15. 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 September 26, 2014

	Parent		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	470,139	$	321,665		$	722,548	$	—		$	1,514,352
Accounts receivable	—		1,189,969			1,336,911		—			2,526,880
Inventories	—		1,653,596			1,973,044		—			3,626,640
Inter company receivable	10,094,013		8,128,810			10,142,505		(28,365,328		)	—
Other current assets	6,577		202,559			1,002,052		—			1,211,188
Total current assets	10,570,729		11,496,599			15,177,060		(28,365,328		)	8,879,060
Property and equipment, net	—		504,883			1,689,083		—			2,193,966
Goodwill and other intangible assets, net	625		47,428			365,184		—			413,237
Other assets	2,495,053		108,349			2,196,815		(4,366,607		)	433,610
Investment in subsidiaries	930,357		1,372,617			16,077,482		(18,380,456		)	—
Total assets	$	13,996,764	$	13,529,876		$	35,505,624	$	(51,112,391	)	$	11,919,873

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Bank borrowings and current portion of long-term debt	$	40,000	$	35		$	5,544	$	—		$	45,579
Accounts payable	—		1,657,866			3,035,660		—			4,693,526
Accrued payroll	—		117,170			264,096		—			381,266
Inter company payable	9,532,897		11,370,249			7,462,182		(28,365,328		)	—
Other current liabilities	26,609		825,056			1,084,239		—			1,935,904
Total current liabilities	9,599,506		13,970,376			11,851,721		(28,365,328		)	7,056,275
Long term liabilities	2,092,704		2,091,422			2,703,225		(4,366,607		)	2,520,744
Flextronics International Ltd. shareholders’ equity	2,304,554		(2,531,922		)	20,912,378		(18,380,456		)	2,304,554
Noncontrolling interests	—		—			38,300		—			38,300
Total shareholders’ equity	2,304,554		(2,531,922		)	20,950,678		(18,380,456		)	2,342,854
Total liabilities and shareholders’ equity	$	13,996,764	$	13,529,876		$	35,505,624	$	(51,112,391	)	$	11,919,873

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	$	210,462		$	744,552	$	—		$	1,593,728
Accounts receivable	—		1,203,600			1,494,385		—			2,697,985
Inventories	—		1,701,872			1,897,136		—			3,599,008
Inter company receivable	8,867,520		6,963,002			9,528,158		(25,358,680		)	—
Other current assets	246		383,590			1,125,769		—			1,509,605
Total current assets	9,506,480		10,462,526			14,790,000		(25,358,680		)	9,400,326
Property and equipment, net	—		490,166			1,798,490		—			2,288,656
Goodwill and other intangible assets, net	775		46,916			329,527		—			377,218
Other assets	2,585,169		120,739			4,692,156		(6,964,114		)	433,950
Investment in subsidiaries	3,350,690		822,528			15,965,981		(20,139,199		)	—
Total assets	$	15,443,114	$	11,942,875		$	37,576,154	$	(52,461,993	)	$	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	—		1,614,384			3,133,395		—			4,747,779
Accrued payroll	—		106,046			248,843		—			354,889
Inter company payable	8,607,486		10,126,691			6,624,503		(25,358,680		)	—
Other current liabilities	24,868		756,767			1,739,809		—			2,521,444
Total current liabilities	8,664,854		12,603,948			11,746,565		(25,358,680		)	7,656,687
Long term liabilities	4,615,210		2,140,985			2,849,703		(6,964,114		)	2,641,784
Flextronics International Ltd. shareholders’ equity	2,163,050		(2,802,058		)	22,941,257		(20,139,199		)	2,163,050
Noncontrolling interest	—		—			38,629		—			38,629
Total shareholders’ equity	2,163,050		(2,802,058		)	22,979,886		(20,139,199		)	2,201,679
Total liabilities and shareholders’ equity	$	15,443,114	$	11,942,875		$	37,576,154	$	(52,461,993	)	$	12,500,150

Condensed Consolidating Statements of Operations for the Three-Month Period Ended September 26, 2014

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net sales	$	—		$	4,456,995		$	5,219,767		$	(3,148,245	)	$	6,528,517
Cost of sales	—			4,139,945			5,159,736			(3,148,245		)	6,151,436
Gross profit	—			317,050			60,031			—			377,081
Selling, general and administrative expenses	—			57,525			147,065			—			204,590
Intangible amortization	75			605			7,552			—			8,232
Interest and other, net	(68,309		)	277,193			(198,962		)	—			9,922
Income (loss) from continuing operations before income taxes	68,234			(18,273		)	104,376			—			154,337
Provision for income taxes	—			8,142			7,292			—			15,434
Equity in earnings in subsidiaries	70,669			(49,086		)	50,147			(71,730		)	—
Net income (loss)	$	138,903		$	(75,501	)	$	147,231		$	(71,730	)	$	138,903

Condensed Consolidating Statements of Operations for the Three-Month Period Ended September 27, 2013

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net sales	$	—		$	4,325,352		$	5,239,450		$	(3,154,696	)	$	6,410,106
Cost of sales	—			3,965,291			5,231,088			(3,154,696		)	6,041,683
Gross profit	—			360,061			8,362			—			368,423
Selling, general and administrative expenses	—			57,999			160,501			—			218,500
Intangible amortization	75			955			6,688			—			7,718
Interest and other, net	(163,869		)	284,155			(106,685		)	—			13,601
Income (loss) from continuing operations before income taxes	163,794			16,952			(52,142		)	—			128,604
Provision for income taxes	—			2,188			8,211			—			10,399
Equity in earnings in subsidiaries	(45,589		)	(85,198		)	41,901			88,886			—
Net income (loss)	$	118,205		$	(70,434	)	$	(18,452	)	$	88,886		$	118,205

Condensed Consolidating Statements of Operations for the Six-Month Period Ended September 26, 2014

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net sales	$	—		$	8,968,224	$	10,025,449		$	(5,822,411	)	$	13,171,262
Cost of sales	—			8,298,137		9,937,670			(5,822,411		)	12,413,396
Gross profit	—			670,087		87,779			—			757,866
Selling, general and administrative expenses	—			112,019		301,848			—			413,867
Intangible amortization	150			1,229		13,804			—			15,183
Interest and other, net	(51,777		)	536,944		(500,617		)	—			(15,450		)
Income from continuing operations before income taxes	51,627			19,895		272,744			—			344,266
Provision for income taxes	—			14,790		16,686			—			31,476
Equity in earnings in subsidiaries	261,163			12,774		86,579			(360,516		)	—
Net income (loss)	$	312,790		$	17,879	$	342,637		$	(360,516	)	$	312,790

Condensed Consolidating Statements of Operations for the Six-Month Period Ended September 27, 2013

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net sales	$	—		$	8,066,344		$	9,582,043		$	(5,447,156	)	$	12,201,231
Cost of sales	—			7,360,905			9,608,024			(5,447,156		)	11,521,773
Gross profit (loss)	—			705,439			(25,981		)	—			679,458
Selling, general and administrative expenses	800			118,448			322,871			—			442,119
Intangible amortization	150			2,036			13,734			—			15,920
Interest and other, net	(213,203		)	550,750			(304,262		)	—			33,285
Income (loss) from continuing operations before income taxes	212,253			34,205			(58,324		)	—			188,134
Provision for income taxes	10			6,582			4,080			—			10,672
Equity in earnings in subsidiaries	(34,781		)	(95,847		)	34,748			95,880			—
Net income (loss)	$	177,462		$	(68,224	)	$	(27,656	)	$	95,880		$	177,462

Condensed Consolidating Statements of Comprehensive Income (Loss) for the Three-Month Period Ended September 26, 2014

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net income (loss)	$	138,903		$	(75,501	)	$	147,231		$	(71,730	)	$	138,903
Other comprehensive income (loss):
Foreign currency translation adjustments, net of zero tax	(5,683		)	75,966			65,611			(141,577		)	(5,683		)
Unrealized gain (loss) on derivative instruments and other, net of zero tax	(2,433		)	(2,058		)	(2,433		)	4,491			(2,433		)
Comprehensive income (loss)	$	130,787		$	(1,593	)	$	210,409		$	(208,816	)	$	130,787

Condensed Consolidating Statements of Comprehensive Income (Loss) for the Three-Month Period Ended September 27, 2013

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net income (loss)	$	118,205		$	(70,434	)	$	(18,452	)	$	88,886		$	118,205
Other comprehensive income (loss):
Foreign currency translation adjustments, net of zero tax	(11,988		)	(38,084		)	(39,132		)	77,216			(11,988		)
Unrealized gain (loss) on derivative instruments and other, net of zero tax	9,553			4,668			9,553			(14,221		)	9,553
Comprehensive income (loss)	$	115,770		$	(103,850	)	$	(48,031	)	$	151,881		$	115,770

Condensed Consolidating Statements of Comprehensive Income (Loss) for the Six-Month Period Ended September 26, 2014

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated
	(in thousands)
Net income (loss)	$	312,790		$	17,879		$	342,637	$	(360,516	)	$	312,790
Other comprehensive income (loss):
Foreign currency translation adjustments, net of zero tax	(9,828		)	91,618			71,337		(162,955		)	(9,828		)
Unrealized gain (loss) on derivative instruments and other, net of zero tax	8,292			(228		)	8,292		(8,064		)	8,292
Comprehensive income (loss)	$	311,254		$	109,269		$	422,266	$	(531,535	)	$	311,254

Condensed Consolidating Statements of Comprehensive Income (Loss) for the Six-Month Period Ended September 27, 2013

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net income (loss)	$	177,462		$	(68,224	)	$	(27,656	)	$	95,880		$	177,462
Other comprehensive income (loss):
Foreign currency translation adjustments, net of zero tax	(29,497		)	(64,165		)	(66,413		)	130,578			(29,497		)
Unrealized gain (loss) on derivative instruments and other, net of zero tax	(581		)	3,424			(582		)	(2,842		)	(581		)
Comprehensive income (loss)	$	147,384		$	(128,965	)	$	(94,651	)	$	223,616		$	147,384

Condensed Consolidating Statements of Cash Flows for the Six-Month Period Ended September 26, 2014

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Net cash provided by operating activities	$	24,949		$	217,745		$	63,551		$	—		306,245
Cash flows from investing activities:
Purchases of property and equipment, net of proceeds from disposal	—			(73,455		)	(64,929		)	(11		)	(138,395		)
Acquisition of businesses, net of cash acquired	—			—			(32,589		)	—			(32,589		)
Proceeds from divesture of business, net of cash held in divested business	—			—			(5,493		)	—			(5,493		)
Investing cash flows from (to) affiliates	(833,951		)	(1,064,718		)	351,146			1,547,523			—
Other investing activities, net	—			(6,134		)	(22,721		)	—			(28,855		)
Net cash provided by (used in) investing activities	(833,951		)	(1,144,307		)	225,414			1,547,512			(205,332		)
Cash flows from financing activities:
Proceeds from bank borrowings and long-term debt	—			—			11,387			—			11,387
Repayments of bank borrowings, long-term debt and capital lease obligations	(6,250		)	(888		)	(2,047		)	—			(9,185		)
Payments for repurchases of ordinary shares	(206,771		)	—			—			—			(206,771		)
Net proceeds from issuance of ordinary shares	11,412			—			—			—			11,412
Financing cash flows from (to) affiliates	925,410			1,039,792			(417,690		)	(1,547,512		)	—
Other financing activities, net	—			—			3,382			—			3,382
Net cash provided by (used in) financing activities	723,801			1,038,904			(404,968		)	(1,547,512		)	(189,775		)
Effect of exchange rates on cash and cash equivalents	(83,374		)	(1,139		)	93,999			—			9,486
Net increase (decrease) in cash and cash equivalents	(168,575		)	111,203			(22,004		)	—			(79,376		)
Cash and cash equivalents, beginning of period	638,714			210,462			744,552			—			1,593,728
Cash and cash equivalents, end of period	$	470,139		$	321,665		$	722,548		$	—		$	1,514,352

Condensed Consolidating Statements of Cash Flows for the Six-Month Period Ended September 27, 2013

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

Net cash provided by (used in) operating activities	$	199,101		$	(729,765	)	$	884,283		$	139		$	353,758
Cash flows from investing activities:
Purchases of property and equipment, net of proceeds from disposal	—			(175,791		)	(135,190		)	—			(310,981		)
Acquisition of businesses, net of cash acquired	—			(61,587		)	(125,956		)	—			(187,543		)
Proceeds from divestiture of business, net of cash held in divested business	—			—			1,000			—			1,000
Investing cash flows from (to) affiliates	(345,190		)	110,985			(2,108,241		)	2,342,446			—
Other investing activities, net	—			1,165			6,271			—			7,436
Net cash provided by (used in) investing activities	(345,190		)	(125,228		)	(2,362,116		)	2,342,446			(490,088		)
Cash flows from financing activities:
Proceeds from bank borrowings and long-term debt	933,000			278			169			—			933,447
Repayments of bank borrowings, long-term debt and capital lease obligations	(403,821		)	(979		)	(1		)	—			(404,801		)
Payments for early retirement of long-term debt	(503,422		)	(41,418		)	—			—			(544,840		)
Payments for repurchases of ordinary shares	(324,594		)	—			—			—			(324,594		)
Net proceeds from issuance of ordinary shares	19,637			—			—			—			19,637
Financing cash flows from (to) affiliates	(90,262		)	823,930			1,608,917			(2,342,585		)	—
Other financing activities, net	—			—			14,743			—			14,743
Net cash provided by (used in) financing activities	(369,462		)	781,811			1,623,828			(2,342,585		)	(306,408		)
Effect of exchange rates on cash and cash equivalents	38,541			1,502			(57,326		)	—			(17,283		)
Net decrease (increase) in cash and cash equivalents	(477,010		)	(71,680		)	88,669			—			(460,021		)
Cash and cash equivalents, beginning of period	740,515			226,372			620,200			—			1,587,087
Cash and cash equivalents, end of period	$	263,505		$	154,692		$	708,869		$	—		$	1,127,066