Flex (FLEX) 10-K risk factor changes: FY2020 vs FY2019

[removed: We] [added: We] depend on industries that continually produce technologically advanced products with short product life cycles and our business would be adversely affected if our customers' products are not successful or if our customers lose market [removed: share.][added: share.]

| • | our customers' products may have supply chain [removed: issues;] [added: issues, including as a result of the COVID-19 pandemic] |

| • | there may be recessionary periods in our customers' [removed: markets.] [added: markets, including as a result of the COVID-19 pandemic.] |

[removed: Our] [added: Our] customers may cancel their orders, change production quantities or locations, or delay production, and our current and potential customers may decide to manufacture some or all of their products internally, which could harm our [removed: business.][added: business.]

Cancellations, reductions, or delays by a significant customer or by a group of customers have harmed, and may in the future harm, our results of operations by reducing the volumes of products we manufacture and deliver for those customers, by causing a delay in the repayment of our expenditures for inventory in preparation for customer orders [removed: and for] [added: and/or] an impairment loss for inventory, and by lowering our asset utilization and overhead absorption resulting in lower gross margins and earnings.

In addition, we face competition from the manufacturing operations of some of our current and potential customers, who are continually evaluating the merits of [added: manufacturing products internally against the advantages of outsourcing.]

[removed: Our] [added: Our] industry is extremely competitive; if we are not able to continue to provide competitive services, we may lose [removed: business.][added: business.]

[removed: A] [added: A] significant percentage of our sales come from a small number of customers and a decline in sales to any of these customers could adversely affect our [removed: business.][added: business.]

Our ten largest customers accounted for approximately [removed: 43%, 41% and] [added: 39%,] 43% [added: and 41%] of net sales in fiscal years [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017,] [added: 2018,] respectively.

No customer accounted for more than 10% of net sales in fiscal year [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017.][added: 2018.]

[removed: If a significant transaction involving any of our key customers results in] the loss of or reduction in purchases by any of our largest customers, it could have a materially adverse effect on our business, results of operations, financial condition and prospects.

[removed: Our] [added: Our] components business is dependent on our ability to quickly launch world-class component products, and our investment in the development of our component capabilities, together with the start-up and integration costs necessary to achieve quick launches of world-class component products, may adversely affect our margins and [removed: profitability.][added: profitability.]

[removed: Our] [added: Our] exposure to financially troubled customers or suppliers may adversely affect our financial [removed: results.][added: results.]

On April 21, 2016, SunEdison, Inc. [removed: and] [added: (together with] certain of its [removed: subsidiaries (“SunEdison”)] [added: subsidiaries, “SunEdison”)] filed for protection under Chapter 11 of the U.S. Bankruptcy Code.

[removed: For] [added: During] the fiscal year ended March 31, 2016, we recognized a bad debt reserve charge of $61.0 million associated with our outstanding SunEdison receivables and accepted return of previously shipped inventory of approximately [removed: $90] [added: $90.0] million.

[removed: We] [added: We] may be adversely affected by supply chain issues, including shortages of required electronic [removed: components.][added: components.]

These unanticipated component shortages [added: have resulted and] could [added: continue to] result in curtailed production or delays in production, which may prevent us from making scheduled shipments to customers.

Our supply chain [removed: may] [added: has] also [added: been and may continue to] be impacted by [added: the COVID-19 pandemic, and may be impacted by] other events outside our control, including macro-economic events, trade restrictions, political crises, [added: other public health emergencies,] or natural or environmental occurrences.

[removed: Our] [added: Our] margins and profitability may be adversely affected due to substantial investments, start-up and production ramp costs in our design [removed: services.][added: services.]

[removed: We] [added: We] conduct operations in a number of countries and are subject to the risks inherent in international [removed: operations.][added: operations.]

[removed: Depending upon their duration and implementation, as well as our ability to mitigate their impact, these tariffs, the executive order and its] implementation and other regulatory actions could materially affect our business, including in the form of increased cost of goods sold, decreased margins, increased pricing for customers, and reduced sales.

[removed: The] [added: The] success of certain of our activities depends on our ability to protect our intellectual property rights; claims of infringement or misuse of intellectual property and/or breach of license agreement provisions against our customers or us could harm our [removed: business.][added: business.]

In addition, the basis [removed: (e.g.] [added: (e.g.,] base price) for any royalty amounts owed are audited by licensors and may be challenged.

[removed: We] [added: We] are subject to risks relating to litigation and regulatory investigations and proceedings, which may have a material adverse effect on our [removed: business.][added: business.]

We have initiated an internal investigation regarding this [removed: matter.][added: matter which is ongoing.]

[removed: If] [added: If] we do not effectively manage changes in our operations, our business may be harmed; we have taken substantial restructuring charges in the past and we may need to take material restructuring charges in the [removed: future.][added: future.]

In recent years, including fiscal years [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017,] [added: 2018,] we initiated targeted restructuring activities focused on optimizing our portfolio, in particular customers and products in our CTG business, optimizing our cost structure in lower growth areas and, more importantly, streamlining certain corporate and segment [removed: functions as well as exited our NIKE operations in Mexico.][added: functions.]

We may be required to take additional charges in the future to align our operations and cost structures with global economic conditions, market demands, cost competitiveness, and our geographic footprint as it relates to our customers' production [removed: requirements.][added: requirements and in response to the economic challenges in light of recent events with COVID-19.]

[removed: If we are required to] take additional restructuring charges in the future, our operating results, financial condition, and cash flows could be adversely impacted.

[removed: A] [added: A] breach of our IT or physical security systems, or violation of data privacy laws, may cause us to incur significant legal and financial [removed: exposure.][added: exposure.]

We [removed: rely] [added: are increasingly reliant] on our information systems to process, transmit and store electronic information (including sensitive data such as confidential business information and personally identifiable data relating to employees, customers, and other business partners), and to manage or support a variety of critical business processes and activities.

Additionally, California recently enacted legislation, the California Consumer Privacy Act (“CCPA”), which [removed: will become] [added: became] effective January 1, 2020.

The [removed: CCPA will,] [added: CCPA,] among other requirements, require covered companies to provide new disclosures to California consumers, and allow such consumers new abilities to opt-out of certain sales of personal information.

The effects of the [added: GDPR, the] CCPA [added: and other data privacy laws and regulations] may be significant, and may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply.

[removed: Our] [added: Our] strategic relationships with major customers create [removed: risks.][added: risks.]

[removed: If] [added: If] our compliance policies are breached, we may incur significant legal and financial [removed: exposure.][added: exposure.]

[removed: We] [added: We] are subject to the risk of increased income [removed: taxes.][added: taxes.]

[added: While it is often difficult to predict the final outcome or the] timing of the resolution of a tax examination, we believe that our reserves for uncertain tax benefits reflect the outcome of tax positions that are more likely than not to occur.

[removed: Changes] [added: Changes] in financial accounting standards or policies have affected, and in the future may affect, our reported financial condition or results of [removed: operations.][added: operations.]

For example, significant changes to [removed: revenue recognition] [added: lease accounting] rules have been enacted and applied to us in fiscal year [removed: 2019] [added: 2020] per Accounting Standard Update ("ASU") [removed: 2014-09 "Revenue from Contracts with Customers (Topic 606)".][added: 2016-02 "Leases".]

The COVID-19 pandemic has materially and adversely affected our business and results of operations.

The duration and extent to which it will continue to adversely impact our business and results of operations remains uncertain and could be material.

The COVID-19 pandemic has resulted in a widespread public health crisis and numerous disease control measures being taken to limit its spread, including travel bans and restrictions, quarantines, shelter-in-place orders, and shutdowns.

These measures have materially impacted and are continuing to impact our workforce and operations, the operations of our customers, and those of our respective vendors and suppliers.

We have significant operations worldwide, including in China, Mexico, the United States, Brazil, India, Malaysia and Europe, and each of these geographies has been affected by the outbreak and has taken measures to try to contain it, resulting in disruptions at many of our manufacturing operations and facilities.

Further measures may be implemented and there can be no assurance as to when any such restrictions may be eased or lifted.

The impact of the pandemic on our business has included and could in the future include:

| • | disruptions to or restrictions on our ability to ensure the continuous provision of our manufacturing services and solutions; |

| • | temporary closures or reductions in operational capacity of our manufacturing facilities; |

| • | reductions in our capacity utilization levels; |

| • | temporary closures of our direct and indirect suppliers, resulting in adverse effects to our supply chain, and other supply chain disruptions, which adversely affect our ability to procure sufficient inventory to support customer orders; |

| • | temporary shortages of skilled employees available to staff manufacturing facilities due to shelter-in-place orders and travel restrictions within as well as into and out of countries; |

| • | restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls or closures; |

| • | increases in operational expenses and other costs related to requirements implemented to mitigate the impact of the pandemic; |

| • | delays or limitations on the ability of our customers to perform or make timely payments; |

| • | reductions in short- and long-term demand for our manufacturing services and solutions, or other disruptions in technology buying patterns; |

| • | workforce disruptions due to illness, quarantines, governmental actions, other restrictions, and/or the social distancing measures we have taken to mitigate the impact of COVID-19 at our locations around the world in an effort to protect the health and well-being of our employees, customers, suppliers and of the communities in which we operate (including working from home, restricting the number of employees attending events or meetings in person, limiting the number of people in our buildings and factories at any one time, further restricting access to our facilities and suspending employee travel); and |

| • | our management team continuing to commit significant time, attention and resources to monitoring the COVID-19 pandemic and seeking to mitigate its effects on our business and workforce. |

The global spread of COVID-19 also has created significant macroeconomic uncertainty, volatility and disruption, which may adversely affect our and our customers’ and suppliers’ liquidity, cost of capital and ability to access the capital markets.

As a result, the continued spread of COVID-19 could cause further disruptions in our supply chain and customer demand, and could adversely affect the ability of our customers to perform, including in making timely payments to us, which could further adversely impact our business, financial condition and results of operations.

In addition, the COVID-19 pandemic has caused an economic slowdown that is likely to continue and is highly likely to cause a global recession.

Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of the pandemic’s global economic impact, including any recession, economic downturn, government spending cuts, tightening of credit markets or increased unemployment that has occurred or may occur in the future, which could cause our customers and potential customers to postpone or reduce spending on our manufacturing services and solutions.

The extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments such as the length and severity of the crisis, the potential resurgence of COVID-19 in the future, future government actions in response to the crisis and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable.

We cannot at this time quantify or forecast the business impact of COVID-19, and there can be no assurance that the COVID-19 pandemic will not have a material and adverse effect on our business, financial results and financial condition.

In addition, the COVID-19 pandemic increases the likelihood and potential severity of other risks described in this “Risk Factors” section.

Additionally, the withdrawal of the United Kingdom from the EU ("Brexit") may also adversely impact worldwide economic conditions.

The U.K. left the EU on January 31, 2020, and is currently in an 11-month transition period following which it will leave the single market and customs union pursuant to terms of a trade agreement currently being negotiated by the U.K. and the EU.

The terms of this trade agreement are uncertain, and the political and economic instability created by Brexit caused and may continue to cause significant volatility in global markets.

The U.S. has thus far signaled a desire to reach a broad trade deal with a post-Brexit U.K. this year, but demands for concessions on issues like tariffs, non-tariff barriers, tax policies, and market access could present obstacles to achieving an agreement.

Disagreements over similar issues, including market access, non-tariff barriers, and digital

service taxes continue to raise the possibility of the U.S. imposing more tariffs on EU goods, even as the U.S. government signals a desire to reach a trade deal with the EU.

The COVID-19 pandemic has served to further delay any potential progress on any U.S.-U.K. and U.S.-EU trade deal.

Meetings between U.S. and U.K. trade officials to discuss a bilateral trade deal, which were scheduled for the end of March, then postponed indefinitely, as both countries instead dealt with the COVID-19 pandemic.

For the period ended March 31, 2020, we derived our revenues from customers in the following business groups (which, beginning in fiscal year 2021, we expect to realign in two reportable segments (Flex Agility Solutions Group and Flex Reliability Solutions Group)):

| • | A negative impacts of the COVID-19 pandemic on our customers or on the demand for our customers’ products; |

If a significant transaction involving any of our key customers results in

Any of these risks may be heightened by the effects of the COVID-19 pandemic.

No preference claims have been asserted against the Company and consideration has been given to the related contingencies based on the facts currently known.

We have also experienced, and may continue to experience, such shortages due to the effects of the COVID-19 pandemic.

| • | exposure to infectious disease, epidemics and pandemics, including the effects of the COVID-19 on our business operations in geographic locations impacted by the outbreak and on the business operations of our customers and suppliers; |

We derive our revenues from customers in the following business groups:

manufacturing products internally against the advantages of outsourcing.

During the second quarter of fiscal year 2017, prices for solar panel modules declined significantly.

We determined that certain solar panel inventory previously designated for SunEdison 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 during fiscal year 2017.

In addition, we recognized a $16.0 million impairment charge for solar module equipment and incurred $16.9 million of incremental costs primarily related to negative margin sales and other associated solar panel direct costs.

The estimates underlying our recorded provisions, as well as consideration of other potential customer bankruptcy-related contingencies associated with the SunEdison bankruptcy proceedings, are based on the facts currently known to us; no preference claims have been asserted against the Company.

We believe that we continue to have a number of affirmative and direct defenses to any potential claims for recovery and intend to vigorously defend any such claim, if asserted.

| • | exposure to infectious disease and epidemics; |

Motions for appointment as lead plaintiff are due June 4, 2019.

Defendants’ deadline to move to dismiss is vacated until after the lead plaintiff appointment process is complete and an operative complaint is designated.

In addition, the Court has set a case management conference for July 17, 2019.

The matter

is at a very preliminary stage and we cannot predict the total costs to be incurred in response to any steps taken by OFAC, the potential impact on our personnel or to what extent we could be subject to penalties, which could be material.

Nor can we predict how long it will take to complete our investigation and for a disposition by OFAC.

While it is often difficult to predict the final outcome or the

[removed: OVERVIEW][added: OVERVIEW]

These segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by [removed: the] [added: our] Chief Operating Decision Maker (“CODM”).

Refer to note [removed: 19] [added: 20] to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for additional information on our operating segments.

During the past several years, we have evolved our long-term portfolio towards a mix of businesses which possess longer product life cycles and higher segment operating margins [removed: such] as reflected in our IEI and HRS businesses.

We are one of the world's largest providers of global supply chain solutions, with revenues of [removed: $26.2] [added: $24.2] billion in fiscal year [removed: 2019.][added: 2020.]

We design, build, ship, and service consumer and enterprise products for our customers through a network of over 100 facilities in approximately [removed: 35] [added: 30] countries across four continents.

As of March 31, [removed: 2019,] [added: 2020,] our total manufacturing capacity was approximately 27 million square feet.

In fiscal year [removed: 2019,] [added: 2020,] our net sales in [removed: Asia,] the [removed: Americas] [added: Americas, Asia] and Europe represented approximately [removed: 44%, 38%] [added: 42%, 39%] and [removed: 18%,] [added: 19%,] respectively, of our total net sales, based on the location of the manufacturing site.

The following tables set forth the relative percentages and dollar amounts of net sales and net property and equipment, by country, based on the location of our manufacturing [removed: sites:][added: sites (amounts may not sum due to rounding):]

| | [removed: Fiscal] [added: Fiscal] Year Ended March [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | | |

| Net sales: | [removed: 2019] | | | | | | | [removed: 2018] | | | | | | | [removed: 2017] | | | | | |

| | [removed: (In millions)] [added: (In millions)] | | | | | | | | | | | | | | | | | | | |

| China | $ | [removed: 6,649] [added: 5,665] | | | [removed: 25] [added: 23] | % | | $ | [removed: 7,450] [added: 6,649] | | | [removed: 29] [added: 25] | % | | $ | [removed: 7,214] [added: 7,450] | | | [removed: 30] [added: 29] | % |

| Mexico | [removed: 4,539] [added: 4,449] | | | | [removed: 17] [added: 18] | % | | [removed: 4,362] [added: 4,539] | | | | 17 | % | | [removed: 4,076] [added: 4,362] | | | | 17 | % |

| U.S. | [removed: 3,106] [added: 3,719] | | | | [removed: 12] [added: 15] | % | | [removed: 2,860] [added: 3,106] | | | | [removed: 11] [added: 12] | % | | [removed: 2,560] [added: 2,860] | | | | 11 | % |

| Brazil | [removed: 2,181] [added: 1,831] | | | | 8 | % | | [removed: 2,578] [added: 2,181] | | | | [removed: 10] [added: 8] | % | | [removed: 1,908] [added: 2,578] | | | | [removed: 8] [added: 10] | % |

| Malaysia | [removed: 1,996] [added: 1,539] | | | | [removed: 8] [added: 6] | % | | [removed: 2,005] [added: 1,996] | | | | 8 | % | | [removed: 2,267] [added: 2,005] | | | | [removed: 10] [added: 8] | % |

| India | [removed: 1,805] [added: 1,298] | | | | [removed: 7] [added: 5] | % | | [removed: 609] [added: 1,805] | | | | [removed: 2] [added: 7] | % | | [removed: 511] [added: 609] | | | | 2 | % |

| | $ | [removed: 26,211] [added: 24,210] | | | | | | $ | [removed: 25,441] [added: 26,211] | | | | | | $ | [removed: 23,863] [added: 25,441] | | | | |

| | [removed: Fiscal] [added: Fiscal] Year Ended March [removed: 31,] [added: 31,] | | | | | | | | | | | | |

| Property and equipment, net: | [removed: 2019] | | | | | | | [removed: 2018] | | | | | |

| | [removed: (In millions)] [added: (In millions)] | | | | | | | | | | | | |

| Mexico | $ | [removed: 537] [added: 555] | | | [removed: 23] [added: 25] | % | | $ | [removed: 587] [added: 537] | | | [removed: 26] [added: 23] | % |

| China | [removed: 523] [added: 396] | | | | [removed: 22] [added: 18] | % | | [removed: 492] [added: 523] | | | | 22 | % |

| U.S. | [removed: 361] [added: 378] | | | | [removed: 15] [added: 17] | % | | [removed: 305] [added: 361] | | | | [removed: 14] [added: 15] | % |

| India | [removed: 219] [added: 207] | | | | 9 | % | | [removed: 78] [added: 219] | | | | [removed: 3] [added: 9] | % |

| Hungary | [removed: 103] [added: 100] | | | | 4 | % | | [removed: 150] [added: 103] | | | | [removed: 7] [added: 4] | % |

| Malaysia | [removed: 138] [added: 111] | | | | [removed: 6] [added: 5] | % | | [removed: 153] [added: 138] | | | | [removed: 7] [added: 6] | % |

| Other | [removed: 454] [added: 469] | | | | [removed: 21] [added: 22] | % | | [removed: 475] [added: 454] | | | | 21 | % |

| • | the impacts on our business due to component shortages or other supply chain related [removed: constraints;] [added: constraints including as a result of the COVID-19 pandemic;] |

Net sales for fiscal year [removed: 2019 increased 3%] [added: 2020 decreased 8%,] or [removed: $0.8 billion] [added: $2.0 billion,] to [removed: $26.2] [added: $24.2] billion from the prior year.

Refer to note 2 to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for details of the investment [removed: impairments and the deconsolidation of Bright Machines, respectively.][added: impairments.]

Our net working [removed: capital, defined] [added: capital is calculated] as [added: 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 [removed: inventories,] [added: inventories and contract assets,] less accounts [removed: payable, was redefined upon the adoption of ASC 606 (as further described in note 2 to the consolidated financial statements in Item 8, "Financial Statements] [added: payable] and [removed: Supplementary Data"),] [added: certain other current liabilities related] to [removed: include contract assets on a going forward basis.][added: vendor financing programs.]

Our net working capital as a percentage of annualized sales for fiscal year [removed: 2019 increased] [added: 2020 decreased slightly] by [removed: 0.3%] [added: 0.4%] to [removed: 6.7%] [added: 6.3%] from the prior year.

[removed: 2019,] [added: This was primarily driven by the impact of our adoption of ASU 2016-15 during fiscal year 2019 referred to above, which requires us to classify] cash collections on deferred purchase price from our ABS [removed: programs] [added: Programs] that were previously classified as operating cash inflows [removed: are now classified] as cash flows from investing activities.

Refer to note [removed: 2] [added: 3] to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for further [removed: description on the ASU.][added: details.]

[removed: As a result, we redefined our] [added: Our adjusted] free cash flow [added: is defined] as cash from operating activities, plus cash collections of deferred purchase [removed: price,] [added: price receivables,] less net purchases of property and equipment [removed: in order] to present [removed: free] [added: adjusted] cash flows on a consistent basis for investor transparency.

We also excluded the [removed: reduction] [added: impact] to [removed: operating] cash flows related to certain vendor programs [removed: from the free cash flow calculation.][added: that is required for US GAAP presentation.]

[removed: Free] [added: Our adjusted free] cash flow was [removed: $3] [added: $672] million for fiscal year [removed: 2019] [added: 2020] compared to [removed: $236] [added: $3] million for fiscal year [removed: 2018.][added: 2019.]

Refer to the Liquidity and Capital Resources section for the [added: adjusted] free cash flows reconciliation to [removed: our] [added: the] most directly comparable GAAP financial measure of cash flows from operations.

We are the manufacturing partner of choice that helps a diverse customer base design and build products that improve the world.

Through the collective strength of a global workforce across approximately 30 countries and responsible, sustainable operations, we deliver technology innovation, supply chain, and manufacturing solutions to diverse industries and end markets.

As of March 31, 2020, our reporting business segments were as follows:

In March 2020, we announced a change in organization structure as part of our strategy to further drive growth and productivity with two focused delivery models.

As a result, beginning in fiscal year 2021, we expect to report our financial performance based on two reportable segments (Flex Agility Solutions Group and Flex Reliability Solutions Group) and analyze operating income as the measure of segment profitability.

During fiscal year 2019, we took actions to optimize our portfolio with greater focus to be placed on higher margin, less volatile businesses.

During the first half of fiscal year 2020, in connection with the recent geopolitical developments and uncertainties, primarily impacting one customer in China, we experienced a reduction in demand for products assembled for that customer.

As a result, we accelerated our strategic decision to reduce our exposure to certain high-volatility products in both China and India.

We also initiated targeted activities to restructure our business to further reduce and streamline our cost structure.

We recognized $216 million of charges during the fiscal year 2020, comprised of approximately $159 million of cash charges predominantly for employee severance, and $57 million of non-cash charges primarily related to asset impairments.

While the bulk of the restructuring activities were executed in fiscal year 2020 and prior, we may be required to execute additional restructuring activities as we continue to streamline our cost structure while focusing on higher margin, less volatile businesses and in response to the economic challenges in light of recent events with COVID-19 as discussed below.

Impact of COVID-19 on Our Business

The COVID-19 pandemic has resulted in a widespread public health crisis and numerous disease control measures being taken to limit its spread, including travel bans and restrictions, quarantines, shelter-in-place orders, and shutdowns.

These measures have materially impacted and are continuing to impact our workforce and operations, the operations of our customers, and those of our respective vendors and suppliers.

We have significant operations worldwide, including in China, Mexico, the United States, Brazil, India, Malaysia and Europe, and each of these geographies has been affected by the outbreak and taken measures to try to contain it, resulting in disruptions at many of our manufacturing operations and facilities.

The extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments such as the length and severity of the crisis, the potential resurgence of COVID-19 in the future, future government actions in response to the crisis and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable.

See “Risk Factors - *The COVID-19 pandemic has materially and adversely affected our business and results of operations.

The duration and extent to which it will continue to adversely impact our business and results of operations remains uncertain and could be material.*”

In response to the outbreak, we deployed our contingency and resiliency plans that are encompassed in our business continuity programs.

Our resiliency advisory and crisis management teams defined work streams and set up “war” rooms with hundreds of employees, organizing across our global footprint, and coordinating and communicating with our suppliers and customers.

Our leadership teams initiated enhanced health and safety measures across all facilities, as our foremost focus has been the health and safety of our employees.

We modified practices at our manufacturing locations and offices to require personal protective equipment, sanitization measures, temperature checks and social distancing well before these measures were mandated.

Our protocols to protect employees and safely operate our facilities have been implemented in partnership with several governments, including in China, Mexico, Malaysia, Brazil, and Europe.

These measures also have enabled us to

continue to conduct operations which are considered to be essential services, including but not limited to the manufacture of critical health care products.

As one of the largest medical device manufacturers, we recognized that we had a responsibility to do our part to make a difference in the fight against this disease.

With many of the products we make for our healthcare customers related to critical care quickly running in short supply, we ramped our efforts to expand delivery of critical products, including oxygen concentrators, patient monitors, infusion pumps, and ICU beds.

We are also greatly increasing our testing equipment production for both point of care and large laboratory systems and are currently partnering with our customers to manufacture ventilators at six sites around the globe.

We are presently operating in the majority of our manufacturing facilities across the globe.

Our China operations are now fully up and running.

There are a few regions that were impacted by acute outbreaks, such as Italy, or have seen complete country shutdowns, including India and Malaysia.

In these geographies, we remain in contact with the local and national governments, and have received or are in the process of receiving waivers to safely return factories to full capacity.

In addition, we have also shut down our automotive facilities (including in Mexico and Europe) in line with shutdowns executed by the major North American and European auto makers.

For those employees who are not working at our manufacturing facilities, including corporate and regional headquarters, we have been operating on a work-from-home basis.

We do not believe that our work-from-home protocols have materially adversely impacted our internal controls, financial reporting systems or our operations.

All of our business segments were impacted in the fourth quarter of our fiscal year 2020, with our High Reliability Solutions segment impacted by factory shutdowns by several of our large OEM customers of our automotive business, although our health solutions business has experienced a significant increased demand for critical health care products.

Our Industrial and Emerging Industries segment was impacted by supply chain disruptions that impacted product ramps for various industrial and home and lifestyle customers.

Our Communications & Enterprise Compute segment was impacted by production disruptions in certain of our Asian facilities and late quarter disruptions in our Mexican facilities.

Finally, our Consumer Technologies Group segment was impacted by significant China-based supply chain constraints.

Overall, we absorbed additional direct incremental costs of approximately $52 million primarily related to costs associated with enhanced health and safety infrastructure, labor incentives and incremental supply chain expenses.

We are a globally-recognized, provider of Sketch-to-Scale® services - innovative design, engineering, manufacturing, and supply chain services and solutions - from conceptual sketch to full-scale production.

We design, build, deliver and manage complete packaged consumer and enterprise products, from medical devices and connected automotive systems to sustainable lighting and cloud data center infrastructures, for companies of all sizes in various industries and end-markets, through our activities in the following segments:

During the fourth quarter of fiscal year 2019, we announced that Revathi Advaithi was appointed CEO of the Company effective February 11, 2019.

As part of her new role and responsibilities, the CEO along with certain direct reports that oversee operations of the business, are now considered the CODM.

There is a possibility that the CODM will request changes in the

information that is regularly reviewed in determining how to allocate resources and in assessing performance, which could eventually result in changes to our reportable segments.

During fiscal year 2019, we took action to revise our go-to-market strategy within our CTG business, where we are actively managing under-performing accounts and are focused on partnering with well-funded, leading multi-national brands that control multiple categories of products and have regional demand requirements.

We expect this transition to continue in fiscal year 2020 which will continue to put downward pressure on the segment operating margins until fully transitioned.

During the fiscal year 2019, we also completed the wind down of our NIKE operations in Mexico and concurrently streamlined our third-party investments.

In addition, we developed a measured and sustainable operating plan for India and as of March 31, 2019, we have completed the majority of our regional build-out.

We continue to invest in the capital expenditures necessary to support underlying higher margin, long-term programs in our IEI and HRS businesses.

On April 1, 2018, we adopted a new revenue standard and as a result we recognized a cumulative effect of adoption as an adjustment to the opening balance of retained earnings, as further described in note 2 to the consolidated financial statements included under Item 8.

The comparative information has not been restated and continues to be reported under the accounting standards in effect at the time.

| Other | 5,935 | | | | 23 | % | | 5,577 | | | | 23 | % | | 5,327 | | | | 22 | % |

Amounts may not sum due to rounding.

| | $ | 2,336 | | | | | | $ | 2,240 | | | | |

| • | our exposure to financially troubled customers; |

The increase was primarily due to a $0.6 billion increase in our CEC segment and a $0.2 billion increase in our IEI segment.

Our fiscal year 2019 gross profit totaled $1.5 billion, representing a decrease of $78 million, or 5%, from the prior year, which is primarily driven by an incremental increase of $32 million of restructuring charges, coupled with approximately $47 million of additional charges related to distressed customers that were included in cost of sales in fiscal year 2019.

These incremental charges were part of our targeted actions to optimize our business portfolio, most notably within CTG, as we eliminated certain non-core activities and repositioned ourselves to align with go-forward strategies.

The decline in gross margin is also due to the mix of revenues included in our portfolio most notably a decline in revenues from our automotive products and services within HRS which carry higher gross profit margins.

Increased revenues from our ramping businesses in India further impacted the decline in gross profit margin from the prior year as the new programs were pressured below our average margins during the ramp.

Our net income totaled $93 million, representing a decrease of $335 million, or 78%, compared to fiscal year 2018.

The decrease in net income during fiscal year 2019 is primarily due to the same factors explained above in addition to the recognition of $193 million of charges primarily for the impairment of certain of our investments, including our investment in Elementum SCM (Cayman) Ltd ("Elementum"), offset by an $87 million gain from the deconsolidation of Bright Machines (formerly known as AutoLab AI).

We also recognized a $152 million gain from the deconsolidation of Elementum in fiscal year 2018, which contributed further to the decrease in net income from fiscal year 2018 to 2019.

Cash used in operations decreased by approximately $0.9 billion to $3.0 billion for fiscal year 2019 compared with $3.9 billion for fiscal year 2018 primarily due to a lower level of cash collections on deferred purchase price being reclassed to investing activities offset by elevated levels of investment required to support the business growth and operating through a more constrained inventory marketplace in fiscal year 2019.

Upon adoption of Accounting Standard Update (ASU) 2016-15 during the first quarter of fiscal year

The decrease in free cash flow is primarily due to increased capital expenditures in fiscal year 2019 as we built out our regional capacity in India and continued to expand our capacity and capability in support of our expanding IEI and HRS businesses, as well as increased inventory levels due to a more constrained inventory marketplace and higher business levels.

The aggregate charge was primarily driven by write-downs of the Company's investment positions in a non-core cost method investment and Elementum as well as other investment impairments that were individually immaterial.

To the extent

During fiscal year 2019, we adopted ASU 2017-04 "Simplifying the Test for Goodwill Impairment", which simplifies the subsequent measurement of goodwill by eliminating step 2 from the goodwill impairment test.

We performed our goodwill impairment assessment on January 1, 2019 and determined that no impairment existed as of the date of the impairment test because the fair value of each one of our reporting units exceeded its respective carrying value.

As of the date of the impairment test, all reporting units' fair values were 25% or more, over their respective carrying values, with the exception of the CTG reporting unit which was 22% in excess of its carrying value.

The estimated future results for CTG used in the impairment analysis reflect our revised strategy including the wind down of our NIKE operations in Mexico, further restrictions on capital expenditures related to our expansion into India and our focus on partnering with well-funded, leading multi-national brands that control multiple categories of products and have regional demand requirements.

If we are not successful in driving improved results in our CTG segment it is reasonably possible that material goodwill impairment charges could be recorded in future periods.

On April 1, 2018, we adopted the new revenue standard and as a result we recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings, as further described in note 2 to the consolidated financial statements included under Item 8.

During fiscal year 2018, the increase in net sales was primarily driven by an increase of $1.3 billion in the Americas and to a lesser extent, $0.2 billion in Asia with Europe remaining relatively consistent from the prior year.

businesses, offset by declines in our capital equipment and energy businesses.

Net sales during fiscal year 2018 increased $1.0 billion or 20% in our IEI segment, which was mainly driven by our industrial, home and lifestyle businesses in addition to growth in our solar energy business.

Our CTG segment increased $0.6 billion or 10% largely attributable to stronger sales in our connected living and mobile devices businesses, offset by a decrease in gaming.

[removed: INTEREST] [added: INTEREST] RATE [removed: RISK][added: RISK]

Our cash is principally invested in the U.S. dollar and China [removed: RMB] [added: renminbi] serving as a natural hedge of our [removed: RMB] [added: renminbi] denominated costs.

As of March 31, [removed: 2019,] [added: 2020,] the outstanding amount in the highly liquid investment portfolio was [removed: $0.5] [added: $0.4] billion, the largest components of which were [added: U.S. dollar,] Brazilian real, China renminbi and Indian rupee denominated money market accounts with an average return of [removed: 2.18%.][added: 2.72%.]

We had variable rate debt outstanding of approximately [removed: $1.5] [added: $1.0] billion as of March 31, [removed: 2019.][added: 2020.]

Interest on these obligations is discussed in note [removed: 7] [added: 8] to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data".

As of March 31, [removed: 2019,] [added: 2020,] the approximate average fair value of our debt outstanding under our term loan facilities that mature in [removed: November 2021 and] June 2022, and Notes due February [removed: 2020, February 2023 and] [added: 2023,] June 2025 [added: and June 2029] was [removed: 99.9%] [added: 98.3%] of the face value of the debt obligations based on broker trading prices.

[removed: FOREIGN] [added: FOREIGN] CURRENCY EXCHANGE [removed: RISK][added: RISK]

The aggregate notional amount of outstanding contracts as of March 31, [removed: 2019] [added: 2020] amounted to [removed: $7.8] [added: $9.8] billion and the recorded fair values of the associated assets and liabilities were not material.

[removed: They will settle primarily in the Brazilian real, British] pound, China renminbi, Euro, Hungarian forint, Indian rupee, [added: Israeli shekel,] Malaysian ringgit, Mexican peso, [removed: Singapore dollar,] [added: Swedish krona,] and U.S. dollar.

Based on our overall currency rate exposures as of March 31, [removed: 2019,] [added: 2020,] including the derivative financial instruments intended to hedge the nonfunctional currency-denominated monetary assets, liabilities and cash flows, and other [removed: factors] [added: factors,] a 10% appreciation or depreciation of the U.S. dollar from its cross-functional rates would not be expected, in the aggregate, to have a material effect on our financial position, results of operations and cash flows in the near-term.

In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.

As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee which identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative to USD-LIBOR in derivatives and other financial contracts.

We are not able to predict when LIBOR will cease to be published or precisely how SOFR will be calculated and published.

Any changes adopted by FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR.

If that were to occur, our interest payments could change.

If a contract is not transitioned to an alternative rate and LIBOR is discontinued, the impact is likely to vary by contract.

If LIBOR is discontinued or if the method of calculating LIBOR changes from its current form, interest rates on our current or future indebtedness may be adversely affected.

While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that LIBOR will become unavailable prior to that point.

This could result, for example, if sufficient banks decline to make submissions to the LIBOR administrator.

In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.

They will settle primarily in the Brazilian real, British

[removed: OVERVIEW][added: OVERVIEW]

Our segments are determined based on several factors, including the nature of products and services, the nature of production processes, customer [removed: base,] [added: bases,] delivery channels and similar economic characteristics.

Refer to note [removed: 19] [added: 20] to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for additional information on our operating segments.

We provide design, manufacturing and supply chain services through a network of over 100 locations in approximately [removed: 35] [added: 30] countries across five continents.

We have established global scale through an extensive network of innovation labs, design centers, manufacturing and services sites in the world's major consumer and enterprise products markets (Asia, the Americas, [added: and Europe) in order to serve the supply chain needs of both multinational and regional companies.]

Our services provide customers with a competitive advantage by delivering [added: leading-edge manufacturing technology, supply chain expertise,] improved product quality, increased flexibility, [removed: leading-edge manufacturability, improved performance,] faster [removed: time-to-market,] [added: time to market,] and [added: overall] value.

For the fiscal year ended March 31, [removed: 2019,] [added: 2020,] we had revenue of [removed: $26.2] [added: $24.2] billion and net income of [removed: $93] [added: $88] million.

We believe that the combination of our [removed: extensive innovative solutions,] design and engineering services, advanced supply chain management solutions and [removed: services, significant] [added: manufacturing technology capabilities along with our] global scale and regional [removed: presence, and manufacturing sites in key geographies] [added: presence] provide us with a competitive [removed: advantage and strong differentiation in the market for designing, building, and servicing consumer and enterprise products for leading multinational and regional companies.][added: advantage.]

[removed: INDUSTRY OVERVIEW][added: INDUSTRY OVERVIEW]

Our [added: areas of] expertise [removed: is Sketch-to-Scale® services:] [added: are] design, [removed: manufacture,] [added: manufacturing] and supply chain services for a broad range of products, from medical devices, connected automotive systems and smart home appliances to [removed: sustainable lighting and] cloud [added: and] data center infrastructures.

[removed: Although Flex has evolved beyond traditional EMS, the majority of our customers are electronics original equipment manufacturers ("OEMs"); as] [added: As] such, the closest broad definition of our industry remains the outsourced EMS industry.

In recent [removed: years] [added: years,] we have seen an increased level of diversification by many companies, in the technology, automotive and healthcare industries along with the convergence of many industries being transformed by technology [removed: advancements.][added: advances.]

Increasingly complex products require highly customized [removed: supply chain] solutions, in turn resulting in significant changes to the overall manufacturing and supply chain landscape.

The intensely competitive nature of the electronics industry, the increasing complexity and sophistication of electronics products, and [removed: pressure] [added: pressures] on OEMs to reduce product costs and shorten product life cycles are all factors that encourage OEMs to utilize supply chain service providers as part of their business and manufacturing strategies.

Utilizing global manufacturing and service providers allows OEMs to take advantage of the global design, manufacturing and supply chain management expertise of [removed: such] [added: outsource] providers, and enables OEMs to concentrate on product research, development, marketing, and sales.

| • | Accelerated [removed: time-to-market] [added: time to market] and time-to-volume production; |

We believe that growth in the EMS industry will be largely driven by the need for OEMs to respond to rapidly changing industries, markets and technologies, [added: as well as] the increasing complexity of supply chains and the continued pressure to be innovative and cost competitive.

Additionally, we believe that there are significant opportunities for global EMS providers to win additional business from OEMs in markets or industry segments that have yet to substantially [removed: utilize such providers.][added: outsource manufacturing.]

[removed: SERVICE OFFERINGS][added: SERVICE OFFERINGS]

[removed: We] believe [removed: a] [added: our] key competitive [removed: advantage is] [added: advantages are] our people, [removed: processes] [added: our processes,] and [added: our] capabilities for making products, systems and solutions for our customers:

| • | [removed: Speed:] [added: *Speed:*] Our sophisticated supply chain management tools and expertise allow us to provide customers with access to real-time information that increases visibility throughout the entire product lifecycle, reducing risk while accelerating execution. [added: Our experience with new product introductions and manufacturing ramps provides customers with a time to market advantage.] |

| • | [removed: Scope:] [added: *Scope:*] Our full range of services, [removed: from Sketch-to-Scale®,] [added: *from Sketch-to-Scale*®,] include innovation and design, engineering, manufacturing, forward and reverse logistics, and circular economy supply chain management. Our deep [removed: industry and] cross-industry knowledge and multi-domain expertise accelerate the production of increasingly complex products for increasingly interconnected industries. |

| • | [removed: Scale:] [added: *Scale:*] Our physical infrastructure includes over 100 facilities in approximately [removed: 35] [added: 30] countries, staffed by approximately [removed: 200,000] [added: 160,000] employees, providing our customers with truly global scale and strategic geographic distribution capabilities. |

Our expertise can help improve our customers' market positioning by effectively adjusting product plans and roadmaps to efficiently and cost-effectively deliver high quality products that meet their [removed: time-to-market] [added: geographic and time to market] requirements.

[added: *Innovation Services.*] We provide a comprehensive set of services that enable companies to successfully ideate, create new products and solutions, and gain access to new markets.

| • | [removed: Innovation] [added: *Innovation] and Design [removed: Centers.] [added: Centers.*] Our Innovation and Design Centers specialize in supporting customer design and product development. Customers gain access to our design and engineering facilities, technical subject matter expertise, and rapid prototyping resources such as metal and plastic 3D printers and soft tooling capabilities. |

| • | [removed: Cross-industry Technologies.] [added: *Cross-industry Technologies.*] Along with our portfolio of [added: specific] building block technologies in electrical/electronics, electromechanical, and software, we also have deep technical expertise in cross-industry [removed: technologies. Our Cross-industry] technologies [removed: are a combination of building block technologies expertly applied to products and solutions for use within numerous industries. These technologies include:] [added: including:] Human Machine Interface (HMI), Audio and Video, System in Package (SIP), Miniaturization, IoT Platforms and [removed: Asset Tracking.] [added: Power Management.] |

| • | [removed: Systems] [added: *Systems] Integration [removed: Services.] [added: Services.*] Through systems integration, we design and integrate advanced data center servers, storage and networking [removed: equipment] [added: equipment,] and data center [removed: appliances, providing] [added: appliances. These systems provide] engineering and design services with an emphasis on multivendor integration and open technologies that promote interoperability at a lower cost. [removed: Our CloudLabs provide a staging lab for customers to deploy the latest technologies, allowing for performance testing of workloads and enabling faster diffusion of technologies in a controlled environment.] |

[added: *Extensive] Design and Engineering [removed: Services.][added: Capabilities*.]

[added: *Design and Engineering Services.*] We offer a comprehensive range of value-added design and engineering services, tailored to specific industries and markets, and the needs of our customers.

See "Risk [removed: Factors—The] [added: Factors - *The] success of certain of our activities depends on our ability to protect our intellectual property rights; claims of infringement or misuse of intellectual property and/or breach of license agreement provisions against our customers or us could harm our [removed: business."][added: business.*"]

[added: *Systems Assembly and Manufacturing.*] Our assembly and manufacturing operations, which generate the majority of our revenues, include printed circuit board assembly and assembly of systems and subsystems that incorporate printed circuit boards and complex electromechanical components.

Our systems assembly and manufacturing [removed: expertise] [added: capabilities] includes the following:

| • | [removed: Enclosures.] [added: *Enclosures.*] We offer a comprehensive set of custom electronics enclosures and related products and services. Our services include the design, manufacture, integration and deployment of electronics packaging systems, including custom enclosure systems, power and thermal subsystems, interconnect subsystems, cabling, and cases. In addition to standard sheet metal and plastic fabrication services, we assist in the design of electronics packaging systems that protect sensitive electronics and enhance functionality. Our enclosure design services focus on functionality, manufacturability, and testing. These services are integrated with our other assembly and manufacturing services to provide our customers with improved overall supply chain management. |

| • | [removed: Testing Services.] [added: *Testing Services.*] We offer computer-aided testing services for assembled printed circuit boards, systems, and subsystems. These services significantly improve our ability to deliver high-quality products on a consistent basis. Our test services include management defect analysis, in-circuit testing and functional [removed: testing;] [added: testing] as well as environmental stress tests of board and system assemblies. We also offer design for test, manufacturing, and environmental services to jointly improve customer product design and manufacturing. |

| • | [removed: Materials] [added: *Materials] Procurement and Inventory [removed: Management.] [added: Management.*] Our manufacturing and assembly operations capitalize on our materials inventory management expertise and volume procurement capabilities. As a result, we believe that we are able to achieve highly competitive cost reductions and shorten total manufacturing cycle times [added: for] our [removed: OEM] customers. Materials procurement and management consists of the planning, purchasing, expediting, and warehousing of components and materials used in the manufacturing process. In addition, our strategy includes having third-party suppliers of custom components located in our industrial parks to reduce material and transportation costs, simplify logistics, and facilitate inventory management. We also use a sophisticated automated manufacturing resource planning system and enhanced electronic data interchange capabilities to ensure inventory control and optimization. [removed: Through our manufacturing resources planning system, we have real-time visibility of material availability and are able to track work in process. We utilize electronic data interchange with our customers and suppliers to implement a variety of supply chain management programs.] Electronic data interchange allows customers to share demand and product forecasts, deliver purchase orders and assists suppliers with satisfying just-in-time delivery and supplier-managed inventory requirements. [removed: This also enables us to implement vendor-managed inventory solutions to increase flexibility and reduce overall capital allocation in the supply chain. We procure a wide assortment of materials, including electronic components, plastics and metals.] There are a number of sources for these materials, including customers for whom we are providing systems assembly and manufacturing services. On some occasions, there have been shortages of certain electronic components, most recently [removed: this has been] [added: for] connectors, capacitors, LCD panels and memory (both DRAM and Flash). [removed: However,] [added: As a result of the COVID-19 pandemic, we experienced component shortages and other supply chain constraints in the fourth quarter of our fiscal year 2020, and] such [added: component] shortages [added: and supply chain constraints] have [removed: not had] [added: continued to] a [removed: material impact on] [added: lesser extent in the first quarter of] our [removed: operating results for any periods presented.] [added: fiscal year 2021.] See "Risk [removed: Factors—We] [added: Factors—*We] may be adversely affected by supply chain issues, including shortages of required electronic [removed: components."] [added: components*."] |

[added: *Power Modules.*] We offer a full-service power supply business that provides a range of solutions from custom to highly scalable system solutions.

[removed: Flex has] [added: We have] expertise in high efficiency and high-density switching power supplies ranging from 1 to 3,000 watts.

Our products are fully compliant with [removed: the] environmental and Energy Star requirements that drive efficiency specifications in our industry.

[removed: Our] [added: *Logistics.* Through our] Flex Global Services [removed: business is a provider of services including] [added: business, we provide] after-market and forward supply chain logistics services.

Flex is the manufacturing partner of choice that helps a diverse customer base design and build products that improve the world.

Through the collective strength of a global workforce across approximately 30 countries and responsible, sustainable operations, Flex delivers technology innovation, supply chain, and manufacturing solutions to diverse industries and end markets.

As of March 31, 2020, our reporting business segments were as follows:

In March 2020, we announced a change in organization structure as part of our strategy to further drive growth and productivity with two focused delivery models.

As a result, beginning in fiscal year 2021, we expect to report our financial performance based on two reportable segments (Flex Agility Solutions Group and Flex Reliability Solutions Group) and analyze operating income as the measure of segment profitability.

Flex offers solutions that span from initial design through ramp-up and volume manufacturing as well as through end of life and circularity offerings.

This full range of capabilities provides our customers with expertise across the entire value chain.

Technology innovation is at the center of delivering these end-to-end capabilities.

The estimated growth of the EMS industry for calendar year 2019 was minimal at approximately 1%.

Finally, we believe that the COVID-19 pandemic is highlighting numerous new vulnerabilities and challenges for OEMs, which will require OEMs from all markets and industries to value and evaluate their supply chain resiliency, which may drive further growth opportunities.

We

| • | System Architecture, User Interface and Industrial Design; |

| • | Hardware Design; |

| • | Software Design; and |

| • | Design for Excellence. |

See "Risk Factors—*The success of certain of our activities depends on our ability to protect our intellectual property rights; claims of infringement or misuse of intellectual property and/or breach of license agreement provisions against our customers or us could harm our business*."

We help our customers responsibly build products that create value and improve people’s lives.

*Talent*.

*Customer Focus*.

We believe that building strong partnerships with our customer and delivering on our commitments strengthens trust and customer retention.

We are highly collaborative and leverage our global system and processes to operate with speed and responsiveness to provide our customers with a reliant supply chain partner.

*Market Focus*.

Increasingly, our customers are transitioning to regional based supply chains to take advantage of time to market and specific customization required to win in those markets.

We believe that our long-term relationships with key customers is a result of our track record of meeting commitments and delivering value that increases our customers' competitiveness.

We believe that we are operating one of the most well-balanced and diversified portfolio from a product, geographical and customer diversification perspective.

We have no customer accounting for more than 10% and our ten largest accounted for 39% of our net sales in fiscal year 2020.

We believe we are well-positioned through our diverse portfolio and global footprint to grow faster than the industry average.

Flex is a founding member of the RBA and a member of the Global Business Initiative Human Rights and the Business for Social Responsibility Network.

Our foremost focus in our response to the COVID-19 pandemic has been the health and safety of our employees.

In response to the COVID-19 pandemic, the Flex Foundation has been working with leading organizations and making financial contributions to help support efforts in combating COVID-19 in the countries where we have a presence.

In response to the COVID-19 outbreak, we deployed our contingency and resiliency plans that are encompassed in our business continuity programs.

Our resiliency advisory and crisis management teams defined work streams and set up “war” rooms with hundreds of employees, organizing across our global footprint, and coordinating and communicating with our suppliers and customers.

Our leadership teams initiated enhanced health and safety measures across all facilities, as our foremost focus has been the health and safety of our employees.

We modified practices at our manufacturing locations and offices to require personal protective equipment, sanitization measures, temperature checks and social distancing well before these measures were mandated.

Our protocols to protect employees and safely operate our facilities have been in partnership with several governments, including in China, Mexico, Malaysia, Brazil and Europe.

These measures also have enabled us to continue to conduct operations which are considered to be essential services, including but not limited to the manufacture of critical health care products.

We are a globally-recognized, provider of Sketch-to-Scale® services - innovative design, engineering, manufacturing, and supply chain services and solutions - from conceptual sketch to full-scale production.

We design, build, ship and manage complete packaged consumer and enterprise products, from medical devices and connected automotive systems to sustainable lighting and cloud and data center solutions, for companies of all sizes in various industries and end-markets, through our activities in the following segments:

| | |

| --- | --- |

and Europe) in order to serve the supply chain needs of both multinational and regional companies.

Over the past several years, we have evolved beyond a traditional Electronics Manufacturing Services ("EMS") company, and now consider ourselves to be a provider of a full range of Sketch-to-Scale® services – beyond electronics manufacturing services – including strategic product development planning and design-phase innovation, supported by teams of talented design engineers.

Our innovation strategy is focused on three levels: products, systems, and manufacturing technologies and processes.

Through these services, centers and sites, we offer our customers improved product design, increased flexibility and responsiveness.

We also enable faster time to market, product safety and regulatory compliance and supply chain predictability with real-time visibility, all of which accelerate product launches, access to new markets, and mitigate of risks.

We recognized research and development costs primarily related to our product design and innovations service offerings of $66 million, $78 million, and $66 million for the fiscal years ended March 31, 2019, 2018 and 2017, respectively.

EMS has experienced significant change and growth as an increasing number of companies elect to outsource some or all of their design, manufacturing, and after-market services requirements.

Companies that have historically identified themselves as software providers, internet service providers, or e-commerce retailers are entering the highly competitive and rapidly evolving hardware markets, with products that include mobile devices, home entertainment products, and wearable devices.

This trend has resulted in significant changes to the hardware manufacturing and supply chain solutions requirements of such companies.

The growth of the overall industry for calendar year 2018 is estimated to have been around 4%.

We believe the total available market for the EMS industry is poised for continued growth, with current penetration rates estimated to be about 31%.

Innovation Services.

This area of our business has seen increased investment and focus over the past few years.

Beyond our flagship Customer Engagement Center in Silicon Valley, we have established a global network of Design and Engagement Centers.

Our innovation and design services include:

| • | Centers of Excellence/Competence. Our Centers of Excellence/Competence provide strategic technology capabilities developed by Flex in critical solutions areas which leverage our expertise across multiple |

industries, for integration into our customers' products and next generation industry requirements.

Centers of Excellence/Competence have specialized capabilities in connectivity, sensors and actuators, power, battery, interconnects and PMATX, smart software, optical, and "soft" Systems.

These services can be delivered using one of two primary business models:

| • | Design Services, where customers purchase engineering and development services on a time and materials basis; or |

| • | Joint Design and Manufacturing Services, where our engineering and development teams work jointly with our customers' teams to ensure product development integrity, seamless manufacturing handoffs, and faster time to market. |

| • | System Architecture, User Interface and Industrial Design. We help our customers design and develop innovative and cost-effective products that address the needs of the user and the market. These services include product definition, analysis and optimization of performance and functional requirements, 2-D sketch level drawings, 3-D mock-ups and CAD drawings, proofs of concept, product prototypes, interaction and interface models, detailed hard models, and product packaging. |

| • | Hardware Design. We offer design for printed-circuit board assemblies (PCBA); identification and selection of key components, Subsystem design and full-product design including electrical and mechanical design. We provide complete electrical and hardware design for products ranging from small handheld consumer devices to large, high-speed, carrier-grade, telecommunications equipment, incorporating embedded microprocessors, memory, digital signal processing, high-speed digital interfaces, analog circuit design, power management solutions, wired and wireless communication protocols, display imaging, audio/video, and radio frequency systems and antenna design. In addition, we offer detailed mechanical, structural, and thermal design solutions for enclosures that utilize a wide range of plastic, metal and other material technologies. These capabilities and technologies are increasingly important to our customers' product differentiation goals. |

| • | Software Design. We offer cloud integration design services which include developing and embedding a cloud agent onto a device, firmware and applications services including developing and embedding software of functionality and user-specific tasks and features. |

| • | Design for Excellence. We provide comprehensive design for manufacturing, testing, and reliability services leveraging robust, internally-developed tools and databases. These services leverage our core manufacturing competencies to help our customers achieve their time-to-revenue goals. |

Systems Assembly and Manufacturing.

A continuous focus on Lean manufacturing, and a systematic approach to identifying and eliminating waste (non-value-added activities) through continuous improvement based on customer demand allows us to increase our efficiency and flexibility to meet dynamic customer requirements.

Components Business.

We pride ourselves on our ability to service the needs of industry leaders in these markets through valuable technology, design expertise, collaborative development, and efficient execution.

Customers who engage with Flex gain access to compelling innovations and design expertise in digital control and smart power.

Logistics.

By leveraging our operational infrastructure, supply chain network, and IT systems, we are able to offer our customers globally consistent logistics solutions.

By linking the flow of information from these supply chains, we create supply chain insight for our

customers.

Reverse Logistics and Repair Services.

Our objective is to maximize asset value retention for our customers' products throughout their product life cycle while simultaneously minimizing non-value added repair inventory levels and handling in the supply chain.

For a description of our material legal proceedings, see note [removed: 12] [added: 13] "Commitments and Contingencies" to the consolidated financial statements included under Item 8, which is incorporated herein by reference.

[added: UNITED STATES] SECURITIES AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: Form 10-K][added: Form 10-K]

| [removed: (Mark One)] [added: (Mark One)] | | |

| [removed: ý] [added: ☒] | | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: | For] [added: For] the fiscal year [removed: ended March] [added: ended March] 31, [removed: 2019 | | |][added: 2020]

| [removed: o] [added: ☐] | | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: Commission] [added: Commission] file [removed: number 000-23354][added: number 000-23354]

[removed: FLEX LTD.][added: FLEX LTD.]

| [removed: Singapore] (State or other jurisdiction of incorporation or organization) | | [removed: Not Applicable] (I.R.S. Employer Identification No.) |

| [removed: 2 Changi South Lane, Singapore] (Address of registrant's principal executive offices) | | [removed: 486123] (Zip Code) |

[removed: (65) 6876-9899][added: (65) 6876-9899]

| [removed: Title] [added: Title] of each [removed: class] [added: class] | [removed: Trading Symbol(s)] | [removed: Name] [added: Trading Symbol(s) | | Name] of each exchange on which [removed: registered] [added: registered] |

| Ordinary Shares, No Par Value | [added: |] FLEX | [added: |] The Nasdaq Stock Market LLC |

Securities registered pursuant to Section 12(g) of the [removed: Act—NONE][added: Act—NONE]

Yes [removed: ý] [added: ☒] No [removed: o][added: ☐]

Yes [removed: o] [added: ☐] No [removed: ý][added: ☒]

| Large [removed: accelerated filer ý] [added: Accelerated Filer] | [added: ☒] | Accelerated filer [removed: o] | [added: ☐] | Non-accelerated filer [removed: o] | [added: ☐] | Smaller reporting company [removed: o] | [added: ☐ |]

| Emerging growth company [removed: o] | [added: ☐] | | | | | | [added: |]

As of September [removed: 28, 2018,] [added: 27, 2019,] the aggregate market value of the Company's ordinary shares held by non-affiliates of the registrant was approximately [removed: $6.9] [added: $5.3] billion based upon the closing sale price as reported on the Nasdaq Global Select Market.

| [removed: Class] [added: Class] | | [removed: Outstanding] [added: Outstanding] at May [removed: 13, 2019] [added: 20, 2020] |

| Ordinary Shares, No Par Value | | [removed: 514,029,702] [added: 497,611,169] |

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

| [removed: Document] [added: Document] | | [removed: Parts] [added: Parts] into Which [removed: Incorporated] [added: Incorporated] |

| Proxy Statement to be delivered to shareholders in connection with the Registrant's [removed: 2019] [added: 2020] Annual General Meeting of Shareholders | | Part III |

[removed: TABLE] [added: TABLE] OF [removed: CONTENTS][added: CONTENTS]

| | | [removed: Page] [added: Page] |

[removed: | [PART I](#s555529FB1C325A32BF3B52A5C10F180E) | | |][added: PART I]

[removed: | | [Forward-Looking Statements](#s555529FB1C325A32BF3B52A5C10F180E) | [3](#s555529FB1C325A32BF3B52A5C10F180E) |][added: FORWARD-LOOKING STATEMENTS]

| [Item [removed: 1.](#s2C0DDD162BA05644BD9AA8E822663310)] [added: 1.](#sF3389A8FDA3A5BA9AF7CC07A72514104)] | [removed: [Business](#s2C0DDD162BA05644BD9AA8E822663310)] [added: [Business](#sF3389A8FDA3A5BA9AF7CC07A72514104)] | [removed: [3](#s2C0DDD162BA05644BD9AA8E822663310)] [added: [3](#sF3389A8FDA3A5BA9AF7CC07A72514104)] |

| [Item [removed: 1A.](#s92AFED7C9DBD5AE5A37F3283A4693C54)] [added: 1A.](#sD2BBA78B9D1555E2AA5A45FA99CAF323)] | [Risk [removed: Factors](#s92AFED7C9DBD5AE5A37F3283A4693C54)] [added: Factors](#sD2BBA78B9D1555E2AA5A45FA99CAF323)] | [removed: [14](#s92AFED7C9DBD5AE5A37F3283A4693C54)] [added: [11](#sD2BBA78B9D1555E2AA5A45FA99CAF323)] |

| [Item [removed: 1B.](#s9D340B3C92E15A72AA1024D95D360E81)] [added: 1B.](#sE8BD2A2DE20A5AA39F0ADAE431D89FAB)] | [Unresolved Staff [removed: Comments](#s9D340B3C92E15A72AA1024D95D360E81)] [added: Comments](#sE8BD2A2DE20A5AA39F0ADAE431D89FAB)] | [removed: [27](#s9D340B3C92E15A72AA1024D95D360E81)] [added: [27](#sE8BD2A2DE20A5AA39F0ADAE431D89FAB)] |

| [Item [removed: 2.](#sCF2830189FDF5BAEB95239EED20DE109)] [added: 2.](#s8BE93709FE5F539484DE6120EEE042A9)] | [removed: [Properties](#sCF2830189FDF5BAEB95239EED20DE109)] [added: [Properties](#s8BE93709FE5F539484DE6120EEE042A9)] | [removed: [27](#sCF2830189FDF5BAEB95239EED20DE109)] [added: [27](#s8BE93709FE5F539484DE6120EEE042A9)] |

| [Item [removed: 3.](#sBDB36065D04B5964B18B1D24A6EE6E43)] [added: 3.](#s0A7D0845C9C457CA8B1BF768BCDDCFF2)] | [Legal [removed: Proceedings](#sBDB36065D04B5964B18B1D24A6EE6E43)] [added: Proceedings](#s0A7D0845C9C457CA8B1BF768BCDDCFF2)] | [removed: [28](#sBDB36065D04B5964B18B1D24A6EE6E43)] [added: [28](#s0A7D0845C9C457CA8B1BF768BCDDCFF2)] |

| [Item [removed: 4.](#s9D2F320204355280A29A8BD2D0CC34E2)] [added: 4.](#s463EE79232175CB2B90B964CEC8A2032)] | [Mine Safety [removed: Disclosures](#s9D2F320204355280A29A8BD2D0CC34E2)] [added: Disclosures](#s463EE79232175CB2B90B964CEC8A2032)] | [removed: [28](#s9D2F320204355280A29A8BD2D0CC34E2)] [added: [28](#s463EE79232175CB2B90B964CEC8A2032)] |

| [Item [removed: 5.](#sFF43B5E08E0353AC9C5E7B18DDDC2262)] [added: 5.](#s4222C4C98BDD538F8FA4035D56E285F4)] | [Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity [removed: Securities](#sFF43B5E08E0353AC9C5E7B18DDDC2262)] [added: Securities](#s4222C4C98BDD538F8FA4035D56E285F4)] | [removed: [29](#sFF43B5E08E0353AC9C5E7B18DDDC2262)] [added: [29](#s4222C4C98BDD538F8FA4035D56E285F4)] |

| [Item [removed: 6.](#sE2911E1F44D1539AA7B2934A9FE07406)] [added: 6.](#sBE9EF7DF9D685051BDAF312011B05C38)] | [Selected Financial [removed: Data](#sE2911E1F44D1539AA7B2934A9FE07406)] [added: Data](#sBE9EF7DF9D685051BDAF312011B05C38)] | [removed: [32](#sE2911E1F44D1539AA7B2934A9FE07406)] [added: [32](#sBE9EF7DF9D685051BDAF312011B05C38)] |

| [Item [removed: 7.](#sFAA24FC07C2B56AAB868095C4603174F)] [added: 7.](#sAA0074768FBB595E87ACA25A5FBDF5DC)] | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sFAA24FC07C2B56AAB868095C4603174F)] [added: Operations](#sAA0074768FBB595E87ACA25A5FBDF5DC)] | [removed: [33](#sFAA24FC07C2B56AAB868095C4603174F)] [added: [33](#sAA0074768FBB595E87ACA25A5FBDF5DC)] |

| [Item [removed: 7A.](#sAA26F66FD87B50CCAC4662754EF6458E)] [added: 7A.](#sA6AB1BBF32B258558366CE4D1F827809)] | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sAA26F66FD87B50CCAC4662754EF6458E)] [added: Risk](#sA6AB1BBF32B258558366CE4D1F827809)] | [removed: [50](#sAA26F66FD87B50CCAC4662754EF6458E)] [added: [53](#sA6AB1BBF32B258558366CE4D1F827809)] |

| [Item [removed: 8.](#sC61F5F7E08E555B08EF87F3DCF981671)] [added: 8.](#s19C8A8B06FE15650A1545B9F81B00C9C)] | [Financial Statements and Supplementary [removed: Data](#sC61F5F7E08E555B08EF87F3DCF981671)] [added: Data](#s19C8A8B06FE15650A1545B9F81B00C9C)] | [removed: [51](#sC61F5F7E08E555B08EF87F3DCF981671)] [added: [55](#s19C8A8B06FE15650A1545B9F81B00C9C)] |

| Or | | |

| Singapore | | Not Applicable |

| 2 Changi South Lane, | | |

| Singapore | | 486123 |

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | |

Yes ☒ No ☐

Yes ☒ No ☐

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | |

Yes ☐ No ☒

| [PART II](#s478C7834EBBD5A04B1F5181D425D0812) | | |

| [PART IV](#s46DEECEF777B539B9311B8810F8164D5) | | |

| [Signatures](#sED3EF417638358BCB17120BBEB59DE12) | | [115](#sED3EF417638358BCB17120BBEB59DE12) |

10-K 1 flex331201910-k.htm 10-K

UNITED STATES

____________________________________________________________________________

| Or | | |

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| [PART II](#s9BBEA6630661532DBD819589CC0D7287) | | |

| [PART IV](#sE2F91AF7D3B551DE8181472BF547A387) | | |

| [Signatures](#sE3F6CE4218C9530FBFE3AB6EC1AB2F58) | | [114](#sE3F6CE4218C9530FBFE3AB6EC1AB2F58) |

Our facilities consist of a global network of industrial parks, regional manufacturing operations, and design, engineering and product introduction centers, providing approximately 27 million square feet of productive capacity as of March 31, [removed: 2019.][added: 2020.]

| | [removed: Leased (Manufacturing)] [added: Leased (Manufacturing)] | | | [removed: Owned (Manufacturing)] [added: Owned (Manufacturing)] | | | [removed: Total (Manufacturing)] [added: Total (Manufacturing)] | | | [removed: Non-manufacturing] [added: Non-manufacturing] | | | [removed: Total] [added: Total] | |

| | [removed: (in] [added: (in] million square [removed: feet)] [added: feet)] | | | | | | | | | | | | | |

We also have regional manufacturing operations, generally ranging in size from under 100,000 to approximately 2.7 million square feet in Austria, Brazil, Canada, China, Denmark, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Malaysia, Mexico, The Netherlands, Poland, Romania, Singapore, Spain, Switzerland, [removed: the] Ukraine [added: and the United States.]

| Americas | 3.8 | | | 5.6 | | | 9.4 | | | 8.8 | | | 18.2 | |

| Asia | 6.8 | | | 5.9 | | | 12.7 | | | 7.8 | | | 20.5 | |

| Europe | 2.3 | | | 2.6 | | | 4.9 | | | 4.9 | | | 9.8 | |

| Total | 12.9 | | | 14.1 | | | 27.0 | | | 21.5 | | | 48.5 | |

| Americas | 3.4 | | | 5.4 | | | 8.8 | | | 8.9 | | | 17.7 | |

| Asia | 7.8 | | | 5.9 | | | 13.7 | | | 7.6 | | | 21.3 | |

| Europe | 1.9 | | | 2.6 | | | 4.5 | | | 5.1 | | | 9.6 | |

| Total | 13.1 | | | 13.9 | | | 27.0 | | | 21.6 | | | 48.6 | |

and the United States.

[removed: PART II][added: PART II]

[removed: MARKET] [added: MARKET] AND SHAREHOLDER [removed: INFORMATION][added: INFORMATION]

As of May [removed: 13, 2019] [added: 20, 2020] there were [removed: 3,053] [added: 2,994] holders of record of our ordinary shares.

[removed: DIVIDENDS][added: DIVIDENDS]

We currently do not have plans to pay any dividends in fiscal year [removed: 2020.][added: 2021.]

[removed: STOCK] [added: STOCK] PRICE PERFORMANCE [removed: GRAPH][added: GRAPH]

[removed: The] [added: *The] following stock price performance graph and accompanying information is not deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulation 14A under the Securities Exchange Act of 1934 or to the liabilities of Section 18 of the Securities Exchange Act of 1934, and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, regardless of any general incorporation language in any such [removed: filing.][added: filing.*]

The graph below assumes that $100 was invested in our ordinary shares, in the Standard & Poor's 500 Stock Index and in the peer group described above on March 31, [removed: 2014] [added: 2015] and reflects the annual return through March 31, [removed: 2019,] [added: 2020,] assuming dividend reinvestment.

[removed: COMPARISON] [added: COMPARISON] OF 5 YEAR CUMULATIVE TOTAL [removed: RETURN][added: RETURN]

[removed: ][added: ]

Copyright [removed: 1980-2019][added: 1980-2020]

[removed: Issuer] [added: Issuer] Purchases of Equity [removed: Securities][added: Securities]

The following table provides information regarding purchases of our ordinary shares made by us for the period from January 1, [removed: 2019] [added: 2020] through March 31, [removed: 2019.][added: 2020.]

| [removed: Period (2)] [added: Period (2)] | [removed: Total] [added: | Total] Number of Shares Purchased [removed: (1)] [added: (1)] | | | [removed: Average] [added: Average] Price Paid per [removed: Share] [added: Share] | | | | [removed: Total] [added: Total] Number of Shares Purchased as Part of Publicly Announced Plans or [removed: Programs] [added: Programs] | | | [removed: Approximate] [added: Approximate] Dollar Value of Shares that May Yet Be Purchased Under the Plans or [removed: Programs] [added: Programs] | | |

| (1) | During the period from January 1, [removed: 2019] [added: 2020] through March 31, [removed: 2019] [added: 2020] all purchases were made pursuant to the program 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 [removed: 16, 2018,] [added: 20, 2019,] 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 March 31, [removed: 2019,] [added: 2020,] shares in the aggregate amount of [removed: $324,522,119] [added: $315.2 million] were available to be repurchased under the current plan. |

[removed: RECENT] [added: RECENT] SALES OF UNREGISTERED [removed: SECURITIES][added: SECURITIES]

[removed: INCOME] [added: INCOME] TAXATION UNDER SINGAPORE [removed: LAW][added: LAW]

[added: *Dividends.*] Singapore does not impose a withholding tax on dividends.

[added: *Gains on Disposal.*] Under current Singapore tax law there is no tax on capital gains, and thus any profits from the disposal of shares are not taxable in Singapore unless the gains arising from the disposal of shares are income in nature and subject to tax, especially if they arise from activities which the Inland Revenue Authority of Singapore regards as the carrying on of a trade or business in Singapore (in which case, the profits on the sale would be taxable as trade profits rather than capital gains).

[added: *Stamp Duty.*] There is no stamp duty payable for holding shares, and no duty is payable on the issue of new shares.

[added: *Estate Taxation.*] The estate duty was abolished for deaths occurring on or after February 15, 2008.

[added: *Tax Treaties Regarding Withholding.*] There is no reciprocal income tax treaty between the U.S. and Singapore regarding withholding taxes on dividends and capital gains.

| | 3/15 | | | 3/16 | | | 3/17 | | | 3/18 | | | 3/19 | | | 3/20 | |

| Flex Ltd. | 100.00 | | | 95.11 | | | 132.49 | | | 128.79 | | | 78.86 | | | 66.05 | |

| S&P 500 Index | 100.00 | | | 101.78 | | | 119.26 | | | 135.95 | | | 148.86 | | | 138.47 | |

| Peer Group | 100.00 | | | 90.70 | | | 137.35 | | | 117.24 | | | 110.69 | | | 93.72 | |

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | |

| January 1 - January 31, 2020 | | 727,887 | | | $ | 13.05 | | | 727,887 | | | $ | 392,523,252 | |

| February 1 - February 28, 2020 | | 3,690,995 | | | 12.98 | | | | 3,690,995 | | | 344,627,426 | | |

| February 29 - March 31, 2020 | | 3,015,107 | | | 9.75 | | | | 3,015,107 | | | 315,227,484 | | |

| Total | | 7,433,989 | | | | | | | 7,433,989 | | | | | |

All dividends on our ordinary shares are not taxable in Singapore to shareholders, provided that any dividends are paid to shareholders outside of Singapore for this purpose and such dividends are not received or deemed to be received in Singapore by shareholders and are not derived by shareholders pursuant to any trade or business carried on in Singapore.

Certain tax exemptions are available for foreign-sourced dividends received by Singapore tax residents, subject to conditions.

Since inception, we have not declared or paid any cash dividends on our ordinary shares, and we currently do not have plans to pay any dividends.

| | 3/14 | | | 3/15 | | | 3/16 | | | 3/17 | | | 3/18 | | | 3/19 | |

| Flex Ltd. | 100.00 | | | 137.23 | | | 130.52 | | | 181.82 | | | 176.73 | | | 108.23 | |

| S&P 500 Index | 100.00 | | | 112.73 | | | 114.74 | | | 134.45 | | | 153.26 | | | 167.81 | |

| Peer Group | 100.00 | | | 123.37 | | | 111.90 | | | 169.45 | | | 144.64 | | | 136.56 | |

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| January 1 - January 25, 2019 | 1,058,740 | | | $ | 8.03 | | | 1,058,740 | | | $ | 381,021,766 | |

| January 26 - March 1, 2019 | 2,245,925 | | | 10.24 | | | | 2,245,925 | | | 358,017,848 | | |

| March 2 - March 31, 2019 | 3,270,091 | | | 10.24 | | | | 3,270,091 | | | 324,522,119 | | |

| Total | 6,574,756 | | | | | | | 6,574,756 | | | | | |

Dividends.

All dividends are tax exempt to shareholders.

Gains on Disposal.

Stamp Duty.

Estate Taxation.

Tax Treaties Regarding Withholding.

The following selected consolidated financial data set forth below was derived from our historical audited consolidated financial statements and is qualified by reference to, and should be read in conjunction with, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Item 8, "Financial Statements and Supplementary Data." On April 1, 2018, we adopted the new revenue standard and as a result we recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained [removed: earnings, as further described in note 2 to the consolidated financial statements included under Item 8.][added: earnings.]

| | [removed: Fiscal] [added: Fiscal] Year Ended March [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | |

| | [removed: 2019] [added: 2020] | | | | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| | [removed: (In] [added: (In] millions, except per share [removed: amounts)] [added: amounts)] | | | | | | | | | | | | | | | | | | |

| [removed: CONSOLIDATED] [added: CONSOLIDATED] STATEMENT OF OPERATIONS [removed: DATA:] [added: DATA:] | | | | | | | | | | | | | | | | | | | |

| Net sales | $ | [removed: 26,211] [added: 24,210] | | | $ | [removed: 25,441] [added: 26,211] | | | $ | [removed: 23,863] [added: 25,441] | | | $ | [removed: 24,419] [added: 23,863] | | | $ | [removed: 26,148] [added: 24,419] | |

| Cost of sales | [removed: 24,594] [added: 22,681] | | | | [removed: 23,778] [added: 24,594] | | | | [removed: 22,303] [added: 23,778] | | | | [removed: 22,811] [added: 22,303] | | | | [removed: 24,603] [added: 22,811] | | |

| Restructuring charges (3) | [removed: 99] [added: 26] | | | | [removed: 67] [added: 14] | | | | [removed: 39] [added: 24] | | | | [removed: —] [added: 11] | | | | — | | |

| Gross profit | [removed: 1,518] [added: 1,338] | | | | [removed: 1,596] [added: 1,518] | | | | [removed: 1,521] [added: 1,596] | | | | [removed: 1,608] [added: 1,521] | | | | [removed: 1,545] [added: 1,608] | | |

| Selling, general and administrative expenses | [removed: 953] [added: 834] | | | | [removed: 1,019] [added: 953] | | | | [removed: 937] [added: 1,019] | | | | [removed: 955] [added: 937] | | | | [removed: 844] [added: 955] | | |

| Intangible amortization | [removed: 74] [added: 64] | | | | [removed: 79] [added: 74] | | | | [removed: 81] [added: 79] | | | | [removed: 66] [added: 81] | | | | [removed: 32] [added: 66] | | |

| Restructuring charges (3) | [removed: 14] [added: 190] | | | | [removed: 24] [added: 99] | | | | [removed: 11] [added: 67] | | | | [removed: —] [added: 39] | | | | — | | |

| Interest and other, net | [removed: 183] [added: 164] | | | | [removed: 123] [added: 183] | | | | [removed: 100] [added: 123] | | | | [removed: 84] [added: 100] | | | | [removed: 51] [added: 84] | | |

| Other charges (income), net (1) | [added: 92 | | | |] 110 | | | | (170 | | ) | | 21 | | | | 48 | | | [removed: | (53 | | ) |]

| Income before income taxes | [removed: 182] [added: 158] | | | | [removed: 521] [added: 182] | | | | [removed: 371] [added: 521] | | | | [removed: 455] [added: 371] | | | | [removed: 671] [added: 455] | | |

| Provision for income taxes | [removed: 89] [added: 71] | | | | [removed: 92] [added: 89] | | | | [removed: 51] [added: 92] | | | | [removed: 11] [added: 51] | | | | [removed: 70] [added: 11] | | |

| Net income | $ | [removed: 93] [added: 88] | | | $ | [removed: 429] [added: 93] | | | $ | [removed: 320] [added: 429] | | | $ | [removed: 444] [added: 320] | | | $ | [removed: 601] [added: 444] | |

| Total | $ | [removed: 0.18] [added: 0.17] | | | $ | [removed: 0.80] [added: 0.18] | | | $ | [removed: 0.59] [added: 0.80] | | | $ | [removed: 0.79] [added: 0.59] | | | $ | [removed: 1.02] [added: 0.79] | |

| | [removed: As] [added: As] of March [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | |

| | [removed: (In millions)] [added: (In millions)] | | | | | | | | | | | | | | | | | | |

| [removed: CONSOLIDATED] [added: CONSOLIDATED] BALANCE SHEET [removed: DATA:] [added: DATA:] | | | | | | | | | | | | | | | | | | | |

| Working capital (2) | $ | [removed: 1,506] [added: 1,875] | | | $ | [removed: 1,902] [added: 1,506] | | | $ | [removed: 1,883] [added: 1,902] | | | $ | [removed: 1,743] [added: 1,883] | | | $ | [removed: 1,986] [added: 1,743] | |

| Total assets | [removed: 13,499] [added: 13,690] | | | | [removed: 13,716] [added: 13,499] | | | | [removed: 12,593] [added: 13,716] | | | | [removed: 12,385] [added: 12,593] | | | | [removed: 11,653] [added: 12,385] | | |

| Total long-term debt, excluding current portion [added: (4)] | [removed: 2,422] [added: 2,689] | | | | [removed: 2,898] [added: 2,422] | | | | [removed: 2,891] [added: 2,898] | | | | [removed: 2,709] [added: 2,891] | | | | [removed: 2,026] [added: 2,709] | | |

| Shareholders' equity | [removed: 2,972] [added: 2,831] | | | | [removed: 3,019] [added: 2,972] | | | | [removed: 2,678] [added: 3,019] | | | | [removed: 2,606] [added: 2,678] | | | | [removed: 2,396] [added: 2,606] | | |

| (1) | For fiscal years [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017,] [added: 2018,] refer to note [removed: 15] [added: 16] to the consolidated financial statements in Item 8, "Financial Statements and Supplementary Data" for further discussion. |

| (3) | The Company initiated restructuring plans during fiscal years [added: 2020,] 2019, 2018 and [removed: 2017,] [added: 2017. For the restructuring plans initiated during fiscal years 2020, 2019, and 2018,] refer to note [removed: 14] [added: 15] to the consolidated financial statements in Item 8, "Financial Statements [removed: and Supplementary Data" for further discussion.] |

(Amounts may not sum due to rounding).

| | 2020 | | | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | |

and Supplementary Data" for further discussion.

During fiscal year 2017, the Company initiated a restructuring plan to accelerate its ability to support more *Sketch-to-Scale*® efforts across the Company and reposition away from historical legacy programs and structures through rationalizing its current footprint at existing sites and at corporate SG&A functions.

The Company recognized restructuring charges of approximately $49.4 million primarily for employee termination costs under the above plan.

Of these total charges, approximately $38.8 million was recognized in cost of sales.

| | |

| --- | --- |

| (4) | In May 2020, the Company issued $425 million aggregate principal amount of 3.750% Notes due February 2026, at 99.617% of face value, and $325 million aggregate principal amount of 4.875% Notes due May 2030, at 99.562% of face value. Refer to note 8 to the consolidated financial statement in Item 8, "Financial Statements and Supplementary Data" |

During fiscal year 2015, an amendment to a customer contract to reimburse a customer for certain performance provisions was executed which included the derecognition of a $55 million contractual obligation previously recognized during fiscal year 2014.

Accordingly, the Company reversed this charge with a corresponding credit to other charges (income), net in the consolidated statement of operations.

Additionally, during fiscal year 2015, the Company recognized a loss of $11 million in connection with the disposition of a manufacturing facility in Western Europe.

[removed: REPORT] [added: REPORT] OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING [removed: FIRM][added: FIRM]

[removed: Opinion] [added: Opinion] on the Financial [removed: Statements][added: Statements]

We have audited the accompanying consolidated balance sheets of Flex Ltd. and subsidiaries (the "Company") as of March 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended March 31, [removed: 2019] [added: 2020,] and the related [removed: notes.][added: notes (collectively referred to as the “financial statements”).]

In our opinion, the [removed: consolidated] financial statements present fairly, in all material respects, the financial position of [removed: Flex Ltd. and subsidiaries] [added: the Company] as of March 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of [removed: their] [added: its] operations and [removed: their] [added: its] cash flows for each of the three years in the period ended March 31, [removed: 2019,] [added: 2020,] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United [removed: States),] [added: States) (PCAOB),] the Company's internal control over financial reporting as of March 31, [removed: 2019,] [added: 2020,] based on the criteria established in [removed: Internal] [added: *Internal] Control-Integrated [removed: Framework (2013)] [added: Framework* *(2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated May [removed: 20, 2019,] [added: 28, 2020,] expressed an unqualified opinion on the Company's internal control over financial reporting.

[removed: Change] [added: Change] in Accounting [removed: Principles][added: Principles]

As discussed in Note 2 to the financial statements, the Company changed its method of accounting for [removed: revenue from contracts with customers] [added: leases] in fiscal year [removed: 2019] [added: 2020] due to the adoption of Accounting [removed: Standards] [added: Standard] Update [added: (ASU)] No. [added: 2016-02, *Leases.* In fiscal year 2019, the Company changed its method of accounting for revenue from contracts with customers due to the adoption of ASU No.] 2014-09, [removed: Revenue] [added: *Revenue] from Contracts with [removed: Customers,] [added: Customers*,] using the modified retrospective approach.

[removed: Basis] [added: Basis] of [removed: Opinion][added: Opinion]

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 [removed: U.S.] [added: US] federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Such [removed: procedure] [added: procedures] included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

[removed: /s/] [added: */s/] DELOITTE & TOUCHE [removed: LLP][added: LLP*]

[removed: FLEX LTD.][added: FLEX LTD.]

[removed: CONSOLIDATED] [added: CONSOLIDATED] BALANCE [removed: SHEETS][added: SHEETS]

| | [removed: As] [added: As] of March [removed: 31,] [added: 31,] | | | | | | |

| | [removed: 2019] [added: 2020] | | | | [removed: 2018] [added: 2019] | | | [added: | 2018 | | |]

| | [removed: (In] [added: (In] thousands, [removed: except share amounts)] [added: except share amounts)] | | | | | | |

| [removed: ASSETS] [added: ASSETS] | | | | | | | |

| Cash and cash [removed: equivalents | $] [added: equivalents, beginning of year] | 1,696,625 | | | [removed: $] | 1,472,424 | | [added: | | 1,830,675 | | |]

| Accounts receivable, net of allowance for doubtful accounts (Note 2) | [removed: 2,612,961] [added: 2,435,982] | | | | [removed: 2,517,695] [added: 2,612,961] | | |

| Contract assets | [removed: 216,202] [added: 282,444] | | | | [removed: —] [added: 216,202] | | |

| Inventories | [removed: 3,722,854] [added: 3,785,073] | | | | [removed: 3,799,829] [added: 3,722,854] | | |

| Other current assets | [removed: 854,790] [added: 660,085] | | | | [removed: 1,380,466] [added: 854,790] | | |

| Total current assets | [removed: 9,103,432] [added: 9,086,270] | | | | [removed: 9,170,414] [added: 9,103,432] | | |

| Property and equipment, net | [removed: 2,336,213] [added: 2,215,991] | | | | [removed: 2,239,506] [added: 2,336,213] | | |

| Goodwill | [removed: 1,073,055] [added: 1,064,553] | | | | [removed: 1,121,170] [added: 1,073,055] | | |

| Other intangible assets, net | [removed: 330,995] [added: 262,418] | | | | [removed: 424,433] [added: 330,995] | | |

| Other assets | [removed: 655,672] [added: 455,315] | | | | [removed: 760,332] [added: 655,672] | | |

| Total assets | $ | [removed: 13,499,367] [added: 13,689,617] | | | $ | [removed: 13,715,855] [added: 13,499,367] | |

| [removed: LIABILITIES] [added: LIABILITIES] AND SHAREHOLDERS' [removed: EQUITY] [added: EQUITY] | | | | | | | |

| Bank borrowings and current portion of long-term debt | $ | [removed: 632,611] [added: 149,130] | | | $ | [removed: 43,011] [added: 632,611] | |

| Accounts payable | [removed: 5,147,236] [added: 5,108,251] | | | | [removed: 5,122,303] [added: 5,147,236] | | |

| Accrued payroll | [removed: 391,591] [added: 363,644] | | | | [removed: 383,332] [added: 391,591] | | |

| Other current liabilities | [removed: 1,426,075] [added: 1,590,060] | | | | [removed: 1,719,418] [added: 1,426,075] | | |

| Total current liabilities | [removed: 7,597,513] [added: 7,211,085] | | | | [removed: 7,268,064] [added: 7,597,513] | | |

| Long-term debt, net of current portion | [removed: 2,421,904] [added: 2,689,109] | | | | [removed: 2,897,631] [added: 2,421,904] | | |

| Other liabilities | [removed: 507,590] [added: 429,303] | | | | [removed: 531,587] [added: 507,590] | | |

| Commitments and contingencies (Note [removed: 12)] [added: 13)] | | | | | | | |

[removed: | Flex Ltd. Shareholders' equity | | | | | | | |][added: FLEX LTD.]

| Ordinary shares, no par value; [removed: 566,787,620] [added: 547,665,632] and [removed: 578,317,848] [added: 566,787,620] issued, and [removed: 516,548,265] [added: 497,426,277] and [removed: 528,078,493] [added: 516,548,265] outstanding as of March 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] respectively | [removed: 6,523,750] [added: 6,336,445] | | | | [removed: 6,636,747] [added: 6,523,750] | | |

| Treasury stock, at cost; 50,239,355 shares as of March 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] respectively | (388,215 | | ) | | (388,215 | | ) |

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill - Consumer Technologies Group and Communications & Enterprise Compute Reporting Units - Refer to Note 2 to the financial statements

*Critical Audit Matter Description*

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value.

The Company determines the fair value of its reporting units using a combination of a discounted cash flow model and the market approach.

The determination of the fair value using the discounted cash flow model and market approach requires management to make significant judgments and assumptions related to forecasts of future revenues, earnings before interest, taxes, depreciation, and amortization (EBITDA), and capital expenditures, and the selection of the discount rate.

As of March 31, 2020, the goodwill balance was approximately $1.1 billion, of which $103.3 million and $129.3 million was allocated to the Consumer Technologies Group (“CTG”) and Communications & Enterprise Compute (“CEC”) reporting units, respectively.

The fair values of the CTG and CEC reporting units exceeded their carrying values as of the measurement date and, therefore, no impairment was recognized.

We identified the goodwill valuation for CTG and CEC as a critical audit matter due to the relatively small excess of each reporting unit’s fair value over its book value, the significant judgments and assumptions made by management to estimate the fair value of the reporting units, and the inherent uncertainty of future forecasts that are dependent on the Company executing against its strategy for CTG and CEC.

These factors required a high degree of auditor judgement and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s judgments and assumptions related to forecasts of future revenues, EBITDA and capital expenditures, and the selection of the discount rate.

For these reasons we identified the valuation of CTG and CEC goodwill as a critical audit matter.

*How the Critical Audit Matter Was Addressed in the Audit*

Our audit procedures related to the forecasts of the CTG and CEC reporting units’ future revenues, EBITDA and capital expenditures, and the selection of the discount rate, included the following, among others:

| • | We tested the effectiveness of internal controls over management’s goodwill impairment evaluation, including those over the forecasts of future revenue, EBITDA and capital expenditures, and selection of the discount rate. |

| • | We evaluated the reasonableness of management’s revenue, EBITDA and capital expenditures forecasts by comparing the forecasts to: |

| • | Historical revenues, EBITDA, and capital expenditures; |

| • | Internal communications to management and the Board of Directors; |

| • | Forecasted information included in Company press releases as well as in analyst and industry reports of the Company and companies in its peer group. |

| • | With the assistance of our fair value specialists, we evaluated the reasonableness of (1) the valuation methodology and (2) the discount rate by: |

| • | Testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation; |

| • | Developing a range of independent estimates and comparing those to the discount rate selected by management. |

Revenue - Customer Contracts and Related Obligations - Refer to Notes 2 and 4 to the financial statements

*Critical Audit Matter Description*

Certain of the Company’s customer agreements include potential price adjustments which are accounted for as variable consideration under the relevant accounting literature.

For arrangements that include potential price adjustments the Company limits the amount of revenue recognized to that amount which is not probable of significant reversal, considering potential refunds required by the contract, historical experience and other surrounding facts and circumstances.

The amount of variable consideration that is deferred is recorded in ‘customer-related accruals’ on the consolidated balance sheets, which totaled $195.1 million as of March 31, 2020.

Auditing the Company’s estimates of variable consideration required extensive audit effort and a high degree of auditor judgment.

For these reasons we identified the measurement of variable consideration and the associated customer-related accruals as a critical audit matter.

*How the Critical Audit Matter Was Addressed in the Audit*

Our audit procedures related to variable consideration and associated customer related accruals included the following, among others:

| • | We tested the effectiveness of controls the Company has in place relating to reviewing customer contracts to identify price adjustment clauses, estimating variable consideration and assessing the reasonableness of customer related accrual balances. |

| • | We evaluated the Company’s accounting policy with respect to variable consideration, as well as its process for identifying contracts that include potential price adjustment clauses. |

| • | We selected a sample of contracts with customers that included potential price adjustment clauses and performed the following: |

| • | We read the customer contracts to develop an understanding of clauses that could give rise to variable consideration and evaluated whether the Company’s accounting conclusions with respect to those clauses were reasonable. |

| • | We obtained and tested the mathematical accuracy of the Company’s calculations of customer related accruals and evaluated the Company’s judgments regarding the amount of variable consideration that should be deferred. In making this evaluation we considered both the terms included in the customer contract and the Company’s historical experience in settling amounts with the customer. |

| • | We tested the recognition of previous deferrals for variable consideration to determine whether the conditions that resulted in the prior deferral had been resolved to support recognition of revenues in the current year. |

May 28, 2020

| | 2020 | | | | 2019 | | |

As also discussed in Note 2 to the financial statements, the Company changed its method of accounting for cash receipts on the deferred purchase price from asset-backed securitization programs in fiscal year 2019 due to the adoption of ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments using the retrospective approach.

May 20, 2019

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| BALANCE AT MARCH 31, 2016 | 544,823 | | | $ | 6,598,999 | | | $ | (3,892,212 | ) | | $ | (41,522 | ) | | $ | (94,393 | ) | | $ | (135,915 | ) | | $ | 2,570,872 | | | $ | 34,658 | | | $ | 2,605,530 | |

| Exercise of stock options | 2,283 | | | 12,438 | | | | — | | | | — | | | | — | | | | — | | | | 12,438 | | | | 610 | | | | 13,048 | | |

| Issuance of subsidiary shares | — | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 9,306 | | | | 9,306 | | |

| Net income | — | | | — | | | | 319,564 | | | | — | | | | — | | | | — | | | | 319,564 | | | | (8,492 | | ) | | 311,072 | | |

| Total other comprehensive income | — | | | — | | | | — | | | | 9,096 | | | | (1,324 | | ) | | 7,772 | | | | 7,772 | | | | — | | | | 7,772 | | |

| Proceeds from exercise of stock options | 245 | | | | 2,774 | | | | 12,438 | | |

| Cash and cash equivalents, beginning of year | 1,472,424 | | | | 1,830,675 | | | | 1,607,570 | | |

1.

The Company is a globally-recognized, provider of Sketch-to-Scale® services - innovative design, engineering, manufacturing, and supply chain services and solutions - from conceptual sketch to full-scale production.

The Company designs, builds, ships and manages complete packaged consumer and enterprise products, from medical devices and connected automotive systems to sustainable lighting and cloud and data center solutions for companies of all sizes in various industries and end-markets, through its activities in the following segments:

2.

As of March 31, 2019, the noncontrolling interest was not material as a result of the deconsolidation of one of the Company's subsidiaries.

In prior years, the noncontrolling interest was included on the consolidated balance sheets as a component of total shareholders' equity.

As part of adopting ASC 606, revenue for certain customer contracts where the Company is manufacturing products for which there is no alternative use and the Company has an enforceable right to payment including a reasonable profit for work-in-progress, revenue is recognized over time (i.e., as the Company manufactures the product) instead of upon shipment of products.

The cumulative effect of change made to the Company's April 1, 2018 condensed consolidated balance sheet for the adoption of ASC 606 was as follows:

| Condensed Consolidated Balance Sheet | | | | | | | | | | | |

| | Impact of Adopting ASC 606 | | | | | | | | | | |

| | Balance at March 31, 2018 | | | | Adjustments | | | | Balance at April 1, 2018 | | |

| Contract assets | $ | — | | | $ | 451,287 | | | $ | 451,287 | |

| Inventories | 3,799,829 | | | | (447,752 | | ) | | 3,352,077 | | |

| Other current assets | 1,380,466 | | | | (51,479 | | ) | | 1,328,987 | | |

| Other current liabilities | 1,719,418 | | | | (87,897 | | ) | | 1,631,521 | | |

| Other liabilities | 531,587 | | | | 2,098 | | | | 533,685 | | |

| Accumulated deficit | $ | (3,144,114 | ) | | $ | 37,855 | | | $ | (3,106,259 | ) |

The adoption of ASC 606 resulted in the establishment of contract asset and contract liability balance sheet accounts and in the reclassification to these new accounts from certain asset and liability accounts, primarily inventories.

The decrease in accumulated deficit in the table above reflects $37.9 million of net adjustments to the balance sheet as of April 1, 2018, resulting from the adoption of ASC 606 primarily related to certain customer contracts requiring an over-time method of revenue recognition.

The declines in inventories and other current assets reflect reclassifications to contract assets due to the earlier recognition of certain costs of products sold for over-time contracts.

The decline in other current liabilities is primarily due to the reclassification of payments from customers in advance of work performed to contract assets to reflect the net position of the related over-time contracts.

The following tables summarize the impacts of ASC 606 adoption on the Company’s consolidated balance sheets and consolidated statements of operations:

| | As Reported | | | | Adjustments | | | | Balance without ASC 606 Adoption | | |

| Contract assets | $ | 216,202 | | | $ | (216,202 | ) | | $ | — | |

| Inventories | 3,722,854 | | | | 252,844 | | | | 3,975,698 | | |

| Other current assets | 854,790 | | | | 8,865 | | | | 863,655 | | |

| Other current liabilities | 1,426,075 | | | | 65,705 | | | | 1,491,780 | | |

| Accumulated deficit | $ | (3,012,012 | ) | | $ | (35,114 | ) | | $ | (3,047,126 | ) |

| Condensed Consolidated Statement of Operations | | | | | | | | | | | |

| (a) | [removed: Evaluation] [added: Evaluation] of Disclosure Controls and [removed: Procedures] [added: 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 Exchange Act) as of March 31, [removed: 2019.][added: 2020.]

Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, [removed: 2019,] [added: 2020,] 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 [added: 1934, as amended, is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.]

| (b) | [removed: Management's] [added: Management's] Annual Report on Internal Control over Financial [removed: Reporting] [added: Reporting] |

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule [removed: 13a- 15(f)] [added: 13a-15(f)] under the Securities Exchange Act of 1934, as amended.

As of March 31, [removed: 2019,] [added: 2020,] under the supervision and with the participation of management, including the Company's Chief Executive Officer and Chief Financial Officer, an evaluation was conducted of the effectiveness of the Company's internal control over financial reporting based on the framework in [removed: Internal] [added: *Internal] Control—Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

Based on that evaluation, management concluded that the Company's internal control over financial reporting was effective as of March 31, [removed: 2019.][added: 2020.]

| (c) | [removed: Attestation] [added: Attestation] Report of the Registered Public Accounting [removed: Firm] [added: Firm] |

The effectiveness of the Company's internal control over financial reporting as of March 31, [removed: 2019] [added: 2020] has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which appears in this Item under the heading "Report of Independent Registered Public Accounting Firm."

[added: |] (d) [removed: Changes] [added: | Changes] in Internal Control Over Financial [removed: Reporting][added: Reporting |]