diversity~~extent they choose to sell their receivables to the financial institutions in ~~practice~~advance of the due date. Our suppliers’ participation in the programs is voluntary, the Company is not involved in negotiations of the suppliers’ arrangements with the financial institutions to sell their receivables, and ~~provide guidance~~our rights and obligations to our suppliers are not impacted by our suppliers’ decisions to sell amounts under these programs. Under these supplier finance programs, the Company pays the financial institutions the stated amount of confirmed invoices from its participating suppliers on ~~how certain cash receipts~~the original maturity dates of the invoices. All payment terms are short-term in nature and ~~payments~~ are ~~presented and classified~~not dependent on whether the suppliers participate in the supplier finance programs or if the suppliers elect to receive early payment from the financial institutions. No guarantees are provided by the Company under the supplier finance programs and the Company incurs no costs related to the programs. We have no economic interest in a supplier’s decision to participate in the supplier finance programs.

Obligations under these programs are classified within accounts payable on the condensed consolidated balance sheets, with the associated payments reflected in the operating activities section of the condensed consolidated statement of cash flows. The ~~majority~~

Table of the guidance in ASU 2016-15 is consistent with our current cash flow classification. However, cash receipts on the deferred purchase price as described in Note 10 will be classified as cash flow from investing activities insteadContents

rollforward of the Company's ~~current presentation~~outstanding obligations confirmed as cash flows from operations. The Company intends to adopt the guidance when it becomes effective in the first quarter of fiscal year 2019 and retrospectively report cash flows from operating and investing activities for all periods presented. While the Company is still quantifying the impact of adoption of this standard, it does expect the standard to result in a material increase in cash flows from investing activities and corresponding reduction in cash flows from operating activities for all periods presented.

In February 2016, the FASB issued new guidance intended to improve financial reporting on leasing transactions. The new lease guidance will require entities that lease assets to recognize on the balance sheet the assets and liabilitiesvalid under its supplier finance programs for the rights and obligations created by those leases with lease terms of more than 12 months. The guidance will also enhance existing disclosure requirements relating to those leases. The Company intends to adopt the new lease guidance when it becomes effective in the first quarter of fiscal year 2020 using a modified retrospective approach. Upon initial evaluation, the Company believes the new guidance will have a material impact on its consolidated balance sheets when adopted.three-month period ended June 30, 2023 is as follows.


	Three-Month Period Ended
	June 30, 2023
	(In millions)
Confirmed obligations outstanding at the beginning of the period	$	275
Invoices confirmed during the period	272
Confirmed invoices paid during the period	(279)
Foreign currency exchange impact	3
Confirmed obligations outstanding at the end of the period	$	271

In May 2014, the FASB issued new guidance which requires an entity to recognize revenue relating to contracts with customers that depicts the transfer of promised goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled in exchange for such goods or services. In order to meet this requirement, the entity must apply the following steps: (i) identify the contracts with the customers; (ii) identify performance obligations in the contracts; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations per the contracts; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Additionally, disclosures required for revenue recognition will include qualitative and quantitative information about contracts with customers, significant judgments and

~~changes in judgments, and assets recognized from costs to obtain or fulfill a contract. The guidance is effective for the Company beginning in the first quarter of fiscal year 2019.~~

The Company is in the process of implementation activities in accordance with the planned effective date. These activities are focused on the review of significant customer contracts, identification and development of additional systems capabilities to enable the Company to make reasonable estimates of revenue as products are manufactured, and the design and implementation of relevant internal controls. The Company has determined that the new standard will change the timing of revenue recognition for a significant portion of its business. Under the new standard, revenue for a significant majority of the manufacturing services customer contracts will be recognized earlier than under the current accounting rules (where Flex recognizes revenue based on shipping and delivery). This change will also have material impacts to the Company’s balance sheet, primarily related to a reduction in finished goods and work-in-process inventories and an increase in unbilled receivables.

The new guidance allows for two transition methods in application - (i) retrospective to each prior reporting period presented, or (ii) prospective with the cumulative effect of adoption recognized on April 1, 2018, the first day of the Company's fiscal year 2019 (also known as the modified retrospective approach). The Company will adopt the standard using the modified retrospective approach, which will result in an adjustment to accumulated deficit for the cumulative effect of applying this guidance to contracts in process as of the adoption date. Under this approach, prior financial statements presented will not be restated. This guidance requires additional disclosures of the amount by which each financial statement line item affected in the current reporting period during fiscal year 2019 as compared to the guidance that was in effect before the change, and an explanation of the reasons for the significant changes.

2. BALANCE SHEET ITEMS

Inventories

The components of inventories, net of applicable lower of cost and net realizable value write-downs, were as follows:


	As of December 31, 2017		As of March 31, 2017			As of June 30, 2023		As of March 31, 2023
	(In thousands)					(In millions)
Raw materials	$	2,590,065	$	2,537,623	Raw materials	$	5,990	$	6,140
Work-in-progress	446,469		279,493		Work-in-progress	756		709
Finished goods	689,109		579,346		Finished goods	780		681
	$	3,725,643	$	3,396,462		$	7,526	$	7,530

Goodwill and Other Intangible Assets

~~The following table summarizes~~During the three-month period ended June 30, 2023, there was no material activity in the ~~Company’s~~Company's goodwill account for each of its ~~four segments during the nine-month period ended December 31, 2017:~~

HRS CTG IEI CEC Amount
(In thousands)
Balance, beginning of the year $ 420,935
$ 111,223
$ 337,707
$ 115,002
$ 984,867
Additions (1) 75,280
—
—
9,174
84,454
Divestitures (2) —
(3,475 ) —
—
(3,475 )
Purchase accounting adjustments —
—
—
(14 ) (14 )
Foreign currency translation adjustments (3) 38,938
—
—
—
38,938
Balance, end of the period $ 535,153
$ 107,748
$ 337,707
$ 124,162
$ 1,104,770

~~(1)~~

The goodwill generated from the Company’s acquisition of AGM Automotive ("AGM") in the HRS segment and the Company's acquisition of a Power Modules business in the CEC segment, completed during the nine-month period ended December 31, 2017, are primarily related to value placed on the acquired employee workforces, service offerings and capabilities of the acquired businesses. The goodwill is not deductible for income tax purposes. See note 12 for additional information.


~~(2)~~	During the nine-month period ended December 31, 2017, the Company disposed of Wink Labs Inc. ("Wink"), a business within the CTG segment, and recorded an aggregate reduction of goodwill of $3.5 million accordingly, which is included as an offset to the gain on sale recorded in other charges (income), net on the condensed consolidated statement of operations.


~~(3)~~	During the nine-month period ended December 31, 2017, the Company recorded $38.9 million of foreign currency translation adjustments primarily related to the goodwill associated with the acquisition of Mirror Controls International ("MCi") and AGM, as the U.S. Dollar fluctuated against foreign currencies.

reportable segments.

The components of acquired intangible assets are as follows:


	As of December 31, 2017							As of March 31, 2017								As of June 30, 2023						As of March 31, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(In thousands)															(In millions)
Intangible assets:															Intangible assets:
Customer-related intangibles	$	369,356	$	(135,411	)	$	233,945	$	260,704	$	(105,912	)	$	154,792	Customer-related intangibles	$	351	$	(193)	$	158	$	373	$	(204)	$	169
Licenses and other intangibles	302,522		(97,915		)	204,607		283,897		(76,508		)	207,389		Licenses and other intangibles	302		(161)		141		299		(152)		147
Total	$	671,878	$	(233,326	)	$	438,552	$	544,601	$	(182,420	)	$	362,181	Total	$	653	$	(354)	$	299	$	672	$	(356)	$	316

The gross carrying amounts of intangible assets are removed when fully amortized. ~~During the nine-month period ended December 31, 2017, the total value~~

Table of intangible assets increased primarily as a result of the Company's estimated value of $82.0 million for customer related intangibles acquired with the AGM acquisition in the HRS segment, which will amortize over a weighted-average estimated useful life of 10 years, and $34.5 million for customer-related and licenses and other intangibles acquired with the power modules acquisition in the CEC segment, which will amortize over a weighted-average estimated useful life of 9 years. The increase was partially offset by $7.5 million for the divestiture of Wink in the CTG segment. The assigned value is subject to change as the Company completes the valuation. Contents

The estimated future annual amortization expense for intangible assets is as follows:

Fiscal Year Ending March 31, Amount
(In thousands)
2018 (1) $ 19,933
2019 74,510
2020 68,272
2021 63,839
2022 54,754
Thereafter 157,244
Total amortization expense $ 438,552


Fiscal Year Ending March 31,	Amount
	(In millions)
2024 (1)	$	51
2025	64
2026	43
2027	36
2028	27
Thereafter	78
Total amortization expense	$	299


~~(1)~~	~~Represents estimated amortization for the remaining three-month period ending March 31, 2018.~~

(1)Represents estimated amortization for the remaining fiscal nine-month period ending March 31, 2024.

~~Other Current Assets~~Customer Working Capital Advances

~~Other current assets include approximately $420.6 million~~Customer working capital advances were $2.2 billion and ~~$506.5 million~~$2.3 billion, as of ~~December 31, 2017~~June 30, 2023 and March 31, ~~2017, respectively, for the deferred purchase price receivable from the Company's Global and North American Asset-Backed Securitization programs. See note 10 for additional information.~~

~~Other Assets~~

During the first quarter of fiscal year 2018, the Company sold Wink to an unrelated third-party venture backed company in exchange for contingent consideration fair valued at $59.0 million. This estimated consideration was based on the value of the acquirer as of the most recent third-party funding of which the Company participated. The Company recognized a non-cash

gain on sale of $38.7 million, which is recorded in other charges (income), net on the condensed consolidated statement of operations in the nine-month period ended December 31, 2017. The contingent consideration is expected to be settled in the fourth quarter of fiscal year 2018, based on a remeasured fair value on the settlement date. As of December 31, 2017, the total investment, including working capital advances, of $76.5 million is accounted for as a cost method investment, and is included in other assets on the condensed consolidated balance sheet.

During the second quarter of fiscal year 2018, the Company deconsolidated one of its majority owned subsidiaries, following the amendments of certain agreements that resulted in joint control of the board of directors between the Company and other non-controlling interest holders. As of December 31, 2017, this subsidiary is accounted for as a cost method investment of approximately $129.7 million and is included in other assets on the condensed consolidated balance sheet. See note 5 for additional information on the deconsolidation.

~~Other Current Liabilities~~

Other current liabilities include customer working capital advances of $171.3 million and $231.3 million, customer-related accruals of $441.0 million and $501.9 million, and deferred revenue of $344.0 million and $280.7 million as of December 31, 2017 and March 31, 2017,2023, respectively. The customer working capital advances are not interest-bearing, do not generally have fixed repayment dates and are generally reduced as the underlying working capital is consumed in ~~production.~~production or the customer working capital advance agreement is terminated.

Other Current Liabilities

Other current liabilities include customer-related accruals of $272 million and $313 million as of June 30, 2023 and March 31, 2023, respectively.

3. REVENUE

Revenue Recognition

The Company provides a comprehensive suite of services for its customers that range from advanced product design to manufacturing and logistics to after-sales services. The first step in its process for revenue recognition is to identify a contract with a customer. A contract is defined as an agreement between two parties that creates enforceable rights and obligations and can be written, verbal, or implied. The Company generally enters into master supply agreements (“MSAs”) with its customers that provide the framework under which business will be conducted. This includes matters such as warranty, indemnification, transfer of title and risk of loss, liability for excess and obsolete inventory, pricing formulas, payment terms, etc., and the level of business under those agreements may not be guaranteed. In those instances, the Company bids on a program-by-program basis and typically receives customer purchase orders for specific quantities and timing of products. As a result, the Company considers its contract with a customer to be the combination of the MSA and the purchase order, or any other similar documents such as a statement of work, product addendum, emails or other communications that embody the commitment by the customer.

In determining the appropriate amount of revenue to recognize, the Company applies the following steps: (i) identifies the contracts with the customers; (ii) identifies performance obligations in the contracts; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations per the contracts; and (v) recognizes revenue when (or as) the Company satisfies a performance obligation. Further, the Company assesses whether control of the products or services promised under the contract are transferred to the customer at a point in time (PIT) or over time (OT). The Company is first required to evaluate whether its contracts meet the criteria for OT recognition. The Company has determined that for a portion of its contracts the Company is manufacturing products for which there is no alternative use (due to the unique nature of the customer-specific product and intellectual property restrictions) and the Company has an enforceable right to payment including a reasonable profit for work-in-progress inventory with respect to these contracts. For certain other contracts, the Company’s performance creates and enhances an asset that the customer controls as the Company performs under the contract. As a result, revenue is recognized under these contracts OT based on the cost-to-cost method as it best depicts the transfer of control to the customer measured based on the ratio of costs incurred to date as compared to the total estimated costs at completion of the performance obligation. For all other contracts that do not meet these criteria, the Company recognizes revenue when it has transferred control of the related manufactured products which generally occurs upon delivery and passage of title to the customer.

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Customer Contracts and Related Obligations

Certain of the Company’s customer agreements include potential price adjustments which may result in variable consideration. 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. The Company estimates the variable consideration related to these price adjustments as part of the total transaction price and recognizes revenue in accordance with the pattern applicable to the performance obligation, subject to a constraint. The Company constrains the amount of revenues recognized for these contractual provisions based on its best estimate of the amount which will not result in a significant reversal of revenue in a future period. The Company determines the amounts to be recognized based on the amount of potential refunds required by the contract, historical experience and other surrounding facts and circumstances. Often these obligations are settled with the customer in a period after shipment through various methods which include reduction of prices for future purchases, issuance of a payment to the customer, or issuance of a credit note applied against the customer’s accounts receivable balance. In many instances, the agreement is silent on the settlement mechanism. Any difference between the amount accrued for potential refunds and the actual amount agreed to with the customer is recorded as an increase or decrease in revenue. These potential price adjustments are included as part of other current liabilities on the condensed consolidated balance sheet and disclosed as part of customer-related accruals in note 2.

Performance Obligations

The Company derives its revenues primarily from manufacturing services, and to a lesser extent, from innovative design, engineering, and supply chain services and solutions.

A performance obligation is an implicitly or explicitly promised good or service that is material in the context of the contract and is both capable of being distinct (customer can benefit from the good or service on its own or together with other readily available resources) and distinct within the context of the contract (separately identifiable from other promises). The Company considers all activities typically included in its contracts, and identifies those activities representing a promise to transfer goods or services to a customer. These include, but are not limited to, design and engineering services, prototype products, tooling, etc. Each promised good or service with regards to these identified activities is accounted for as a separate performance obligation only if it is distinct - i.e., the customer can benefit from it on its own or together with other resources that are readily available to the customer. Certain activities on the other hand are determined not to constitute a promise to transfer goods or service, and therefore do not represent separate performance obligations for revenue recognition (e.g., procurement of materials and standard workmanship warranty).

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of the Company's contracts have a single performance obligation as the promise to transfer the individual good or service is not separately identifiable from other promises in the contract and is, therefore, not distinct. Promised goods or services that are immaterial in the context of the contract are not separately assessed as performance obligations. In the event that more than one performance obligation is identified in a contract, the Company is required to allocate the transaction price between the performance obligations. The allocation would generally be performed on the basis of a relative standalone price for each distinct good or service. This standalone price most often represents the price that the Company would sell similar goods or services separately.

Contract Balances

A contract asset is recognized when the Company has recognized revenue, but not issued an invoice for payment. Contract assets are classified separately on the condensed consolidated balance sheets and transferred to receivables when rights to payment become unconditional.

A contract liability is recognized when the Company receives payments in advance of the satisfaction of performance. Contract liabilities, identified as deferred revenue, were $897 million and $885 million as of June 30, 2023 and March 31, 2023, respectively, of which $802 million and $795 million, respectively, is included in deferred revenue and customer working capital advances under current liabilities.

Disaggregation of Revenue

The following table presents the Company’s revenue disaggregated based on timing of transfer, point in time or over time, for the three-month periods ended June 30, 2023 and July 1, 2022, respectively.

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	Three-Month Periods Ended
	June 30, 2023		July 1, 2022
Timing of Transfer	(In millions)
FAS
Point in time	$	3,436	$	3,779
Over time	165		212
Total	3,601		3,991
FRS
Point in time	3,132		2,790
Over time	159		179
Total	3,291		2,969
Nextracker
Point in time	6		23
Over time	474		372
Total	480		395
Intersegment eliminations
Point in time	(36)		(8)
Over time	—		—
Total	(36)		(8)
Flex
Point in time	6,538		6,584
Over time	798		763
Total	$	7,336	$	7,347

4. SHARE-BASED COMPENSATION

Equity Compensation Plans

~~Historically, the~~Flexhistorically maintains stock-based compensation plans at a corporate level. The Company's primary plan used for granting equity compensation awards ~~was the 2010 Equity Incentive Plan (the "2010 Plan"). Effective August 15, 2017, awards are granted under~~is the Company's 2017 Equity Incentive Plan (the "2017 Plan"). During the fiscal year 2023, Nextracker granted equity compensation awards to Nextracker employees under the 2022 Nextracker Inc. Equity Incentive Plan (the "2022 Nextracker Plan"), which ~~was approved~~is administered by Nextracker, a majority owned subsidiary of the Company's shareholders at the 2017 Annual General Meeting of Shareholders. For further discussion on this 2017 Plan, refer to the Company's Proxy Statement, which was filed with the Securities and Exchange Commission on July 5, 2017.Company.

Share-Based Compensation Expense

The following table summarizes the Company’s share-based compensation ~~expense:~~expense for all equity incentive plans:


	Three-Month Periods Ended				Nine-Month Periods Ended					Three-Month Periods Ended
	December 31, 2017		December 31, 2016		December 31, 2017		December 31, 2016			June 30, 2023		July 1, 2022
	(In thousands)									(In millions)
Cost of sales	$	5,358	$	2,437	$	13,662	$	7,506	Cost of sales	$	9	$	7
Selling, general and administrative expenses	15,400		18,344		49,356		59,805		Selling, general and administrative expenses	32		19
Total share-based compensation expense	$	20,758	$	20,781	$	63,018	$	67,311	Total share-based compensation expense	$	41	$	26

Total unrecognized compensation expense related to share options under all plans was $8.9 million, and will be recognized over a weighted-average remaining vesting period of 2.2 years. As of December 31, 2017, the number of options outstanding and exercisable ~~under all plans was 1.4 million and 0.5 million, respectively, at a weighted-average exercise price~~were immaterial as of ~~$3.39 per share and $4.71 per share, respectively.~~June 30, 2023. All options have been fully expensed as of June 30, 2023.

The 2017 Plan

During the ~~nine-month~~three-month period ended ~~December 31, 2017,~~June 30, 2023, the Company granted ~~6.0~~4.8 million ~~unvested~~restricted share ~~bonus~~unit ("RSU") awards. Of this amount, approximately ~~4.3~~3.0 million are plain-vanilla unvested ~~share bonus~~RSU awards ~~have~~that vest over a period of three years, with no performance or market conditions, and with an average grant date price of ~~$16.45~~$26.81 per award. In addition, approximately 0.4 million unvested shares represent the target amount of grants made to certain key employees whereby vesting is contingent on certain performance conditions, and with an average grant date price of $26.72 per award. The number of shares contingent on performance conditions that ultimately will vest will range from zero up to a maximum of approximately 0.8 million based

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on a measurement of the Company's adjusted earnings per share growth over certain specified periods, and will cliff vest ~~over four years.~~after a period of three years, to the extent such performance conditions have been met. Further, approximately ~~0.6~~0.4 million ~~of these~~ unvested shares ~~represents~~represent the target amount of grants made to certain key employees whereby vesting is contingent on certain market conditions. The average grant date fair value of these awards contingent on certain market conditions was estimated to be ~~$20.25~~$35.64 per award and was calculated using a Monte Carlo simulation. The number of shares contingent on market conditions that ultimately will vest will range from zero up to a maximum of ~~1.2~~approximately 0.8 million based on a measurement of the percentile rank of the Company’s total shareholder return over a certain specified ~~period~~periods against the ~~Standard and Poor’s (“S&P”) 500 Composite Index~~Company's peer companies, and will cliff vest after a period of three years, ifto the extent such market conditions have been met. ~~Also, an immaterial amount~~Finally, the remaining balance of ~~options and share bonus~~approximately 1.2 million represents the number of shares issued upon vesting of RSU awards above target levels based on the achievement of certain market conditions for awards granted in the fiscal year 2021. These awards were ~~granted by~~issued and immediately vested in accordance with the ~~Company during~~terms and conditions of the ~~nine-month period ended December 31, 2017 under an immaterial plan.~~

underlying awards.

As of ~~December 31, 2017,~~June 30, 2023, approximately ~~15.5~~12.6 million unvested ~~share bonus~~RSU awards under ~~all plans~~the 2017 plan were outstanding, of which vesting for a targeted amount of ~~2.0~~1.3 million shares is contingent ~~primarily~~ on meeting certain market conditions, and vesting for a targeted amount of 1.3 million shares is contingent on meeting certain performance conditions. The number of shares tied to market conditions that will ultimately be issued can range from zero to ~~4.0~~2.6 million based on the achievement ~~levels~~levels. The number of shares tied to performance conditions that will ultimately be issued can range from zero to 2.6 million based on the ~~respective conditions.~~achievement levels. During the ~~nine-month~~three-month period ended ~~December 31, 2017, 1.4~~June 30, 2023, 2.3 million shares vested in connection with the ~~share bonus~~ awards with market conditions granted in fiscal year ~~2015.~~

2021.

As of ~~December 31, 2017,~~June 30, 2023, total unrecognized compensation expense related to unvested ~~share bonus~~RSU awards under ~~all plans~~the 2017 Plan, was approximately ~~$162.8~~$237 million, and will be recognized over a weighted-average remaining vesting period of ~~2.6~~2.4 years.

The2022 Nextracker Plan

During the three-month period ended June 30, 2023, Nextracker awarded 1.1 million equity-based compensation awards to its employees under the 2022 Nextracker Plan, which included approximately 0.5 million option awards, 0.5 million RSU ("NRSU") awards and 0.1 million performance-based restricted share unit ("NPSU") awards. Vesting for the awards granted under the 2022 Nextracker Plan is contingent upon continued employee service and certain performance conditions.

4.As of June 30, 2023, approximately 5.8 million unvested options awards, NRSU awards, and NPSU awards under the 2022 Nextracker Plan were outstanding, of which vesting for a targeted amount of approximately 3.8 million shares is contingent on meeting certain performance conditions.

Total unrecognized compensation expense related to unvested awards under the 2022 Nextracker Plan was approximately $61 million, which is expected to be recognized over a weighted-average period of approximately 2.5 years. Approximately $8 million of expense was recognized for equity-based compensation awards granted under the 2022 Nextracker Plan for the three-month period ended June 30, 2023.

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5. EARNINGS PER SHARE

The following table reflects basic weighted-average ordinary shares outstanding and diluted weighted-average ordinary share equivalents used to calculate basic and diluted earnings per share attributable to the shareholders of ~~Flex Ltd.:~~Flex:


										Three-Month Periods Ended
	Three-Month Periods Ended				Nine-Month Periods Ended					June 30, 2023		July 1, 2022
	December 31, 2017		December 31, 2016		December 31, 2017		December 31, 2016			(In millions, except per share amounts)
	(In thousands, except per share amounts)
Basic earnings per share attributable to the shareholders of Flex Ltd.									Basic earnings per share attributable to the shareholders of Flex Ltd.
Net income	$	118,333	$	129,469	$	448,129	$	232,690	Net income	$	211	$	195
Net income attributable to noncontrolling interest and redeemable noncontrolling interest									Net income attributable to noncontrolling interest and redeemable noncontrolling interest	25		6
Net income attributable to Flex Ltd.									Net income attributable to Flex Ltd.	$	186	$	189
Shares used in computation:									Shares used in computation:
Weighted-average ordinary shares outstanding	528,405		539,638		529,984		542,780		Weighted-average ordinary shares outstanding	447		458
Basic earnings per share	$	0.22	$	0.24	$	0.85	$	0.43	Basic earnings per share	$	0.42	$	0.41

Diluted earnings per share:
Diluted earnings per share attributable to the shareholders of Flex Ltd.									Diluted earnings per share attributable to the shareholders of Flex Ltd.
Net income	$	118,333	$	129,469	$	448,129	$	232,690	Net income	$	211	$	195
Net income attributable to noncontrolling interest and redeemable noncontrolling interest									Net income attributable to noncontrolling interest and redeemable noncontrolling interest	25		6
Net income attributable to Flex Ltd.									Net income attributable to Flex Ltd.	$	186	$	189
Shares used in computation:									Shares used in computation:
Weighted-average ordinary shares outstanding	528,405		539,638		529,984		542,780		Weighted-average ordinary shares outstanding	447		458
Weighted-average ordinary share equivalents from stock options and awards (1) (2)	5,947		5,384		5,988		5,592
Weighted-average ordinary share equivalents from RSU awards (1)									Weighted-average ordinary share equivalents from RSU awards (1)	8		10
Weighted-average ordinary shares and ordinary share equivalents outstanding	534,352		545,022		535,972		548,372		Weighted-average ordinary shares and ordinary share equivalents outstanding	455		468
Diluted earnings per share	$	0.22	$	0.24	$	0.84	$	0.42	Diluted earnings per share	$	0.41	$	0.40

(1)An immaterial amount of ~~options~~RSU awards and ~~share bonus~~5.2 million RSU awards ~~was~~for the three-month periods ended June 30, 2023 and July 1, 2022, respectively, were excluded from the computation of diluted earnings per share ~~during the three-month period ended December 31, 2017,~~ due to their anti-dilutive impact on the weighted-average ordinary share equivalents. ~~Options to purchase ordinary shares of 0.5 million and an immaterial amount of anti-dilutive share bonus awards was excluded for the three-month period ended December 31, 2016.~~

~~(2)~~ An immaterial amount of options and share bonus awards was excluded from the computation of diluted earnings per share during the nine-month period ended December 31, 2017, due to their anti-dilutive impact on the weighted-average ordinary share equivalents. Options to purchase ordinary shares of 0.7 million and an immaterial amount of anti-dilutive share bonus awards was excluded for the nine-month period ended December 31, 2016.

~~5. DECONSOLIDATION OF SUBSIDIARY ENTITY~~

The Company has a majority owned subsidiary, Elementum SCM (Cayman) Ltd ("Elementum"), which qualifies as a variable interest entity for accounting purposes. The Company owns a majority of Elementum’s outstanding equity (consisting primarily of preferred stock) and as of March 31, 2017, controlled its board of directors, which gave the Company the power to direct the activities of Elementum that most significantly impact its economic performance. Accordingly, the Company recognized the carrying value of the noncontrolling interest as a component of total shareholders' equity, and the consolidated financial statements include the financial position and results of operations of Elementum as of and for the period ended March 31, 2017.

During the second quarter of fiscal year 2018, the Company and other minority shareholders of Elementum amended certain agreements resulting in joint control of the board of directors between the Company and other non-controlling interest holders. As a result, the Company concluded it is no longer the primary beneficiary of Elementum and accordingly, deconsolidated the entity. The Company no longer recognizes the carrying value of the noncontrolling interest as a component of total shareholder’s equity resulting in a reduction of $90.6 million of noncontrolling interest from its condensed consolidated balance sheet upon deconsolidation, which was treated as a non-cash financing activity in the condensed consolidated statement of cash flows for the nine-month period ended December 31, 2017. Further, the Company derecognized approximately $72.6

million of cash of Elementum as of the date of deconsolidation which is reflected as an outflow from investing activities within other investing activities, net in the condensed consolidated statement of cash flows for the nine-month period ended December 31, 2017. There were no other material impacts to the condensed consolidated balance sheet or condensed consolidated cash flows resulting from deconsolidation of the entity. The noncontrolling interest in the operating losses of Elementum prior to deconsolidation is immaterial for all periods presented and is classified as a component of interest and other, net, in the Company's condensed consolidated statements of operations.

The carrying amount of the Company’s variable interest in Elementum was approximately $129.7 million as of December 31, 2017, is accounted for as a cost method investment, and is included in other assets on the condensed consolidated balance sheet. The value of the Company’s variable interest on the date of deconsolidation was based on management’s estimate of the fair value of Elementum at that time. The Company concluded that the market approach was the most appropriate method to determine the fair value of the entity on the date of deconsolidation, given that Elementum raised equity funding from third-party investors around the same period. The Company recognized a gain on deconsolidation of approximately $151.6 million with no related tax impact, which is included in other charges (income), net on the condensed consolidated statement of operations. As the Company is not obligated to fund future losses of Elementum, the carrying amount is the Company’s maximum risk of loss. Pro-forma financials have not been presented because the effects were not material to the Company’s condensed consolidated financial position and results of operation for all periods presented. Elementum remains a related party to the Company after deconsolidation and transactions between the Company and Elementum during the three-month period ended December 31, 2017 are immaterial.

6. BANK BORROWINGS AND ~~LONG TERM~~LONG-TERM DEBT

Bank borrowings and long-term debt as of June 30, 2023 and March 31, 2023 are as follows:


	Maturity Date	As of June 30, 2023		As of March 31, 2023
		(In millions)
4.750% Notes (1)	June 2025	$	597	$	599
3.750% Notes (1)	February 2026	685		686
6.000% Notes (1)	January 2028	397		396
4.875% Notes (1)	June 2029	658		658
4.875% Notes (1)	May 2030	684		685
JPY Term Loan (2)	April 2024	—		253
Delayed Draw Term Loan	November 2023	150		150
Nextracker Term Loan	February 2028	150		150
3.600% HUF Bonds	December 2031	294		284
Other		—		1
Debt issuance costs		(20)		(21)
		3,595		3,841
Current portion, net of debt issuance costs		(151)		(150)
Non-current portion		$	3,444	$	3,691

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As of December 31, 2017 As of March 31, 2017
(In thousands)
4.625% Notes due February 2020 $ 500,000
$ 500,000
Term Loan, including current portion, due in installments through November 2021 691,875
700,000
Term Loan, including current portion, due in installments through June 2022 489,938
502,500
5.000% Notes due February 2023 500,000
500,000
4.75% Notes due June 2025 596,282

595,979
Other 181,175

169,671
Debt issuance costs (14,596 )
(16,007 )
Total $ 2,944,674

$ 2,952,143
(1)The notes are carried at the principal amount of each note, less any unamortized discount or premium and unamortized debt issuance costs. These notes represent the Company’s senior unsecured obligations and hold equal ranking with all other existing and future senior unsecured debt obligations.

(2)During the first quarter of fiscal year 2024, the Company repaid the JPY Term Loan for approximately $241 million. In addition, the Company also settled the associated USD JPY cross currency swap for approximately $60 million.

The weighted-average interest ~~rates~~rate for the ~~Company’s~~Company's long-term debt ~~were 3.7%~~was 4.6% and ~~3.5%~~4.7% as of ~~December 31, 2017~~June 30, 2023 and March 31, ~~2017,~~2023, respectively.

On June 30, 2017, the Company entered into a five-year credit facility consisting of a $1.75 billion revolving credit facility and a $502.5 million term loan, which is due to mature on June 30, 2022 (the "2022 Credit Facility"). This 2022 Credit Facility replaced the Company's $2.1 billion credit facility, which was due to mature in March 2019. The outstanding principal of the term loan portion of the 2022 Credit Facility is repayable in quarterly installments of approximately $6.3 million from September 30, 2017 through June 30, 2020 and approximately $12.6 million from September 30, 2020 through March 31, 2022 with the remainder due upon maturity. The Company determined that effectively extending the maturity date of the revolving credit and repaying the term loan due March 2019 qualified as a debt modification and consequently all unamortized debt issuance costs related to the $2.1 billion credit facility are capitalized and will be amortized over the term of the 2022 Credit Facility.

Borrowings under the 2022 Credit Facility bear interest, at the Company’s option, either at (i) the Base Rate, which is defined as the greatest of (a) the Administrative Agent’s prime rate, (b) the federal funds effective rate, plus 0.50% and (c) the LIBOR (the London Interbank Offered Rate) rate that would be calculated as of each day in respect of a proposed LIBOR loan with a one-month interest period, plus 1.0%; plus, in the case of each of clauses (a) through (c), an applicable margin ranging from 0.125% to 0.875% per annum, based on the Company’s credit ratings (as determined by Standard & Poor’s Financial Services LLC, Moody’s Investors Service, Inc. and Fitch Ratings Inc.) or (ii) LIBOR plus the applicable margin for LIBOR loans ranging between 1.125% and 1.875% per annum, based on the Company’s credit ratings.

The 2022 Credit Facility is unsecured, and contains customary restrictions on the ability of the Company and its subsidiaries to (i) incur certain debt, (ii) make certain investments, (iii) make certain acquisitions of other entities, (iv) incur liens, (v) dispose of assets, (vi) make non-cash distributions to shareholders, and (vii) engage in transactions with affiliates. These covenants are subject to a number of significant exceptions and limitations. The 2022 Credit Facility also requires that the Company maintain a maximum ratio of total indebtedness to EBITDA (earnings before interest expense, taxes, depreciation and amortization), and a minimum interest coverage ratio during the term of the 2022 Credit Facility. As of December 31, 2017, the Company was in compliance with the covenants under the 2022 Credit Facility agreement.

The Company has three tranches of Notes, the 4.625% Notes due 2020, the 5.000% Notes due 2023 and the 4.75% Notes due 2025. These Notes are senior unsecured obligations, and prior to June 30, 2017, were guaranteed, fully and unconditionally, jointly and severally, on an unsecured basis, by certainScheduled repayments of the Company's ~~100% owned subsidiaries (the "guarantor subsidiaries"). Upon~~bank borrowings and long-term debt as of June 30, 2023 are as follows:


Fiscal Year Ending March 31,	Amount
	(In millions)
2024 (1)	$	151
2025	—
2026	1,282
2027	—
2028	547
Thereafter	1,635
Total	$	3,615

(1)Represents estimated repayments for the ~~termination~~remaining fiscal nine-month period ending March 31, 2024.

7. INTEREST, NET

Interest and other, net for the three-month periods ended June 30, 2023 and July 1, 2022 are primarily composed of the $2.1 billion credit facility, all guarantor subsidiaries were released from their guarantees under each indenture for each Note. As a result, the Company will no longer be providing supplemental guarantor and non-guarantor condensed consolidating financial statements.following:


	Three-Month Periods Ended
	June 30, 2023		July 1, 2022
	(In millions)
Interest expenses on debt obligations	$	47	$	43
Interest income	(18)		(4)
AR sales program related expenses	12		5

~~Repayment of the Company’s long term debt outstanding as of December 31, 2017 is as follows:~~

Fiscal Year Ending March 31, Amount
(In thousands)
2018 (1) $ 10,739
2019 42,934
2020 542,872
2021 115,247
2022 809,103
Thereafter 1,438,375
Total $ 2,959,270


~~(1)~~	~~Represents scheduled repayment for the remaining three-month period ending March 31, 2018.~~

~~7. INTEREST AND OTHER, NET~~

During the three-month and nine-month periods ended December 31, 2017, the Company recognized interest expense of $32.1 million and $90.7 million, respectively, on its debt obligations outstanding during the periods. During the three-month and nine-month periods ended December 31, 2016, the Company recognized interest expense of $26.6 million and $79.9 million, respectively.

8. FINANCIAL INSTRUMENTS

Foreign Currency Contracts

The Company enters into ~~forward contracts~~short-term and long-term foreign currency derivative contracts, including forward, swap, and options contracts, ~~primarily~~ to ~~manage the foreign~~hedge only those currency ~~risk~~exposures associated with ~~monetary~~certain assets and liabilities, primarily accounts receivable, accounts payable, debt, and ~~anticipated foreign currency~~cash flows denominated ~~transactions.~~in non-functional currencies. Gains and losses on the Company's derivative contracts are designed to offset losses and gains on the assets, liabilities and transactions hedged, and accordingly, generally do not subject the Company to risk of significant accounting losses. The Company hedges committed exposures and does not engage in speculative transactions. The credit risk of these derivative contracts is minimized since the contracts are with large financial institutions and, accordingly, fair value adjustments related to the credit risk of the counterparty financial institutions were not material.

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As of ~~December 31, 2017,~~June 30, 2023, the aggregate notional amount of the Company’s outstanding foreign currency derivative contracts was ~~$8.2~~$11.3 billion as summarized below:


	Foreign Currency Amount		Notional Contract Value in USD					Notional Contract Value in USD
Currency	Buy	Sell	Buy		Sell		Currency	Buy		Sell
	(In thousands)
Cash Flow Hedges							Cash Flow Hedges
CNY	1,724,000	—	$	262,937	$	—
EUR	53,756	109,351	63,973		128,767

HUF	19,654,800	—	75,314		—		HUF	$	446	$	—
ILS	73,700	—	21,233		—
INR	1,392,540	—	21,200		—

MXN	3,072,680	—	154,955		—		MXN	566		—
MYR	173,000	39,500	42,318		9,662
PLN	87,890	—	24,963		—
RON	117,780	—	30,124		—
SGD	29,900	—	22,335		—

Other	N/A	N/A	12,567		5,017		Other	649		37
			731,919		143,446			1,661		37
Other Foreign Currency Contracts							Other Foreign Currency Contracts
BRL	—	871,000	—		263,229
CAD	267,328	289,019	211,126		228,257
CHF	16,327	28,889	16,527		29,245

CNY	2,832,338	—	427,268		—		CNY	541		66
EUR	1,958,706	2,306,257	2,329,926		2,744,141		EUR	2,515		2,750
GBP	35,355	63,776	47,390		85,505		GBP	229		308
HUF	18,783,285	22,480,502	71,975		86,142		HUF	179		144
INR	6,222,378	1,252,331	96,829		19,200

MXN	2,254,587	1,374,623	113,699		69,322		MXN	636		508
MYR	456,260	247,030	111,607		60,427		MYR	327		170
RON	88,521	81,054	22,641		20,731
SGD	78,855	48,690	58,904		36,371

Other	N/A	N/A	114,386		81,631		Other	655		575
			3,622,278		3,724,201			5,082		4,521

Total Notional Contract Value in USD			$	4,354,197	$	3,867,647	Total Notional Contract Value in USD	$	6,743	$	4,558

As of ~~December 31, 2017,~~June 30, 2023, the fair value of the Company’s short-term foreign currency contracts was included in other current assets or other current liabilities, as applicable, in the condensed consolidated balance sheets. Certain of these contracts are designed to economically hedge the Company’s exposure to monetary assets and liabilities denominated in a non-functional currency and are not accounted for as hedges under the accounting standards. Accordingly, changes in the fair value of these instruments are recognized in earnings during the period of change as a component of ~~interest and~~ other charges (income), net in the condensed consolidated statements of operations. As of ~~December 31, 2017~~June 30, 2023 and March 31, ~~2017,~~2023, the Company also has included net deferred gains and losses in accumulated other comprehensive loss, a component of shareholders’ equity in the condensed

consolidated balance sheets, relating to changes in fair value of its foreign currency contracts that are accounted for as cash flow hedges. ~~These~~The deferred ~~losses were $7.2~~gain was $27 million as of ~~December 31, 2017,~~June 30, 2023, and ~~are~~is expected to be recognized primarily as a component of cost of sales in the condensed consolidated statements of operations ~~primarily~~ over the next twelve-month ~~period.~~ period, except for the USD HUF cross currency swaps.

The ~~gains and losses recognized~~Company entered into USD HUF cross currency swaps in ~~earnings due~~December 2021 to hedge ~~ineffectiveness were not material for all fiscal periods presented~~the foreign currency risk on the HUF bonds due December 2031, and the fair value of the cross currency swaps was included in current and long-term other liabilities as of June 30, 2023 and March 31, 2023. The changes in fair value of the USD HUF cross currency swaps are ~~included as a component~~reported in accumulated other comprehensive loss. In addition, corresponding amounts are reclassified out of ~~interest and~~accumulated other comprehensive loss to other charges (income), net into offset the ~~condensed consolidated statements~~remeasurement of ~~operations.~~the underlying HUF bond principal, which also impacts the same line.

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The following table presents the fair value of the Company’s derivative instruments utilized for foreign currency risk management purposes:


	Fair Values of Derivative Instruments											Fair Values of Derivative Instruments
	Asset Derivatives					Liability Derivatives						Asset Derivatives					Liability Derivatives
		Fair Value					Fair Value						Fair Value					Fair Value
	Balance Sheet Location	December 31, 2017		March 31, 2017		Balance Sheet Location	December 31, 2017		March 31, 2017			Balance Sheet Location	June 30, 2023		March 31, 2023		Balance Sheet Location	June 30, 2023		March 31, 2023
	(In thousands)											(In millions)
Derivatives designated as hedging instruments											Derivatives designated as hedging instruments
Foreign currency contracts	Other current assets	$	6,627	$	11,936	Other current liabilities	$	15,057	$	1,814	Foreign currency contracts	Other current assets	$	60	$	46	Other current liabilities	$	15	$	22
Foreign currency contracts											Foreign currency contracts	Other assets	$	—	$	—	Other liabilities	$	17	$	88

Derivatives not designated as hedging instruments											Derivatives not designated as hedging instruments
Foreign currency contracts	Other current assets	$	14,376	$	10,086	Other current liabilities	$	10,273	$	9,928	Foreign currency contracts	Other current assets	$	39	$	26	Other current liabilities	$	47	$	19

The Company has financial instruments subject to master netting arrangements, which ~~provides~~provide for the net settlement of all contracts with ~~a single counterparty.~~certain counterparties. The Company does not offset fair value amounts for assets and liabilities recognized for derivative instruments under these arrangements, ~~and~~ as such, the asset and liability balances presented in the table above reflect the gross amounts of derivatives in the condensed consolidated balance sheets. The impact of netting derivative assets and liabilities is not material to the Company’s financial position for any of the periods presented.

9. ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in accumulated other comprehensive loss by component, net of tax, are as follows:

Three-Month Periods Ended
December 31, 2017 December 31, 2016
Unrealized loss on
derivative
instruments and
other Foreign currency
translation
adjustments Total Unrealized loss on derivative
instruments and
other Foreign currency
translation
adjustments Total
(In thousands)
Beginning balance $ (48,470 ) $ (75,403 ) $ (123,873 ) $ (42,233 ) $ (80,319 ) $ (122,552 )
Other comprehensive gain (loss) before reclassifications (4,643 ) 7,248
2,605
(1,354 ) (33,770 ) (35,124 )
Net (gains) losses reclassified from accumulated other comprehensive loss (74 ) 244
170
1,153
(2,642 ) (1,489 )
Net current-period other comprehensive gain (loss) (4,717 ) 7,492
2,775
(201 ) (36,412 ) (36,613 )
Ending balance $ (53,187 ) $ (67,911 ) $ (121,098 ) $ (42,434 ) $ (116,731 ) $ (159,165 )

Nine-Month Periods Ended
December 31, 2017 December 31, 2016
Unrealized loss on
derivative
instruments and
other Foreign currency
translation
adjustments Total Unrealized loss on derivative
instruments and
other Foreign currency
translation
adjustments Total
(In thousands)
Beginning balance $ (32,426 ) $ (95,717 ) $ (128,143 ) $ (41,522 ) $ (94,393 ) $ (135,915 )
Other comprehensive gain (loss) before reclassifications (5,488 ) 27,562
22,074
(1,031 ) (19,471 ) (20,502 )
Net (gains) losses reclassified from accumulated other comprehensive loss (15,273 ) 244
(15,029 ) 119
(2,867 ) (2,748 )
Net current-period other comprehensive gain (loss) (20,761 ) 27,806
7,045
(912 ) (22,338 ) (23,250 )
Ending balance $ (53,187 ) $ (67,911 ) $ (121,098 ) $ (42,434 ) $ (116,731 ) $ (159,165 )


	Three-Month Periods Ended
	June 30, 2023						July 1, 2022
	Unrealized gain (loss) on derivative instruments and other		Foreign currency translation adjustments		Total		Unrealized gain (loss) on derivative instruments and other		Foreign currency translation adjustments		Total
	(In millions)
Beginning balance	$	(14)	$	(180)	$	(194)	$	(66)	$	(116)	$	(182)
Other comprehensive gains (loss) before reclassifications	101		(9)		92		(79)		(68)		(147)
Net (gains) loss reclassified from accumulated other comprehensive loss	(67)		—		(67)		78		(3)		75
Net current-period other comprehensive gains (loss)	34		(9)		25		(1)		(71)		(72)
Ending balance	$	20	$	(189)	$	(169)	$	(67)	$	(187)	$	(254)

Substantially all unrealized gains and losses relating to derivative instruments and other, reclassified from accumulated other comprehensive loss for the three-month ~~and nine-month periods~~period ended ~~December 31, 2017~~June 30, 2023 were ~~recognized as a component~~reclassified out of accumulated other comprehensive loss to other charges (income), net and cost of sales in the condensed consolidated statement of operations, which primarily relate to the Company’s foreign currency contracts accounted for as cash flow hedges. The tax impacts on the changes in accumulated other comprehensive loss for the three-month periods ended June 30, 2023 and July 1, 2022 were $2 million and $4 million tax benefits, respectively.

10. TRADE RECEIVABLES SECURITIZATION

The Company sells trade receivables under two asset-backed securitization programs and ~~under~~ an accounts receivable factoring program.

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Asset-Backed Securitization Programs

The Company ~~continuously sells designated pools of~~historically has engaged in asset-backed securitization programs (the “ABS Programs”), selling trade receivables under its Global Asset-Backed Securitization Agreement (the “Global Program”) and its North American Asset-Backed Securitization Agreement (the “North American Program,” collectively, the “ABS Programs”) to affiliated special purpose entities ~~each of which in turn sells 100% of the receivables~~and then to unaffiliated financial institutions. These programs allow the operating subsidiaries to receive a cash payment and a deferred purchase price receivable for sold receivables. Following the transfer of the receivables to the special purpose entities, the transferred receivables are isolated from the Company and its affiliates, and uponUpon the sale of the receivables from the special purpose entities to the unaffiliated financial institutions, the receivables are derecognized from our consolidated balance sheet as effective control of the transferred receivables is passed to the unaffiliated financial institutions, which ~~has~~have the right to pledge or sell the receivables. Although the special purpose entities are consolidated by the Company, they are separate corporate entities and their assets are available first to satisfy the claims of their creditors. The investment limits set by the financial institutions are $950.0 million for the Global Program, of which $775.0 million is committed and $175.0 million is uncommitted, and $250.0 million for the North American Program, of which $210.0 million is committed and $40.0 million is uncommitted. Both programs require a minimum level of deferred purchase priceAccounts receivable ~~to be retained by the Company in connection with the sales.~~

The Company services, administers and collects the receivables on behalf of the special purpose entities and receives a servicing fee of 0.1% to 0.5% of serviced receivables per annum. Servicing fees recognized during the three-month and nine-month periods ended December 31, 2017 and December 31, 2016 were not material and are included in interest and other, net within the condensed consolidated statements of operations. As the Company estimates the fee it receives in return for its obligation to service these receivables is at fair value, no servicing assets and liabilities are recognized.

As of December 31, 2017, approximately $1.5 billion of accounts receivable had been sold to the special purpose entities under the ABS Programs for which the Company had received net cash proceeds of approximately $1.1 billion and deferred purchase price receivables of approximately $420.6 million. As of March 31, 2017, approximately $1.5 billion of accounts receivable had been sold to the special purpose entities for which the Company had received net cash proceeds of $1.0 billion and deferred purchase price receivables of approximately $506.5 million. The portion of the purchase price for the receivables which is not paid by the unaffiliated financial institutions in cash is a deferred purchase price receivable, which is paid to the

special purpose entity as payments on the receivables are collected from account debtors. The deferred purchase price receivable represents a beneficial interest in the transferred financial assets and is recognized at fair value as part of the sale transaction. The deferred purchase price receivables are included in other current assets as of December 31, 2017 and March 31, 2017, and were carried at the expected recovery amount of the related receivables. The difference between the carrying amount of the receivables sold under these programs and the sum of the cash and fair value of the deferred purchase price receivables received at time of transfer is recognized as a loss on sale of the related receivables and recorded in interest and other, net in the condensed consolidated statements of operations and were immaterial for all periods presented.

The Company's deferred purchase price receivables relating to its asset-backed securitization program are recorded initially at fair value based on a discounted cash flow analysis using unobservable inputs (i.e., level 3 inputs), which are primarily risk free interest rates adjusted for the credit quality of the underlying creditor. Due to its high credit quality and short term maturity, the fair value approximates carrying value. Significant increases in either of the major unobservable inputs (credit spread, risk free interest rate) in isolation would result in lower fair value estimates, however the impact is not material. The interrelationship between these inputs is also insignificant.

~~As of December 31, 2017 and March 31, 2017, the accounts receivable balances that were~~ sold under the ABS Programs ~~were removed from the condensed consolidated balance sheets and the net cash proceeds received by the Company were~~are included as cash provided by operating activities in the ~~condensed~~ consolidated ~~statements~~statement of cash ~~flows.~~

~~For~~flow. During the ~~nine-month~~three-month periods ended ~~December 31, 2017~~June 30, 2023 and ~~December 31, 2016, cash flows from sales of receivables~~July 1, 2022, no accounts receivable were sold under the ABS Programs consisted of approximately $4.6 billion and $4.2 billion, for transfers of receivables, respectively (of which approximately $290.4 million and $315.1 million, respectively, represented new transfers and the remainder proceeds from collections reinvested in revolving-period transfers).

Programs.

Trade Accounts Receivable Sale Programs

The Company also ~~sold~~sells accounts receivables to certain third-party banking institutions. The outstanding balance of receivables sold and not yet collected on accounts where the Company has continuing involvement was approximately ~~$233.3 million~~$0.8 billion and ~~$225.2 million~~$0.8 billion as of ~~December 31, 2017~~June 30, 2023 and March 31, ~~2017,~~2023, respectively. For the ~~nine-month~~three-month periods ended ~~December 31, 2017~~June 30, 2023 and ~~December 31, 2016,~~July 1, 2022, total accounts receivable sold to certain ~~third party~~third-party banking institutions was approximately ~~$1.0~~$0.8 billion and $0.8 billion, respectively. The receivables that were sold were removed from the condensed consolidated balance sheets and the cash received ~~is reflected~~was included as cash provided by operating activities in the condensed consolidated statements of cash flows.

11. FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability. The accounting guidance for fair value establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

Level 1 - Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. There were no balances classified as level 1 in the fair value hierarchy as of June 30, 2023 and March 31, 2023.

The Company has deferred compensation plans for its officers and certain other employees. Amounts deferred under the plans are invested in hypothetical investments selected by the participant or the participant’s investment manager. The Company’s deferred compensation plan assets are for the most part included in other noncurrent assets on the condensed consolidated balance sheets and primarily include investments in equity securities that are valued using active market prices.

Level 2 - Applies to assets or liabilities for which there are inputs other than quoted prices included within level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets) such as cash and cash equivalents and money market funds; or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

The Company values foreign exchange forward contracts using level 2 observable inputs which primarily consist of an income approach based on the present value of the forward rate less the contract rate multiplied by the notional amount.

The Company’s cash equivalents ~~are comprised of~~include bank time deposits and money market funds, which are valued using level 2 inputs, such as interest rates and maturity periods. Due to their short-term nature, their carrying amount approximates fair value.

The ~~Company’s~~Company has deferred compensation plans for its officers and certain other employees. Amounts deferred under the plans are invested in hypothetical investments selected by the participant or the participant's investment manager. The Company's deferred compensation plan assets ~~also~~are included in other assets on the consolidated balance sheets and include money market funds, mutual funds, corporate and government bonds and certain convertible securities that are valued using prices obtained from various pricing sources. These sources price these investments using certain market indices and the performance of these investments in relation to these indices. As a result, the Company has classified these investments as level 2 in the fair value hierarchy.

Level 3 - Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company has accrued for contingent consideration in connection with its business acquisitions as applicable, which is measured at fair value based on certain internal models and unobservable inputs.

The significant inputs in the fair value measurement not supported by market activity included the Company's probability assessments of expected future revenue during the earn-out period and associated volatility, appropriately discounted considering the uncertainties associated with the obligation, and calculated in accordance with the terms of the merger agreement. Significant decreases in expected revenue during the earn-out period, or significant increases in the discount rate or volatility in isolation would result in lower fair value estimates. The interrelationship between these inputs is not considered significant.

~~The following table summarizes the activities related to contingent consideration payable for historic acquisitions:~~

Three-Month Periods Ended Nine-Month Periods Ended
December 31,
2017 December 31,
2016 December 31,
2017 December 31,
2016
(In thousands)
Beginning balance $ 17,342
$ 75,614
$ 22,426
$ 73,423
Payments (17,109 ) (40,555 ) (17,109 ) (42,776 )
Fair value adjustments 767
(6,997 ) (4,317 ) (2,585 )
Ending balance $ 1,000
$ 28,062
$ 1,000
$ 28,062

In connection with the acquisition of NEXTracker, Inc. in fiscal year 2016, the Company had an obligation to pay additional cash consideration to the former shareholders contingent upon NEXTracker, Inc.'s achievement of revenue targets during the two years after acquisition (ending on September 30, 2017). During the nine-month period ended December 31, 2017, the Company paid $17.1 million of the total contingent consideration following the second year's targets achievement in accordance with the terms of the merger agreement. The payment of the contingent consideration is included in other financing activities, net, in the condensed consolidated statements of cash flows.

There were no transfers between levels in the fair value hierarchy during the ~~nine-month~~three-month periods ended ~~December 31, 2017~~June 30, 2023 and ~~December 31, 2016.~~July 1, 2022.

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Financial Instruments Measured at Fair Value on a Recurring Basis

The following table presents the Company’s assets and liabilities measured at fair value on a recurring ~~basis:~~basis as of June 30, 2023 and March 31, 2023:


	Fair Value Measurements as of June 30, 2023
	Level 1		Level 2		Level 3		Total
	(In millions)
Assets:
Money market funds and time deposits (included in cash and cash equivalents of the condensed consolidated balance sheet)	$	—	$	1,266	$	—	$	1,266

Foreign currency contracts (Note 8)	—		99		—		99

Deferred compensation plan assets:							0
Mutual funds, money market accounts and equity securities	—		40		—		40
Liabilities:
Foreign currency contracts (Note 8)	$	—	$	(79)	$	—	$	(79)



	Fair Value Measurements as of March 31, 2023
	Level 1		Level 2		Level 3		Total
	(In millions)
Assets:
Money market funds and time deposits (included in cash and cash equivalents of the condensed consolidated balance sheet)	$	—	$	2,324	$	—	$	2,324

Foreign currency contracts (Note 8)	—		72		—		72
Deferred compensation plan assets:							0
Mutual funds, money market accounts and equity securities	—		37		—		37
Liabilities:							0
Foreign currency contracts (Note 8)	$	—	$	(129)	$	—	$	(129)

Fair Value Measurements as of December 31, 2017
Level 1 Level 2 Level 3 Total
(In thousands)
Assets:

Money market funds and time deposits (included in cash and cash equivalents of the condensed consolidated balance sheet) $ —
$ 424,744
$ —
$ 424,744
Foreign exchange contracts (Note 8) —
21,003
—
21,003
Deferred compensation plan assets:

0
Mutual funds, money market accounts and equity securities 7,212
67,503
—
74,715
Liabilities:

0
Foreign exchange contracts (Note 8) $ —
$ (25,330 ) $ —
$ (25,330 )
Contingent consideration in connection with business acquisitions —
—
(1,000 ) (1,000 )

Fair Value Measurements as of March 31, 2017
Level 1 Level 2 Level 3 Total
(In thousands)
Assets:

Money market funds and time deposits (included in cash and cash equivalents of the condensed consolidated balance sheet) $ —
$ 1,066,841
$ —
$ 1,066,841
Foreign exchange contracts (Note 8) —
22,022
—
22,022
Deferred compensation plan assets:

0
Mutual funds, money market accounts and equity securities 7,062
52,680
—
59,742
Liabilities:

0
Foreign exchange contracts (Note 8) $ —
$ (11,742 ) $ —
$ (11,742 )
Contingent consideration in connection with business acquisitions —
—
(22,426 ) (22,426 )

Other financial instruments

The following table presents the Company’s major debts not carried at fair value:

As of December 31, 2017
As of March 31, 2017

Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Fair Value
Hierarchy
(In thousands)
4.625% Notes due February 2020 $ 500,000

$ 516,925

$ 500,000
$ 526,255

Level 1
Term Loan, including current portion, due in installments through November 2021 691,875

693,605

700,000
699,566

Level 1
Term Loan, including current portion, due in installments through June 2022 (1) 489,938
491,163
502,500
503,756
Level 1
5.000% Notes due February 2023 500,000

536,515

500,000
534,820

Level 1
4.750% Notes due June 2025 596,282

643,440

595,979
633,114

Level 1
Euro Term Loan due September 2020 58,021
58,021
53,075
53,075
Level 1
Euro Term Loan due January 2022 119,786
119,786
107,357
107,357
Level 1
Total $ 2,955,902

$ 3,059,455

$ 2,958,911

$ 3,057,943

(1) On June 30, 2017, the Company entered into a new agreement that effectively extended the maturity date of the loan from March 31, 2019 to June 30, 2022. Refer to note 6 for further details of the arrangement.


	As of June 30, 2023				As of March 31, 2023
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Hierarchy
	(In millions)
JPY Term Loan due April 2024	$	—	$	—	$	253	$	253	Level 2
4.750% Notes due June 2025	597		585		599		590		Level 1
3.750% Notes due February 2026	685		654		686		657		Level 1
6.000% Notes due January 2028	397		404		396		399		Level 1
4.875% Notes due June 2029	658		630		658		631		Level 1
4.875% Notes due May 2030	684		663		685		661		Level 1
Delayed Draw Term Loan due November 2023	150		150		150		150		Level 2
Nextracker Term Loan due February 2028	150		146		150		150		Level 2
3.600% HUF Bonds due December 2031	294		215		284		196		Level 2

The ~~Company values its Euro Term Loans due September 2020 and January 2022 based on the current market rate, and as of December 31, 2017, the carrying amounts approximate fair values.~~

~~The Term Loans due November 2021 and June 2022, and the~~ Notes due ~~February 2020, February 2023 and~~ June 2025, February 2026, January 2028, June 2029 and May 2030 are valued based on broker trading prices in active markets.

~~12. BUSINESS AND ASSET ACQUISITIONS & DIVESTITURES~~

~~Business~~HUF Bonds and ~~asset acquisitions~~

~~During~~Nextracker Term Loan due February 2028 are valued based on the ~~nine-month period ended December 31, 2017, the Company completed two acquisitions that were not individually, nor~~broker trading prices in ~~the aggregate, significant to the consolidated financial position, results of operation and cash flows of the Company.~~

In April 2017, the Company completed its acquisition of AGM, which expanded its capabilities in the automotive market, and is included within the HRS segment. The Company paid $213.7 million, net of cash acquired.

Additionally, in September 2017, the Company acquired a certain power modules business from Ericsson, and expanded its capabilities within the CEC segment. The Company paid $56.0 million, net of cash acquired.

~~A summary of the allocation of the total purchase consideration is presented as follows (in thousands):~~

Purchase Consideration Net Tangible Assets Acquired Purchased Intangible Assets Goodwill
AGM $ 213,718
$ 56,438
$ 82,000
$ 75,280
Power Modules Business 56,006
12,332
34,500
9,174

an inactive market.

The ~~Company is in the process of finalizing its valuation of the fair value of the assets~~Delayed Draw Term Loan due November 2023 bears interest at floating interest rates, and ~~liabilities acquired. Additional information, which existed~~therefore, as of June 30, 2023, the ~~acquisition date, may become known to the Company during the remainder~~carrying amounts approximate fair values.

Table of the measurement period, a period not to exceed 12 months from the date of acquisition. Changes to amounts recorded as assets and liabilities may result in a corresponding adjustment to goodwill during the respective measurement periods.Contents

The results of operations of the acquisitions were included in the Company’s condensed consolidated financial results beginning on the date of acquisition, and the total amount of net income and revenue, collectively, were immaterial to the Company's condensed consolidated financial results for the three-month and nine-month periods ended December 31, 2017. Pro-forma results of operations have not been presented because the effects were not material to the Company’s condensed consolidated financial results for all periods presented.

~~13.~~12. COMMITMENTS AND CONTINGENCIES

Litigation and other legal matters

In connection with the matters described below, the Company has accrued for loss contingencies where it believes that losses are probable and estimable. ~~The Company does not believe that the amounts accrued are material.~~ Although it is reasonably possible that actual losses could be in excess of the Company’s accrual, the Company is unable to estimate a reasonably possible loss or range of loss in excess of its accrual, ~~except as discussed below,~~ due to various reasons, including, among others, that: (i) the proceedings are in early stages or no claims ~~has~~have been asserted, (ii) specific damages have not been sought in all of these matters, (iii) damages, if asserted, are considered unsupported and/or exaggerated, (iv) there is uncertainty as to the outcome of pending appeals, motions, or settlements, (v) there are significant factual issues to be resolved, and/or (vi) there are novel legal issues or unsettled legal theories presented. Any such excess loss could have a material ~~adverse~~ effect on the Company’s results of operations or cash flows for a particular period or on the Company’s financial condition.

On April 21, 2016, SunEdison, Inc. (together with certain of its subsidiaries, "SunEdison") filed for protection under Chapter 11 of the U.S. Bankruptcy Code. During the fiscal year ended March 31, 2016, the Company recognized a bad debt reserve charge of $61.0 million associated with its outstanding SunEdison receivables and accepted return of previously shipped inventory of approximately $90.0 million. SunEdison stated in schedules filed with the Bankruptcy Court that, within

the 90 days preceding SunEdison's bankruptcy filing, the Company received approximately $98.6 million of inventory and cash transfers of $69.2 million, which in aggregate represents the Company's estimate of the maximum reasonably possible loss. No preference claims have been asserted against the Company and consideration has been given to the related contingencies based on the facts currently known. The Company has a number of affirmative and direct defenses to any potential claims for recovery and intends to vigorously defend any such claim, if asserted.

One of the Company's Brazilian subsidiaries has received ~~related~~ assessments for certain sales and import taxes. There ~~are~~were originally six tax assessments totaling ~~291~~the updated amount inclusive of interest and penalties of 419 million Brazilian reals (approximately USD ~~$88~~$86 million based on the exchange rate as of ~~December 31, 2017)~~June 30, 2023). The Company successfully defeated one of the six assessments ~~are~~ in ~~various stages~~September 2019 (totaling approximately 61 million Brazilian reals or USD $13 million). The Company successfully defeated another three of the assessments in September 2022 (totaling the updated amount inclusive of interest and penalties of approximately 261 million Brazilian reals or USD $54 million), each of which remains subject to appeal. The Company was unsuccessful at the administrative level for one of the assessments and filed an annulment action in federal court in Brasilia, Brazil on March 23, 2020; the updated value of that assessment inclusive of interest and penalties is 41 million Brazilian reals (approximately USD $8 million). One of the assessments remains in the review process at the administrative level. The Company believes there is no legal basis for any of these assessments and that it has meritorious ~~defenses and plans to~~defenses. The Company will continue to vigorously oppose all of these assessments, as well as any future assessments. The Company does not expect final judicial determination on any of these claims in the near future.

On February 14, 2019, the Company submitted an initial notification of voluntary disclosure to the U.S. Department of the Treasury, Office of Foreign Assets Control ("OFAC") regarding possible noncompliance with U.S. economic sanctions requirements among certain non-U.S. Flex-affiliated operations. On September 28, 2020, the Company made a submission to OFAC that completed the Company’s voluntary disclosure based on the results of an internal investigation regarding the matter. On June 11, 2021, the Company notified OFAC that it had identified possible additional relevant transactions at one non-U.S. Flex-affiliated operation. The Company submitted an update to OFAC on November 16, 2021 reporting on the results of its review of those transactions. The Company intends to continue to cooperate fully with OFAC in this matter going forward. Nonetheless, it is reasonably possible that the Company could be subject to penalties that could have a material adverse effect on the Company’s financial position, results of operations or cash flows.

A foreign Tax Authority (“Tax Authority”) has assessed a cumulative total of approximately $221 million in taxes owed for ~~several years.~~multiple Flex legal entities within its jurisdiction for various fiscal years ranging from fiscal year 2010 through fiscal year 2020. The assessed amounts related to the denial of certain deductible intercompany payments and taxability of income earned outside such jurisdiction. The Company disagrees with the Tax Authority’s assessments and is actively contesting the assessments through the administrative and judicial processes.

As the final resolution of the above outstanding tax item remains uncertain, the Company continues to provide for the uncertain tax positions based on the more likely than not standard. While the resolution of the issues may result in tax liabilities, interest and penalties, which may be significantly higher than the amounts accrued for these matters, management currently believes that the resolution will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

In addition to the matters discussed above, from time to time, the Company is subject to legal proceedings, claims, and litigation arising in the ordinary course of business. The Company defends itself vigorously against any such claims. Although the outcome of these matters is currently not determinable, management expects that any losses that are probable or reasonably possible of being incurred as a result of these matters, which are in excess of amounts already accrued in the Company’s consolidated balance sheets, would not be material to the financial statements as a whole.

~~14.~~13. SHARE REPURCHASES

During the three-month ~~and nine-month periods~~period ended ~~December 31, 2017,~~June 30, 2023, the Company repurchased ~~2.0~~8.7 million shares at an aggregate purchase price of ~~$35.0~~$197 million, ~~and 10.8 million shares at an aggregate purchase price of $180.0 million, respectively,~~ and retired all of these shares.

Under the Company’s current share repurchase program, the Board of Directors authorized repurchases of its outstanding ordinary shares for up to ~~$500 million~~$1.0 billion in accordance with the share repurchase mandate approved by the Company’s

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shareholders at the date of the most recent Annual General Meeting held on August ~~15, 2017.~~25, 2022. As of ~~December 31, 2017,~~June 30, 2023, shares in the aggregate amount of ~~$410.1~~$697 million were available to be repurchased under the current plan.

~~15.~~14. SEGMENT REPORTING

The Company ~~has four~~reports its financial performance based on three operating and reportable ~~segments: HRS, CTG, IEI,~~segments, Flex Agility Solutions, Flex Reliability Solutions and ~~CEC. These~~Nextracker, and analyzes operating income as the measure of segment profitability. The determination of these segments ~~are determined~~is based on several factors, including the nature of products and services, the nature of production processes, customer base, delivery channels and similar economic characteristics. ~~Refer to note 1 for a description of the various product categories manufactured under each of these segments.~~

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 intangible amortization, ~~of intangibles,~~ stock-based compensation, restructuring charges, legal and other, and interest, net and other charges (income), ~~net~~net. A portion of depreciation is allocated to the respective segments, together with other general corporate research and ~~interest~~development and ~~other, net.~~

administrative expenses.

Selected financial information by segment is in the table below.


	Three-Month Periods Ended
	June 30, 2023		July 1, 2022
	(In millions)
Net sales:
Flex Agility Solutions	$	3,601	$	3,991
Flex Reliability Solutions	3,291		2,969
Nextracker	480		395
Intersegment eliminations	(36)		(8)
	$	7,336	$	7,347
Segment income and reconciliation of income before income taxes:
Flex Agility Solutions	$	146	$	171
Flex Reliability Solutions	165		147
Nextracker	82		30
Corporate and Other	(16)		(18)
Total segment income	377		330
Reconciling items:
Intangible amortization	20		22
Stock-based compensation	41		26

Restructuring charges	23		—
Legal and other (1)	2		10
Interest, net	41		49
Other charges (income), net	11		(9)

Income before income taxes	$	239	$	232

(1)Legal and other consists of costs not directly related to core business results and may include matters relating to commercial disputes, government regulatory and compliance, intellectual property, antitrust, tax, employment or shareholder issues, product liability claims and other issues on a global basis as ~~follows:~~

Three-Month Periods Ended Nine-Month Periods Ended
December 31, 2017 December 31, 2016 December 31, 2017 December 31, 2016
(In thousands)
Net sales:
Communications & Enterprise Compute $ 1,979,045
$ 2,102,321
$ 5,853,435
$ 6,400,233
Consumer Technologies Group 2,056,801
1,848,970
5,323,913
4,827,488
Industrial & Emerging Industries 1,491,063
1,140,366
4,336,201
3,672,103
High Reliability Solutions 1,224,643
1,023,342
3,516,695
3,100,513
$ 6,751,552
$ 6,114,999
$ 19,030,244
$ 18,000,337
Segment income and reconciliation of income before tax:
Communications & Enterprise Compute $ 50,206
$ 62,109
$ 141,541
$ 176,460
Consumer Technologies Group 38,768
59,282
87,494
139,230
Industrial & Emerging Industries 61,328
39,681
167,650
127,020
High Reliability Solutions 100,976
82,729
283,552
249,972
Corporate and Other (31,557 ) (20,695 ) (94,273 ) (82,395 )
Total segment income 219,721
223,106
585,964
610,287
Reconciling items:

Intangible amortization 19,588
18,734
55,865
62,318
Stock-based compensation 20,758
20,781
63,018
67,311
Distressed customers asset impairments (1) —
—
4,753
92,915
Contingencies and other (2) —
17,421
43,933
28,960
Other charges (income), net 6,865
3,090
(172,467 ) 15,007
Interest and other, net 31,350
22,838
85,780
71,869
Income before income taxes $ 141,160
$ 140,242
$ 505,082
$ 271,907

~~(1)~~well as acquisition related costs and customer related asset recoveries. During the ~~fourth~~first quarter of fiscal year ~~2016,~~2023, the Company accepted return of previously shipped inventory from a former customer, SunEdison, of approximately $90 million. On April 21, 2016, SunEdison filed a petition for reorganization under bankruptcy law, and as a result, the Company recognized a bad debt reserve of $61 million as of March 31, 2016, associated with its outstanding SunEdison receivables.

During the second quarter of fiscal year 2017, prices for solar panel modules declined significantly. The Company determined that certain solar panel inventory on hand at the end of the second quarter of fiscal year 2017 was not fully recoverable and recorded a charge of $60.0 million to reduce the carrying costs to market in the nine-month period ended December 31, 2016. The Company also recognized a $16.0 million impairment charge for solar module equipment and $16.9 million primarily related to negative margin sales and other associated direct costs. The total charge of $92.9 million is included in cost of sales for the nine-month period ended December 31, 2016 but is excluded from segment results above.

~~(2) During the second quarter of fiscal year 2018, the Company incurred charges in connection with the matters described in note 13,~~accrued for certain loss contingencies where ~~it believes that~~ losses are considered probable and estimable. ~~Additionally, the Company incurred various other charges predominately related to damages incurred from a typhoon that impacted one of its China facilities.~~

During fiscal year 2017, the Company initiated a plan to rationalize the current footprint at existing sites including corporate SG&A functions and to continue to shift the talent base in support of its ~~Sketch-to-Scale~~^tminitiatives. As part of this plan, approximately $17.4 million and $29.0 million was recognized during the three and nine-month periods ended December 31, 2016, respectively. The plan was finalized and completed during fiscal year 2017.

Corporate and other primarily includes corporate ~~services~~service costs that are not included in the ~~Chief Operating Decision Maker's~~chief operating decision maker's ("CODM") assessment of the performance of each of the identified ~~reporting~~reportable segments.

~~Property~~The Company provides an overall platform of assets and ~~equipment on a segment basis is not disclosed as it is~~services, which the segments utilize for the benefit of their various customers. The shared assets and services are contained within the Company's global manufacturing and design operations and include manufacturing and design facilities. Most of the underlying manufacturing and design assets are co-mingled in the operating campuses and are compatible to operate across segments and highly interchangeable throughout the platform. Given the highly interchangeable nature of the assets, they are not separately identified ~~and is not internally~~by segment nor reported by segment to the Company's CODM.

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15. RESTRUCTURING CHARGES

The Company continued to identify certain structural changes to restructure its business throughout the first quarter of fiscal year 2024. During the three-month period ended June 30, 2023, the Company recognized approximately $23 million of restructuring charges, most of which related to employee severance.

The following table summarizes the provisions, respective payments, and remaining accrued balance as of June 30, 2023 for charges incurred during the three-month period ended June 30, 2023:


	Severance		Long-Lived Asset Impairment		Other Exit Costs		Total
	(In millions)
Balance as of March 31, 2023	$	44	$	—	$	6	$	50
Provision for charges incurred during the three-month period ended June 30, 2023	20		3		—		23
Cash payments during the three-month period ended June 30, 2023	(22)		—		—		(22)
Non-cash charges incurred during the three-month period ended June 30, 2023	—		(3)				(3)

Balance as of June 30, 2023	42		—		6		48
Less: Current portion (classified as other current liabilities)	42		—		6		48
Accrued restructuring costs, net of current portion (classified as other liabilities)	$	—	$	—	$	—	$	—

16. VARIABLE INTEREST ENTITIES

The Company controls Nextracker Inc. ("Nextracker") through its holding of Class B common stock that does not participate in the earnings of Nextracker. As such, the shareholders of the equity at risk in Nextracker (the Class A common stock shareholders) do not have the power to direct the key activities of Nextracker and consequently Nextracker is a variable interest entity ("VIE"). The Company has the ability to control Nextracker's activities through its control of 61.2% and 61.4% of the voting rights of Nextracker as of June 30, 2023 and March 31, 2023, respectively. The Company also has the ability to receive significant benefits from the VIE (through its ability to convert its investments in Nextracker and Nextracker LLC into Class A common stock of Nextracker or cash) and as such the Company has been determined to be the primary beneficiary of the VIE. As such, the Company continues to consolidate Nextracker and the interests in Nextracker held by third parties are presented as a noncontrolling interest. Evaluation of the VIE model and identification of the primary beneficiary requires significant judgements to be made regarding which entities can control the activities of a VIE, who can receive benefits or absorb losses from the VIE and the significance of those benefits and losses to the VIE.

As of June 30, 2023 and March 31, 2023, noncontrolling interest was $380 million and $355 million, respectively. Net income attributable to noncontrolling interest was $25 million and zero for the three-month periods ended June 30, 2023 and July 1, 2022, respectively. As a result of the Nextracker's February 13, 2023 initial public offering ("IPO"), the noncontrolling interest previously determined to be redeemable prior to the IPO did not exist as of June 30, 2023. Net income attributable to redeemable noncontrolling interest was zero and $6 million for the three-month periods ended June 30, 2023 and July 1, 2022, respectively.

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The carrying amounts and classification of the VIE's external assets and liabilities as of June 30, 2023 and March 31, 2023 are included in the condensed consolidated balance sheets as follows:


	As of June 30, 2023		As of March 31, 2023
	(In millions) (Unaudited)
Assets
Current assets:
Cash	$	355	$	130
Accounts receivable, net	223		271
Contract assets	320		298
Inventories	137		138
Other current assets	82		35
Total current assets	1,117		872
Property and equipment, net	7		7
Goodwill	265		265
Other intangible assets, net	1		1
Other assets	267		275
Total assets	$	1,657	$	1,420

Liabilities
Current liabilities:
Accounts payable	$	293	$	211
Accrued expenses	57		60
Deferred revenue	251		176
Other current liabilities	53		49
Total current liabilities	654		496
Long-term debt	147		147
Other liabilities	277		280
Total liabilities	$	1,078	$	923

17. SUBSEQUENT EVENTS

On July 3, 2023, the Company's subsidiary Nextracker completed a follow-on offering to its IPO, which was completed on February 13, 2023, and issued 15,631,562 shares of Class A common stock and received net proceeds of $551 million. The entire net proceeds were used by Nextracker to acquire 14,025,000 Nextracker LLC common units from Yuma, Inc., the Company’s indirect wholly-owned subsidiary, and 1,606,562 Nextracker LLC common units from TPG Rise Flash, L.P., an affiliate of the global alternative asset management firm TPG. As a result of the repurchase of Nextracker LLC common units by Nextracker, 15,631,562 shares of Nextracker Class B common stock were cancelled. Subsequent to the follow-on offering, Flex owned 74,432,619 shares of Class B common stock, representing 51.5% of the total outstanding shares of Nextracker common stock and, accordingly, still controls Nextracker. The Company received approximately $495 million from the follow-on offering, after distribution of net proceeds to TPG and expenses.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise specifically stated, references in this report to “Flex,” “the Company,” “we,” “us,” “our” and similar terms mean Flex Ltd., and its subsidiaries.

This report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. The words “expects,” “anticipates,” “believes,” “intends,” “plans” and similar expressions identify forward-looking statements. In addition, any statements which refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. We undertake no obligation to publicly disclose any revisions to these forward-looking statements to reflect events or circumstances occurring subsequent to filing this Form 10-Q with the Securities and Exchange ~~Commission.~~Commission (the "SEC"). These forward-looking statements are subject to risks and uncertainties, including, without limitation, those risks and uncertainties discussed in this section, as well as any risks and uncertainties discussed ~~in Part II, Item 1A, “Risk Factors” of this report on Form 10-Q, and~~ in Part I, Item 1A, “Risk Factors” and in Part II, 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, ~~2017.~~2023. In addition, new risks emerge from time to time and it is not possible for management to predict all such risk factors or to assess the impact of such risk factors on our business. Accordingly, our future results may differ materially from historical results or from those discussed or implied by these forward-looking statements. Given these risks and uncertainties, the reader should not place undue reliance on these forward-looking statements.

OVERVIEW

We are the diversified manufacturing partner of choice that helps market-leading brands design, build and deliver innovative products that improve the world. Through the collective strength of a ~~globally-recognized, provider~~global workforce across approximately 30 countries with responsible, sustainable operations, we support the entire product lifecycle with advanced manufacturing solutions and operate one of ~~Sketch-to-Scale~~^tmthe most trusted global supply chains. We also provide additional value to customers through a broad array of services, ~~- innovative~~including design engineering, ~~manufacturing,~~component services, rapid prototyping, fulfillment, and ~~supply chain services~~circular economy solutions. We support a diverse set of industries including cloud, communications, enterprise, automotive, industrial, consumer devices, lifestyle, healthcare, and ~~solutions - from conceptual sketch to full-scale production. We design, build, ship~~energy. As of June 30, 2023, our three operating and service complete packaged consumer and industrial products, from athletic shoes to electronics, for companies of all sizes in various industries and end-markets, through our activities in the following segments:reportable segments were as follows:

~~Communications & Enterprise Compute~~•Flex Agility Solutions ("CEC"), which includes our telecom business of radio access base stations, remote radio heads, and small cells for wireless infrastructure; our networking business which includes optical, routing, broadcasting, and switching products for the data and video networks; our server and storage platforms for both enterprise and cloud-based deployments; next generation storage and security appliance products; and rack level solutions, converged infrastructure and software-defined product solutions;

Consumer Technologies Group ("CTG"), which includes our consumer-related businesses in connected living, wearables, gaming, augmented and virtual reality, fashion, and mobile devices; and including various supply chain solutions for notebook personal computers ("PC"), tablets, and printers; in addition, CTG is expanding its business relationships to include supply chain optimization for non-electronics products such as footwear and clothing;

~~Industrial and Emerging Industries ("IEI"~~FAS"), which is comprised of ~~energy~~the following end markets:

◦Lifestyle, including appliances, consumer packaging, floorcare, micro mobility and ~~lifestyle, industrial automation~~audio

◦Consumer Devices, including mobile and ~~kiosks, and lighting; and~~high velocity consumer devices.

~~High~~•Flex Reliability Solutions ("~~HRS"~~FRS"), which is comprised of ~~our~~the following end markets:

◦Automotive, including next generation mobility, autonomous, connectivity, electrification, and smart technologies

◦Health Solutions, including medical ~~business,~~devices, medical equipment and drug delivery

◦Industrial, including ~~consumer health, digital health, disposables, precision plastics, drug delivery, diagnostics, life sciences~~capital equipment, industrial devices, and ~~imaging equipment; our automotive business, including vehicle electrification, connectivity, autonomous vehicles,~~renewables and ~~clean technologies.~~grid edge.

Our strategy is to provide customers with a full range of cost competitive, vertically-integrated global supply chain solutions through which we can design, build, ship and service a complete packaged product for our customers. This enables our customers to leverage our supply chain solutions to meet their product requirements throughout the entire product ~~life cycle.~~

lifecycle.

Over the past few years, we have seen an increased level of diversification by many companies, primarily in the technology sector. Some companies that have historically identified themselves as software providers, Internet service providers or e-commerce retailers have entered the highly competitive and rapidly evolving technology hardware markets, such as mobile devices, home entertainment and wearable devices. This trend has resulted in a significant change in the manufacturing and supply chain ~~solutions~~solution requirements of such companies. While the products have become more complex, the supply chain solutions required by such companies have become more customized and demanding, and it has changed the manufacturing and supply chain landscape significantly.

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We use a portfolio approach to manage our extensive service offerings. As our customers change the way they go to market, we ~~are able~~have the capability to reorganize and rebalance our business portfolio in order to align with our customers' needs and requirements in an effort to optimize operating results. The objective of our business model is to allow us to be flexible and redeploy and reposition our assets and resources as necessary to meet specific ~~customer's~~customers' supply chain ~~solutions~~solution needs across all of the markets we serve and earn a return on our invested capital above the weighted average cost of that capital.

During the past few years, we have made significant efforts to evolve our long-term portfolio towards a higher mix of businesses which possess longer product life cycles and higher segment operating margins such as reflected in our IEI and HRS businesses. Since the beginning of fiscal year 2016, we launched several programs broadly across our portfolio of services and in some instances we deployed certain new technologies. We continue to invest in innovation and we have expanded our design and engineering relationships through our product innovation centers.

We believe that our continued business transformation is strategically positioning us to take advantage of the long-term, future growth prospects for outsourcing of advanced manufacturing capabilities, design and engineering services and after-market ~~services,~~services.

Update on Component Shortages and Logistical Constraints on our Business

Component shortages and logistical constraints improved as the year progressed, however, we continue to see constraints in large-node semiconductors. We continue to monitor potential supply chain disruptions. Refer to “Risk Factors - “Supply chain disruptions, manufacturing interruptions or delays, or the failure to accurately forecast customer demand, have in the past affected, and may in the future, affect our ability to meet customer demand, lead to higher costs, or result in excess or obsolete inventory. We have been and continue to be adversely affected by supply chain issues, including shortages of required electronic components.”as disclosed in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

We are continuously evaluating our capital structure in response to the current environment and expect that our current financial condition, including our liquidity sources are adequate to fund future commitments. See additional discussion in the Liquidity and Capital Resources section below.

Russian Invasion of Ukraine

We continue to monitor and respond 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. The full impact of the conflict on our business operations and financial performance remains uncertain and will depend on future developments, including the severity and duration of the conflict and its impact on regional and global economic conditions. 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.

Other Developments

On July 3, 2023, our subsidiary Nextracker Inc. ("Nextracker") completed a follow-on offering to its initial public offering, which ~~remain strong.~~was completed on February 13, 2023, and issued 15,631,562 shares of Class A common stock and received net proceeds of $551 million. The entire net proceeds were used by Nextracker to acquire 14,025,000 Nextracker LLC common units from Yuma, Inc., our indirect wholly-owned subsidiary, and 1,606,562 Nextracker LLC common units from TPG Rise Flash, L.P., an affiliate of the global alternative asset management firm TPG. As a result of the repurchase of Nextracker LLC common units by Nextracker, 15,631,562 shares of Nextracker Class B common stock were cancelled. Subsequent to the follow-on offering, we owned 74,432,619 shares of Class B common stock, representing 51.5% of the total outstanding shares of Nextracker common stock and, accordingly, still controls Nextracker. We received approximately $495 million from the follow-on offering, after distribution of net proceeds to TPG and expenses.

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BusinessOverview

We are one of the world's largest providers of global supply chain solutions, with revenues of ~~$19.0~~$7.3 billion for the ~~nine-month~~three-month period ended ~~December 31, 2017~~June 30, 2023 and ~~$23.9~~$30.3 billion in the fiscal year ~~2017.~~ended March 31, 2023. 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. We design, build, ship, and service consumer and enterprise products for our customers through a network of over 100 facilities in approximately 30 countries across four continents. We also provide intelligent, integrated solar tracker and software solutions used in utility-scale and ground-mounted distributed generation solar projects around the world. 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:


	Three-Month Periods Ended
	June 30, 2023				July 1, 2022
	(In millions)
Net sales by region:
Americas	$	3,482	47	%	$	3,315	45	%
Asia	2,317		32	%	2,517		34	%
Europe	1,537		21	%	1,515		21	%
	$	7,336			$	7,347

Net sales by country:
Mexico	$	1,731	24	%	$	1,555	21	%
China	1,414		19	%	1,584		22	%
U.S.	1,325		18	%	1,216		17	%
Malaysia	546		7	%	570		8	%
Brazil	402		5	%	527		7	%
Hungary	351		5	%	286		4	%
Other	1,567		22	%	1,609		21	%
	$	7,336			$	7,347

Three-Month Periods Ended Nine-Month Periods Ended
Net sales: December 31, 2017 December 31, 2016 December 31, 2017 December 31, 2016
(In millions)
China $ 1,996
30 % $ 1,823
30 % $ 5,493
29 % $ 5,623
31 %
Mexico 1,183
17 % 1,129
17 % 3,302
17 % 2,998
17 %
Brazil 729
11 % 536
9 % 1,969
10 % 1,326
7 %
U.S. 723
11 % 589
10 % 2,157
12 % 2,006
11 %
Malaysia 507
7 % 585
10 % 1,527
8 % 1,698
10 %
Other 1,614
24 % 1,453
24 % 4,582
24 % 4,349
24 %
$ 6,752

$ 6,115

$ 19,030

$ 18,000


	As of				As of					As of				As of
Property and equipment, net:	December 31, 2017				March 31, 2017				Property and equipment, net:	June 30, 2023				March 31, 2023
	(In millions)									(In millions)
China	$	713	29	%	$	720	31	%
Mexico	599		25	%	525		23	%	Mexico	$	788	33	%	$	763	32	%
U.S.	307		13	%	291		13	%	U.S.	361		15	%	365		16	%
China									China	336		14	%	338		14	%
Malaysia	154		6	%	173		7	%	Malaysia	152		6	%	152		6	%
Hungary	147		6	%	133		6	%	Hungary	140		6	%	140		6	%
India									India	91		4	%	96		4	%
Other	523		21	%	475		20	%	Other	495		22	%	495		22	%
	$	2,443			$	2,317				$	2,363			$	2,349

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 ~~industrial~~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 ~~electronics~~ and ~~industrial~~enterprise products for leading multinational and regional customers. Specifically, we ~~have launched multiple product innovation centers ("PIC") focused exclusively on offering~~offer our customers the ability to simplify their global product development, manufacturing process, and after sales services, and enable them to meaningfully accelerate their time to market and cost savings.

Our operating results are affected by a number of factors, including the following:

~~changes in~~•global economic conditions, including inflationary pressures, currency volatility, slower growth or recession, higher interest rates, and geopolitical uncertainty (including the ~~macro-economic environment~~ongoing conflict between Russia and ~~related changes in consumer demand;~~Ukraine);

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•the mix of the manufacturing services we are providing, the number, size, and ~~size~~complexity of new manufacturing programs, the degree to which we utilize our manufacturing capacity, seasonal demand, ~~shortages of components~~ 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 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;

•exposure to infectious disease, epidemics and pandemics on our business operations in geographic locations impacted by the outbreak and on the business operations of our customers and suppliers;

•the effects on our business due to ~~our customers’~~certain customers' products having short product ~~life cycles;~~lifecycles;

•our ~~customers’~~customers' ability to cancel or delay orders or change production quantities;

•our ~~customers’ decision~~customers' decisions to choose internal manufacturing instead of outsourcing for their product requirements;

~~our exposure to financially troubled customers;~~

•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.

We are also subject to other risks as outlined in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

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. GAAP” or “GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Due to 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 Russian invasion of Ukraine. These estimates may change, as new events occur, and additional information is obtained. Actual results may differ from those estimates and assumptions.

Refer to the accounting policies under 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, ~~2017,~~2023, where we discuss our more significant judgments and estimates used in the preparation of the condensed consolidated financial statements.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain statements of operations data expressed as a percentage of net ~~sales.~~sales (amounts may not sum due to rounding). The financial information and the discussion below should be read together with the condensed consolidated financial statements and notes thereto included in this document. In addition, reference should be made to our audited consolidated financial statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our ~~2017~~ Annual Report on Form ~~10-K.~~10-K for the fiscal year ended March 31, 2023.


	Three-Month Periods Ended
	June 30, 2023		July 1, 2022
Net sales	100.0	%	100.0	%
Cost of sales	91.8		92.7
Restructuring charges	0.2		—
Gross profit	8.0		7.3
Selling, general and administrative expenses	3.7		3.3
Restructuring charges	0.1		—
Intangible amortization	0.2		0.3
Operating income	4.0		3.7
Interest, net	0.6		0.6
Other charges (income), net	0.1		(0.1)

Income before income taxes	3.3		3.2
Provision for income taxes	0.4		0.5
Net income	2.9	%	2.7	%
Net income attributable to noncontrolling interest and redeemable noncontrolling interest	0.4		0.1
Net income attributable to Flex Ltd.	2.5	%	2.6	%

Three-Month Periods Ended Nine-Month Periods Ended
December 31, 2017 December 31, 2016 December 31, 2017 December 31, 2016
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 93.4
93.2
93.4
93.7
Gross profit 6.6
6.8
6.6
6.3
Selling, general and administrative expenses 3.7
3.8
4.1
4.0
Intangible amortization 0.3
0.3
0.3
0.3
Interest and other, net 0.5
0.4
0.5
0.4
Other charges (income), net 0.1
0.1
(0.9 ) 0.1
Income before income taxes 2.0
2.2
2.6
1.5
Provision for income taxes 0.3
0.2
0.3
0.2
Net income 1.7 % 2.0 % 2.3 % 1.3 %

Net sales

The following table sets forth our net sales by segment, and their relative ~~percentages. Historical information has been recast~~percentages (the sum of the individual percentages may not equal 100% due to ~~reflect realignment of customers and/or products between segments to ensure comparability:~~rounding):

Three-Month Periods Ended Nine-Month Periods Ended
Segments: December 31, 2017 December 31, 2016 December 31, 2017 December 31, 2016
(In millions)
Communications & Enterprise Compute $ 1,979
29 % $ 2,102
34 % $ 5,853
31 % $ 6,400
36 %
Consumer Technologies Group 2,057
30 % 1,849
30 % 5,324
28 % 4,827
27 %
Industrial & Emerging Industries 1,491
22 % 1,140
19 % 4,336
23 % 3,672
20 %
High Reliability Solutions 1,225
19 % 1,023
17 % 3,517
18 % 3,101
17 %
$ 6,752

$ 6,114

$ 19,030

$ 18,000


	Three-Month Periods Ended
	June 30, 2023				July 1, 2022
	(In millions)
Net sales:
Flex Agility Solutions	$	3,601	49	%	$	3,991	54	%
Flex Reliability Solutions	3,291		45	%	2,969		41	%
Nextracker	480		7	%	395		5	%
Intersegment eliminations	(36)		—	%	(8)		—	%
	$	7,336			$	7,347

Net sales during the three-month period ended ~~December 31, 2017~~June 30, 2023 totaled ~~$6.8~~$7.3 billion, representing ~~an increase~~a decrease of approximately ~~$0.7 billion,~~$11 million, or ~~10%~~less than 1% from ~~$6.1~~$7.3 billion during the three-month period ended ~~December 31, 2016. The overall~~July 1, 2022. Net sales for our FAS segment decreased approximately $0.4 billion, or 10% from the three-month period ended July 1, 2022, primarily driven by a significant decrease in our Consumer Devices business and a mid-teens decrease in our Lifestyle business due to weakness in consumer end markets. Sales in our Communications, Enterprise and Cloud ("CEC") business were flat due to the effect of easing supply constraints and softer demand in certain markets. Net sales for our FRS segment increased approximately $0.3 billion, or 11% from the three-month period ended July 1, 2022, primarily driven by a mid-teens increase in our Automotive business, a low-teens increase in our Health Solutions business and a high single-digit increase in our Industrial business due to strong customer demand and ramps across various end markets. Net sales ~~was~~for our Nextracker segment increased approximately $0.1 billion, or 21% from the three-month period ended July 1, 2022, primarily driven by ~~increases~~an increase in ~~three of our segments~~gigawatts delivered. Net sales decreased $0.2 billion to $2.3 billion in Asia, offset by a ~~decline in sales in our CEC segment. Our IEI segment increased $351 million, mainly driven by our industrial, home and lifestyle business in addition~~$0.2 billion increase to growth in our solar energy business. Our CTG segment increased $208 million, primarily because of stronger sales in our connected living and mobile devices businesses, offset by a decrease in gaming. Our HRS segment increased $201 million from higher sales in our automotive business. Sales in our CEC segment declined $123 million, largely attributable to lower sales within our telecom

~~and networking businesses, offset by increased sales in our cloud and data center business. Net sales increased $395 million to $2.7~~$3.5 billion in the Americas, ~~increased $193~~and a $23 million increase to ~~$3.0 billion in Asia, and increased $48 million to $1.1 billion in Europe~~

Net sales during the nine-month period ended December 31, 2017 totaled $19.0 billion, representing an increase of approximately $1.0 billion, or 6% from $18.0 billion during the nine-month period ended December 31, 2016. The overall increase in net sales during the nine-month period ended December 31, 2017, was driven by increases of $664 million in our IEI segment, $496 million in our CTG segment, and $416 million in our HRS segment due to the same drivers as described above. These increases were offset by a decrease of $547 million in our CEC segment as a result of lower sales within our telecom and legacy server and storage businesses, offset by increased sales in our cloud and data center business. Net sales increased $1.1 billion to $7.5 billion in the Americas, offset by decreases of $83 million to $8.3 billion in Asia and $29 million to $3.2$1.5 billion in Europe.

Our ten largest customers during the ~~three and nine-month~~three-month periods ended ~~December 31, 2017~~June 30, 2023 and July 1, 2022 accounted for approximately ~~43%~~34% and ~~42%~~35% of net sales, respectively. No customer accounted for more than 10% of net sales during the ~~three and nine-month~~three-month periods ended ~~December 31, 2017.~~June 30, 2023 or July 1, 2022.

Cost of sales

~~Our ten largest customers, during the three and nine-month periods ended December 31, 2016 accounted for approximately 46% and 43%~~Cost of ~~net~~ sales ~~respectively. No customer accounted for more than 10% of net sales during the three and nine-month periods ended December 31, 2016.~~

~~Gross profit~~

~~Gross profit~~ is affected by a number of factors, including the number and size of new manufacturing programs, product mix, labor cost fluctuations by region, component costs and availability and capacity utilization.

Cost of sales during the three-month period ended June 30, 2023 totaled $6.7 billion, representing a decrease of approximately $0.1 billion, or 1% from $6.8 billion during the three-month period ended July 1, 2022. Lower cost of sales for the three-month period ended June 30, 2023 was primarily driven by a reduction in FAS segment sales, improvement in freight and logistics costs at Nextracker and favorable product ~~life cycles,~~mix within our FRS segment partially offset by an increase in FRS segment sales. Cost of sales in FAS for the three-month period ended June 30, 2023 decreased approximately $0.4 billion, or 10% from the three-month period ended July 1, 2022, which is in line with the overall 10% decrease in FAS revenue during the same period. Cost of sales in FRS for the three-month period ended June 30, 2023 increased approximately $0.3 billion, or 11% from the three-month period ended July 1, 2022, which is primarily attributed to the overall 11% increase in FRS revenue during the same period. Cost of sales in our Nextracker segment for the three-month period ended June 30, 2023 increased approximately $17 million, or 5% from the three-month period ended July 1, 2022, primarily due to the 21% increase in Nextracker revenue during the same period, offset by improved profitability resulting from a decline in freight and logistics cost increases and overall better execution on our contracts.

Gross profit

Gross profit is affected by a fluctuation in cost of sales elements as outlined above and further by a number of factors, including product lifecycles, unit volumes, product mix, pricing, competition, new product introductions, ~~capacity utilization~~ and the expansion or consolidation of manufacturing facilities, ~~including~~as well as specific restructuring activities initiated from time to time. The flexible design of our manufacturing processes allows us to ~~build~~manufacture a broad range of products in our facilities and better utilize our manufacturing capacity across our diverse geographic ~~footprint.~~footprint and service customers from all segments. In the ~~cases~~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. As a result of these various factors, our gross margin varies from period to period.

Gross profit during the three-month period ended ~~December 31, 2017~~June 30, 2023 increased ~~$30 million~~$0.1 billion to ~~$446 million,~~$0.6 billion, or ~~6.6%~~8% of net sales, from ~~$416 million,~~$0.5 billion, or ~~6.8%~~7.3% of net sales, during the three-month period ended ~~December 31, 2016~~July 1, 2022. Gross margin improved 70 basis points during the three-month period ended June 30, 2023 primarily due to ~~flow through from higher sales across three of~~favorable mix with growth in our ~~four~~higher-margin FRS and Nextracker segments, as discussed above. The gross profit percentage decline of 20 basis points from the prior year quarter was driven primarily by lower gross profit generation by our CTG segment as it realized greater levels of costs associated with ramping a strategic customer as further explained below. Gross profit during the nine-month period ended December 31, 2017 increased $0.1 billion to $1.2 billion, or 6.6% of net sales, from $1.1 billion, or 6.3% of net sales, during the nine-month period ended December 31, 2016. The increase in gross profit for the nine-month period ended December 31, 2017 is primarily due to contribution flow through from the additional $1.0 billion in sales from the prior year to date period. In addition, the prior year to date period gross profit included $93 million of charges related to the significant decline in prices for solar modules and slowdown in demand. This was partially offset by ~~an elevated level of costs associated with ramping a strategic customer~~unfavorable mix in our ~~CTG segment as further explained below.~~

CEC business.

Segment ~~Income~~

income

An operating ~~segment’s~~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 intangible amortization, ~~of intangibles,~~ stock-based compensation, restructuring charges, legal and other, and interest, net and other charges (income), ~~net and interest and other,~~ net. A portion of depreciation is allocated to the respective ~~segment~~segments, together with other general corporate research and development and administrative expenses.

The following table sets forth segment income and margins. ~~Historical information has been recast to reflect realignment of customers and/or products between segments:~~

Three-Month Periods Ended Nine-Month Periods Ended
December 31, 2017 December 31, 2016 December 31, 2017 December 31, 2016
(In millions)
Segment income & margin:
Communications & Enterprise Compute $ 50
2.5 % $ 62
3.0 % $ 142
2.4 % $ 176
2.8 %
Consumer Technologies Group 39
1.9 % 59
3.2 % 87
1.6 % 139
2.9 %
Industrial & Emerging Industries 61
4.1 % 40
3.5 % 168
3.9 % 127
3.5 %
High Reliability Solutions 101
8.2 % 83
8.1 % 283
8.1 % 250
8.1 %
Corporate and Other (32 ) (21 ) (94 ) (82 )
Total segment income 219
3.3 % 223
3.6 % 586
3.1 % 610
3.4 %
Reconciling items:
Intangible amortization 19
19
56
62

Stock-based compensation 21
21
63
67

Distressed customers asset impairments (1) —
—
5
93

Contingencies and other (2) —
17
44
29

Other charges (income), net 7
3
(173 ) 15

Interest and other, net 31
23
86
72

Income before income taxes $ 141
$ 140
$ 505
$ 272

(1) During the fourth quarter of fiscal year 2016, the Company accepted return of previously shipped inventory from a former customer, SunEdison, Inc. ("SunEdison"), of approximately $90 million. On April 21, 2016, SunEdison filed a petition for reorganization under bankruptcy law, and as a result, the Company recognized a bad debt reserve of $61 million as of March 31, 2016, associated with its outstanding SunEdison receivables.

During the second quarter of fiscal year 2017, prices for solar panel modules declined significantly. The Company determined that certain solar panel inventory on hand at the end of the second quarter of fiscal year 2017 was not fully recoverable and recorded a charge of $60 million to reduce the carrying costs to marketSegment margins in the ~~nine-month period ended December 31, 2016. The Company also recognized a $16 million impairment charge for solar module equipment and $17 million primarily related~~table below may not recalculate exactly due to negative margin sales and other associated direct costs. The total charge of $93 million is included in cost of sales for the nine-month period ended December 31, 2016 but is excluded from segment results above.rounding.


	Three-Month Periods Ended
	June 30, 2023				July 1, 2022
	(In millions)
Segment income:
Flex Agility Solutions	$	146	4.1	%	$	171	4.3	%
Flex Reliability Solutions	165		5.0	%	147		5.0	%
Nextracker	82		17.2	%	30		7.6	%

(2) During the second quarter of fiscal year 2018, the Company incurred charges in connection with the matters described in note 13 to the condensed consolidated financial statements for certain loss contingencies where it believes that losses are probable and estimable. Additionally, the Company incurred various other charges predominately related to damages incurred from a typhoon that impacted one of our China facilities.

During fiscal year 2017, the Company initiated a plan to rationalize the current footprint at existing sites including corporate SG&A functions and to continue to shift the talent base in support of its ~~Sketch-to-Scale~~^tm ~~initiatives. As part of this plan, approximately $29 million was recognized in the nine-month period ended December 31, 2016. The plan was finalized and completed during fiscal year 2017.~~

~~CEC~~FAS segment margin decreased 50approximately 20 basis points, to ~~2.5%~~4.1%, for the three-month period ended ~~December 31, 2017,~~June 30, 2023, from 3.0% during the three-month period ended December 31, 2016. CEC segment margin decreased 40 basis points, to 2.4% for the nine-month period ended December 31, 2017, from 2.8% for the nine-month period ended December 31, 2016. The decreases in CEC's margins for both the three and nine-month periods ended December 31, 2017 were due to lower capacity utilization causing reduced overhead absorption, coupled with modest increased investments to expand its converged enterprise and cloud data center engineering capabilities.

~~CTG segment margin decreased 130 basis point to 1.9%~~4.3% for the three-month period ended ~~December~~ July 1, 2022. The margin decrease was attributable to unfavorable mix and ramp costs in CEC.

31 ~~2017, from 3.2% during~~

FRS segment margin remained relatively flat at 5.0% for the three-month ~~period~~periods ended ~~December 31, 2016. CTG~~June 30, 2023 and July 1, 2022. Improving margins in our Health Solutions business due to increased productivity offset by continued project ramps and costs related to lingering semiconductor supply chain disruptions in our Industrial and Automotive businesses.

Nextracker segment margin ~~decreased 130~~increased approximately 960 basis points, to 1.6% for the nine-month period ended December 31, 2017 from 2.9% for the nine-month period ended December 31, 2016. The decreases in CTG's margins for both the three and nine-month periods ended December 31, 2017 reflected the negative impacts from the elevated levels of costs associated with material management, labor inefficiencies and capacity refinements as we ramp up production with a strategic customer.

~~IEI segment margin increased 60 basis points, to 4.1%~~17.2% for the three-month period ended ~~December 31, 2017,~~June 30, 2023, from 3.5% during the three-month period ended December 31, 2016. IEI segment margin increased 40 basis points, to 3.9% for the nine-month period ended December 31, 2017, from 3.5% for the nine-month period ended December 31, 2016. The increases in IEI's margins for both the three and nine-month periods ended December 31, 2017 are primarily due to revenue increases resulting in improved absorption of costs as a result of ramping multiple new programs in our industrial, home and lifestyle and energy businesses. This was partially offset by high levels of start-up costs on several new customer programs as we prepositioned resources in advance of the significant underlying ramps, as well as an impact from the underlying mix of business.

~~HRS segment margin increased 10 basis points, to 8.2%~~7.6% for the three-month period ended ~~December 31, 2017, from 8.1% during~~July 1, 2022. The margin increase was driven by improved pricing, freight savings, and favorable cost absorption with increased revenues.

Restructuring charges

During the three-month period ended ~~December 31, 2016 primarily as a result~~June 30, 2023, we recognized approximately $23 million of ~~new customers and programs ramp up coupled with solid operational management. HRS segment margin remained consistent at 8.1% for the nine-month periods ended December 31, 2017 and December 31, 2016.~~

~~Restructuring~~restructuring charges,

On January 25, 2018, the Company announced a plan to initiate targeted restructuring activities focused on optimizing the cost base in lower growth areas and more importantly, streamlining certain corporate and segment functions. The objective of the plan is to make Flex a faster, more responsive and agile company better positioned to react to marketplace opportunities. While a detailed action plan has not been finalized, the Company expects to incur a minimum charge of $50 million during the fourth quarter of fiscal year 2018 and will substantially complete all the associated activities by the end of this fiscal year. The estimated costs are primarily related to ~~one-time~~ employee ~~termination benefits and will be settled in cash.~~severance.

Selling, general and administrative expenses

Selling, general and administrative expenses (“SG&A”) was ~~$247 million,~~approximately $0.3 billion, or 3.7% of net sales, during the three-month period ended ~~December 31, 2017,~~June 30, 2023, increasing ~~$16~~$29 million from ~~$232 million,~~approximately $0.2 billion, or ~~3.8%~~3.3% of net sales, during the three-month period ended ~~December 31, 2016. This~~July 1, 2022. The increase was primarily due to ~~incremental~~elevated SG&A costs ~~associated with our continued expansion of our design and engineering resources and innovation system~~ to support higher revenue growth in our ~~increased~~ ~~Sketch-to-Scale~~^tm initiatives. SG&A was $772 million, or 4.1% of net sales, during the nine-month period ended December 31, 2017, increasing $57 million from $715 million, or 4.0% of net sales, during the nine-month period ended December 31, 2016. This increase in SG&A was also due to incremental costs associated with our continued expansion of our designNextracker segment and ~~engineering resources and innovation system but also due to the recognition of certain contingencies that are probable and estimable of payout combined with incremental costs from our acquisitions.~~higher labor costs.

Intangible amortization

Amortization of intangible assets ~~increased $1~~decreased to $20 million during the three-month period ended ~~December 31, 2017 to $20 million,~~June 30, 2023, from ~~$19~~$22 million for the three-month period ended December 31, 2016 due to incremental amortization expense on intangible assets related to our acquisitions completed during fiscal year 2018. Amortization of intangible assets decreased by $6 million during the nine-month period ended December 31, 2017 to $56 million from $62 million during the nine-month period ended December 31, 2016,July 1, 2022, primarily due to certain intangibles now being fully amortized.

Interest, net

Interest, ~~and other, net~~

~~Interest and other,~~ net was ~~$31~~an expense of $41 million during the three-month period ended ~~December 31, 2017~~June 30, 2023 compared to ~~$23~~an expense of $49 million during the three-month period ended December 31, 2016, and $86 million during the nine-month period ended December 31, 2017 compared to $72 million during the nine-month period ended December 31, 2016. The increase in interest and other, net wasJuly 1, 2022, primarily ~~a result of higher interest expense~~ due to higher interest ~~rates and a~~income, offset by higher ~~average borrowing level.~~

variable interest expense compared to the prior year period.

Other charges (income), net

Other charges (income), net was ~~$172~~an expense of $11 million ~~of income~~ during the ~~nine-month~~three-month period ended ~~December 31, 2017~~June 30, 2023 compared to ~~$15~~income of $9 million ~~of expense~~ during the ~~nine-month~~three-month period ended ~~December 31, 2016. The increase is~~July 1, 2022, primarily due to a ~~$152 million non-cash gain as a result of~~higher foreign exchange transaction loss recognized compared to the ~~deconsolidation of our investment in Elementum, coupled with a $39 million gain recognized for the disposition of Wink during the first quarter of fiscal~~prior year ~~2018. Refer to note 5 and note 2 of the condensed consolidated financial statements for details of the deconsolidation and the disposition of Wink, respectively.~~period.

Income taxes

Certain of our subsidiaries, ~~have,~~ at various times, have been granted tax relief in their respective countries, resulting in lower income taxes than would otherwise be the case under ordinary tax rates. Refer to note ~~13,~~15, “Income Taxes” of the notes to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2017~~2023 for further discussion.

~~Our policy is to provide a valuation allowance against deferred tax assets that in our estimation are not more likely than not to be realized.~~

The consolidated effective tax rate was ~~16.2%~~12% and ~~11.3%~~16% for the ~~three and nine-month~~three-month periods ended ~~December 31, 2017,~~June 30, 2023 and ~~7.7% and 14.4% for the three and nine-month periods ended December 31, 2016.~~July 1, 2022, respectively. The effective tax rate varies from the Singapore statutory rate of ~~17.0%~~17% as a result of recognition of earnings in different jurisdictions (we generate most of our revenues and profits from operations outside of Singapore), operating loss carryforwards, income tax credits, release of previously established valuation allowances for deferred tax assets, liabilities for uncertain tax positions, as well as the effect of certain tax holidays and incentives granted to our subsidiaries primarily in China, Malaysia, the Netherlands and Israel. The effective tax rate for the three-month period ended ~~December 31, 2017~~June 30, 2023 is ~~higher~~lower than the effective tax rate for the three-month ~~periods ended December 31, 2016, due to a larger decrease in liabilities for uncertain tax positions (primarily lapses and FX) during the three-month~~ period ended ~~December 31, 2016. The effective tax rate for the nine-month period ended December 31, 2017 is lower than the nine-month period ended December 31, 2016 primarily~~July 1, 2022, due to the ~~$151.6 million Elementum deconsolidation gain recognized during~~changing jurisdictional mix of income and the ~~quarter~~beneficial foreign exchange impacts on material tax balances for the period ended ~~September 29, 2017 with no related~~June 30, 2023.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted into law, which includes a new corporate minimum tax, ~~impact.~~

~~Impact~~a stock repurchase excise tax, numerous green energy credits, other tax provisions, and significantly increased enforcement resources. While detailed regulations on some aspects of the ~~U.S. Tax Reform~~

On December 22, 2017, the U.S. President signed the Tax Cuts and Jobs Act (the “Act”) into law. Effective January 1, 2018, among other changes, the Act (a) reduces the U.S. federal corporate tax rateact are still outstanding, we do not anticipate a material impact to 21 percent, provides for a deemed repatriation and taxation at reduced rates on historical earnings (a “transition tax”) of certain non-US subsidiaries owned by U.S. companies and establishes new mechanisms to tax such earnings going forward. Similar to other large multinational companies with complex tax structures, the Act has wide ranging implications for Flex. However, the impact on Flex'sour consolidated financial statements for the three and nine-month periods ended December 31, 2017 is immaterial, primarily because the Company has a full valuation allowance on deferred tax assets in the U.S., which results in there being no U.S. deferred tax assets or liabilities recorded on the balance sheet that need to be remeasured at the new 21% rate. Further, the Company expects that the new transition tax will be offset by U.S tax attributes such as net operating loss carryforwards, and thus will not result in any incremental taxes payable. The Company will continue to analyze the effects of the Act on its financial statements and operations. Any additional impacts from ~~the enactment of the Act will be recorded as they are identified during the measurement period as provided for in Staff Accounting Bulletin 118.~~these provisions.

LIQUIDITY AND CAPITAL RESOURCES

In response to the challenging economic environment following the COVID-19 pandemic, we continuously evaluate our ability to meet our obligations over the next 12 months and have proactively reset our capital structure during these times to improve maturities and liquidity. As a result, we expect that our current financial condition, including our liquidity sources are adequate to fund current and future commitments. As of ~~December 31, 2017,~~June 30, 2023, we had cash and cash equivalents of approximately ~~$1.3~~ $2.7

billion and bank and other borrowings of approximately ~~$2.9~~$3.6 billion. ~~We have~~As of June 30, 2023, we had a ~~$1.75~~$2.5 billion revolving credit facility that ~~expires~~is due to mature in ~~June 2022,~~July 2027 (the "2027 Credit Facility"), and a $0.5 billion revolving credit facility that is due to mature in February 2028 (the "Nextracker Revolver"), under which ~~there were~~we had no borrowings ~~outstanding as of the end of the quarter.~~outstanding. As of ~~December 31, 2017,~~June 30, 2023, we were in compliance with the covenants under ~~each~~all of our ~~existing~~credit facilities and indentures; we also expect to remain in compliance with the covenants in the upcoming 12 months for our credit facilities and indentures.

In fiscal year 2024, we implemented a 10b5-1 bond buyback program, aiming to repurchase certain outstanding bonds issued by us. During the three-month period ended June 30, 2023, we repurchased approximately $2 million of the 4.750% Notes due 2025, resulting in an immaterial gain on our condensed consolidated statement of operations.

Cash provided by operating activities was ~~$431~~$6 million during the ~~nine-month~~three-month period ended ~~December 31, 2017. This resulted from $448 million~~June 30, 2023, primarily driven by $0.2 billion of net income for the period plus ~~adjustments for $430 million, net,~~$0.2 billion of non-cash charges such as depreciation, amortization, non-cash lease expense, and stock-based ~~compensation. These were partially~~compensation, offset by ~~a $152 million gain from the deconsolidation of Elementum, and a $39 million gain on sale of Wink, which are both included~~certain changes in ~~the determination of~~ net income. The foregoing was further offset by a $256 million net increase in our operating assets and liabilities driven primarily by significant increases in accounts receivable and inventory not fully offset by the increase in accounts payable all reflecting our increased level of operations.working capital as discussed below.

We believe net working capital ~~and net working capital as~~("NWC") is a ~~percentage of annualized net sales are~~ key ~~metrics~~metric that ~~measure the Company’s~~measures our liquidity. Net working capital ~~increased $230 million~~is calculated as current assets less current liabilities. Net working capital decreased $0.3 billion to ~~$1.8~~$4.9 billion as of ~~December 31, 2017,~~June 30, 2023, from ~~$1.6~~$5.2 billion as of March 31, ~~2017.~~2023. This ~~increase~~decrease is primarily driven by a ~~$329 million~~$0.6 billion decrease in cash due to debt repayments, capital expenditures, and share repurchases, offset by a $0.1 billion increase in ~~our inventory levels from March 31, 2017, as we are carrying elevated levels to support our~~other current assets, and a $0.1 billion decrease in deferred revenue ~~growth~~ and ~~positioning for multiple large ramps. Despite the increase in net~~ working capital position from March 31, 2017, current quarter net working capital as a percentage of annualized net sales for the quarter then ended remained relatively consistent at 6.8% as compared to 6.9% of annualized net sales for the quarter ended December 31, 2017. The Company generally operates in a net working capital targeted range between 6%-8% of annualized revenue for the quarter. Net working capital position was calculated as current quarter accounts receivable, net of allowance for doubtful accounts, adding back the reduction in accounts receivable resulting from non-cash accounts receivable sales, plus inventories, less accounts payable.

advances.

Cash used in investing activities ~~amounted to $783 million~~was $0.2 billion during the ~~nine-month~~three-month period ended December 31, 2017. During the nine-month period ended December 31, 2017, we paid $214 million for the acquisition of AGM, net of cash acquired, and we also paid $56 million for a power module business, net of cash acquired. Further, we invested $389 millionJune 30, 2023. This was primarily driven by $0.2 billion of net capital expenditures for property and equipment to ~~expand~~continue expanding capabilities and capacity in support of our ~~automotive, medical, footwear~~CEC, Automotive, and ~~IEI~~Industrial businesses. In addition, other investing activities includes $73 million of cash outflow resulting from the deconsolidation of Elementum, and $47 million of payments for investments, net of cash received, in non-core businesses.

We believe adjusted free cash flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to repay debt obligations, make investments, fund acquisitions, repurchase company shares and for certain other activities. Our adjusted free cash flow is ~~calculated~~defined as cash from operations, less net purchases of property and ~~equipment.~~equipment allowing us to present adjusted cash flows on a consistent basis for investors. Our adjusted free cash ~~flows~~flow for the ~~nine-month period~~three-month periods ended ~~December 31, 2017~~June 30, 2023 and July 1, 2022 was ~~$42 million compared to $628 million for the nine-month period ended December 31, 2016. Free~~an outflow of $0.2 billion and an outflow of $0.1 billion, respectively. 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. ~~Free~~Adjusted free cash flow should not be considered in isolation or as an alternative to net cash provided by operating activities. ~~Free~~Adjusted free cash flows reconcile to the most directly comparable GAAP financial measure of cash flows from operations as follows:


	Nine-Month Periods Ended							Three-Month Periods Ended
	December 31, 2017			December 31, 2016				June 30, 2023		July 1, 2022
	(In millions)							(In millions)
Net cash provided by operating activities	$	431		$	1,013		Net cash provided by operating activities	$	6	$	38

Purchases of property and equipment	(433		)	(413		)	Purchases of property and equipment	(167)		(107)
Proceeds from the disposition of property and equipment	44			28			Proceeds from the disposition of property and equipment	11		16
Free cash flow	$	42		$	628
Adjusted free cash flow							Adjusted free cash flow	$	(150)	$	(53)

Cash used inby financing activities was ~~$173 million~~$0.5 billion during the ~~nine-month~~three-month period ended ~~December 31, 2017,~~June 30, 2023, which was primarily driven by $0.2 billion of cash paid for the repurchase of our ordinary shares ~~in the amount~~and $0.3 billion of ~~$180 million and~~net cash for repayments of ~~debts of $42 million, offset by $65 million received from third party investors during fiscal year 2018, in exchange for~~bank borrowings and long-term debt and an ~~additional noncontrolling equity interest in Elementum prior to the deconsolidation described above.~~

associated cross-currency swap.

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. 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. 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. As of ~~December 31, 2017~~June 30, 2023 and March 31, ~~2017, over half~~2023, approximately 37% and 27%, respectively, of our cash and cash equivalents ~~was~~were held by foreign subsidiaries outside of Singapore. Although substantially all of the amounts held outside of Singapore could be repatriated under current laws, a significant amount could be subject to income tax withholdings. We 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 ~~$1.2~~$1.9 billion as of March 31, ~~2017)~~2023). Repatriation could result in an additional income tax ~~payment,~~payment; however, for the majority of our foreign entities, our intent is to permanently reinvest these funds outside of Singapore and our current plans do not demonstrate a need to repatriate them to fund our operations in jurisdictions outside of where they are held. 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.

Future liquidity needs will depend on fluctuations in levels of inventory, accounts receivable and accounts payable, the timing of capital expenditures for new equipment, the extent to which we utilize operating leases for new facilities and equipment, and the levels of shipments and changes in the volumes of customer ~~orders, our targeted investments,~~orders.

We maintain various uncommitted short-term financing facilities including but not limited to a commercial paper program, and ~~our targeted business~~a revolving sale and ~~asset acquisitions.~~

repurchase of subordinated notes established under the asset-backed securitization ("ABS") programs, under which there were no borrowings outstanding as of June 30, 2023.

Historically, we have funded operations from cash and cash equivalents generated from operations, proceeds from public offerings of equity and debt securities, bank debt and lease financings. We also have the ability to sell a designated pool of trade receivables under ~~asset-backed securitization~~ABS programs and sell certain trade receivables, which are in addition to the trade receivables sold in connection with these securitization agreements.

We ~~anticipate that we will~~may enter into debt and equity financings, sales of accounts receivable and lease transactions to fund acquisitions and ~~growth.~~ anticipated growth as needed.

The sale or issuance of equity or convertible debt securities could result in dilution to current shareholders. Further, we may issue debt securities that have rights and privileges senior to those of holders of ordinary shares, and the terms of this debt could impose restrictions on operations and could increase debt service obligations. This increased indebtedness could limit our flexibility as a result of debt service requirements and restrictive covenants, potentially affect our credit ratings, and may limit our ability to access additional capital or execute our business strategy. Any downgrades in credit ratings could adversely affect our ability to borrow as a result of more restrictive borrowing terms. We continue to assess our capital structure and evaluate the merits of redeploying available cash to reduce existing debt or repurchase ordinary shares.

Under our current share repurchase program, our Board of Directors authorized repurchases of our outstanding ordinary shares for up to ~~$500 million~~$1.0 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 ~~15, 2017.~~25, 2022. During the ~~nine-month~~three-month period ended ~~December 31, 2017,~~June 30, 2023, we paid ~~$180~~$197 million to repurchase shares under the current ~~and prior~~ repurchase ~~plans~~plan at an average price of ~~$16.63~~$22.71 per share. As of ~~December 31, 2017,~~June 30, 2023, shares in the aggregate amount of ~~$410~~$697 million were available to be repurchased under the current plan.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

Information regarding our long-term debt payments, operating lease payments, capital lease payments and other commitments is provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on our Form 10-K for the fiscal year ended March 31, ~~2017.~~ 2023.

There ~~have been~~were no material changes in our contractual obligations and commitments ~~since March 31, 2017 except for the following changes to our debt obligations.~~

Onas of June 30, 2017, we extended the maturity date of one of our term loan agreements from March 31, 2019 to June 30, 2022. Refer to note 6 to the condensed consolidated financial statements for additional details on this term loan.2023.

Future payments due under our long-term debt changed from those described in the Contractual Obligations and Commitments table contained within our Annual Report on our Form 10-K for the fiscal year ended March 31, 2017, and accordingly have been updated as follows:

Total Less Than
1 Year 1-3 Years 4-5 Years Great Than
5 Years
(In thousands)
Long-term Debt Obligations:
Long-term debt $ 2,968,150
$ 37,730
$ 585,434
$ 905,870
$ 1,439,116

~~OFF-BALANCE SHEET ARRANGEMENTS~~

We sell designated pools of trade receivables to unaffiliated financial institutions under our ABS programs, and in addition to cash, we receive a deferred purchase price receivable for each pool of the receivables sold. Each of these deferred purchase price receivables serves as additional credit support to the financial institutions and is recorded at its estimated fair value. As of December 31, 2017 and March 31, 2017, the fair values of our deferred purchase price receivable were approximately $421 million and $507 million, respectively. As of December 31, 2017 and March 31, 2017, the outstanding balance on receivables sold for cash was $1.4 billion and $1.2 billion under all our accounts receivable sales programs, which are not included in our condensed consolidated balance sheets. For further information, see note 10 to the condensed consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes in our exposure to market risks for changes in interest and foreign currency exchange rates for the ~~nine-month~~three-month period ended ~~December 31, 2017~~June 30, 2023 as compared to the fiscal year ended March 31, ~~2017.~~2023.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

The Company's management, with the participation of the Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange ~~Act)~~Act of 1934, as amended (the "Exchange Act")) as of ~~December 31, 2017.~~June 30, 2023. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that, as of ~~December 31, 2017,~~June 30, 2023, the Company's disclosure controls and procedures were effective in ensuring that information required to be disclosed by the Company in reports that it files or submits under the ~~Securities~~ Exchange Act, ~~of 1934, as amended,~~ is (i) recorded, processed, summarized and reported within the time periods specified in the ~~Securities and Exchange Commission's~~SEC's rules and forms and (ii) accumulated and communicated to our management, including our ~~principal executive officer~~ChiefExecutive Officer and ~~principal financial officer,~~Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control Over Financial Reporting

There were no changes in our internal ~~controls~~control over financial reporting that occurred during our ~~third~~ quarter ~~of fiscal year 2018~~ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal ~~controls~~control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For a description of our material legal proceedings, see note 1312 “Commitments and Contingencies” in the notes to the condensed consolidated financial statements, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the risks and uncertainties discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2017,~~2023, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be not material also may materially and adversely affect our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table provides information regarding purchases of our ordinary shares made by us for the period from ~~September~~April 1, 2023 through June 30, ~~2017~~2023:


Period (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
April 1, 2023 - May 5, 2023	4,718,147	$	20.99	4,718,147	$	794,016,115
May 6, 2023 - June 2, 2023	2,335,354	$	23.55	2,335,354	$	739,020,101
June 3, 2023 - June 30, 2023	1,601,576	$	26.54	1,601,576	$	696,520,800
Total	8,655,077			8,655,077

(1)During the period from April 1, 2023 through ~~December 31, 2017:~~June 30, 2023, all purchases were made pursuant to the programs discussed below in open market transactions. 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. 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 June 30, 2023, shares in the aggregate amount of $697 million were available to be repurchased under the current plan.

Period (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
September 30, 2017 - November 3, 2017 576,262
$ 17.08
576,262
$ 435,264,194
November 4, 2017 - December 1, 2017 —
$ —
—
$ 435,264,194
December 2, 2017 - December 31, 2017 1,394,867
$ 18.07
1,394,867
$ 410,064,509
Total 1,971,129

1,971,129


~~(1)~~	~~During the period from September 30, 2017 through December 31, 2017, all purchases were made in accordance with Rule 10b-18 under the Securities Exchange Act of 1934.~~

~~(2)~~

On August 15, 2017, our Board of Directors authorized repurchases of our outstanding ordinary shares for up to $500 million. 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 December 31, 2017, shares in the aggregate amount of $410.1 million were available to be repurchased under the current plan.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

During the fiscal quarter ended June 30, 2023, none of the Company's directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement", as those terms are defined in Regulation S-K, Item 408.

~~None~~

ITEM 6. EXHIBITS

EXHIBIT INDEX

Incorporated by Reference

~~Filed~~

Exhibit No.

Exhibit

Form

File No.

Filing Date

Exhibit No.

Filed Herewith

10.01

Description of Annual Incentive Bonus Plan for Fiscal Year 2024

10.02

Summary of Compensation Arrangements of Certain Executive Officers of Flex Ltd.

10.03

Form of Restricted Share Unit Award Agreement under the Amended and Restated Flex Ltd. 2017 Equity Incentive Plan for performance-based vesting awards (FY24)

15.01

Letter in lieu of consent of Deloitte & Touche ~~LLP.~~LLP

31.01

Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002

31.02

Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002

32.01

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*2002*

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibit 101)

* This exhibit is furnished with this Quarterly Report on Form 10-Q, is not deemed filed with the Securities and Exchange Commission, and is not incorporated by reference into any filing of Flex Ltd. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		FLEX LTD.
		(Registrant)


		/s/ ~~Michael M. McNamara~~REVATHI ADVAITHI
		~~Michael M. McNamara~~Revathi Advaithi
		Chief Executive Officer
		(Principal Executive Officer)

Date:	~~January 26, 2018~~July 28, 2023
		/s/ ~~Christopher Collier~~PAUL R. LUNDSTROM
		~~Christopher Collier~~Paul R. Lundstrom
		Chief Financial Officer
		(Principal Financial Officer)

Date:	~~January 26, 2018~~July 28, 2023

4139



	As of December 31, 2017			As of March 31, 2017
	(In thousands, except share amounts) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,291,183		$	1,830,675
Accounts receivable, net of allowance for doubtful accounts of $60,113 and $57,302 as of December 31, 2017 and March 31, 2017, respectively	3,100,808			2,192,704
Inventories	3,725,643			3,396,462
Other current assets	965,470			967,935
Total current assets	9,083,104			8,387,776
Property and equipment, net	2,443,050			2,317,026
Goodwill	1,104,770			984,867
Other intangible assets, net	438,552			362,181
Other assets	770,834			541,513
Total assets	$	13,840,310		$	12,593,363

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Bank borrowings and current portion of long-term debt	$	42,954		$	61,534
Accounts payable	5,406,512			4,484,908
Accrued payroll	385,985			344,245
Other current liabilities	1,580,618			1,613,940
Total current liabilities	7,416,069			6,504,627
Long-term debt, net of current portion	2,901,720			2,890,609
Other liabilities	542,541			519,851
Shareholders’ equity
Flex Ltd. shareholders’ equity
Ordinary shares, no par value; 577,829,371 and 581,534,129 issued, and 527,590,016 and 531,294,774 outstanding as of December 31, 2017 and March 31, 2017, respectively	6,613,812			6,733,539
Treasury stock, at cost; 50,239,355 shares as of December 31, 2017 and March 31, 2017	(388,215		)	(388,215		)
Accumulated deficit	(3,124,519		)	(3,572,648		)
Accumulated other comprehensive loss	(121,098		)	(128,143		)
Total Flex Ltd. shareholders’ equity	2,979,980			2,644,533
Noncontrolling interests	—			33,743
Total shareholders’ equity	2,979,980			2,678,276
Total liabilities and shareholders’ equity	$	13,840,310		$	12,593,363



	HRS		CTG			IEI		CEC			Amount
	(In thousands)
Balance, beginning of the year	$	420,935	$	111,223		$	337,707	$	115,002		$	984,867
Additions (1)	75,280		—			—		9,174			84,454
Divestitures (2)	—		(3,475		)	—		—			(3,475		)
Purchase accounting adjustments	—		—			—		(14		)	(14		)
Foreign currency translation adjustments (3)	38,938		—			—		—			38,938
Balance, end of the period	$	535,153	$	107,748		$	337,707	$	124,162		$	1,104,770



	Purchase Consideration		Net Tangible Assets Acquired		Purchased Intangible Assets		Goodwill
AGM	$	213,718	$	56,438	$	82,000	$	75,280
Power Modules Business	56,006		12,332		34,500		9,174



	Three-Month Periods Ended								Nine-Month Periods Ended
Segments:	December 31, 2017				December 31, 2016				December 31, 2017				December 31, 2016
	(In millions)
Communications & Enterprise Compute	$	1,979	29	%	$	2,102	34	%	$	5,853	31	%	$	6,400	36	%
Consumer Technologies Group	2,057		30	%	1,849		30	%	5,324		28	%	4,827		27	%
Industrial & Emerging Industries	1,491		22	%	1,140		19	%	4,336		23	%	3,672		20	%
High Reliability Solutions	1,225		19	%	1,023		17	%	3,517		18	%	3,101		17	%
	$	6,752			$	6,114			$	19,030			$	18,000



	Total		Less Than 1 Year		1-3 Years		4-5 Years		Great Than 5 Years
	(In thousands)
Long-term Debt Obligations:
Long-term debt	$	2,968,150	$	37,730	$	585,434	$	905,870	$	1,439,116