14. SUPPLEMENTAL GUARANTOR AND NON-GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

Flextronics International Ltd. (“Parent”) has two tranches of Notes of $500 million each outstanding, which mature on February 15, 2020 and February 15, 2023, respectively. These Notes are senior unsecured obligations, and are guaranteed, fully and unconditionally, jointly and severally, on an unsecured basis, by certain of the Company’s 100% owned subsidiaries (the “guarantor subsidiaries”). These subsidiary guarantees will terminate upon 1) a sale or other disposition of the guarantor or the sale or disposition of all or substantially all the assets of the guarantor (other than to the Parent or a subsidiary); 2) such guarantor ceasing to be a guarantor or a borrower under the Company’s Term Loan Agreement and the Revolving Line of Credit; 3) defeasance or discharge of the Notes, as provided in the Notes indenture; or 4) if at any time the Notes are rated investment grade.

In lieu of providing separate financial statements for the guarantor subsidiaries, the Company has included the accompanying condensed consolidating financial statements, which are presented using the equity method of accounting. The principal elimination entries relate to investment in subsidiaries and intercompany balances and transactions, including transactions with the Company’s non-guarantor subsidiaries.

Condensed Consolidating Balance Sheets as of June 27, 2014

	Parent		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	265,273	$	25,164		$	1,057,253	$	—		$	1,347,690
Accounts receivable	—		806,735			2,087,887		—			2,894,622
Inventories	—		1,238,539			2,271,624		—			3,510,163
Inter company receivable	10,127,115		7,656,660			9,710,239		(27,494,014		)	—
Other current assets	389		145,098			1,091,461		—			1,236,948
Total current assets	10,392,777		9,872,196			16,218,464		(27,494,014		)	8,989,423
Property and equipment, net	—		438,870			1,815,794		—			2,254,664
Goodwill and other intangible assets, net	700		38,451			350,218		—			389,369
Other assets	2,573,176		98,214			2,126,471		(4,363,493		)	434,368
Investment in subsidiaries	1,013,070		858,751			16,602,017		(18,473,838		)	—
Total assets	$	13,979,723	$	11,306,482		$	37,112,964	$	(50,331,345	)	$	12,067,824

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Bank borrowings and current portion of long-term debt	$	36,250	$	45		$	19,043	$	—		$	55,338
Accounts payable	—		1,265,284			3,476,749		—			4,742,033
Accrued payroll	—		95,635			281,498		—			377,133
Inter company payable	9,539,121		9,978,361			7,976,532		(27,494,014		)	—
Other current liabilities	38,491		696,874			1,323,343		—			2,058,708
Total current liabilities	9,613,862		12,036,199			13,077,165		(27,494,014		)	7,233,212
Long term liabilities	2,103,601		2,007,345			2,786,291		(4,363,493		)	2,533,744
Flextronics International Ltd. shareholders’ equity	2,262,260		(2,737,062		)	21,210,900		(18,473,838		)	2,262,260
Noncontrolling interests	—		—			38,608		—			38,608
Total shareholders’ equity	2,262,260		(2,737,062		)	21,249,508		(18,473,838		)	2,300,868
Total liabilities and shareholders’ equity	$	13,979,723	$	11,306,482		$	37,112,964	$	(50,331,345	)	$	12,067,824

Condensed Consolidating Balance Sheets as of March 31, 2014

	Parent		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	638,714	$	30,500		$	924,514	$	—		$	1,593,728
Accounts receivable	—		766,110			1,931,875		—			2,697,985
Inventories	—		1,387,510			2,211,498		—			3,599,008
Inter company receivable	8,867,520		6,968,138			9,149,244		(24,984,902		)	—
Other current assets	246		277,035			1,232,324		—			1,509,605
Total current assets	9,506,480		9,429,293			15,449,455		(24,984,902		)	9,400,326
Property and equipment, net	—		427,390			1,861,266		—			2,288,656
Goodwill and other intangible assets, net	775		39,074			337,369		—			377,218
Other assets	2,585,169		103,335			4,628,970		(6,883,524		)	433,950
Investment in subsidiaries	3,350,690		522,489			16,392,541		(20,265,720		)	—
Total assets	$	15,443,114	$	10,521,581		$	38,669,601	$	(52,134,146	)	$	12,500,150

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Bank borrowings and current portion of long-term debt	$	32,500	$	60		$	15	$	—		$	32,575
Accounts payable	—		1,256,204			3,491,575		—			4,747,779
Accrued payroll	—		83,288			271,601		—			354,889
Inter company payable	8,607,486		9,422,179			6,955,237		(24,984,902		)	—
Other current liabilities	24,868		626,550			1,870,026		—			2,521,444
Total current liabilities	8,664,854		11,388,281			12,588,454		(24,984,902		)	7,656,687
Long term liabilities	4,615,210		2,050,460			2,859,638		(6,883,524		)	2,641,784
Flextronics International Ltd. shareholders’ equity	2,163,050		(2,917,160		)	23,182,880		(20,265,720		)	2,163,050
Noncontrolling interest	—		—			38,629		—			38,629
Total shareholders’ equity	2,163,050		(2,917,160		)	23,221,509		(20,265,720		)	2,201,679
Total liabilities and shareholders’ equity	$	15,443,114	$	10,521,581		$	38,669,601	$	(52,134,146	)	$	12,500,150

Condensed Consolidating Statements of Operations for the Three-Month Period Ended June 27, 2014

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net sales	$	—		$	3,915,326	$	5,312,077		$	(2,584,658	)	$	6,642,745
Cost of sales	—			3,580,578		5,266,040			(2,584,658		)	6,261,960
Gross profit	—			334,748		46,037			—			380,785
Selling, general and administrative expenses	—			44,626		164,651			—			209,277
Intangible amortization	75			623		6,253			—			6,951
Interest and other, net	16,531			259,748		(301,651		)	—			(25,372		)
Income (loss) from continuing operations before income taxes	(16,606		)	29,751		176,784			—			189,929
Provision for income taxes	—			1,482		14,560			—			16,042
Equity in earnings in subsidiaries	190,493			67,301		33,179			(290,973		)	—
Net income (loss)	$	173,887		$	95,570	$	195,403		$	(290,973	)	$	173,887

Condensed Consolidating Statements of Operations for the Three-Month Period Ended June 28, 2013

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net sales	$	—		$	3,484,434		$	4,595,431		$	(2,288,740	)	$	5,791,125
Cost of sales	—			3,140,837			4,627,993			(2,288,740		)	5,480,090
Gross profit (loss)	—			343,597			(32,562		)	—			311,035
Selling, general and administrative expenses	800			51,224			171,595			—			223,619
Intangible amortization	75			1,081			7,046			—			8,202
Interest and other, net	(49,280		)	267,202			(198,238		)	—			19,684
Income (loss) from continuing operations before income taxes	48,405			24,090			(12,965		)	—			59,530
Provision for (benefit from) income taxes	10			1,251			(988		)	—			273
Equity in earnings in subsidiaries	10,862			(11,551		)	2,772			(2,083		)	—
Net income (loss)	$	59,257		$	11,288		$	(9,205	)	$	(2,083	)	$	59,257

Condensed Consolidating Statements of Comprehensive Income (Loss) for the Three-Month Period Ended June 27, 2014

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net income (loss)	$	173,887		$	95,570		$	195,403		$	(290,973	)	$	173,887
Other comprehensive income (loss):
Foreign currency translation adjustments, net of zero tax	(4,145		)	(77,152		)	(271,529		)	348,681			(4,145		)
Unrealized gain (loss) on derivative instruments and other, net of zero tax	10,725			(21,989		)	(22,124		)	44,113			10,725
Comprehensive income (loss)	$	180,467		$	(3,571	)	$	(98,250	)	$	101,821		$	180,467

Condensed Consolidating Statements of Comprehensive Income (Loss) for the Three-Month Period Ended June 28, 2013

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net income (loss)	$	59,257		$	11,288		$	(9,205	)	$	(2,083	)	$	59,257
Other comprehensive income (loss):
Foreign currency translation adjustments, net of zero tax	(17,509		)	(13,644		)	(27,281		)	40,925			(17,509		)
Unrealized gain (loss) on derivative instruments and other, net of zero tax	(10,134		)	2			(10,135		)	10,133			(10,134		)
Comprehensive income (loss)	$	31,614		$	(2,354	)	$	(46,621	)	$	48,975		$	31,614

Condensed Consolidating Statements of Cash Flows for the Three-Month Period Ended June 27, 2014

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Net cash provided by (used in) operating activities	$	(13,025	)	$	248,848		$	(316,992	)	$	—		(81,169		)
Cash flows from investing activities:
Purchases of property and equipment, net of proceeds from disposal	—			(35,401		)	(37,516		)	—			(72,917		)
Proceeds from divesture of business, net of cash held in divested business	—			—			(5,493		)	—			(5,493		)
Investing cash flows from (to) affiliates	(1,185,671		)	(538,017		)	572,278			1,151,410			—
Other investing activities, net	—			(959		)	(20,503		)	—			(21,462		)
Net cash provided by (used in) investing activities	(1,185,671		)	(574,377		)	508,766			1,151,410			(99,872		)
Cash flows from financing activities:
Proceeds from bank borrowings and long-term debt	—			—			26,615			—			26,615
Repayments of bank borrowings, long-term debt and capital lease obligations	—			(393		)	(466		)	—			(859		)
Payments for repurchases of ordinary shares	(105,568		)	—			—			—			(105,568		)
Net proceeds from issuance of ordinary shares	9,329			—			—			—			9,329
Financing cash flows from (to) affiliates	931,635			321,342			(101,567		)	(1,151,410		)	—
Other financing activities, net	—			—			300			—			300
Net cash provided by (used in) financing activities	835,396			320,949			(75,118		)	(1,151,410		)	(70,183		)
Effect of exchange rates on cash and cash equivalents	(10,141		)	(756		)	16,083			—			5,186
Net increase (decrease) in cash and cash equivalents	(373,441		)	(5,336		)	132,739			—			(246,038		)
Cash and cash equivalents, beginning of period	638,714			30,500			924,514			—			1,593,728
Cash and cash equivalents, end of period	$	265,273		$	25,164		$	1,057,253		$	—		$	1,347,690

Condensed Consolidating Statements of Cash Flows for the Three-Month Period Ended June 28, 2013

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)

Net cash provided by (used in) operating activities	$	51,963		$	(568,028	)	$	713,609		$	1,032		$	198,576
Cash flows from investing activities:
Purchases of property and equipment, net of proceeds from disposal	—			(105,657		)	(35,165		)	(551		)	(141,373		)
Acquisition of businesses, net of cash acquired	—			(1,026		)	(186,517		)	—			(187,543		)
Investing cash flows from (to) affiliates	(438,186		)	354,871			(589,921		)	673,236			—
Other investing activities, net	—			890			29,289			—			30,179
Net cash provided by (used in) investing activities	(438,186		)	249,078			(782,314		)	672,685			(298,737		)
Cash flows from financing activities:
Proceeds from bank borrowings and long-term debt	—			133			25			—			158
Repayments of bank borrowings, long-term debt and capital lease obligations	(8,636		)	(414		)	(101		)	—			(9,151		)
Payments for repurchases of ordinary shares	(215,210		)	—			—			—			(215,210		)
Net proceeds from issuance of ordinary shares	10,909			—			—			—			10,909
Financing cash flows from (to) affiliates	371,446			311,306			(9,035		)	(673,717		)	—
Other financing activities, net	—			—			15,652			—			15,652
Net cash provided by (used in) financing activities	158,509			311,025			6,541			(673,717		)	(197,642		)
Effect of exchange rates on cash and cash equivalents	10,211			369			(20,290		)	—			(9,710		)
Net decrease in cash and cash equivalents	(217,503		)	(7,556		)	(82,454		)	—			(307,513		)
Cash and cash equivalents, beginning of period	740,515			82,900			763,672			—			1,587,087
Cash and cash equivalents, end of period	$	523,012		$	75,344		$	681,218		$	—		$	1,279,574