10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended October 1, 2010

or

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

For the transition period from                      to                     

Commission file number 0-23354

FLEXTRONICS INTERNATIONAL LTD.

(Exact name of registrant as specified in its charter)

Singapore	Not Applicable
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
2 Changi South Lane,	486123
Singapore	(Zip Code)
(Address of registrant’s principal executive offices)

Registrant’s telephone number, including area code
(65) 6890 7188

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

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

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

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

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

Class	Outstanding at October 28, 2010
Ordinary Shares, No Par Value	766,200,284

FLEXTRONICS INTERNATIONAL LTD.

INDEX

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements		3
Report of Independent Registered Public Accounting Firm		3
Condensed Consolidated Balance Sheets (unaudited) — October 1, 2010 and March 31, 2010		4
Condensed Consolidated Statements of Operations (unaudited) — Three-Month and Six-Month Periods Ended October 1, 2010 and October 2, 2009		5
Condensed Consolidated Statements of Cash Flows (unaudited) — Six-Month Periods Ended October 1, 2010 and October 2, 2009		6
Notes to Condensed Consolidated Financial Statements (unaudited)		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 3. Quantitative and Qualitative Disclosures About Market Risk		30
Item 4. Controls and Procedures		30
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		31
Item 1A. Risk Factors		31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		31
Item 3. Defaults Upon Senior Securities		31
Item 4. (Removed and Reserved)		31
Item 5. Other Information		31
Item 6. Exhibits		31
Signatures		32
Exhibit 10.04
Exhibit 15.01
Exhibit 31.01
Exhibit 31.02
Exhibit 32.01
Exhibit 32.02
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Flextronics International Ltd.
Singapore

We have reviewed the accompanying condensed consolidated balance sheet of Flextronics International Ltd. and subsidiaries (the “Company”) as of October 1, 2010, and the related condensed consolidated statements of operations for the three-month and six-month periods ended October 1, 2010 and October 2, 2009, and of cash flows for the six-month periods ended October 1, 2010 and October 2, 2009. These interim financial statements are the responsibility of the Company’s management.

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

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

As discussed in Notes 2 and 8 to the condensed consolidated financial statements, on April 1, 2010 the Company adopted new accounting standards related to the accounting for variable interest entities and the transfers of financial assets.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Flextronics International Ltd. and subsidiaries as of March 31, 2010, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated May 21, 2010, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 31, 2010 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ DELOITTE & TOUCHE LLP

San Jose, California
November 3, 2010

3

FLEXTRONICS INTERNATIONAL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

	As of			As of
	October 1, 2010			March 31, 2010
	(In thousands,
	except share amounts)
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,788,196		$	1,927,556
Accounts receivable, net of allowance for doubtful accounts of $11,518 and $13,163 as of October 1, 2010 and March 31, 2010, respectively		2,978,359			2,438,950
Inventories		3,638,637			2,875,819
Other current assets		964,970			747,676
Total current assets		9,370,162			7,990,001
Property and equipment, net		2,175,946			2,118,576
Goodwill and other intangible assets, net		226,824			254,717
Other assets		236,705			279,258
Total assets	$	12,009,637		$	10,642,552
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Bank borrowings, current portion of long-term debt and capital lease obligations	$	19,881		$	266,551
Accounts payable		5,713,561			4,447,968
Accrued payroll		379,363			347,324
Other current liabilities		1,377,228			1,285,368
Total current liabilities		7,490,033			6,347,211
Long-term debt and capital lease obligations, net of current portion		2,212,727			1,990,258
Other liabilities		287,296			320,516
Commitments and contingencies (Note 10)
Shareholders’ equity
Ordinary shares, no par value; 846,818,714 and 843,208,876 shares issued, and 765,933,642 and 813,429,154 outstanding as of October 1, 2010 and March 31, 2010, respectively		8,956,115			8,924,769
Treasury stock, at cost; 80,885,072 and 29,779,722 shares as of October 1, 2010 and March 31, 2010, respectively		(560,017	)		(260,074	)
Accumulated deficit		(6,402,129	)		(6,664,723	)
Accumulated other comprehensive income (loss)		25,612			(15,405	)
Total shareholders’ equity		2,019,581			1,984,567
Total liabilities and shareholders’ equity	$	12,009,637		$	10,642,552

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

4

FLEXTRONICS INTERNATIONAL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three-Month Periods Ended					Six-Month Periods Ended
	October 1, 2010		October 2, 2009			October 1, 2010		October 2, 2009
	(In thousands, except per share amounts)
	(Unaudited)
Net sales	$	7,422,338	$	5,831,761		$	13,988,218	$	11,614,440
Cost of sales		7,024,691		5,519,778			13,219,753		11,026,353
Restructuring charges		—		12,403			—		64,512
Gross profit		397,647		299,580			768,465		523,575
Selling, general and administrative expenses		198,954		176,246			394,672		377,938
Intangible amortization		21,439		22,710			39,429		46,044
Restructuring charges		—		187			—		12,917
Other charges, net		—		91,999			—		199,398
Interest and other expense, net		22,838		38,091			50,367		74,977
Income (loss) before income taxes		154,416		(29,653	)		283,997		(187,699	)
Provision for (benefit from) income taxes		10,000		(49,312	)		21,403		(53,315	)
Net income (loss)	$	144,416	$	19,659		$	262,594	$	(134,384	)
Earnings (loss) per share:
Basic	$	0.19	$	0.02		$	0.33	$	(0.17	)
Diluted	$	0.18	$	0.02		$	0.33	$	(0.17	)
Weighted-average shares used in computing per share amounts:
Basic		776,362		811,364			793,499		810,769
Diluted		784,271		817,260			804,144		810,769

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

5

FLEXTRONICS INTERNATIONAL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six-Month Periods Ended
	October 1, 2010			October 2, 2009
	(In thousands)
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	262,594		$	(134,384	)
Depreciation, amortization and other impairment charges		230,714			466,472
Changes in working capital and other		104,211			86,316
Net cash provided by operating activities		597,519			418,404
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(273,172	)		(95,891	)
Proceeds from the disposition of property and equipment		51,438			15,728
Acquisition of businesses, net of cash acquired		(2,502	)		(59,055	)
Other investments and notes receivable, net		13,123			255,281
Net cash (used in) provided by investing activities		(211,113	)		116,063
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank borrowings and long-term debt		1,249,515			786,909
Repayments of bank borrowings, long-term debt and capital lease obligations		(1,491,192	)		(992,449	)
Payments for repurchase of long-term debt		(7,029	)		(203,183	)
Payments for repurchase of ordinary shares		(299,943	)		—
Net proceeds from issuance of ordinary shares		3,309			3,423
Net cash used in financing activities		(545,340	)		(405,300	)
Effect of exchange rates on cash		19,574			15,441
Net (decrease) increase in cash and cash equivalents		(139,360	)		144,608
Cash and cash equivalents, beginning of period		1,927,556			1,821,886
Cash and cash equivalents, end of period	$	1,788,196		$	1,966,494

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

6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. ORGANIZATION OF THE COMPANY

Flextronics International Ltd. (“Flextronics” or the “Company”) was incorporated in the Republic of Singapore in May 1990. The Company is a leading provider of advanced design and electronics manufacturing services (“EMS”) to original equipment manufacturers (“OEMs”) of a broad range of products in the following markets: infrastructure; mobile communication devices; computing; consumer digital devices; industrial, semiconductor capital equipment, clean technology, aerospace and defense, and white goods; automotive and marine; and medical devices. The Company’s strategy is to provide customers with a full range of cost competitive, vertically-integrated global supply chain services through which the Company designs, builds, ships and services a complete packaged product for its OEM customers. OEM customers leverage the Company’s services to meet their product requirements throughout the entire product life cycle.

The Company’s service offerings include rigid printed circuit board and flexible circuit fabrication, systems assembly and manufacturing (including enclosures, testing services, materials procurement and inventory management), logistics, after-sales services (including product repair, re-manufacturing and maintenance) and multiple component product offerings. Additionally, the Company provides market-specific design and engineering services ranging from contract design services (“CDM”), where the customer purchases services on a time and materials basis, to original product design and manufacturing services, where the customer purchases a product that was designed, developed and manufactured by the Company (commonly referred to as original design manufacturing, or “ODM”). ODM products are then sold by the Company’s OEM customers under the OEMs’ brand names. The Company’s CDM and ODM services include user interface and industrial design, mechanical engineering and tooling design, electronic system design and printed circuit board design. The Company also provides after market services such as logistics, repair and warranty services.

2. SUMMARY OF ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”) for interim financial information and in accordance with the requirements of Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements, and should be read in conjunction with the Company’s audited consolidated financial statements as of and for the fiscal year ended March 31, 2010 contained in the Company’s Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three-month and six-month periods ended October 1, 2010 are not necessarily indicative of the results that may be expected for the fiscal year ended March 31, 2011.

The first fiscal quarters ended on July 2, 2010 and July 3, 2009, respectively, and the second fiscal quarters ended on October 1, 2010 and October 2, 2009, respectively. The Company’s third fiscal quarter ends on December 31, and the fourth fiscal quarter and year ends on March 31 of each year.

7

Inventories

The components of inventories, net of applicable lower of cost or market write-downs, were as follows:

	As of		As of
	October 1, 2010		March 31, 2010
	(In thousands)
Raw materials	$	2,433,012	$	1,874,244
Work-in-progress		607,718		480,216
Finished goods		597,907		521,359
	$	3,638,637	$	2,875,819

Property and Equipment

Depreciation expense associated with property and equipment amounted to approximately $97.8 million and $191.3 million for the three-month and six-month periods ended October 1, 2010, respectively, and $91.5 million and $186.0 million for the three-month and six-month periods ended October 2, 2009, respectively.

Goodwill and Other Intangibles

The following table summarizes the activity in the Company’s goodwill account during the six-month period ended October 1, 2010:

	Amount
	(In thousands)
Balance, beginning of the year, net of accumulated impairment of $5,949,977	$	84,360
Acquisitions (1)		2,358
Purchase accounting adjustments (2)		1,170
Foreign currency translation adjustments		156
Balance, end of the quarter, net of accumulated impairment of $5,949,977	$	88,044

(1)

Balance is attributable to certain acquisitions that were not individually, nor in the aggregate, significant to the Company. Refer to the discussion of the Company’s acquisitions in Note 11, “Business and Asset Acquisitions.”

(2)

Includes adjustments and reclassifications resulting from management’s review of the valuation of assets and liabilities acquired through certain business combinations completed in a period subsequent to the respective acquisition, based on management’s estimates. The amount was attributable to purchase accounting adjustments for certain historical acquisitions that were not individually, nor in the aggregate, significant to the Company.

The components of acquired intangible assets are as follows:

	As of October 1, 2010							As of March 31, 2010
	Gross					Net		Gross					Net
	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
	Amount		Amortization			Amount		Amount		Amortization			Amount
			(In thousands)							(In thousands)
Intangible assets:
Customer-related	$	485,154	$	(362,133	)	$	123,021	$	506,595	$	(355,409	)	$	151,186
Licenses and other		42,893		(27,134	)		15,759		54,792		(35,621	)		19,171
Total	$	528,047	$	(389,267	)	$	138,780	$	561,387	$	(391,030	)	$	170,357

8

The gross carrying amounts of intangible assets are removed when the recorded amounts have been fully amortized. Total intangible amortization expense was $21.4 million and $39.4 million during the three-month and six-month periods ended October 1, 2010, respectively, and $22.7 million and $46.0 million during the three-month and six-month periods ended October 2, 2009, respectively. The estimated future annual amortization expense for acquired intangible assets is as follows:

Fiscal Year Ending March 31,	Amount
	(In thousands)
2011 (1)	$	30,583
2012		43,497
2013		29,448
2014		19,389
2015		9,506
Thereafter		6,357
Total amortization expense	$	138,780

(1) Represents estimated amortization for the six-month period ending March 31, 2011.

Other Assets

The Company has certain equity investments in non-publicly traded companies which are included within other assets in the Company’s Condensed Consolidated Balance Sheets. As of October 1, 2010 and March 31, 2010, the Company’s equity investments in these non-publicly traded companies totaled $33.3 million and $27.3 million, respectively. The Company monitors these investments for impairment and makes appropriate reductions in carrying values as required. Fair values of these investments, when required, are estimated using unobservable inputs, which are primarily discounted cash flow projections.

During the three-month and six-month periods ended October 1, 2010, the Company recognized a gain of approximately $13.5 million and $18.6 million, respectively, associated with the sale of an equity investment that was previously fully impaired and is included in Interest and other expense, net, in the Condensed Consolidated Statement of Operations.

In August of 2009, the Company sold its interest in one of its non-majority owned investments and related note receivable for approximately $252.2 million, net of closing costs and recognized an impairment charge associated with the sale of $107.4 million in the three-month period ended July 3, 2009. During the three-month period ended October 2, 2009, the Company recognized charges totaling approximately $92.0 million associated with the impairment of notes receivable from one affiliate and an equity investment in another affiliate. Total impairment charges related to the Company’s equity investments and notes receivables for the six-month period ended October 2, 2009 were approximately $199.4 million and are included in Other charges, net in the Condensed Consolidated Statements of Operations.

Provision for income taxes

The Company has tax loss carryforwards attributable to operations for which the Company has recognized deferred tax assets. The Company’s policy is to provide a reserve against those deferred tax assets that in management’s estimate are not more likely than not to be realized.

Recent Accounting Pronouncements

In June 2009, a new accounting standard was issued which amends the consolidation guidance applicable to variable interest entities (“VIEs”), the approach for determining the primary beneficiary of a VIE, and disclosure requirements of a company’s involvement with VIEs. Also in June 2009, a new accounting standard was issued which removes the concept of a qualifying special-purpose entity, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, clarifies other sale-accounting criteria, and changes the initial measurement of a transferor’s interest in transferred financial assets. These standards are effective for fiscal years beginning after November 15, 2009 and were adopted by the Company effective April 1, 2010. The adoption of these standards did not impact the Company’s consolidated statement of operations. Upon adoption, accounts receivables sold in the Global Asset-Backed Securitization program were consolidated by the Company and remained on its balance sheet; cash received from the program was treated as a bank borrowing on the Company’s balance sheet and as a financing activity in the statement of cash flows. As a result of the adoption of these standards, the Company recorded accounts receivables and related bank borrowings of $217.1 million as of April 1, 2010. In September 2010 the securitization agreement was amended such that sales of accounts receivable from this program are accounted for as sales of financial assets and are removed from the consolidated balance sheets. Cash received from the sale of accounts receivables, under this program, including amounts received for the beneficial interest that are paid upon collection of accounts receivables, are reported as cash provided by operating activities in the statement of cash flows (see Note 8).

9

The North American Asset-Backed Securitization program and the accounts receivable factoring program were amended effective in the quarter ended July 2, 2010, such that sales of accounts receivable from these programs continue to be accounted for as sales of financial assets and are removed from the consolidated balance sheets. Cash received from the sale of accounts receivables under these programs, including amounts received for the beneficial interest that are paid upon collection of accounts receivables, are reported as cash provided by operating activities in the statement of cash flows (see Note 8).

3. STOCK-BASED COMPENSATION

The Company historically granted equity compensation awards to acquire the Company’s ordinary shares under four plans. Effective July 23, 2010, equity awards are granted under the Company’s 2010 Equity Incentive Plan, which was approved by the Company’s shareholders at the 2010 Annual General Meeting. These plans collectively are referred to as the Company’s equity compensation plans below. For further discussion of the Company’s four historical Plans, refer to Note 2, “Summary of Accounting Policies,” of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2010. Refer to the Company’s Definitive Proxy Statement, which was filed with the Securities and Exchange Commission on June 7, 2010, for further discussion of the Company’s 2010 Equity Incentive Plan.

Compensation expense for the Company’s stock options and unvested share bonus awards was as follows:

	Three-Month Periods Ended				Six-Month Periods Ended
	October 1, 2010		October 2, 2009		October 1, 2010		October 2, 2009
	(In thousands)				(In thousands)
Cost of sales	$	2,648	$	2,375	$	5,371	$	5,015
Selling, general and administrative expenses		11,282		10,620		23,049		23,183
Total stock-based compensation expense	$	13,930	$	12,995	$	28,420	$	28,198

For the six-month period ended October 1, 2010, the Company granted 925,803 stock options, at a weighted average fair value per option of $2.55. Total unrecognized compensation expense related to stock options is $42.8 million, net of estimated forfeitures, and will be recognized over a weighted average vesting period of 1.6 years. As of October 1, 2010, total unrecognized compensation expense related to unvested share bonus awards is $78.4 million, net of estimated forfeitures, and will be recognized over a weighted average vesting period of 2.7 years. Approximately $22.7 million of the unrecognized compensation cost is related to awards where vesting is contingent upon meeting both a service requirement and achievement of long-term performance goals. As of October 1, 2010, management believes achievement of these goals is probable for approximately 315,000 of these awards and approximately $1.6 million of compensation expense is remaining to be recognized in fiscal year 2011.

The number of options outstanding and exercisable was 60.3 million and 34.1 million, respectively, as of October 1, 2010, at weighted average exercise prices of $7.26 and $9.01, respectively.

10

The following table summarizes share bonus award activity for the Company’s equity compensation plans during the six-month period ended October 1, 2010:

				Weighted
				Average
	Number of			Grant-Date
	Shares			Fair Value
Unvested share bonus awards as of March 31, 2010		8,801,609		$	10.31
Granted		8,410,125			6.92
Vested		(2,270,952	)		10.86
Forfeited		(1,163,699	)		10.37
Unvested share bonus awards as of October 1, 2010		13,777,083		$	8.14

Of the 8.4 million share bonus awards granted during the six-month period ended October 1, 2010, approximately 1.2 million represents the target amount of grants made to certain key employees whereby vesting is contingent on meeting a certain market condition. The number of shares that ultimately will vest are based on a measurement of Flextronics’s total shareholder return against the Standard and Poor’s (“S&P”) 500 Composite Index. The actual number of shares issued can range from zero to 1.8 million. These awards vest over a period of four years, subject to achievement of total shareholder return levels relative to the S&P 500 Composite Index. The grant-date fair value of these awards was estimated to be $7.32 per share and was calculated using a Monte Carlo simulation.

4. EARNINGS PER SHARE

The following table reflects the basic and diluted weighted-average ordinary shares outstanding used to calculate basic and diluted earnings per share:

	Three-Month Periods Ended				Six-Month Periods Ended
	October 1, 2010		October 2, 2009		October 1, 2010		October 2, 2009
	(In thousands, except per share amounts)
Basic earnings per share:
Net income (loss)	$	144,416	$	19,659	$	262,594	$	(134,384	)
Shares used in computation:
Weighted-average ordinary shares outstanding		776,362		811,364		793,499		810,769
Basic earnings (loss) per share	$	0.19	$	0.02	$	0.33	$	(0.17	)
Diluted earnings per share:
Net income (loss)	$	144,416	$	19,659	$	262,594	$	(134,384	)
Shares used in computation:
Weighted-average ordinary shares outstanding		776,362		811,364		793,499		810,769
Weighted-average ordinary share equivalents from stock options and awards (1)		7,909		5,896		10,645		—
Weighted-average ordinary share equivalents from convertible notes (2)		—		—		—		—
Weighted-average ordinary shares and ordinary share equivalents outstanding		784,271		817,260		804,144		810,769
Diluted earnings (loss) per share	$	0.18	$	0.02	$	0.33	$	(0.17	)

(1)	Ordinary share equivalents from stock options to purchase approximately 28.4 million and 27.0 million shares outstanding during the three-month and six-month periods ended October 1, 2010, respectively, and 41.1 million and 50.0 million share outstanding during the three-month and six-month periods ended October 2, 2009, respectively, were excluded from the computation of diluted earnings per share primarily because the exercise price of these options was greater than the average market price of the Company’s ordinary shares during the respective periods. As a result of the Company’s net loss for the six-month period ended October 2, 2009, ordinary share equivalents from approximately 5.3 million options and share bonus awards were excluded from the calculation of diluted earnings (loss) per share.
(2)	On August 2, 2010 the Company paid approximately $240.0 million to redeem its 1% Convertible Subordinated Notes upon maturity. The notes carried conversion provisions to issue shares to settle any conversion spread (excess of the conversion value over the conversion price) in stock. The conversion price was $15.525 per share (subject to certain adjustments). On the maturity date, the Company’s stock price was less than the conversion spread, and therefore no shares were issued. During the three-month and six-month periods ended October 1, 2010 and October 2, 2009, the conversion obligation was less than the principal portion of these notes and accordingly, no additional shares were included as ordinary share equivalents.
	On July 31, 2009, the principal amount of the Company’s Zero Coupon Convertible Junior Subordinated Notes was settled in cash upon maturity. These notes carried conversion provisions to issue shares to settle any conversion spread (excess of the conversion value over the conversion price) in stock. The conversion price was $10.50 per share. On the maturity date, the Company’s stock price was less than the conversion price, and therefore no shares were issued.

11

5. OTHER COMPREHENSIVE INCOME

The following table summarizes the components of other comprehensive income:

	Three-Month Periods Ended				Six-Month Periods Ended
	October 1, 2010		October 2, 2009		October 1, 2010		October 2, 2009
	(In thousands)				(In thousands)
Net income (loss)	$	144,416	$	19,659	$	262,594	$	(134,384	)
Other comprehensive income:
Foreign currency translation adjustment		23,828		17,637		14,509		27,929
Unrealized gain on derivative instruments and other income		29,700		2,558		26,508		13,988
Comprehensive income (loss)	$	197,944	$	39,854	$	303,611	$	(92,467	)

6. BANK BORROWINGS AND LONG-TERM DEBT

Bank borrowings and long-term debt are as follows:

	As of			As of
	October 1, 2010			March 31, 2010
	(In thousands)
Short-term bank borrowings	$	753		$	6,688
1.00% convertible subordinated notes due August 2010		—			234,240
6.25% senior subordinated notes due November 2014		302,172			302,172
Term Loan Agreement, including current portion, due in installments through October 2014		1,683,105			1,691,775
Term loan, including current portion, due September 2013		50,000			—
Term loan, due September 2013		130,000			—
Outstanding under revolving lines of credit		60,000			—
Other		5,922			19,955
		2,231,952			2,254,830
Current portion		(19,593	)		(265,954	)
Non-current portion	$	2,212,359		$	1,988,876

As of October 1, 2010, there were $60.0 million in borrowings outstanding under the Company’s $2.0 billion credit facility, and the Company was in compliance with the financial covenants under this credit facility.

Asia Term Loans

On September 27, 2010, the Company entered into a $50.0 million term loan agreement with a bank based in Asia, the entire amount of which was borrowed on the date the facility was entered into. The term loan agreement matures on September 27, 2013. Borrowings under the term loan bear interest at LIBOR plus 2.30%. The Company, at its election, may convert the loan (in whole or in part) to bear interest at the higher of the Federal Funds rate plus 0.5% or the prime rate plus, in each case 1.0%. Principal payments of $500,000 are due quarterly with the balance due on the maturity date. The Company has the right to prepay any part of the loan without penalty. Borrowings under the term loan agreement are guaranteed by certain subsidiaries of the Company.

On September 28, 2010, the Company entered into a $130.0 million term loan facility with a bank in Asia, the entire amount of which was borrowed on the date the facility was entered into. The term loan facility matures on September 28, 2013. Borrowings under the facility bear interest at LIBOR plus a margin of 2.15%, and the Company paid a non-refundable fee of $1.4 million at the inception of the loan. The Company has the right to prepay any part of the loan without penalty.

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The term loan agreements are unsecured, and contain customary restrictions on the ability of the Company and its subsidiaries to, among other things, (i) incur certain debt, (ii) make certain investments, (iii) make certain acquisitions of other entities, (iv) incur liens, (v) dispose of assets, (vi) make non-cash distributions to shareholders, and (vii) engage in transactions with affiliates. These covenants are subject to a number of significant exceptions and limitations. The term loan agreements also require the Company maintain a maximum ratio of total indebtedness to EBITDA, during the term of the term loan agreement. As of October 1, 2010, the Company was in compliance with the financial covenants under these facilities.

Redemption

During August 2010 the Company paid $240.0 million to redeem the 1% Convertible Subordinated Notes at par upon maturity plus accrued interest. These notes carried conversion provisions to issue shares to settle any conversion spread (excess of conversion value over the conversion price) in stock. The conversion price was $15.525 per share (subject to certain adjustments). On the maturity date, the Company’s stock price was less than the conversion price, and therefore no ordinary shares were issued.

Fair Values

As of October 1, 2010, the approximate fair values of the Company’s 6.25% Senior Subordinated Notes, and debt outstanding under its $1.7 billion Term Loan Agreement were 102.6% and 95.3% of the face values of the debt obligations, respectively, based on broker trading prices. The estimated fair value for the Asia Term Loans would approximate 95.3% of their carrying amount, based on the broker trading prices for the Term Loan Agreement.

Interest Expense

During the three-month and six-month periods ended October 1, 2010, the Company recognized interest expense of $27.0 million and $58.3 million, respectively, on its debt obligations outstanding during the period. During the three-month and six-month periods ended October 2, 2009, the Company recognized interest expense of $39.3 million and $85.5 million, respectively, on its debt obligations.

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7. FINANCIAL INSTRUMENTS

Foreign Currency Contracts

The Company enters into forward contracts and foreign currency swap contracts to manage the foreign currency risk associated with monetary accounts and anticipated foreign currency denominated transactions. The Company hedges committed exposures and does not engage in speculative transactions. As of October 1, 2010, the aggregate notional amount of the Company’s outstanding foreign currency forward and swap contracts was $2.7 billion as summarized below:

		Foreign		Notional
		Currency		Contract Value
Currency	Buy/Sell	Amount		in USD
		(In thousands)
Cash Flow Hedges
CNY	Buy		2,724,752	$	407,257
EUR	Sell		15,775		21,658
HUF	Buy		14,678,000		72,459
ILS	Buy		109,000		30,065
MXN	Buy		1,207,700		96,369
MYR	Buy		379,050		122,789
SGD	Buy		55,927		42,556
Other	Buy		N/A		62,450
					855,603
Other Forward/Swap Contracts
CAD	Buy		48,213		46,648
CAD	Sell		80,604		77,826
CNY	Buy		439,913		65,200
EUR	Buy		222,653		301,898
EUR	Sell		286,631		386,325
GBP	Buy		53,879		85,451
GBP	Sell		51,364		81,720
JPY	Buy		4,469,414		53,506
JPY	Sell		2,682,323		32,064
MXN	Buy		708,620		56,544
SEK	Buy		1,819,895		270,819
SEK	Sell		562,732		83,791
Other	Buy		N/A		149,977
Other	Sell		N/A		110,819
					1,802,588
Total Notional Contract Value in USD				$	2,658,191

Certain of these contracts are designed to economically hedge the Company’s exposure to monetary assets and liabilities denominated in a non-functional currency and are not treated as hedges under the accounting standards. Accordingly, changes in the fair value of these instruments are recognized in earnings during the period of change as a component of Interest and other expense, net in the Condensed Consolidated Statement of Operations. As of October 1, 2010 and October 2, 2009 the amount recognized in earnings related to these contracts was not material. As of October 1, 2010 and March 31, 2010, the Company also has included net deferred gains and losses, respectively, in other comprehensive income, a component of shareholders’ equity in the Condensed Consolidated Balance Sheet, relating to changes in fair value of its foreign currency contracts that are accounted for as cash flow hedges. These deferred gains and losses were not material, and the deferred gains as of October 1, 2010 are expected to be recognized as a component of gross profit in the Condensed Consolidated Statement of Operations over the next twelve month period. The gains and losses recognized in earnings due to hedge ineffectiveness were not material for all fiscal periods presented and are included as a component of Interest and other expense, net in the Condensed Consolidated Statement of Operations.

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The following table presents the Company’s assets and liabilities related to foreign currency contracts measured at fair value on a recurring basis as of October 1, 2010, aggregated by level in the fair-value hierarchy within which those measurements fall:

	Level 1		Level 2			Level 3		Total
	(In thousands)
Assets:
Foreign currency contracts	$	—	$	41,182		$	—	$	41,182
Liabilities:
Foreign currency contracts		—		(27,768	)		—		(27,768	)
Total:	$	—	$	13,414		$	—	$	13,414

There were no transfers between levels in the fair value hierarchy during the six-month period ended October 1, 2010. The Company’s foreign currency forward contracts are measured on a recurring basis at fair value based on foreign currency spot and forward rates quoted by banks or foreign currency dealers.

The following table presents the fair value of the Company’s derivative instruments located on the Condensed Consolidated Balance Sheets utilized for foreign currency risk management purposes at October 1, 2010:

	Fair Values of Derivative Information
	Asset Derivatives			Liability Derivatives
	Balance Sheet	Fair		Balance Sheet	Fair
	Location	Value		Location	Value
	(In thousands)
Derivatives designated as hedging instruments
Foreign currency contracts	Other current assets	$	25,276	Other current liabilities	$	(471	)
Derivatives not designated as hedging instruments
Foreign currency contracts	Other current assets	$	15,906	Other current liabilities	$	(27,297	)

Interest Rate Swap Agreements

The Company is also exposed to variability in cash flows associated with changes in short-term interest rates primarily on borrowings under its revolving credit facility and term loan agreement. Swap contracts that were outstanding during the six-month period ended October 1, 2010, which were entered into during fiscal years 2009 and 2008 to mitigate the exposure to interest rate risk resulting from unfavorable changes in interest rates resulting from the term loan agreement, are summarized below:

Notional Amount	Fixed Interest			Interest Payment
(in millions)	Rate Payable			Received	Term	Expiration Date
Fiscal 2009 Contracts:
$100.0		1.00	%	1-Month Libor	12 month	April 2010
Fiscal 2008 Contracts:
$250.0		3.61	%	1-Month Libor	34 months	October 2010
$250.0		3.61	%	1-Month Libor	34 months	October 2010
$175.0		3.60	%	3-Month Libor	36 months	January 2011
$72.0		3.57	%	3-Month Libor	36 months	January 2011

In April 2010, a $100.0 million swap, with a fixed interest rate of 1% expired. In October 2010, two swaps totaling $500.0 million with fixed interest rates of 3.61% expired. The swap contracts provide for the receipt of interest payments at rates equal to the terms of the underlying borrowings outstanding under the term loan arrangement. As of November 1, 2010, the Company had an aggregate notional amount of $247.0 million in swaps outstanding with a weighted average fixed interest rate of 3.59%.

The Company’s interest rate swap agreements are accounted for as cash flow hedges, and there was no charge for ineffectiveness during the three-month and six-month periods ended October 1, 2010 and October 2, 2009. For the three-month and six-month periods ended October 1, 2010 and October 2, 2009, the net amount recorded as interest expense from these swaps was not material. As of October 1, 2010 and March 31, 2010, the fair value of the Company’s interest rate swaps was not material and is included in Other current liabilities in the Condensed Consolidated Balance Sheets, with a corresponding decrease in other comprehensive income. The deferred losses included in other comprehensive income will effectively be released through earnings as the Company makes fixed, and receives variable, interest payments over the remaining term of the swaps through January 2011.

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8. TRADE RECEIVABLES SECURITIZATION

The Company continuously sells designated pools of trade receivables under two asset backed securitization programs and under an accounts receivable factoring program.

Global Asset-Backed Securitization Agreement

The Company continuously sells a designated pool of trade receivables to an affiliated special purpose entity, which in turn sells an undivided ownership interest to an unaffiliated financial institution. The Company continues to service, administer and collect the receivables on behalf of the special purpose entity and receives a servicing fee of 1.00% of serviced receivables per annum. Servicing fees recognized during the three-month and six-month periods ended October 1, 2010 and October 2, 2009 were not material and are included in Interest and other expense, net within the Condensed Consolidated Statements of Operations. As the Company estimates the fee it receives in return for its obligation to service these receivables is at fair value, no servicing assets and liabilities are recognized.

Effective April 1, 2010, the Company adopted two new accounting standards, the first of which removed the concept of a qualifying special purpose entity and created more stringent conditions for reporting the transfer of a financial asset as a sale. The second standard amended the consolidation guidance for determining the primary beneficiary of a variable interest entity. As a result of the adoption of the second standard, the Company is deemed the primary beneficiary of the special purpose entity to which the pool of trade receivables is sold and, as such, is required to consolidate the special purpose entity. Upon adoption of these standards, the balance of receivables sold for cash as of March 31, 2010, totaling $217.1 million, was recorded as accounts receivables and short-term bank borrowings in the opening balance sheet of fiscal 2011. Upon collection of these receivables the Company recorded cash from operations offset by repayments of bank borrowings from financing activities in the Condensed Consolidated Statements of Cash Flows during the six-month period ended October 1, 2010.

Effective September 29, 2010, the securitization agreement was amended to provide for the sale by the special purpose entity of 100% of the eligible receivables to the unaffiliated financial institution. Following the transfer of the receivables to the special purpose entity, the transferred receivables are isolated from the Company and its affiliates, and effective control of the transferred receivables is passed to the unaffiliated financial institution, which has the right to pledge or sell the receivables. As a result, although the Company still consolidates the special purpose entity, all of the receivables sold to the unaffiliated financial institution are removed from the Condensed Consolidated Balance Sheet and the cash received is no longer accounted for as a secured borrowing. A portion of the purchase price for the receivables is paid by the unaffiliated financial institution in cash and the balance is a deferred purchase price receivable, which is paid to the special purpose entity as payments on the receivables are collected from account debtors. The deferred purchase price receivable represents a beneficial interest in the transferred financial assets and is recognized at fair value as part of the sale transaction.

As of October 1, 2010, $313.5 million in receivables were sold to this special purpose entity and the Company received $172.3 million in net cash proceeds for the sales. The deferred purchase price receivable was approximately $141.2 million, and was recorded in Other current assets in the Condensed Consolidated Balance Sheets. The deferred purchase price receivable was valued using unobservable inputs (i.e., level three inputs), primarily discounted cash flow, and due to its high credit quality and short maturity the fair value approximated book value. There were no transfers between levels in the fair value hierarchy during the six-month period ended October 1, 2010. The accounts receivable balances sold under this agreement were removed from the Condensed Consolidated Balance Sheets and cash received from the sales were reflected as cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows. The amount of the Company’s deferred purchase price receivable will vary primarily depending on the financing requirements of the Company and the performance of the receivables sold.

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As of March 31, 2010, approximately $352.5 million of the Company’s accounts receivable had been sold to a third-party qualified special purpose entity. At that time, the third-party special purpose entity was a qualifying special purpose entity, and accordingly, the Company did not consolidate this entity. The amount of receivables sold represented the face amount of the total outstanding trade receivables on all designated customer accounts on that date. The accounts receivable balances that were sold under this agreement were removed from the Condensed Consolidated Balance Sheet, and the net cash proceeds received by the Company were included as cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows. The Company had a recourse obligation that was limited to the deferred purchase price receivable, which approximated 5% of the total sold receivables, and its own investment participation, the total of which was approximately $135.4 million as of March 31, 2010, which was recorded in Other current assets in the Consolidated Balance Sheet. As the recoverability of the trade receivables underlying the Company’s own investment participation was determined in conjunction with the Company’s accounting policies for determining provisions for doubtful accounts prior to sale into the third party qualified special purpose entity, the fair value of the Company’s own investment participation reflected the estimated recoverability of the underlying trade receivables.

North American Asset-Backed Securitization Agreement

The Company continuously sells a designated pool of trade receivables to an affiliated special purpose entity, which in turn sells such receivables to an agent on behalf of two commercial paper conduits administered by unaffiliated financial institutions. The Company continues to service, administer and collect the receivables on behalf of the special purpose entity and receives a servicing fee of 0.50% per annum on the outstanding balance of the serviced receivables. Servicing fees recognized during the three-month and six-month periods ended October 1, 2010 and October 2, 2009 were not material and were included in Interest and other expense, net within the Condensed Consolidated Statements of Operations. As the Company estimates that the fee it receives in return for its obligation to service these receivables is at fair value, no servicing assets or liabilities are recognized.

The maximum investment limit of the two commercial paper conduits is $300.0 million. During September 2010, the securitization agreement was amended such that the Company pays commitment fees of 0.55% per annum on the aggregate amount of the liquidity commitments of the financial institutions under the facility (which approximates the maximum investment limit) and an additional program fee of 0.55% on the aggregate amounts invested under the facility by the conduits to the extent funded through the issuance of commercial paper.

The Company has the power to direct the activities of the special purpose entity and had the obligation to absorb the majority of expected losses or the rights to receive benefits from transfers of trade receivables into the special purpose entity and, as such, was deemed the primary beneficiary of the special purpose entity. Accordingly, the Company consolidated the special purpose entity and only those receivables sold to the two commercial paper conduits for cash have been removed from the Condensed Consolidated Balance Sheet. Effective April 1, 2010, the securitization agreement was amended to provide for the sale by the special purpose entity of 100% of the eligible receivables to the commercial paper conduits. The transferred receivables are isolated from the Company and its affiliates as a result of the special purpose entity, and effective control is passed to the conduits, which have the right to pledge or sell the receivables. As a result, although the Company still consolidates the special purpose entity, 100% of the receivables sold to the commercial paper conduits are removed from the Condensed Consolidated Balance Sheet beginning April 1, 2010.

A portion of the purchase price for the receivables is paid by the two commercial paper conduits in cash and the balance is a deferred purchase price receivable, which is paid to the special purpose entity as payments on the receivables are collected from account debtors. The deferred purchase price receivable represents a beneficial interest in the transferred financial assets and is recognized at fair value as part of the sale transaction. The Company sold approximately $323.6 million of accounts receivable to the two commercial paper conduits as of October 1, 2010, and received approximately $210.0 million in net cash proceeds for the sales. The deferred purchase price receivable was approximately $112.9 million, and was recorded in Other current assets in the Condensed Consolidated Balance Sheets. The deferred purchase price receivable was valued using unobservable inputs (i.e., level three inputs), primarily discounted cash flow, and due to its high credit quality and short maturity the fair value approximated book value. There were no transfers between levels in the fair value hierarchy during the six-month period ended October 1, 2010. The accounts receivable balances sold under this agreement were removed from the Condensed Consolidated Balance Sheets and cash received from the sales were reflected as cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows. The amount of the Company’s deferred purchase price receivable will vary primarily depending on the financing requirements of the Company and the performance of the receivables sold.

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As of March 31, 2010, the Company had transferred approximately $356.9 million of receivables into the special purpose vehicle. The Company sold approximately $200.7 million of this $356.9 million to the two commercial paper conduits as of March 31, 2010, and received approximately $200.0 million in net cash proceeds for the sales. The accounts receivable balances that were sold to the two commercial paper conduits under this agreement were removed from the Condensed Consolidated Balance Sheets and were reflected as cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows, and the difference between the amount sold and net cash proceeds received was recognized as a loss on sale of the receivables, and was recorded in Interest and other expense, net in the Condensed Consolidated Statements of Operations. The remaining trade receivables transferred into the special purpose vehicle and not sold to the two commercial paper conduits comprised the primary assets of that entity, and were included in trade accounts receivable, net in the Condensed Consolidated Balance Sheets of the Company. The recoverability of these trade receivables, both those included in the Condensed Consolidated Balance Sheets and those sold but uncollected by the commercial paper conduits, were determined in conjunction with the Company’s accounting policies for determining provisions for doubtful accounts. Although the special purpose vehicle is fully consolidated by the Company, it is a separate corporate entity and its assets are available first to satisfy the claims of its creditors.

Factored Accounts Receivable

Effective April 1, 2010, the Company amended its accounts receivable factoring program under which the Company sells accounts receivables in their entirety to certain third-party banking institutions. The outstanding balance of receivables sold and not yet collected was approximately $225.3 million and $164.2 million as of October 1, 2010 and March 31, 2010, respectively. These receivables that were sold were removed from the Condensed Consolidated Balance Sheets and were reflected as cash provided by operating activities in the Condensed Consolidated Statement of Cash Flows.

9. RESTRUCTURING CHARGES

The Company did not recognize restructuring charges during the three-month and six-month periods ended October 1, 2010.

The Company recognized restructuring charges of approximately $12.6 million and $77.4 million during the three-month and six-month periods ended October 2, 2009 as a part of its restructuring plans announced in March 2009 in order to rationalize the Company’s global manufacturing capacity and infrastructure as a result of weak macroeconomic conditions. The Company classified approximately $12.4 million and $64.5 million of these charges as a component of cost of sales during the three-month and six-month periods ended October 2, 2009, respectively.

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The following table summarizes the provisions, respective payments, and remaining accrued balance as of October 1, 2010 for charges incurred in fiscal year 2010 and prior periods:

				Other
	Severance			Exit Costs			Total
	(In thousands)
Balance as of March 31, 2010	$	28,216		$	36,029		$	64,245
Cash payments for charges incurred in fiscal year 2010		(6,692	)		(416	)		(7,108	)
Cash payments for charges incurred in fiscal year 2009 and prior		(2,333	)		(4,535	)		(6,868	)
Balance as of July 2, 2010		19,191			31,078			50,269
Cash payments for charges incurred in fiscal year 2010		(1,136	)		(389	)		(1,525	)
Cash payments for charges incurred in fiscal year 2009 and prior		(2,771	)		(2,012	)		(4,783	)
Balance as of October 1, 2010		15,284			28,677			43,961
Less: current portion (classified as other current liabilities)		(14,289	)		(13,588	)		(27,877	)
Accrued restructuring costs, net of current portion (classified as other liabilities)	$	995		$	15,089		$	16,084

As of October 1, 2010 and March 31, 2010, the remaining accrued balance for restructuring charges incurred during fiscal year 2010 were approximately $5.1 million and $13.7 million, respectively, the entire amount of which was classified as current. As of October 1, 2010 and March 31, 2010, the remaining accrued balance for restructuring charges incurred during fiscal years 2009 and prior were approximately $38.9 million and $50.6 million, respectively, of which approximately $16.1 million and $22.2 million, respectively, were classified as long-term obligations.

As of October 1, 2010 and March 31, 2010, assets that were no longer in use and held for sale, totaled approximately $41.2 million and $46.9 million, respectively, primarily representing manufacturing facilities that have been closed as part of the Company’s historical facility consolidations. These assets are recorded at the lesser of carrying value or fair value, which is based on comparable sales from prevailing market data. For assets held for sale, depreciation ceases and an impairment loss is recognized if the carrying amount of the asset exceeds its fair value less cost to sell. Assets held for sale are included in Other current assets in the Condensed Consolidated Balance Sheets.

For further discussion of the Company’s historical restructuring activities, refer to Note 9 “Restructuring Charges” to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2010.

10. COMMITMENTS AND CONTINGENCIES

The Company is subject to legal proceedings, claims, and litigation arising in the ordinary course of business. The Company defends itself vigorously against any such claims. Although the outcome of these matters is currently not determinable, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on its condensed consolidated financial position, results of operations, or cash flows.

11. BUSINESS AND ASSET ACQUISITIONS AND DIVESTITURES

Business Acquisitions

During the six-month period ended October 1, 2010, the Company completed two acquisitions that were not individually, or in the aggregate, significant to the Company’s consolidated results of operations and financial position. The aggregate cash paid for these acquisitions totaled approximately $2.5 million, net of cash acquired.

During the six-month period ended October 2, 2009, the Company paid $59.1 million relating to the contingent consideration or deferred purchase price payments related to four historical acquisitions. The purchase price for certain historical acquisitions is subject to adjustments for contingent consideration and generally has not been recorded as part of the purchase price, pending the outcome of the contingency.

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Divestitures

During the three-month and six-month periods ended October 1, 2010, the Company recognized a loss of approximately $11.7 million in connection with the divestiture of certain international entities. The results for these entities were not significant for any period presented.

12. SHARE REPURCHASE PLAN

On each of May 26, 2010 and August 12, 2010, the Company’s Board of Directors authorized the repurchase of up to $200.0 million, for a combined total of $400.0 million of the Company’s outstanding ordinary shares. Following shareholder approval at the Company’s 2010 Extraordinary General Meeting on July 23, 2010, the number of shares authorized for repurchase under the Share Purchase Mandate is approximately 78.5 million shares (representing 10% of the outstanding shares on the date of the 2010 Extraordinary General Meeting). The Company may not exceed in the aggregate the $400.0 million repurchase authorized by the Board in May and August without further Board action. Share repurchases will be made in the open market at such times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, market conditions and applicable legal requirements. The share repurchase program does not obligate the Company to repurchase any specific number of shares and may be suspended or terminated at any time without prior notice. During the three-month and six-month periods ended October 1, 2010, the Company repurchased approximately 29.2 million and 51.1 million shares, respectively, under these plans for an aggregate purchase price of $164.1 million and $299.9 million, respectively.

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

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

This report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. The words “expects,” “anticipates,” “believes,” “intends,” “plans” and similar expressions identify forward-looking statements. In addition, any statements which refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. We undertake no obligation to publicly disclose any revisions to these forward-looking statements to reflect events or circumstances occurring subsequent to filing this Form 10-Q with the Securities and Exchange Commission. These forward-looking statements are subject to risks and uncertainties, including, without limitation, those discussed in this section, as well as in Part II, Item 1A, “Risk Factors” of this report on Form 10-Q, and in Part I, Item 1A, “Risk Factors” and in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended March 31, 2010. In addition, new risks emerge from time to time and it is not possible for management to predict all such risk factors or to assess the impact of such risk factors on our business. Accordingly, our future results may differ materially from historical results or from those discussed or implied by these forward-looking statements. Given these risks and uncertainties, the reader should not place undue reliance on these forward-looking statements.

OVERVIEW

We are a leading global provider of advanced design and electronics manufacturing services (“EMS”) to original equipment manufacturers (“OEMs”) of a broad range of products in the following markets: infrastructure; mobile communication devices; computing; consumer digital devices; industrial, semiconductor capital equipment, clean technology, aerospace and defense, and white goods; automotive and marine; and medical devices. We provide a full range of vertically-integrated global supply chain services through which we can design, build, ship and service a complete packaged product for our customers. Customers leverage our services to meet their product requirements throughout the entire product life cycle. Our vertically-integrated service offerings include: design; rigid printed circuit board and flexible circuit fabrication; systems assembly and manufacturing; after-sales services; and multiple component product offerings, including camera modules for consumer products such as mobile devices and power supplies for computing and other electronic devices.

We are one of the world’s largest EMS providers, with revenues of $7.4 billion and $14.0 billion during the three-month and six-month periods ended October 1, 2010, and $24.1 billion in fiscal year 2010. As of March 31, 2010, our total manufacturing capacity was approximately 26.6 million square feet. We help customers design, build, ship and service electronics products through a network of facilities in 30 countries across four continents. The following tables set forth net sales and net property and equipment, by country, based on the location of our manufacturing site:

	Three-Month Periods Ended				Six-Month Periods Ended
Net sales:	October 1, 2010		October 2, 2009		October 1, 2010		October 2, 2009
	(In thousands)
China	$	2,919,610	$	2,008,055	$	5,194,939	$	3,903,051
Mexico		1,123,249		825,136		2,082,651		1,710,089
U.S.		774,670		857,714		1,581,910		1,730,836
Malaysia		679,196		598,983		1,327,110		1,088,084
Hungary		559,984		342,668		1,131,740		717,271
Other		1,365,629		1,199,205		2,669,868		2,465,109
	$	7,422,338	$	5,831,761	$	13,988,218	$	11,614,440

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	As of		As of
Property and equipment, net:	October 1, 2010		March 31, 2010
	(In thousands)
China	$	906,023	$	879,440
Mexico		363,651		361,492
Hungary		164,873		154,759
U.S.		156,679		165,029
Malaysia		154,608		131,606
Other		430,112		426,250
	$	2,175,946	$	2,118,576

We believe that the combination of our extensive design and engineering services, significant scale and global presence, vertically-integrated end-to-end services, advanced supply chain management, industrial campuses in low-cost geographic areas and operational track record provide us with a competitive advantage in the market for designing, manufacturing and servicing electronics products for leading multinational OEMs. Through these services and facilities, we offer our OEM customers the ability to simplify their global product development, their manufacturing process, and their after sales services, and enable them to achieve meaningful time to market and cost savings.

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

• changes in the macroeconomic environment and related changes in consumer demand;

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

• the effects on our business when our customers are not successful in marketing their products, or when their products do not gain widespread commercial acceptance;

• our increased components offerings which have required that we make substantial investments in the resources necessary to design and develop these products;

• our ability to achieve commercially viable production yields and to manufacture components in commercial quantities to the performance specifications demanded by our OEM customers (difficulties in product ramping have adversely affected our ability to achieve desired operating performance);

• the effect on our business due to our customers’ products having short product life cycles;

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

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

• our exposure to financially troubled customers; and

• integration of acquired businesses and facilities.

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Historically, the EMS industry experienced significant change and growth as an increasing number of companies elected to outsource some or all of their design, manufacturing, and logistics requirements. We have seen an increase in the penetration of the global OEM manufacturing requirements since the 2001 — 2002 technology downturn as more and more OEMs pursued the benefits of outsourcing rather than internal manufacturing. In the second half of fiscal 2009, we experienced dramatically deteriorating macroeconomic conditions and demand for our customers’ products slowed in all of the industries we served. This global economic crisis, and related decline in demand for our customers’ products, put pressure on certain of our OEM customers’ cost structures and caused them to reduce their manufacturing and supply chain outsourcing requirements. In response, we announced in March 2009 restructuring plans intended to rationalize our global manufacturing capacity and infrastructure with the intent to improve our operational efficiencies by reducing excess workforce and capacity. We have recognized approximately $258.1 million of associated charges since the announcement, with approximately $107.5 million and $150.6 million recognized during fiscal years 2010 and 2009, respectively. We do not anticipate additional material charges in future periods relating to these restructuring plans. Beginning in the second half of fiscal year 2010, we began seeing some positive signs that demand for our OEM customers’ end products was improving, and this trend of accelerated revenue continued in the quarter ended October 1, 2010. We believe the long-term, future growth prospects for outsourcing of advanced manufacturing capabilities, design and engineering services and after-market services remains strong.

We procure a wide assortment of materials, including electronic components, plastics and metals. We experienced shortages of numerous commodity components, such as capacitors, connectors, semiconductor and power components, during the first quarter ended July 2, 2010. However, these shortages began to abate during our second fiscal quarter, and we anticipate that they will continue to become less significant in future quarters.

We have experienced significant volume increases in our component product solution services. This steep growth is challenging due to the complexities of the products and processes involved. We are encouraged by the increased demand for these product solutions and the successful achievement of acceptance in the market, and we are intensely focused on improving our manufacturing efficiencies for these component product offerings. Our component product solution services, on a combined basis, were less than 10% of our consolidated revenue for the quarter and year-to-date periods ended October 1, 2010.

Our cash provided by operations increased approximately $179.1 million to $597.5 million for the six-month period ended October 1, 2010 as compared with $418.4 million for the six-month period ended October 2, 2009. As discussed further in Liquidity and Capital Resources below, our cash provided by working capital increased primarily as a result of an increase in our accounts payable, partially offset by increases in accounts receivable and inventory, as a result of higher sales and anticipated growth. We define net working capital as accounts receivable plus inventory less accounts payable. Our net working capital as a percentage of sales was approximately 3% for the quarter ended October 1, 2010 and is consistent with our last four quarter range of approximately 3% to 5% of annualized sales. Our free cash flow, which we define as cash from operating activities less net purchases of property and equipment, was $385.4 million for the quarter ended October 1, 2010. We believe free cash flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to repay debt obligations, make investments, fund acquisitions and for certain other activities. Effective September 29, 2010 we amended our Global Asset-Backed Securitization program and, as a result, all of the receivables sold to an unaffiliated financial institution are removed from our Condensed Consolidated Balance Sheets and cash received from the sale of the accounts receivables is no longer accounted for as a secured borrowing.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We believe the accounting policies discussed under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2010, affect our more significant judgments and estimates used in the preparation of the Condensed Consolidated Financial Statements.

Recent Accounting Pronouncements

Information regarding recent accounting pronouncements is provided in Note 2, “Summary of Accounting Policies” of the Notes to Condensed Consolidated Financial Statements.

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RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain statements of operations data expressed as a percentage of net sales. The financial information and the discussion below should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included in this document. In addition, reference should be made to our audited Consolidated Financial Statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2010 Annual Report on Form 10-K.

	Three-Month Periods Ended						Six-Month Periods Ended
	October 1, 2010			October 2, 2009			October 1, 2010			October 2, 2009
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		94.6			94.7			94.5			94.9
Restructuring charges		—			0.2			—			0.6
Gross profit		5.4			5.1			5.5			4.5
Selling, general and administrative expenses		2.7			3.0			2.8			3.3
Intangible amortization		0.3			0.4			0.3			0.4
Restructuring charges		—			—			—			0.1
Other charges, net		—			1.6			—			1.7
Interest and other expense, net		0.3			0.6			0.4			0.6
Income (loss) before income taxes		2.1			(0.5	)		2.0			(1.6	)
Provision for (benefit from) income taxes		0.2			(0.8	)		0.1			(0.4	)
Net income (loss)		1.9	%		0.3	%		1.9	%		(1.2	)%

Net sales

Net sales during the three-month period ended October 1, 2010 totaled $7.4 billion, representing an increase of $1.6 billion, or 27%, from $5.8 billion during the three-month period ended October 2, 2009, primarily due to an improved macroeconomic environment and market share gains as we recognized increased sales from many of our major customers. Sales increased across all of the markets we serve, consisting of: (i) $433.7 million in the mobile communications market, (ii) $385.0 million in the infrastructure market, (iii) $336.0 million in the industrial, automotive, medical and other markets, (iv) $232.0 million in the computing market, and (v) $203.9 million in the consumer digital market. Net sales increased across all of the geographic regions we serve including increases of $995.5 million in Asia, $333.4 million in Europe, and $261.7 million in the Americas.

Net sales during the six-month period ended October 1, 2010 totaled $14.0 billion, representing an increase of $2.4 billion, or 20%, from $11.6 billion during the six-month period ended October 2, 2009, primarily due to an improved macroeconomic environment as we recognized increased sales from many of our major customers. Sales increased across all of the markets we serve, consisting of: (i) $828.5 million in the industrial, automotive, medical and other markets, (ii) $566.6 million in the mobile communications market, (iii) $384.3 million in the computing market, (iv) $320.4 million in the infrastructure market, and (v) $274.1 million in the consumer digital market. Net sales increased across all of the geographic regions we serve including increases of $1.6 billion in Asia, $484.7 million in Europe, and $281.4 million in the Americas.

The following table sets forth net sales by market:

	Three-Month Periods Ended				Six-Month Periods Ended
Market:	October 1, 2010		October 2, 2009		October 1, 2010		October 2, 2009
	(In thousands)
Infrastructure	$	2,024,264	$	1,639,243	$	3,826,233	$	3,505,870
Industrial, Automotive, Medical and Other		1,466,851		1,130,837		2,924,029		2,095,512
Mobile		1,527,526		1,093,857		2,856,142		2,289,580
Computing		1,334,281		1,102,319		2,596,239		2,211,978
Consumer digital		1,069,416		865,505		1,785,575		1,511,500
	$	7,422,338	$	5,831,761	$	13,988,218	$	11,614,440

Our ten largest customers during the three-month and six-month periods ended October 1, 2010 accounted for approximately 53% and 51% of net sales, respectively, with Research In Motion and Hewlett-Packard each accounting for greater than 10% of our net sales in both periods. Our ten largest customers during the three-month and six-month periods ended October 2, 2009 accounted for approximately 47% of net sales in each period, respectively, with no customer accounting for greater than 10% of net sales during either period.

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Gross profit

Gross profit is affected by a number of factors, including the number and size of new manufacturing programs, product mix, component costs and availability, product life cycles, unit volumes, pricing, competition, new product introductions, product manufacturing yields, capacity utilization and the expansion and consolidation of manufacturing facilities. Gross profit during the three-month period ended October 1, 2010 increased $98.0 million to $397.6 million, or 5.4% of net sales, from $299.6 million, or 5.1% of net sales, during the three-month period ended October 2, 2009. The increase in gross margin was primarily attributable to increased demand resulting in improved capacity utilization driven by the 27% increase in our revenues, and in part, due to the completion of our restructuring activities and there being no restructuring costs for the three-month period ended October, 2010 versus restructuring costs of $12.4 million for the three-month period ended October 2, 2009.

Gross profit during the six-month period ended October 1, 2010 increased $244.9 million to $768.5 million, or 5.5% of net sales, from $523.6 million, or 4.5% of net sales, during the six-month period ended October 2, 2009. The increase in gross margin was primarily attributable to increased demand resulting in improved capacity utilization driven by the 20% increase in our revenues, and in part, due to the completion of our restructuring activities and there being no restructuring costs for the six-month period ended October 1, 2010 versus restructuring costs of $64.5 million for the six-month period ended October 2, 2009.

Restructuring charges

We did not incur restructuring charges during the three-month and six-month periods ended October 1, 2010 and have completed all activities associated with previously announced plans. We recognized approximately $12.6 million and $77.4 million during the three-month and six-month periods ended October 2, 2009, respectively, in connection with our restructuring plans announced in March 2009 to rationalize our global manufacturing capacity and infrastructure as a result of weak macroeconomic conditions. Our restructuring activities were intended to improve our operational efficiencies by reducing excess workforce and capacity. The cost associated with these restructuring activities included employee severance, costs related to owned and leased facilities and equipment that is no longer in use and is to be disposed of, and costs associated with the exit of certain contractual arrangements due to facility closures. As of October 1, 2010, there have been no changes to these plans. See Note 9, “Restructuring Charges” in the Notes to the Condensed Consolidated Financial Statements for a summary of the current quarter payments and remaining accrued balance as of October 1, 2010 for charges incurred in fiscal year 2010 and prior periods. The cost reductions associated with the restructuring activities, primarily reduced wages and benefits due to employee terminations, decreased depreciation expense resulting from equipment impairments and reduced costs associated with leased equipment and buildings have been achieved as anticipated. The overall impact on future operating results and cash flows from these restructuring activities is difficult to measure as there are offsetting reductions in revenues at affected locations as well as increases in certain costs at other locations related to transition activities for transferred programs or increased production ramp up costs. We do not separately track all of the interrelated components of these activities.

Refer to Note 9, “Restructuring Charges,” of the Notes to Condensed Consolidated Financial Statements for further discussion of our restructuring activities.

Selling, general and administrative expenses

Selling, general and administrative expenses, or SG&A, amounted to $199.0 million, or 2.7% of net sales, during the three-month period ended October 1, 2010, increasing $22.8 million from $176.2 million, or 3.0% of net sales, during the three-month period ended October 2, 2009. The increase in absolute dollars was primarily the result of an increase in corporate support activities, such as information technology and supply chain management, necessary to support the growth of our operations. The overall decrease in SG&A as a percentage of sales during the three-month period ended October 1, 2010 was primarily due to our significant increase in sales as we were able to leverage our SG&A percentage down.

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Selling, general and administrative expenses, or SG&A, amounted to $394.7 million, or 2.8% of net sales, during the six-month period ended October 1, 2010, increasing $16.8 million from $377.9 million, or 3.3% of net sales, during the six-month period ended October 2, 2009. The increase in absolute dollars was primarily the result of an increase in corporate support activities, such as information technology and supply chain management, necessary to support the growth of our operations. The overall decrease in SG&A as a percentage of sales during the three-month period ended October 1, 2010 was primarily due to our significant increase in sales as we were able to leverage our SG&A percentage down.

Intangible amortization

Amortization of intangible assets during the three-month period ended October 1, 2010 decreased by $1.3 million to $21.4 million from $22.7 million during the three-month period ended October 2, 2009, primarily due to the use of the accelerated method of amortization for certain customer related intangibles, which results in decreasing expense over time and was partially offset by purchase accounting adjustments.

Amortization of intangible assets during the six-month period ended October 1, 2010 decreased by $6.6 million to $39.4 million from $46.0 million during the six-month period ended October 2, 2009, primarily due to the use of the accelerated method of amortization for certain customer related intangibles, which results in decreasing expense over time and was partially offset by purchase accounting adjustments.

Other charges, net

During the three-month and six-month periods ended October 2, 2009, we recognized charges totaling $92.0 million and $199.4 million, respectively, associated with the impairment of notes receivable from one affiliate, an equity investment in another affiliate, and the sale of our interest in one of our non-majority owned investments.

Interest and other expense, net

Interest and other expense, net was $22.8 million during the three-month period ended October 1, 2010 compared to $38.1 million during the three-month period ended October 2, 2009, a decrease of $15.3 million. The decrease in interest expense is the result of less debt outstanding during the period resulting from the approximate $240.0 million redemption of the 1% Convertible Subordinated Notes, and the $300.0 million redemption of the 6.5% Senior Subordinated Notes. Further reduction in interest expense was due to lower interest rates as a result of $400.0 million in fixed rate debt associated with interest rate swaps expiring and converting to variable rate debt, and a $1.7 million decrease in non-cash interest expense from the redemption of our Zero Coupon Convertible Junior Subordinated Notes in July 2009. This decrease in interest expense was partially offset by less interest income resulting from the reduction in other notes receivable that were sold during the third quarter of fiscal year 2010. In addition, during the three-month period ended October 1, 2010, we recognized a gain of approximately $13.5 million associated with the sale of an equity investment and a loss of approximately $11.7 million in connection with the divestiture of certain international entities.

Interest and other expense, net was $50.4 million during the six-month period ended October 1, 2010 compared to $75.0 million during the six-month period ended October 2, 2009, a decrease of $24.6 million. The decrease in interest expense is the result of less debt outstanding during the period resulting from the approximate $240.0 million redemption of the 1% Convertible Subordinated Notes, $400.0 million tender and redemption of the 6.5% Senior Subordinated Notes and the $100.0 million tender of the 6.25% Senior Subordinated Notes. Further reduction in interest expense was due to lower interest rates as a result of $400.0 million in fixed rate debt associated with interest rate swaps expiring and converting to variable rate debt, and a $6.0 million decrease in non-cash interest expense from the redemption of our Zero Coupon Convertible Junior Subordinated Notes in July 2009. This decrease in interest expense was partially offset by less interest income resulting from the reduction in other notes receivable that were sold during the third quarter of fiscal year 2010. In addition, during the six-month period ended October 1, 2010, we recognized a gain of approximately $18.6 million associated with the sale of an equity investment and a loss of approximately $11.7 million in connection with the divestiture of certain international entities.

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Income taxes

Certain of our subsidiaries have, at various times, been granted tax relief in their respective countries, resulting in lower income taxes than would otherwise be the case under ordinary tax rates. Refer to Note 8, “Income Taxes,” of the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended March 31, 2010 for further discussion.

We have tax loss carryforwards attributable to operations for which we have recognized deferred tax assets. Our policy is to provide a reserve against those deferred tax assets that in management’s estimate are not more likely than not to be realized.

The consolidated effective tax rate for a particular period varies depending on the amount of earnings from different jurisdictions, operating loss carryforwards, income tax credits, changes in previously established valuation allowances for deferred tax assets based upon our current analysis of the realizability of these deferred tax assets, as well as certain tax holidays and incentives granted to our subsidiaries primarily in China, Malaysia, Israel, Poland and Singapore.

LIQUIDITY AND CAPITAL RESOURCES

As of October 1, 2010, we had cash and cash equivalents of approximately $1.8 billion and bank and other borrowings of approximately $2.2 billion. We also have a $2.0 billion credit facility, under which we had $60.0 million in borrowings outstanding as of October 1, 2010, which is included in the $2.2 billion of borrowings above. As of October 1, 2010, we were in compliance with the covenants under the Company’s indentures and credit facilities.

Cash provided by operating activities amounted to $597.5 million during the six-month period ended October 1, 2010. This resulted primarily from $262.6 million of net income for the period before adjustments to include approximately $230.7 million of non-cash expenses for depreciation and amortization. Our working capital accounts decreased $69.4 million on a net basis, primarily due to increases in accounts payable of $1.2 billion, partially offset by increases in inventory of $768.1 million and accounts receivable of $448.5 million, as a result of higher sales and anticipated growth. Changes in our other working capital accounts netted to an additional increase in cash provided by working capital of $45.3 million.

Effective September 29, 2010, we amended our Global Asset-Backed Securitization program to provide for the sale our eligible receivables to a special purpose entity, which in turn sells all of the eligible receivables to an unaffiliated financial institution. Following the transfer of the receivables to a special purpose entity, the transferred receivables are isolated from the Company and its affiliates, and effective control of the transferred receivables is passed to the unaffiliated financial institution, which has the right to pledge or sell the receivables. As a result, although we still consolidate the special purpose entity, all of the receivables sold to the unaffiliated financial institution are removed from our Condensed Consolidated Balance Sheets. A portion of the purchase price for the receivables is paid by the unaffiliated financial institution in cash and the balance is a deferred purchase price receivable, which is paid to the special purpose entity as payments on the receivables are collected from account debtors. The deferred purchase price receivable represents a beneficial interest in the transferred financial assets, is recognized at fair value as part of the sale transaction and does not impact cash from operations.

Accounts receivable sold under our Global Asset-Backed Securitization program totaling $313.5 million were removed from our Condensed Consolidated Balance Sheet and our deferred purchase price receivable associated with the sale of $141.2 million was recorded in Other current assets in the Condensed Consolidated Balance Sheet. The balance of receivables sold for cash as of March 31, 2010, totaling $217.1 million, was recorded as accounts receivables and short-term bank borrowings in the opening balance sheet of fiscal 2011. Upon collection of these receivables the Company recorded cash from operations offset by repayments of bank borrowings from financing activities in the Condensed Consolidated Statements of Cash Flows during the six-month period ended October 1, 2010.

Accounts receivable sold under our North American Asset-Backed Securitization program totaling $323.6 million were removed from our Condensed Consolidated Balance Sheet and our deferred purchase price receivable associated with the sale of $112.9 million was recorded in Other current assets in the Condensed Consolidated Balance Sheet. In addition, we sold $225.3 million of accounts receivable under our accounts receivable factoring program which were removed from our Condensed Consolidated Balance Sheet. For further information see Note 8 in our Notes to Condensed Consolidated Financial Statements.

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For the quarterly periods indicated, certain of management’s key liquidity metrics were as follows:

	Three-Month Periods Ended
	October 1,	July 2,	March 31,	December 31,	October 2,
	2010	2010	2010	2009	2009
Days in trade accounts receivable	36 days	37 days	37 days	33 days	34 days
Days in inventory	45 days	46 days	46 days	40 days	44 days
Days in accounts payable	69 days	69 days	72 days	62 days	63 days

Days in trade accounts receivable was calculated as the average accounts receivable for the current and prior quarters divided by annualized sales for the current quarter by day. During the three-month period ended October 1, 2010, days in trade accounts receivable increased by two days to 36 days compared to the three-month period ended October 2, 2009. This increase in trade accounts receivable was primarily attributable to higher sales. Trade receivables used to calculate days in trade accounts receivable in the periods ended October 1, 2010 and July 2, 2010 excludes approximately $254.1 million and $111.2 million, respectively, of the deferred purchase price receivable from the Global and North American Asset-Backed Securitization programs which was recorded in Other current assets in the Condensed Consolidated Balance Sheet.

Days in inventory was calculated as the average inventory for the current and prior quarters divided by annualized cost of sales for the current quarter by day. During the three-month period ended October 1, 2010, days in inventory increased one day compared to the three-month period ended October 2, 2009. The increase in days in inventory is primarily attributable to growth in inventory to accommodate higher anticipated sales.

Days in accounts payable was calculated as the average accounts payable for the current and prior quarters divided by annualized cost of sales for the current quarter by day. During the three-month period ended October 1, 2010, days in accounts payable increased six days to 69 days compared to the three-month period ended October 2, 2009 primarily due to the increase in inventory as a result of anticipated growth.

Cash used by investing activities amounted to $211.1 million during the six-month period ended October 1, 2010. This resulted primarily from $221.7 million in capital expenditures for property and equipment, net of proceeds from the disposition of property and equipment, and was partially offset by proceeds related to the sale of an equity investment for $18.6 million.

Cash used in financing activities amounted to $545.3 million during the six-month period ended October 1, 2010. During the six-month period ended October 1, 2010, we paid approximately $299.9 million to repurchase 51.1 million of our ordinary shares, $240.0 million to redeem our 1% Convertible Subordinated Notes, and $217.1 million related to our Global Asset-Backed Securitization program in connection with the adoption of new accounting standards, effective April 1, 2010, and an amendment to the program effective September 29, 2010. Cash was provided by $180.0 million in borrowings from term loans entered into during the period and $60.0 million from our revolving lines of credit.

As of October 1, 2010, quarterly maturities of our bank borrowings and long-term debt were as follows:

	First		Second		Third		Fourth
Fiscal Year	Quarter		Quarter		Quarter		Quarter		Total
	(In thousands)
2011		—		—	$	5,508	$	4,709	$	10,217
2012	$	4,709	$	4,667		4,667		4,667		18,710
2013		64,667		480,162		3,437		3,437		551,703
2014		3,437		177,937		305,079		2,907		489,360
2015		2,907		1,153,719		—		—		1,156,626
Thereafter (1)		—		—		—		—		5,336
Total									$	2,231,952

(1) Represents cumulative maturities for years subsequent to March 31, 2015.

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We continue to assess our capital structure, and evaluate the merits of redeploying available cash to reduce existing debt or repurchase shares.

During September 2010, we entered into two new three-year term loan agreements with certain financial institutions based in Asia and borrowed $180.0 million in the aggregate. Borrowings under the term loans bear interest at LIBOR plus margins ranging between 2.15% and 2.30% and we paid a non-refundable fee of $1.4 million at the inception of one of the loans.

On August 2, 2010, we paid $240.0 million to redeem the entire principal amount of the 1% Convertible Subordinated Notes at par plus accrued interest. On the maturity date, our stock price was less than the conversion price, and therefore, no ordinary shares were issued in connection with the redemption. The redemption of the 1% Convertible Subordinated Notes was financed primarily by the Asia Term Loans discussed above and $60.0 million in borrowings under our $2.0 billion credit facility.

On each of May 26, 2010 and August 12, 2010, our Board of Directors authorized the repurchase of up to $200.0 million, for a combined total of $400.0 million, of our outstanding ordinary shares. During the six-month period ended October 1, 2010, we repurchased approximately 51.1 million shares at an aggregate purchase price of $299.9 million.

Liquidity is affected by many factors, some of which are based on normal ongoing operations of our business and some of which arise from fluctuations related to global economics and markets. Cash balances are generated and held in many locations throughout the world. Local government regulations may restrict our ability to move cash balances to meet cash needs under certain circumstances. We do not currently expect such regulations and restrictions to impact our ability to pay vendors and conduct operations throughout our global organization. We believe that our existing cash balances, together with anticipated cash flows from operations and borrowings available under our existing credit facilities, will be sufficient to fund our operations through at least the next twelve months.

Future liquidity needs will depend on fluctuations in levels of our working capital requirements, the maturity profile of our existing debt, the timing of capital expenditures for new equipment, the extent to which we utilize operating leases for new facilities and equipment, timing of cash outlays associated with historical restructuring and integration activities, and levels of shipments and changes in volumes of customer orders.

Historically, we have funded our operations from existing cash and cash equivalents, cash generated from operations, proceeds from public offerings of equity and debt securities, bank debt and lease financings. We also continuously sell a designated pool of trade receivables under asset-backed securitization programs and sell certain trade receivables to certain third-party banking institutions with limited recourse under our accounts receivable factoring program. Our asset-backed securitization programs include certain limits on customer default rates. It is possible that we will experience default rates in excess of those limits, which, if not waived by the counterparty, could impair our ability to sell receivables under these arrangements in the future.

We may enter into debt and equity financings, sales of accounts receivable and lease transactions to fund acquisitions, future growth and the refinancing of existing indebtedness. The sale or issuance of equity or convertible debt securities could result in dilution to current shareholders. Additionally, we may issue debt securities that have rights and privileges senior to those of holders of ordinary shares, and the terms of this debt could impose restrictions on operations and could increase debt service obligations. This increased indebtedness could limit our flexibility as a result of debt service requirements and restrictive covenants, potentially affect our credit ratings, and may limit our ability to access additional capital or execute our business strategy. Any downgrades in credit ratings could adversely affect our ability to borrow by resulting in more restrictive borrowing terms.

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CONTRACTUAL OBLIGATIONS AND COMMITMENTS

Information regarding our long-term debt payments, operating lease payments, capital lease payments and other commitments is provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on our Form 10-K for the fiscal year ended March 31, 2010. Aside from the foregoing, there have been no material changes in our contractual obligations since March 31, 2010.

OFF-BALANCE SHEET ARRANGEMENTS

At March 31, 2010, under our Global Asset-Backed Securitization program, we sold a designated pool of receivables to a third-party qualified special purpose entity, which in turn sold an undivided interest to an investment conduit administered by an unaffiliated financial institution. We participated in this securitization arrangement as an investor in the conduit. The fair value of our investment participation, together with our recourse obligation that approximated 5% of the total receivables sold, was approximately $135.4 million.

Effective September 29, 2010, the securitization agreement was amended to provide for the sale by the special purpose entity of 100% of the eligible receivables to an unaffiliated financial institution. We continuously sell a designated pool of trade receivables to the unaffiliated financial institution under this program, and in addition to cash, we receive a deferred purchase price receivable for the receivables sold. The deferred purchase price receivable we retain serves as additional credit support to the financial institution and is recorded at its estimated fair value. The fair value of our deferred purchase price receivable was approximately $141.2 million as of October 1, 2010.

As a result of new accounting guidance effective April 1, 2010 and an amendment to our North American Asset-Backed Securitization program, 100% of the accounts receivable sold under this program are removed from our balance sheet. We continuously sell a designated pool of trade receivables to investment conduits administered by an unaffiliated financial institution under this program, and in addition to cash, we receive a deferred purchase price receivable for the receivables sold. The deferred purchase price receivable we retain serves as additional credit support to the investment conduits and is recorded at its estimated fair value. The fair value of our deferred purchase price receivable was approximately $112.9 million as of October 1, 2010.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes in our exposure to market risk for changes in interest and foreign currency exchange rates for the six-month period ended October 1, 2010 as compared to the fiscal year ended March 31, 2010.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of October 1, 2010, the end of the quarterly fiscal period covered by this quarterly report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of October 1, 2010, such disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s 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) Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during our second quarter of fiscal year 2011 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to legal proceedings, claims, and litigation arising in the ordinary course of business. We defend ourselves vigorously against any such claims. Although the outcome of these matters is currently not determinable, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2010, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be not material also may materially adversely affect our business, financial condition and/or operating results.

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

Issuer Purchases of Equity Securities

The following table provides information regarding purchases of our ordinary shares made by us for the period from July 3, 2010 through October 1, 2010.

					Total Number of Shares		Approximate Dollar Value
	Total Number				Purchased as Part of		of Shares that May Yet
	of Shares		Average Price		Publicly Announced		Be Purchased Under the
Period	Purchased (1)		Paid per Share		Plans or Programs (2)		Plans or Programs (2)
July 3 - August 2, 2010		10,596,295	$	6.09		10,596,295	$	—
August 3 - September 2, 2010		18,611,560		5.35		18,611,560		100,056,782
September 3 - October 1, 2010		—		—		—		100,056,782
Total		29,207,855		5.62		29,207,855

(1)	During the period from July 3, 2010 through October 1, 2010 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 each of May 26, 2010 and August 12, 2010, our Board of Directors authorized the repurchase of up to $200.0 million, for a combined total of $400.0 million, of our outstanding ordinary shares.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. (REMOVED AND RESERVED)

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibits — See Index to Exhibits below.

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SIGNATURES

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

FLEXTRONICS INTERNATIONAL LTD.
(Registrant)
 

/s/ Michael M. McNamara  

Michael M. McNamara 

Chief Executive Officer
(Principal Executive Officer) 

Date: November 3, 2010

/s/ Paul Read  

Paul Read 

Chief Financial Officer
(Principal Financial Officer) 

Date: November 3, 2010

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EXHIBIT INDEX

Exhibit No.		Exhibit
	10.01	Francois Barbier Offer Letter, dated as of July 1, 2010*
	10.02	Francois Barbier Relocation Expenses Addendum, dated as of July 1, 2010**
	10.03	Francois Barbier Confirmation Date Letter, dated as of August 30, 2010***
	10.04	2010 Flextronics International USA, Inc. Deferred Compensation Plan
	15.01	Letter in lieu of consent of Deloitte & Touche LLP.
	31.01	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.02	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.01	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.****
	32.02	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.****
101.INS		XBRL Instance Document****
101.SCH		XBRL Taxonomy Extension Scheme Document****
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document****
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document****
101.LAB		XBRL Taxonomy Extension Label Linkbase Document****
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document****

*	Incorporated by reference to Exhibit 10.01 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 3, 2010.
**	Incorporated by reference to Exhibit 10.02 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 3, 2010.
***	Incorporated by reference to Exhibit 10.03 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 3, 2010.
****	This exhibit is furnished with this Quarterly Report on Form 10-Q, is not deemed filed with the Securities and Exchange Commission, and is not incorporated by reference into any filing of Flextronics International Ltd. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing.

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EX-10.04

Exhibit 10.04

FLEXTRONICS INTERNATIONAL USA, INC.
2010 DEFERRED COMPENSATION PLAN

1. Purpose.

Flextronics International USA, Inc. hereby adopts this 2010 Deferred Compensation Plan (the “Plan”). The Plan sets forth the terms of an unfunded deferred compensation plan for a select group of management, highly compensated employees, directors and persons who have been part of a select group of management, highly compensated employees or directors of the Company (as defined below). It is intended that the Plan constitute an unfunded “top hat plan” for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Each Participant who is an employee of the Company or its Affiliates shall participate in the Plan in the Participant’s capacity as an employee whether or not the Participant also serves as a member of the Company’s board of directors; provided that a Participant who participates in the Plan pursuant to both an employee arrangement and a director arrangement will be treated as participating in the director arrangement in the Participant’s capacity as a director if the director arrangement is substantially similar to arrangements providing benefits to non-employee directors.

2. Definitions.

The following terms used in the Plan shall have the meanings set forth below:

(a) “Affiliate” means, with respect to the Company, any entity directly or indirectly controlling, controlled by, or under common control with the Company or any other entity designated by the Board in which the Company or an Affiliate has an interest.

(b) “Arbitrable Dispute” shall have the meaning set forth in Section 9(f).

(c) “Award Agreement” shall mean an agreement between the Company and a Participant for the payment to the Participant of compensation that is deferred under this Plan.

(d) “Beneficiary” shall mean any person, persons, trust or other entity designated by a Participant to receive benefits, if any, under the Plan upon such Participant’s death in accordance with Section 6(g).

(e) “Board” shall mean the Board of Directors of FIL.

(f) “Change in Control” shall mean a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of its assets, within the meaning of Code Section 409A(a)(2)(A)(v) and Treasury Regulations thereunder.

(g) “Claimant” shall have the meaning set forth in Section 9(a).

(h) “Code” shall mean the Internal Revenue Code of 1986, as amended, and Treasury Regulations issued thereunder.

(i) “Committee” shall mean the Compensation Committee appointed by the Board.

(j) “Company” shall mean Flextronics International USA, Inc. and, for purposes of determining the benefits provided under the Plan or as applicable under ERISA or the Code, any successor to all or a major portion of the Company’s assets or business that assumes the obligations of the Company, and any other corporation or unincorporated trade or business that has adopted the Plan with the approval of the Company, and is a member of the same controlled group of corporations or the same group of trades or businesses under common control (within the meaning of Code Sections 414(b) and 414(c) as modified by Code Section 415(h)) as the Company, or an affiliated service group (as defined in Code Section 414(m)) which includes the Company, or any other entity required to be aggregated with the Company pursuant to regulations under Code Sections 414(o) and 409A or any other affiliated entity that is designated by the Company as eligible to adopt the Plan.

(k) “Deferral Account” shall mean the recordkeeping account, and any sub-accounts that are determined by the Committee to be necessary or appropriate for the proper administration of the Plan, that are established and maintained by the Company in the name of a Participant as provided in Section 4(b) for compensation payable to a Participant pursuant to a Deferral Agreement. As the context requires, a reference to a Deferral Account shall include, if applicable, any subaccount thereof.

(l) “Deferral Agreement” shall mean an agreement executed by the Participant and the Company, in such form as approved by the Committee, and as may be revised from time to time with respect to any one or more Participants by or at the direction of the Committee, whereby (i) the Participant (A) agrees to receive certain types of compensation in the future pursuant to the provisions of this Plan, (B) elects to defer future compensation such Participant would otherwise be entitled to receive in cash from the Company, expressed as an amount or percentage of compensation to be deferred, and/or (C) makes such other elections as are permitted and provides such other information as is required under the Plan, and (ii) the Participant specifies a time and form of payment according to which the Participant will receive the payout of the compensation subject to the Deferral Agreement. Each Deferral Agreement shall be consistent with this Plan and shall incorporate by its terms the provisions of this Plan.

(m) “Deferral Day” shall mean, for each Participant, the day on which the Company is required, by the terms of an applicable Deferral Agreement or any other agreement between the Participant and the Company, to credit an amount to a Deferral Account under this Plan. In the absence of any such requirement to the contrary, a Deferral Day for an amount deferred under the Plan shall be a date as soon as practicable after such amount is deemed earned, or in the case of elective deferrals, as soon as practicable after such amount would have been payable to the Participant if the Participant had not elected to defer such amount, in each case as determined by the Plan Administrator in its sole discretion.

(n) “Disabled” shall mean, with respect to a Participant, that the Social Security Administration has determined that such Participant is totally disabled. This definition shall be construed and administered in accordance with the requirements of Code Section 409A(a)(2)(C) and Treasury Regulations thereunder.

(o) “ERISA” shall have the meaning set forth in Section 1.

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(p) “Fair Market Value” shall mean, on a given date of valuation, (i) with respect to any mutual fund, the closing net asset value as reported in The Wall Street Journal with respect to the date of valuation and (ii) with respect to a security traded on a national securities exchange or the NASDAQ National Market, the closing price on the date of valuation as reported in The Wall Street Journal.

(q) “FIL” shall mean Flextronics International Ltd

(r) “For Cause” shall mean (i) Participant shall have committed a felony, fraud, theft, embezzlement involving the assets of the Company; (ii) Participant willfully violates or causes the Company to violate, in a material respect, any statute, law, ordinance, rule or regulation relating to, or written policy of, the Company, which violation results in a material adverse effect to Company’s business or financial condition; (iii) Participant engages in any activity which is outside the scope of Participant’s authority and can reasonably be expected to have a material adverse effect on the Company’s business.

(s) “Hypothetical Investments” shall have the meaning set forth in Section 4(c)

(t) “Involuntary Separation from Service” shall mean any Separation from Service that is either an Involuntary Termination Without Cause or a Voluntary Termination for Good Reason.

(u) “Involuntary Termination Without Cause” shall mean a Separation from Service due to the independent exercise of the unilateral authority of the Company to terminate a Participant’s services other than For Cause. A termination by the Company shall be presumed to be an Involuntary Termination Without Cause unless the Company sets forth in a written notice of termination the grounds for such termination to be For Cause.

(v) “Manager” shall have the meaning set forth in Section 4(c).

(w) “Officers” shall have the meaning set forth in Section 8(b)(ii).

(x) “Participant” shall mean a present or former employee or director of the Company who participates in this Plan and any other present or former employee or director designated to participate in the Plan from time to time by the Committee.

(y) “Payment Subaccount” shall have the meaning set forth in Section 6(c)(ii).

(z) “Plan” has the meaning set forth in Section 1.

(aa) “Plan Administrator” shall mean the Plan Administrator, if any, appointed pursuant to Section 3(c).

(bb) “Released Party” shall have the meaning set forth in Section 8(b)(iii).

(cc) “Relevant” shall have the meaning set forth in Section 9(c)(i).

(dd) “Separation from Service” shall mean a Participant’s separation from service from the Company within the meaning of Code Section 409A(a)(2)(A)(i) and Treasury Regulations thereunder.

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(ee) “Specified Employee” shall mean a key employee (as defined in Code Section 416(i) without regard to paragraph 5 thereof) of the Company, including all persons with whom the Company would be treated as a single employer under Code Section 414(b) or 414(c), for so long as any of the stock of any such person is publicly traded on an established securities market or otherwise. This definition shall be construed and administered in accordance with the requirements of Code Section 409A(a)(2)(B)(i) and Treasury Regulations thereunder. For purposes of applying this definition, the Committee may, at its discretion, specify a “specified employee effective date” in accordance with the requirements of Treasury Regulation § 1.409A-1(i).

(ff) “Trust” shall mean any trust or trusts established or designated by the Company pursuant to Section 5(a) to hold assets in connection with the Plan.

(gg) “Trustee” shall have the meaning set forth in Section 5(a).

(hh) “Unforeseeable Emergency” shall mean a severe financial hardship to a Participant resulting from an illness or accident of the Participant, the Participant’s Spouse, the Participant’s beneficiary, or a dependent (as defined in Section 152(a) of the Code) of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. This definition shall be construed and administered in accordance with the requirements of Code Section 409A(a)(2)(B)(ii) and Treasury Regulations thereunder.

(ii) “USERRA” shall mean the Uniformed Service Employment and Reemployment Rights Act of 1994, as amended, 38 U.S.C. 4301-4334.

(jj) “Valuation Date” shall have the meaning set forth in Section 6(c)(ii)

(kk) “Voluntary Termination for Good Reason” shall mean a Separation from Service due to the independent exercise of the unilateral authority of a Participant to terminate his or her employment with the Company due to one the following conditions arising without the consent of the Participant:

(i)	A material diminution in the authority, duties, or responsibilities of the Participant or of the budget over which the Participant retains authority;
(ii)	A material reduction by the Company in the Participant’s base salary or other compensation;
(iii)	A material diminution in the authority, duties, or responsibilities of the supervisor to whom the Participant reports;
(iv)	A relocation of the Participant’s principal office to a location more than 50 miles from the current location of the Participant’ principal office; and,
(v)	Any other action or inaction of the Company that constitutes a material breach by the Company of any provision of this Agreement or any other agreement under which the Participant provides services to the Company.

Notwithstanding anything to the contrary in this Agreement, no Voluntary Termination for Good Reason shall occur unless (i) Participant has given written notice to the Company of the existence of a condition described in this Section 2(kk) within ninety (90) days of the initial existence of such condition and such condition has not been remedied by the Company within thirty (30) days after the receipt of such notice.

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3. Authority and Administration of the Committee and Plan Administrator.

(a) In General. The Committee shall administer the Plan and may select one or more persons to serve as the Plan Administrator. The Plan Administrator shall have authority to perform any act that the Committee is entitled to perform under this Plan, except to the extent that the Committee specifies limitations on the Plan Administrator’s authority. Any person selected to serve as the Plan Administrator may, but need not, be a Committee member or an officer or employee of the Company. However, if a person serving as Plan Administrator or a member of the Committee is a Participant, such person may not decide or vote on a matter affecting his interest as a Participant.

(b) Administration by Committee or Plan Administrator. The Committee or Plan Administrator shall administer the Plan in accordance with its terms, and shall have all powers necessary to accomplish such purpose, including the power and authority to reasonably construe and interpret the Plan, to reasonably define the terms used herein, to reasonably prescribe, amend and rescind rules and regulations, agreements, forms, and notices relating to the administration of the Plan, and to make all other determinations reasonably necessary or advisable for the administration of the Plan. The Committee or Plan Administrator may appoint additional agents and delegate thereto powers and duties under the Plan

(c) Designation of Plan Administrator. The initial Plan Administrator shall be the FIL’s Executive Vice President Worldwide HR and Management Systems. The Committee may from time to time designate a different person to serve as Plan Administrator.

4. Deferral Agreements, Deferral Accounts and Share Award Deferrals.

(a) Deferral Agreement. The Company and any Participant may agree to defer all or a portion of his or her compensation by executing a completed Deferral Agreement in the form, and within the time period, specified by the Committee. The Committee shall determine for each Participant the amount and type of compensation that may or shall be deferred pursuant to the Plan and such determination will be reflected on a Deferral Agreement form presented to the Participant. The Committee may establish maximum or minimum amounts of aggregate deferrals that may be elected by a Participant. A Participant shall not be entitled to vary any term set forth in a Deferral Agreement form except to the extent that the Deferral Agreement form itself permits variations. As permitted by the Committee, different components of compensation payable for a single service period, and different tranches of compensation payable for different service periods, may be subject to different Deferral Agreements that provide for different times and forms of payment. Deferrals of compensation may be made under the Plan only within the time periods permitted by Code Section 409A and Treasury Regulations thereunder.

(b) Establishment of Deferral Accounts. The Committee shall establish a Deferral Account for each Participant. Each Deferral Account shall be maintained for the Participant solely as a bookkeeping entry by the Company to evidence unfunded obligations of the Company. The Participant shall be vested in the Participant’s Deferral Account to the extent specified in an applicable Award Agreement, Deferral Agreement or in any other agreement between the Company and the Participant. The provisions with respect to vesting in any such Deferral Agreement or other agreement shall be incorporated in this Plan and given effect as if fully set forth herein. The Committee is authorized in its sole and absolute discretion to waive vesting conditions, or accelerate vesting, with respect to any portion of a Participant’s Deferral Account. A Participant’s Deferral Account shall be credited with the amounts required to be credited to the Participant’s Deferral Account pursuant to an Award Agreement, the Participant’s initial Deferral Agreement, or pursuant to any subsequent Deferral Agreement entered into by that Participant and the Company, in each case, less the amount of federal, state or local tax required by law to be withheld with respect to such amounts, unless such withholding is provided from another source, and shall be adjusted for Hypothetical Investment earnings or losses as described herein.

5

(c) Hypothetical Investments and Managers. The Committee shall select one or more hypothetical investment options (“Hypothetical Investments”). Hypothetical Investments shall be mutual funds or securities readily tradable on a U.S. securities exchange. At its sole discretion, the Committee may (but shall not be required to) allow a Participant to designate one or more investment managers approved by the Committee (each a “Manager”) and a Manager will then select hypothetical investments that, if permitted by the Committee, may or may not be Hypothetical Investments designated by the Committee, but which shall be mutual funds or securities readily tradable on a U.S. securities exchange. Amounts invested with a Manager shall be deemed Hypothetical Investments. The Committee may change or discontinue any Hypothetical Investment or Manager if reasonably necessary to satisfy business objectives of the Company or its Affiliates; provided that, following a Change in Control, the investment options existing immediately prior to such Change in Control shall not be changed or modified in a manner that is reasonably likely to be adverse to the Participants. The Committee may limit Hypothetical Investment choices to designated alternative groups or portfolios of Hypothetical Investments. The Committee may designate Hypothetical Investment (or groups or portfolios of Hypothetical Investments) as available only for vested or unvested amounts in a Participant’s Deferral Account and may require that any unvested amounts be invested only in Hypothetical Investments (or groups or portfolios of Hypothetical Investments) of the Company’s choosing.

(d) Investment of Deferral Accounts. As provided in Section 4(c), each Deferral Account shall be deemed to be invested in one or more Hypothetical Investments as elected by the Participant in the manner designated by the Committee for such election. The amounts of hypothetical gains and losses in value of the Hypothetical Investments shall be credited and debited to, or otherwise reflected in, such Deferral Account from time to time in accordance with procedures established by the Committee. In the event that a Participant fails to specify a Hypothetical Investment for any portion of his or her Deferral Account, such portion shall be deemed invested in the manner determined by the Committee. As permitted by the Committee, a Participant shall be allowed to change his or her investment election no less frequently than once per month. Unless otherwise determined by the Committee, amounts credited to a Deferral Account (or to a subaccount) shall be deemed invested in Hypothetical Investments as of the date such amount is credited to a Participant’s Deferral Account pursuant to an Award Agreement or Deferral Agreement.

(e) No Actual Investment. Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Hypothetical Investments are to be used for measurement purposes only. A Participant’s election of any Hypothetical Investment, the allocation of any deferred amounts to Hypothetical Investments, the calculation of additional amounts and the crediting or debiting of any amounts to a Participant’s Deferral Account shall not be considered or construed in any manner as an actual investment of his or her Deferral Account in any such Hypothetical Investment. In the event that the Company in its own discretion, decides to invest (or to cause the Trustee to invest) funds in any or all of the Hypothetical Investments, no Participant shall have any rights in or to such investments themselves. Without limiting the foregoing, a Participant’s Deferral Account shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Company or the Trust. The Participant shall at all times remain an unsecured creditor of the Company.

6

(f) Forfeiture of Unvested Portions of Deferral Accounts Upon Separation from Service. Upon a Participant’s Separation from Service, any unvested portion of the Participant’s Deferral Account (excluding the portion, if any, that vests as a result of such Separation from Service pursuant to Section 4(g) or otherwise) shall be forfeited and terminated, except as otherwise determined by the Committee in its sole and absolute discretion or as provided for in an applicable Award Agreement.

(g) Special Vesting Upon an Involuntary Separation from Service following a Change in Control. Notwithstanding Section 4(f), and unless the terms of this Section 4(g) are varied by the terms of an applicable Award Agreement, any unvested portion of a Participant’s Deferral Account shall vest immediately prior to an Involuntary Separation from Service within the two year period that follows a Change in Control.

(h) Change in Law. If a future change in law would, in the judgment of the Committee, likely accelerate taxation to a Participant of amounts that would be credited to the Participant’s Deferral Account in the future under the Participant’s Deferral Agreement, the Company and the Participant will attempt to amend the Plan to satisfy the requirements of the change in law and, unless and until such an amendment is agreed to, Company shall cease deferrals under the Participant’s Deferral Agreement on the effective date of such change in law; provided however, the Company shall not cease deferrals if such cessation would violate the provisions of Code Section 409A.

(i) Separate Maintenance of Vested Subaccounts. Separate vested subaccounts shall be established and maintained for each Participant with respect to each portion of the Participant’s Deferral Account (a) that has vested, (b) that vests in accordance with a certain schedule, or (c) that is payable to the Participant in accordance with a certain schedule. Except as otherwise provided in an applicable Award Agreement or applicable Deferral Agreement, the entire amount of a subaccount, as adjusted for Hypothetical Investment gains or losses immediately prior to vesting, shall vest at the same time and pursuant to the same conditions as the amount initially credited to the subaccount; and the amount of each vested subaccount, as adjusted for Hypothetical Investment gains or losses, shall be subject to the same payout conditions as the amount initially credited to the subaccount.

(j) USSERA Rights. The Committee shall make available to a Participant an initial deferral election, and an election to change the time or form of payment of the Participant’s Deferral Account, if and as required to satisfy the requirements of the USERRA and Treasury Regulation 1.409-2(a)(15).

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5. Establishment of Trust.

(a) The Trust Agreement. The Company has entered or will enter into a Trust Agreement for the Plan, providing for the establishment of a trust to be held and administered by a trustee (the “Trustee”) designated in the Trust Agreement (the “Trust”). The Trustee shall be the agent for purposes of such duties delegated to the Trustee by the Committee as set forth in the Trust Agreement. The Trust shall be irrevocable; provided that, upon a Participant’s Separation from Service, the Trustee Agreement shall require that the Trustee pay to the Company an amount equal to the unvested portion of the Participant’s Deferral Account as determined under the Plan.

(b) Funding the Trust. On each relevant Deferral Day, the Company shall deposit into the Trust cash equal to the aggregate amount required to be credited to the Participant’s Deferral Account for that Deferral Day, less applicable taxes withheld, if any. The assets of the Trust shall remain subject to the claims of the general creditors of the Company in the event of an insolvency of the Company. Assets of the Trust shall at all times be located within the United States.

(c) Taxes and Expenses of the Trust. The Committee shall make all investment decisions for the Trust, and no Participant shall be entitled to direct any investments of the Trust. All taxes on any gains and losses from the investment of the assets of the Trust shall be recognized by the Company and the taxes thereon shall be paid by the Company and shall not be recovered from the Deferral Accounts or the Trust. The third-party administrative expenses of the Plan and the Trust, including expenses charged by the Trustee to establish the Trust and the Trustee’s annual fee per Deferral Account, shall be paid by the Company, and shall neither be payable by Trustee from the Trust nor reduce any Deferral Accounts; provided that any Managers’ fees or other expenses incurred with respect to particular Hypothetical Investment or any asset of the Trust which corresponds to a particular Hypothetical Investment shall be charged to the Deferral Account that is deemed invested in such Hypothetical Investment. No part of the Company’s internal expenses to administer the Plan, including overhead expenses, shall be charged to the Trust or the Deferral Accounts.

6. Settlement of Deferral Accounts.

(a) Payout Elections. The Company shall pay or direct the Trustee to pay the net amount of the Participant’s vested Deferral Account as elected by the Participant in the Participant’s Deferral Agreement in accordance with the provisions of this Plan or as provided in an Award Agreement. A Participant shall be required to select one of the payout alternatives set forth in the form of Deferral Agreements provided to the Participant by the Committee from time to time. Except for payouts due to the death, Disability, Unforeseeable Emergency or Separation from Service of the Participant, no payout of amounts credited to a Participant’s Deferral Account shall occur prior to the first anniversary of the Deferral Agreement. The Committee may, in its sole discretion, allow a Participant to redefer the payout of his Deferral Account, or of one or more subaccounts of the Participant’s Deferral Account, one or more times; provided, that (i) such redeferral may not take effect until at least 12 months after the date on which such election is made; (ii) in the case of an election related to any payment other than a payment that would be made upon the Participant’s death, Disability, or the occurrence of an Unforeseeable Emergency, the first payment with respect to which such election is made must be deferred for a period of not less than 5 years from the date such payment would otherwise have been made; and (iii) any election that would affect a scheduled payout may be made not less than 12 months prior to the date of the first scheduled payout date. The preceding restrictions on redeferrals shall be construed and administered in accordance with the requirements of Code Section 409A(a)(4)(C) and Treasury Regulations thereunder. No Participant shall be entitled to accelerate the time or schedule of any payment under the Plan, except where an acceleration would not result in the imposition of additional tax under Code Section 409A.

8

(b) Form of Payment. Distributions from a Participant’s Deferral Account shall be made in cash or, in the sole discretion of the Committee, in marketable securities selected by the Committee, which shall be valued at their Fair Market Value on the date of such distribution. If a Participant has elected a Hypothetical Investment that is in whole or in part not marketable or for which a Fair Market Value cannot be determined, the actual security represented by such Hypothetical Investment may be distributed to Participant in lieu of cash or marketable securities. Any distributions to a Participant shall reduce the Company’s obligations under the Plan to such Participant. The Company’s obligation under the Plan may be satisfied by distributions from the Trust.

(c) Timing of Payments.

(i) Payments in settlement of a Participant’s Deferral Account shall be distributed no earlier than the Participant’s Separation from Service, Disability, death, a specified time (or pursuant to a fixed schedule) specified in the applicable Deferral Agreement, Change in Control or the occurrence of an Unforeseeable Emergency. If no date is specified for payment of a subaccount of a Participant’ Deferral Account in an applicable Deferral Agreement, payment of such subaccount shall made on the date that is six (6) months after the date of the Participant’s Separation from Service (or, if earlier, the date of the Participant’s death). In the case of a Participant who is a Specified Employee, a payment on account of Separation from Service may not be made before the date which is 6 months after the date of Separation from Service (or, if earlier, the date of the Participant’s death). In such event, any payment (including a single lump sum payment or any installment payments) that otherwise would have been payable within such six (6) month period will be accumulated and paid as soon as administratively practicable after such six (6) month period, but no later than 90 days after such 6 month period (with the Plan Administrator retaining discretion as to the specific payment date within that 90 day period). Any payment election set forth in a Participant’s Deferral Agreement shall be construed as prohibiting distributions that would otherwise be payable within the six (6) month period following the Participant’s Separation from Service to the extent, and only to the extent, required under the preceding two sentences.

(ii) Payments in settlement of a Deferral Account shall be made as soon as practicable after the date or dates (including upon the occurrence of specified events), but no later than 90 days after the date or dates (with the Plan Administrator retaining discretion as to the specific payment date within that 90 day period), and in such number of installments, as directed by the Participant in the Participant’s Deferral Agreement, unless otherwise provided in this Section 6. All amounts needed for a payment shall be deemed withdrawn from the Hypothetical Investments on a date (a “Valuation Date”) that is prior to and reasonably proximate to, but in no event shall be no more than 10 days prior to, the date of a payment to a Participant and transferred to a separate subaccount (a “Payout Subaccount”). Payout Subaccounts shall not be adjusted for any investment gains or losses subsequent to the Valuation Date. If a Participant has elected to receive installment payments, the amount of the distribution payable shall be based upon the value of the Deferral Account on the Valuation Date, and Participant’s Hypothetical Investments shall be reduced pro rata on the basis of the value of the Participant’s Hypothetical Investments on the Valuation Date. If a Participant has elected to receive partial payments of the amount in his or her Deferral Account, unpaid balances shall continue to be deemed to be invested in the Hypothetical Investments as designated in the applicable Deferral Agreement.

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(iii) If a Participant fails to designate a Beneficiary or if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant’s benefits, the Participant’s designated Beneficiary shall be the executor or personal representative of the Participant’s estate, if a probate proceeding is open at the time for the distribution(s), and otherwise shall be the person(s) who would be entitled to the distribution(s) under the Participant’s last will and /or revocable trust (if such will distributes the residuary estate to such trust) and otherwise to the person(s) who would inherit the Participant’s property under the law of the Participant’s last domicile. The payment of benefits under the Plan to a Beneficiary shall fully and completely discharge the Company from all further obligations under this Plan with respect to the Participant, and such Participant’s interest in the Plan shall terminate upon such full payment of benefits.

(iv) Irrespective of any elections made by a Participant, if the Committee, acting in good faith, determines that a Participant is Disabled, the net vested amount credited to a Participant’s Deferral Account shall be paid out in a single lump sum to the Participant as soon as practicable after the date that that the Participant is determined to be Disabled, but in no event later than the 90^th day after such date.

(v) Whenever a payment in settlement or partial settlement of a Participant’s Deferral Account is required to be made within a specified period of time, the Participant shall have no right to designate the taxable year of the payment (other than pursuant to a redeferral election made in accordance with the requirements of Section 6(a).

(vi) Each separately identifiable payment under the Plan shall be treated as a separate payment for purposes of Code Section 409A to the fullest extent permitted by Code Section 409A. For purposes of this Plan, a right to receive installment payments shall be treated as a right to receive a series of separate payments.

(vii) The Company may delay a payment to a Participant to the extent that the Company reasonably anticipates that if the payment were made as scheduled under the Plan and the applicable Deferral Agreement, the Company’s deduction with respect to such payment would not be permitted due to the application of Code Section 162(m), provided that the payment is made either during the Company’s first taxable year in which the Company reasonably anticipates, or should reasonably anticipate, that if the payment is made during such year, the deduction of such payment will not be barred by application of Code Section 162(m) or during the period beginning with the date of the Participant’s Separation from Service and ending on the later of the last day of the taxable year of Company in which the service provider separates from service or the 15^th day of the third month following the Participant’s Separation from Service, and provided further that where any scheduled payment to a Participant in the Company’s taxable year is delayed in accordance with this paragraph, all scheduled payments to that Participant that could be delayed in accordance with this paragraph are also delayed. This paragraph shall be construed and administered in accordance with the requirements of Treasury Regulation §1.409A-2(b)(7)(i).

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(d) Unforeseeable Emergency. Other provisions of the Plan notwithstanding, if the Committee, acting in good faith, determines that the Participant has an Unforeseeable Emergency, the Committee shall direct the immediate lump sum payment to the Participant of vested amounts that the Committee determines to be necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such Unforeseeable Emergency is or may be relieved through reimbursement or compensation by insurance, any additional compensation that is available due to the cancellation of a deferral election upon a payment due to an unforeseeable emergency, or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship). The preceding sentence shall be construed and administered in accordance with the requirements of Code Section 409A(a)(2)(B)(ii) and Treasury Regulations thereunder. If the Committee determines that a Participant has an Unforeseeable Emergency, the Committee shall authorize the cessation of deferrals by such Participant under the Plan.

(e) Distribution upon Income Inclusion under Code Section 409A or to Satisfy other Tax Obligations. If the Committee determines that the Plan fails to meet the requirements of Code Section 409A and Treasury Regulations thereunder, the Trustee shall distribute to the Participant the portion of the Participant’s Deferral Account that is required to be included in income as a result of the failure of the Plan to comply with the requirements of Code Section 409A and Treasury Regulations thereunder. If the Committee determines that state, local or foreign tax obligations (including employment taxes and income tax withholding at source on wages) arise from a Participant’s participation in the Plan with respect to an amount deferred under the Plan before the amount is paid or made available to the Participant, the Participant may receive a distribution from the Participant’s Deferral Account (either in the form of withholding that is paid over to a governmental entity pursuant to provisions of applicable law or by distributions directly to the Participant) to reflect such tax obligation, provided the amount so distributed shall not exceed the amount of such taxes due as a result of participation in the Plan. Additionally, a Participant may receive a distribution from the Participant’s Deferral Account to pay income tax at source on wages imposed under Code Section 3401 attributable to additional Section 3401 wages and taxes. Any distribution made to a Participant pursuant to this Section 6(e) shall be paid, to the extent possible, out of the vested portion of the Participant’s Deferral Account. The provisions of this Section 6(e) shall be construed and administered in accordance with the requirements of Treasury Regulation § 1.409A-3(j)(4)(vi), (vii), and (xi), as applicable, so as to prevent, to the extent possible, the imposition of any tax pursuant to Code Section 409A.

(f) Effect on Deferral Account. A Participant’s Deferral Account shall be debited to the extent of any distributions to, or the tax withholding for the benefit of, the Participant pursuant to this Section 6.

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(g) Designation of Beneficiary. Each Participant may from time to time designate any individual, trust, charity or other person or persons to whom the value (or a portion of the value) of the Participant’s Deferral Account shall be paid if the Participant dies before receiving the full value of his or her Deferral Account (the Participant’s “Beneficiary”). A Beneficiary designation shall be made in the manner required by the Plan Administrator for this purpose. Primary, secondary, or contingent Beneficiaries are permitted. A married participant designating a Beneficiary other than his or her spouse must obtain the consent of his or her spouse to such designation (in accordance with procedures determined by the Plan Administrator). Payments to the Participant’s Beneficiary(ies) shall be made in accordance with applicable provisions of the Plan after the Plan Administrator has received proper notification of the Participant’s death.

A Beneficiary designation shall be effective only when the Beneficiary designation is filed with the Plan Administrator while the Participant is alive, and a subsequent Beneficiary designation will cancel all of the Participant’s Beneficiary designations previously filed with the Plan Administrator. Once received and acknowledged by the Plan Administrator, a Beneficiary designation shall be effective as of the date the designation was executed, but without prejudice to the Plan Administrator on account of any payment made before the change is received and acknowledged by the Plan Administrator. If a deceased Participant failed to designate a Beneficiary, or if a designated Beneficiary predeceases the Participant, the value of the Participant’s Deferral Accounts shall be payable to the Participant’s spouse or, if there is none, to the Participant’s estate, or in accordance with such other equitable procedures as determined by the Plan Administrator.

(h) Reemployment. If a former Participant is rehired by the Company, or any person with whom the Company would be considered a single employer under Code Section 414(b) and (c), and regardless of whether such former Participant is designated as a Participant, or a former Participant returns to service as a member of the Board, any payments being made to such former Participant hereunder by reason of such former Participant’s previous Separation from Service shall continue to be made without regard to such rehire or return to service.

7. Amendment and Termination.

(a) Amendment. The Plan Administrator may, with prospective or retroactive effect, amend or alter the Plan (i) if the Internal Revenue Service determines that any amounts deferred under the Plan are includible in the Participant’s gross income prior to being paid out to the Participant, (ii) any time, if determined to be necessary, appropriate or advisable in response to administrative guidance issued under Code Section 409A or to comply with the provisions of Code Section 409A, or (iii) if no Participant is materially adversely affected by such action with respect to amounts required to be credited to the Participant’s Deferral Account under any previously executed Deferral Agreement; provided further that, following a Change in Control, the Plan will not be subject to amendment, alteration, suspension, discontinuation or termination without the prior written consent of each Participant who would be reasonable expected to be materially adversely affected by such action; and provided further that, in each case, the Company may accelerate distributions under this Plan only to the extent (if any) that doing so will not result in the imposition of additional tax or interest under Code Section 409A. Following a Change in Control, the Company will use commercially reasonable efforts to amend the Plan without detriment to a Participant whenever necessary to avoid the imposition of additional tax and interest under Section 409A.

(b) Termination. Notwithstanding any other provision to the contrary and except as may otherwise be provided by the Committee, the Plan shall terminate as soon as possible following the payment of all amounts in respect of all Deferral Accounts.

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8. General Provisions.

(a) Limits on Transfer of Awards. Other than by will, the laws of descent and distribution, or by appointing a Beneficiary, no right, title or interest of any kind in the Plan shall be transferable or assignable by a Participant (or the Participant’s Beneficiary) or be subject to alienation, anticipation, encumbrance, garnishment, attachment, levy, execution or other legal or equitable process, nor subject to the debts, contracts, liabilities or engagements, or torts of any Participant or the Participant’s Beneficiary. Any attempt to alienate, sell, transfer, assign, pledge, garnish, attach or take any other action subject to legal or equitable process or encumber or dispose of any interest in the Plan shall be void.

(b) Waiver, Receipt and Release.

(i) As between the Participant and the Company, a Participant and the Participant’s Beneficiary shall assume all risk (other than for the gross negligence of the Company or the Committee or Plan Administrator, or breach by the Company of the terms of this Plan) in connection with the Plan, Trust design, implementation or administration, decisions made by the Participant’s Manager and the resulting value of the Participant’s Deferral Account, the selection and actions of the Trustee or any other third party providing services to the Company or the Trust in connection with the Plan or Trust (including their administrative and investment expenses), including any income taxes of the Participant or Participant’s Beneficiary relating to or arising out of his or her participation in the Plan, and neither the Company nor the Committee or Plan Administrator shall be liable or responsible therefor other than as provided in Section 5(c). Notwithstanding the foregoing sentence, the Company shall indemnify a Participant for any additional tax and interest imposed pursuant to Code Section 409A as a result of any action of the Company in administering or operating the Plan; provided, however, that the foregoing indemnity shall not apply to additional tax and interest that could have been avoided by any action or inaction of the Participant reasonably requested by the Company that would have had the effect of reducing such additional tax or interest. In addition, the Company shall indemnify each Participant for reasonable defense costs, including reasonable attorneys’ fees and other professional fees, incurred by that Participant as a result of any audit by a taxing authority and subsequent appeals and litigation with respect any matter for which the Participant is indemnified pursuant to this Section 8(b)(i). An amount for which a Participant is indemnified under the preceding two sentences (“Indemnified Amount”) shall be computed on an after-tax basis, so that after the payment by the Participant of any and all taxes (including any interest on such taxes, additions to tax, and penalties) and amounts payable pursuant to Code Section 409A(a)(1)(B)) with respect to matters for which Participant is indemnified, including any Indemnified Amount, the Participant will retain an amount equal to the amount that the Participant would have had if the Participant had not been subject to Code Section 409A(a)(1)(B) with respect to matters for which the Participant is indemnified hereunder. Any Indemnified Amount with respect to taxes, additions to tax or interest shall be paid no later than the end of the Participant’s taxable year following the taxable year of the Participant in which the Participant remits the related taxes; and any Indemnified Amount with respect to fees, expenses or costs of conducting a tax controversy shall be paid no later than the end of the Participant’s taxable year following the taxable year of the Participant in which the taxes that are the subject of the audit or litigation are remitted to the applicable taxing authority, or, where as a result of such audit or litigation no taxes are remitted, no later than the end of the Participant’s taxable year following the taxable year of the Participant in which the audit is completed or there is a final and nonappealable settlement or other resolution of the audit or litigation.

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(ii) As a condition of being a Participant in the Plan, each Participant must sign a waiver (which may be a part of the Deferral Agreement) releasing the Company and its Affiliates, the Committee, the Plan Administrator, officers of the Company or its Affiliates (the “Officers”) and the Board from any claims and liabilities regarding the matters to which the Participant has assumed the risk as set forth in this Section. Payments (in any form) to any Participant or Beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims for compensation deferred and relating to the Deferral Account to which the payments relate against the Company or any Affiliate or the Committee or Plan Administrator, and the Committee or Plan Administrator may require such Participant or Beneficiary, as a condition to such payments, to execute a waiver, receipt and release to such effect.

(iii) As a condition of being a Participant in the Plan, each Participant must sign a waiver releasing the Trustee and each of its Affiliates (each, a “Released Party”) against any and all loss, claims, liability and expenses imposed on or incurred by any Released Party as a result of any acts taken or any failure to act by the Trustee, where such act or failure to act is in accordance with the directions from the Committee or Plan Administrator or any designee of the Committee or Plan Administrator.

(iv) Subject to the Company’s indemnification of Participants described in Section 8(b)(i), each Participant agrees to pay any taxes, penalties and interest such Participant or Beneficiary may incur in connection with his or her participation in this Plan, and further agrees to indemnify the Company and its Affiliates, the Committee, the Plan Administrator, Officers, the Board and the Company’s agents for such taxes, penalties and interest the Participant or Participant’s Beneficiary incurs and fails to pay and for which the Company is made liable by the appropriate tax authority.

(c) Unfunded Status of Awards, Creation of Trusts. The Plan is intended to constitute an unfunded plan for deferred compensation and each Participant shall rely solely on the unsecured promise of the Company for payment hereunder. With respect to any payment not yet made to a Participant under the Plan, nothing contained in the Plan shall give a Participant any rights that are greater than those of a general unsecured creditor of the Company.

(d) Participant Rights. No provision of the Plan or transaction hereunder shall confer upon any Participant any right or impose upon any Participant any obligation to be employed by the Company or an Affiliate, or to interfere in any way with the right of the Company or an Affiliate to increase or decrease the amount of any compensation payable to such Participant. Subject to the limitations set forth in Section 8(c) hereof, the Plan shall inure to the benefit of, and be binding upon, the parties hereto and their successors and assigns.

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(e) Tax Withholding. The Company shall have the right to deduct from amounts otherwise credited to or paid from a Deferral Account any sums that federal, state, local or foreign tax law requires to be withheld.

(f) Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of California, without giving effect to principles of conflicts of laws to the extent not pre-empted by federal law.

(g) Limitation. A Participant and the Participant’s Beneficiary shall assume all risk in connection with (i) the performance of the Managers, (ii) the performance of the Hypothetical Investments, and (iii) the tax treatment of amounts deferred under or paid pursuant to the Plan, and the Company, the Committee, the Plan Administrator, and the Board shall not be liable or responsible therefor.

(h) Construction. The captions and numbers preceding the sections of the Plan are included solely as a matter of convenience of reference and are not to be taken as limiting or extending the meaning of any of the terms and provisions of the Plan. Whenever appropriate, words used in the singular shall include the plural or the plural may be read as the singular.

(i) Severability. In the event that any provision of the Plan shall be declared illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions of the Plan but shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provision had never been inserted herein.

(j) Status. The establishment and maintenance of, or allocations and credits to, the Deferral Account of any Participant shall not vest in any Participant any right, title or interest in or to any Plan or Company assets or benefits except at the time or times and upon the terms and conditions and to the extent expressly set forth in the Plan and in accordance with the terms of any Trust.

(k) Spouse’s Interest. The interest in the benefits hereunder of a Participant’s spouse who has predeceased the Participant shall automatically pass to the Participant and shall not be transferable by such spouse in any manner, including but not limited to such spouse’s will, nor shall such interest pass under the laws of intestate succession.

(l) Successors. The provisions of the Plan shall bind the Company and its successors.

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9. Claims Procedures.

The procedures for filing claims for payments under the Plan are described below:

(a) Presentation of Claim. It is the intent of the Company to make payments under the Plan without the Participant having to complete or submit any claim forms. However, any Participant or Beneficiary who believes he or she is entitled to a payment under the Plan may submit a claim for payment to the Plan Administrator. Any claim for payments under the Plan must be made by the Participant or his Beneficiary in writing and state the Claimant’s name and nature of benefits payable under the Plan. The Claimant’s claim shall be deemed to be filed when delivered to the Plan Administrator which shall make all determinations as to the right of any person(s) to benefits hereunder. Claims for benefits under this Plan shall be made by the Participant, his or her Beneficiary or a duly authorized representative thereof (“Claimant”). If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within sixty (60) days after such notice was received by the Claimant. All other claims must be made within one hundred eighty (180) days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the benefit or other determination desired by the Claimant. The claim must be accompanied with sufficient supporting documentation for the benefit or other determination requested by the Claimant.

(b) Notification of Decision.

(i) Claim for benefits other than upon Disability. If the claim is wholly or partially denied, the Plan Administrator shall provide written or electronic notice thereof to the Claimant within a reasonable period of time, but not later than 90 days after receipt of the claim. An extension of time for processing the claim for benefits is allowable if special circumstances require an extension, but such an extension shall not extend beyond 180 days from the date the claim for benefits is received by the Plan Administrator. Written notice of any extension of time shall be delivered or mailed within 90 days after receipt of the claim and shall include an explanation of the special circumstances requiring the extension and the date by which the Plan Administrator expects to render the final decision.

(ii) Claim for benefits upon Disability. If the claim is wholly or partially denied, the Plan Administrator shall provide written or electronic notice thereof to the Claimant within a reasonable period of time, but not later than 45 days after receipt of the claim. An initial extension of time for processing the claim for benefits is allowable if necessary due to circumstances beyond the Plan Administrator’s control, but such an initial extension shall not extend beyond 30 days from the date the claim for benefits is received by the Plan Administrator. Written notice of the initial extension of time shall be delivered or mailed within 45 days after receipt of the claim and shall include an explanation of the circumstances requiring the extension, the date by which the Plan Administrator expects to render the final decision, the standards on which entitlement to a benefit is based, unresolved issues that prevent a decision and any additional information needed to resolve these issues. If prior to the end of the initial extension, the Plan Administrator determines that, due to matters beyond its control, a decision cannot be rendered within the first 30 day extension period, the period for making the determination may be extended for up to an additional 30 days. Written notice of the additional extension of time shall be delivered or mailed within the initial extension period and shall include an explanation of the circumstances requiring the extension, the date by which the Plan Administrator expects to render the final decision, the standards on which entitlement to a benefit is based, unresolved issues that prevent a decision and any additional information needed to resolve these issues. The Claimant shall have 45 days to provide such additional information.

(iii) Required content of the Notice of Adverse Benefit Determination.

(1) In general. The notice of adverse benefit determination shall:

(A)	specify the reason or reasons the claim was denied;
(B)	reference the pertinent Plan provisions upon which the decision was based;

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(C)	describe any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary;
(D)	indicate the steps to be taken by the Claimant if a review of the denial is desired, including the time limits applicable thereto; and
(E)	contain a statement of the Claimant’s right to bring a civil action under ERISA in the event of an adverse determination on review.

If notice of the adverse benefit determination is not furnished in accordance with the preceding provisions of this Section, the claim shall be deemed accepted and payment shall be made to the Claimant in accordance with the claim.

(2) Claim for disability benefits. The notice of adverse benefit determination shall, in addition to the information specified in (1) above, disclose any internal rule, guidelines, protocol or similar criterion relied on in making the adverse determination or a statement that such information will be provided free of charge upon request.

(c) Review of a Denied Claim.

(i) Claim for benefits other than upon disability. If a claim is denied and a review is desired, the Claimant shall notify the Committee in writing within 60 days after receipt of written notice of a denial of a claim. In requesting a review, the Claimant may submit any written comments, documents, records, and other information relating to the claim, the Claimant feels are appropriate. The Claimant shall, upon request and free of charge, be provided reasonable access to, and copies of, all documents, records and other information that, with respect to the Claimant’s claim for benefits (A) was relied upon in making the benefit determination, (B) was submitted, considered, or generated in the course of making the benefit determination, whether or not actually relied upon in making the determination; or (C) demonstrates compliance with the administrative processes and safeguards of this claims procedure (sometimes referred to for purposes of this Section 9 as “Relevant”). The Committee shall review the claim taking into account all comments, documents, records and other information submitted by the Claimant, without regard to whether such information was submitted or considered in the initial benefit determination.

(ii) Claim for benefits upon disability. The review procedures in Section 9(c)(i) above shall apply, except the Claimant shall notify the Committee in writing within 180 days after receipt of written notice of a denial of a claim, and no deference shall be given to the initial benefit determination. The review shall be conducted by a different individual than the person who made the initial benefit determination or a subordinate of that person. The following procedures will apply to the review of an adverse benefit determination:

(1) In the case of a claim denied on the grounds of a medical judgment, the Committee will consult with a health professional with appropriate training and experience. The health care professional who is consulted on review will not be the same individual who was consulted, if any, regarding the initial benefit determination or a subordinate of that individual.

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(2) A Claimant shall, on request and free of charge, be given reasonable access to, and copies of, all documents, records, and other information Relevant to the Claimant’s claim for benefits. If the advice of a medical or vocational expert was obtained in connection with the initial benefit determination, the names of each such expert shall be provided on request by the Claimant, regardless of whether the advice was relied on by the Plan Administrator.

(d) Decision on Review.

(i) Claim for benefits other than upon disability. The Committee shall provide the Claimant with written notice of its decision on review within a reasonable period of time, but not later than 60 days after receipt of a request for a review. An extension of time for making the decision on the request for review is allowable if special circumstances shall occur, but such an extension shall not extend beyond 120 days from the date the request for review is received by the Committee. Written notice of the extension of time shall be delivered or mailed within 60 days after receipt of the request for review, indicating the special circumstances requiring an extension and the date by which the Committee expects to render a determination.

(ii) Claim for benefits upon disability. The Committee shall provide the Claimant with written notice of its decision on review within a reasonable period of time, but not later than 45 days after receipt of a request for a review. An extension of time for making the decision on the request for review is allowable if special circumstances shall occur, but such an extension shall not extend beyond 90 days from the date the request for review is received by the Committee. Written notice of the extension of time shall be delivered or mailed within 45 days after receipt of the request for review, indicating the special circumstances requiring an extension and the date by which the Committee expects to render a determination.

(iii) Required content of the Notice of Adverse Benefit Determination.

(1) In general. In the event of an adverse benefit determination on review, the notice thereof shall (A) specify the reason or reasons for the adverse determination; (B) reference the specific provisions of this Plan on which the benefit determination is based; (C) contain a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of all records and other information Relevant to the Claimant’s claim for benefits; (D) a statement describing any voluntary appeal procedures offered by the Plan, including the arbitration procedures in Section 9(f); and (E) inform the Claimant of the right to bring a civil action under the provisions of ERISA. If notice of the adverse benefit determination is not furnished in accordance with the preceding provisions of this Section, the claim shall be deemed accepted and payment shall be made to the Claimant in accordance with the claim.

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(2) Claim for disability benefits. The notice of adverse benefit determination shall, in addition to the information specified in (1) above, (A) disclose any internal rule, guidelines, protocol or similar criterion relied on in making the adverse determination or a statement that such information will be provided free of charge upon request, and (B) include the following statement: “You and your Plan may have other voluntary alternative dispute resolution options, such as mediation. One way to find out what may be available is to contact your local U.S. Department of Labor Office and your State insurance regulatory agency.”

(e) Preservation of Remedies. After exhaustion of the claims procedure as provided herein, nothing shall prevent the Claimant from pursuing any other legal or equitable remedy otherwise available, including the right to bring a civil action under Section 502(a) of ERISA, if applicable.

(f) Elective Arbitration. If a Claimant’s claim described in Section 9(a) is denied pursuant to Sections 9(b) and 9(d) (an “Arbitrable Dispute”), the Claimant may, in lieu of the Claimant’s right to bring a civil action under Section 502(a) of ERISA, and as the Claimant’s only further recourse, submit the claim to final and binding arbitration in the city of San Jose, State of California, before an experienced employment arbitrator selected in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association. Except as otherwise provided in this Section 9(f) or Section 9(h), each party shall pay the fees of their respective attorneys, the expenses of their witnesses and any other expenses connected with the arbitration, but all other costs of the arbitration, including the fees of the arbitrator, costs of any record or transcript of the arbitration, administrative fees and other fees and costs shall be paid in equal shares by each party (or, if applicable, each group of parties) to the arbitration. In any Arbitrable Dispute in which the Claimant prevails, the Company shall reimburse the Claimant’s reasonable attorneys fees and related expenses. Related expenses shall include, but not be limited to, witness expenses, fees of the arbitrator, costs of any record or transcript of the arbitration, administrative fees and other fees and expenses connected with the arbitration. Arbitration in this manner shall be the exclusive remedy for any Arbitrable Dispute for which an arbitration is elected. The arbitrator’s decision or award shall be fully enforceable and subject to an entry of judgment by a court of competent jurisdiction. Should any party attempt to resolve an Arbitrable Dispute for which an arbitration is elected by any method other than arbitration pursuant to this Section, the responding party shall be entitled to recover from the initiating party all damages, expenses and attorneys fees incurred as a result.

(g) Legal Action. Prior to a Change in Control, except to enforce an arbitrator’s award, no actions may be brought by a Claimant in any court with respect to an Arbitrable Dispute that is arbitrated.

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(h) Following a Change in Control. Upon the occurrence of a Change in Control, an independent party selected jointly by the Participants in the Plan prior to the Change in Control and the Committee or the Plan Administrator or other appropriate person shall assume all duties and responsibilities of the Committee or Plan Administrator under this Section 9 and actions may be brought by a Claimant in any appropriate court with respect to an Arbitrable Dispute that is arbitrated. After a Change in Control, if any person or entity has failed to comply (or is threatening not to comply) with any of its obligations under the Plan, or takes or threatens to take any action to deny, diminish or to recover from any Participant the benefits intended to be provided thereunder, the Company shall reimburse the Participant for reasonable attorneys fees and related costs incurred in the pursuance or defense of the Participant’s rights. If the Participant does not prevail, attorneys fees shall also be payable under the preceding sentence to the extent the Participant had reasonable justification for pursuing its claim, but only to the extent that the scope of such representation was reasonable.

10. Effective Date.

The Plan shall be effective as of July 1, 2010.

Flextronics International USA, Inc.
By:	/s/ Paul J. Humphries Paul J. Humphries
	Executive VP WW HR & Management Systems

Date Signed: October 8, 2010

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EX-15.01

EXHIBIT 15.01

November 3, 2010

Flextronics International Ltd.
One Marina Boulevard, #28-00
Singapore 018989

We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited interim financial information of Flextronics International Ltd. and subsidiaries for the periods ended October 1, 2010 and October 2, 2009, as indicated in our report dated November 3, 2010 (which report included an explanatory paragraph regarding the adoption of new accounting standards); because we did not perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended October 1, 2010 is incorporated by reference in Registration Statement Nos. 333-46166, 333-55528, 333-55850, 333-57680, 333-60270, 333-69452, 333-75526, 333-101327, 333-103189, 333-110430, 333-119387, 333-120056, 333-121302, 333-126419, 333-143331, 333-143330, 333-146549, 333-146548, and 333-157210 on Form S-8 and Nos. 333-41646, 333-46200, 333-46770, 333-55530, 333-56230, 333-60968, 333-68238, 333-70492, 333-89944, 333-109542, 333-114970, 333-118499, 333-120291, 333-121814, and 333-130253 on Form S-3.

We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

/s/ DELOITTE & TOUCHE LLP

San Jose, California

EX-31.01

EXHIBIT 31.01

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Michael M. McNamara, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Flextronics International Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2010

/s/ Michael M. McNamara Michael M. McNamara

Chief Executive Officer

EX-31.02

EXHIBIT 31.02

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO
SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Paul Read, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Flextronics International Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2010

/s/ Paul Read Paul Read

Chief Financial Officer

EX-32.01

EXHIBIT 32.01

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

I, Michael M. McNamara, Chief Executive Officer of Flextronics International Ltd. (the “Company”), hereby certify to the best of my knowledge, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

• the Quarterly Report on Form 10-Q of the Company for the period ended October 1, 2010, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 3, 2010

/s/ Michael M. McNamara Michael M. McNamara

Chief Executive Officer

(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to Flextronics International Ltd. and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.02

EXHIBIT 32.02

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

I, Paul Read, Chief Financial Officer of Flextronics International Ltd. (the “Company”), hereby certify to the best of my knowledge, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

• the Quarterly Report on Form 10-Q of the Company for the period ended October 1, 2010, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 3, 2010

/s/ Paul Read Paul Read

Chief Financial Officer

(Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to Flextronics International Ltd. and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request.