Flextronics : January 28, 2016

, /PRNewswire/ -- Flex (NASDAQ: FLEX), a leading sketch-to-scale™ solutions company that designs and builds intelligent products for a connected world, today announced results for its third quarter ended :

(US$ in millions, except EPS)		Three Month Periods Ended
		December 31,		September 25,		December 31,
		2015		2015		2014
Net sales	$	6,763	$	6,317	$	7,025
Adjusted operating income	$	236	$	196	$	207
GAAP operating income	$	212	$	180	$	193
Adjusted net income	$	196	$	153	$	175
GAAP net income	$	149	$	123	$	153
Adjusted EPS	$	0.35	$	0.27	$	0.30
GAAP EPS	$	0.27	$	0.22	$	0.26

An explanation and reconciliation of non-GAAP financial measures to GAAP financial measures is presented in Schedule II attached to this press release.

Third Quarter Fiscal 2016 Results of Operations

Flex's net sales for the third quarter ended were approximately , at the high end of its previously provided revenue guidance range of . The Company's adjusted earnings per diluted share of was above the Company's previously provided guidance range of and represents the all - time highest quarterly adjusted EPS for the Company.

Third quarter adjusted operating income increased 20% sequentially, and 14% year-over-year, to and was above the guidance range of . Adjusted operating margin expanded 40 basis points sequentially, and 60 basis points year-over-year, to 3.5%.

'We continue to position our company as a leader in the IoT space, and our third quarter demonstrated sequential growth across all four of our business groups, resulting from new programs and an improving engagement model,' said , chief executive officer at Flex. 'Operating margins improved both sequentially and year-over-year, a testament to the stronger value proposition we are delivering to our customers.'

'Our adjusted earnings per diluted share were this quarter, representing an all-time high for the Company, and we generated in cash flow from operations and in free cash flow during the quarter,' said , chief financial officer at Flex. 'Our consistent free cash flow generation reflects our strong discipline and execution and enables our consistent stock repurchase.'

Guidance
For the fourth quarter ending , revenue is expected to be in the range of and adjusted EPS is expected to be in the range of per diluted share.

GAAP earnings per share is expected to be lower than the adjusted EPS guidance provided herein by approximately per diluted share for estimated intangible amortization and stock-based compensation expense.

Conference Calls and Web Casts
A conference call hosted by the Flex management team will be held today at / to discuss the Company's financial results for the third quarter ended . The conference call will be broadcast via the Internet and may be accessed by logging on to the Company's website at www.flextronics.com. Additional information in the form of a slide presentation may also be found on the Company's site. A replay of the broadcast will remain available on the Company's website afterwards.

About Flex
(Reg. No. 199002645H) is a leading sketch-to-scale™ solutions company that designs and builds intelligent products for a connected world. With approximately 200,000 professionals across 30 countries and a promise to help the world Live smarter™, the company provides innovative design, engineering, manufacturing, real-time supply chain insight and logistics services to companies of all sizes in various industries and end-markets. For more information, visit www.flextronics.com or follow us on Twitter @.

This press release contains forward-looking statements within the meaning of U.S. securities law including statements related to the future expected revenues and earnings per share. These forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from those anticipated by these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. These risks include: that future revenues and earnings may not be achieved as expected; the challenges of effectively managing our operations, including our ability to control costs and manage changes in our operations; compliance with legal and regulatory requirements; that the expected revenue and margins from recently launched programs may not be realized; that recently proposed changes in tax laws in certain jurisdictions where we operate may materially impact our tax expense, and the effects that the current macroeconomic environment could have on our business and demand for our products as well as the effects that current credit and market conditions could have on the liquidity and financial condition of our customers and suppliers, including any impact on their ability to meet their contractual obligations. Additional information concerning these and other risks is described under 'Risk Factors' and 'Management's Discussion and Analysis of Financial Condition and Results of Operations' in our reports on Forms 10-K and 10-Q that we file with the . The forward-looking statements in this press release are based on current expectations and Flex assumes no obligation to update these forward-looking statements. Our share repurchase program does not obligate the Company to repurchase a specific number of shares and may be suspended or terminated at any time without prior notice.

SCHEDULE I
FLEX
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
			Three Month Periods Ended
			December 31, 2015		September 25, 2015		December 31, 2014
GAAP:
	Net sales	$	6,763,177	$	6,316,762	$	7,025,054
	Cost of sales		6,310,710		5,919,846		6,616,397
	Gross profit		452,467		396,916		408,657
	Selling, general and administrative expenses		240,617		216,796		215,993
	Operating income		211,850		180,120		192,664
	Intangible amortization		19,319		16,127		8,045
	Interest and other, net		21,566		22,035		9,035
	Other charges		44,415		1,678		5,067
	Income before income taxes		126,550		140,280		170,517
	Provision for (benefit from) income taxes		(22,360)		17,303		17,618
	Net income	$	148,910	$	122,977	$	152,899
EPS:
	Net income:
	GAAP	$	0.27	$	0.22	$	0.26
	Non-GAAP	$	0.35	$	0.27	$	0.30
	Diluted shares used in computing per share amounts		560,996		569,655		587,201

See Schedule II for the reconciliation of GAAP to non-GAAP financial measures. See the accompanying notes on Schedule V attached to this press release.

SCHEDULE II
FLEX
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
		Three Month Periods Ended
		December 31, 2015		September 25, 2015		December 31, 2014
GAAP gross profit	$	452,467	$	396,916	$	408,657
Stock-based compensation expense		2,407		2,015		2,083
Non-GAAP gross profit	$	454,874	$	398,931	$	410,740
GAAP SG&A Expenses	$	240,617	$	216,796	$	215,993
Stock-based compensation expense		21,826		14,185		12,136
Non-GAAP SG&A Expenses	$	218,791	$	202,611	$	203,857
GAAP operating income	$	211,850	$	180,120	$	192,664
Stock-based compensation expense		24,233		16,200		14,219
Non-GAAP operating income	$	236,083	$	196,320	$	206,883
GAAP provision for (benefit from) income taxes	$	(22,360)	$	17,303	$	17,618
Intangible amortization benefit		1,131		2,355		224
Tax benefit on intangible assets		39,324		-		-
Non-GAAP provision for income taxes	$	18,095	$	19,658	$	17,842
GAAP net income	$	148,910	$	122,977	$	152,899
Stock-based compensation expense		24,233		16,200		14,219
Intangible amortization		19,319		16,127		8,045
Other charges		44,415		-		-
Adjustments for taxes		(40,455)		(2,355)		(224)
Non-GAAP net income	$	196,422	$	152,949	$	174,939
EPS:
Net income:
GAAP	$	0.27	$	0.22	$	0.26
Non-GAAP	$	0.35	$	0.27	$	0.30

SCHEDULE III
FLEX
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
				December 31, 2015			March 31, 2015
ASSETS
Current Assets:
	Cash and cash equivalents		$	1,634,194		$	1,628,408
	Accounts receivable, net			2,584,909			2,337,515
	Inventories			3,490,733			3,488,752
	Other current assets			1,246,768			1,286,225
Total current assets				8,956,604			8,740,900
Property and equipment, net				2,239,921			2,092,167
Goodwill and other intangible assets, net				1,317,017			415,175
Other assets				535,976			417,382
Total assets			$	13,049,518		$	11,665,624
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
	Bank borrowings and current portion of long-term debt		$	65,536		$	46,162
	Accounts payable			4,802,194			4,561,194
	Other current liabilities			2,284,541			2,148,867
Total current liabilities				7,152,271			6,756,223
Long-term debt, net of current portion:
	Revolving credit facility			-			-
	4.625% Notes (due 2020)			500,000			500,000
	5.000% Notes (due 2023)			500,000			500,000
	4.750% Notes (due 2025)			595,494			-
	Term Loans			1,080,000			1,027,500
	Other long-term debt			65,980			10,071
Other liabilities				577,341			475,580
Total shareholders' equity				2,578,432			2,396,250
Total liabilities and shareholders' equity			$	13,049,518		$	11,665,624

SCHEDULE IV
FLEX
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
		Nine-Month Periods Ended
		December 31, 2015				December 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income	$	382,737		$	465,689
	Depreciation, amortization and other impairment charges		381,949			404,260
	Changes in working capital and other		175,086			(200,525)
	Net cash provided by operating activities		939,772			669,424
CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchases of property and equipment		(418,561)			(254,970)
	Proceeds from the disposition of property and equipment		4,627			90,576
	Acquisition and divestiture of businesses, net of cash acquired and cash held in divested business		(900,242)			(58,132)
	Other investing activities, net		1,397			(11,517)
	Net cash used in investing activities		(1,312,779)			(234,043)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from bank borrowings and long-term debt		755,684			234,523
	Repayments of bank borrowings and long-term debt		(40,706)			(251,337)
	Payments for repurchases of ordinary shares		(331,690)			(290,752)
	Net proceeds from issuance of ordinary shares		52,950			12,341
	Other financing activities, net		(49,742)			(29,135)
	Net cash provided by (used in) financing activities		386,496			(324,360)
Effect of exchange rates on cash and cash equivalents			(7,703)			2,472
	Net increase in cash and cash equivalents		5,786			113,493
	Cash and cash equivalents, beginning of period		1,628,408			1,593,728
	Cash and cash equivalents, end of period	$	1,634,194		$	1,707,221

SCHEDULE V
FLEX AND SUBSIDIARIES
NOTES TO SCHEDULES I, II, & III
(1)	To supplement Flex's unaudited selected financial data presented on a basis consistent with Generally Accepted Accounting Principles ('GAAP'), the Company discloses certain non-GAAP financial measures that exclude certain charges, including non-GAAP gross profit, non-GAAP selling, general and administrative expenses, non-GAAP operating income, non-GAAP net income and non-GAAP net income per diluted share. These supplemental measures exclude stock-based compensation expense, intangible amortization, other discrete events as applicable and the related tax effects. These non-GAAP measures are not in accordance with or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Flex's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Flex's results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. We compensate for the limitations of non-GAAP financial measures by relying upon GAAP results to gain a complete picture of the Company's performance.
	In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of the Company's operating performance on a period-to-period basis because such items are not, in our view, related to the Company's ongoing operational performance. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with forecasts and strategic plans, for calculating return on investment, and for benchmarking performance externally against competitors. In addition, management's incentive compensation is determined using certain non-GAAP measures. Also, when evaluating potential acquisitions, we exclude certain of the items described below from consideration of the target's performance and valuation. Since we find these measures to be useful, we believe that investors benefit from seeing results 'through the eyes' of management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with the Company's GAAP financials, provide useful information to investors by offering: the ability to make more meaningful period-to-period comparisons of the Company's on-going operating results; the ability to better identify trends in the Company's underlying business and perform related trend analyses; a better understanding of how management plans and measures the Company's underlying business; and an easier way to compare the Company's operating results against analyst financial models and operating results of competitors that supplement their GAAP results with non-GAAP financial measures.
	The following are explanations of each of the adjustments that we incorporate into non-GAAP measures, as well as the reasons for excluding each of these individual items in the reconciliations of these non-GAAP financial measures:
		Stock-based compensation expense consists of non-cash charges for the estimated fair value of stock options and unvested restricted share unit awards granted to employees and assumed in business acquisitions. The Company believes that the exclusion of these charges provides for more accurate comparisons of its operating results to peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, the Company believes it is useful to investors to understand the specific impact stock-based compensation expense has on its operating results.
		Intangible amortization consists primarily of non-cash charges that can be impacted by, among other things, the timing and magnitude of acquisitions. The Company considers its operating results without these charges when evaluating its ongoing performance and forecasting its earnings trends, and therefore excludes such charges when presenting non-GAAP financial measures. The Company believes that the assessment of its operations excluding these costs is relevant to its assessment of internal operations and comparisons to the performance of its competitors.
		Adjustment for taxes relates to the tax effects of the various adjustments that we incorporate into non-GAAP measures in order to provide a more meaningful measure on non-GAAP net income and certain adjustments related to non-recurring settlements of tax contingencies.
	For the third quarter ended December 31, 2015, Free Cash Flow was $158 million consisting of GAAP net cash flows from operating activities of $278 million less purchases of property and equipment, net of proceeds from dispositions, of $120 million. We believe 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 and for certain other activities. Since Free Cash Flow includes investments in operating assets, we believe this non-GAAP liquidity measure is useful in addition to the most directly comparable GAAP measure - 'net cash flows provided by operating activities.'
(2)	Includes $25 million of non-cash foreign currency translation loss attributable to a non-strategic Western European manufacturing facility we sold during the quarter and $22 million impairment of a non-core investment.
(3)	Includes a $39 million benefit for the release of valuation allowances on certain of our deferred tax assets resulting from our acquisition of the NEXTracker business during the current quarter.

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SOURCE Flex