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 December 31, 2014

	Parent		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	606,521	$	190,162		$	910,538	$	—		$	1,707,221
Accounts receivable	—		1,234,620			1,215,153		—			2,449,773
Inventories	—		1,723,649			1,835,991		—			3,559,640
Inter company receivable	10,447,323		9,136,582			10,145,241		(29,729,146		)	—
Other current assets	3,966		179,289			1,233,331		—			1,416,586
Total current assets	11,057,810		12,464,302			15,340,254		(29,729,146		)	9,133,220
Property and equipment, net	—		476,467			1,638,214		—			2,114,681
Goodwill and other intangible assets, net	550		60,375			356,607		—			417,532
Other assets	2,205,450		115,622			2,179,574		(4,075,606		)	425,040
Investment in subsidiaries	1,435,834		1,470,104			16,170,993		(19,076,931		)	—
Total assets	$	14,699,644	$	14,586,870		$	35,685,642	$	(52,881,683	)	$	12,090,473

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Bank borrowings and current portion of long-term debt	$	40,000	$	8		$	5,166	$	—		$	45,174
Accounts payable	—		1,835,874			3,014,641		—			4,850,515
Accrued payroll	—		102,492			243,047		—			345,539
Inter company payable	10,194,546		11,824,715			7,709,885		(29,729,146		)	—
Other current liabilities	37,346		819,820			1,110,328		—			1,967,494
Total current liabilities	10,271,892		14,582,909			12,083,067		(29,729,146		)	7,208,722
Long term liabilities	2,076,660		2,090,365			2,401,487		(4,075,606		)	2,492,906
Flextronics International Ltd. shareholders’ equity (deficit)	2,351,092		(2,086,404		)	21,163,335		(19,076,931		)	2,351,092
Noncontrolling interests	—		—			37,753		—			37,753
Total shareholders’ equity (deficit)	2,351,092		(2,086,404		)	21,201,088		(19,076,931		)	2,388,845
Total liabilities and shareholders’ equity	$	14,699,644	$	14,586,870		$	35,685,642	$	(52,881,683	)	$	12,090,473

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	—		1,229,243			1,468,742		—			2,697,985
Inventories	—		1,705,872			1,893,136		—			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		10,492,169			14,760,357		(25,358,680		)	9,400,326
Property and equipment, net	—		487,166			1,801,490		—			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		763,780			15,994,981		(20,109,451		)	—
Total assets	$	15,443,114	$	11,910,770		$	37,578,511	$	(52,432,245	)	$	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 (deficit)	2,163,050		(2,834,163		)	22,943,614		(20,109,451		)	2,163,050
Noncontrolling interest	—		—			38,629		—			38,629
Total shareholders’ equity (deficit)	2,163,050		(2,834,163		)	22,982,243		(20,109,451		)	2,201,679
Total liabilities and shareholders’ equity	$	15,443,114	$	11,910,770		$	37,578,511	$	(52,432,245	)	$	12,500,150

Condensed Consolidating Statements of Operations for the Three-Month Period Ended December 31, 2014

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net sales	$	—		$	4,710,233		$	5,484,088		$	(3,169,267	)	$	7,025,054
Cost of sales	—			4,317,463			5,468,201			(3,169,267		)	6,616,397
Gross profit	—			392,770			15,887			—			408,657
Selling, general and administrative expenses	—			57,644			158,349			—			215,993
Intangible amortization	75			708			7,262			—			8,045
Interest and other, net	27,876			224,280			(238,054		)	—			14,102
Income (loss) from continuing operations before income taxes	(27,951		)	110,138			88,330			—			170,517
Provision for income taxes	—			(5,737		)	23,355			—			17,618
Equity in earnings in subsidiaries	180,850			(58,855		)	60,603			(182,598		)	—
Net income (loss)	$	152,899		$	57,020		$	125,578		$	(182,598	)	$	152,899

Condensed Consolidating Statements of Operations for the Three-Month Period Ended December 31, 2013

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net sales	$	—		$	5,023,965		$	6,735,557		$	(4,576,080	)	$	7,183,442
Cost of sales	—			4,661,230			6,699,673			(4,576,080		)	6,784,823
Gross profit	—			362,735			35,884			—			398,619
Selling, general and administrative expenses	—			52,963			171,613			—			224,576
Intangible amortization	75			1,018			4,482			—			5,575
Interest and other, net	(277,297		)	353,773			(61,733		)	—			14,743
Income (loss) from continuing operations before income taxes	277,222			(45,019		)	(78,478		)	—			153,725
Provision for income taxes	26			3,355			5,187			—			8,568
Equity in earnings in subsidiaries	(132,039		)	20,728			53,320			57,991			—
Net income (loss)	$	145,157		$	(27,646	)	$	(30,345	)	$	57,991		$	145,157

Condensed Consolidating Statements of Operations for the Nine-Month Period Ended December 31, 2014

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net sales	$	—		$	13,678,457		$	15,509,537		$	(8,991,678	)	$	20,196,316
Cost of sales	—			12,615,600			15,405,871			(8,991,678		)	19,029,793
Gross profit	—			1,062,857			103,666			—			1,166,523
Selling, general and administrative expenses	—			169,663			460,197			—			629,860
Intangible amortization	225			1,936			21,067			—			23,228
Interest and other, net	(24,933		)	761,224			(737,639		)	—			(1,348		)
Income from continuing operations before income taxes	24,708			130,034			360,041			—			514,783
Provision for income taxes	—			9,053			40,041			—			49,094
Equity in earnings in subsidiaries	440,981			(47,994		)	147,182			(540,169		)	—
Net income (loss)	$	465,689		$	72,987		$	467,182		$	(540,169	)	$	465,689

Condensed Consolidating Statements of Operations for the Nine-Month Period Ended December 31, 2013

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net sales	$	—		$	13,090,309		$	16,317,600		$	(10,023,236	)	$	19,384,673
Cost of sales	—			12,025,135			16,304,697			(10,023,236		)	18,306,596
Gross profit (loss)	—			1,065,174			12,903			—			1,078,077
Selling, general and administrative expenses	800			171,411			494,484			—			666,695
Intangible amortization	225			3,055			18,215			—			21,495
Interest and other, net	(489,834		)	904,524			(366,662		)	—			48,028
Income (loss) from continuing operations before income taxes	488,809			(13,816		)	(133,134		)	—			341,859
Provision for income taxes	37			9,937			9,266			—			19,240
Equity in earnings in subsidiaries	(166,153		)	(76,225		)	84,402			157,976			—
Net income (loss)	$	322,619		$	(99,978	)	$	(57,998	)	$	157,976		$	322,619

Condensed Consolidating Statements of Comprehensive Income (Loss) for the Three-Month Period Ended December 31, 2014

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net income (loss)	$	152,899		$	57,020		$	125,578		$	(182,598	)	$	152,899
Other comprehensive income (loss):
Foreign currency translation adjustments, net of zero tax	(15,154		)	42,655			37,167			(79,822		)	(15,154		)
Unrealized gain (loss) on derivative instruments and other, net of zero tax	(22,797		)	(5,936		)	(22,797		)	28,733			(22,797		)
Comprehensive income (loss)	$	114,948		$	93,739		$	139,948		$	(233,687	)	$	114,948

Condensed Consolidating Statements of Comprehensive Income (Loss) for the Three-Month Period Ended December 31, 2013

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net income (loss)	$	145,157		$	(27,646	)	$	(30,345	)	$	57,991		$	145,157
Other comprehensive income (loss):
Foreign currency translation adjustments, net of zero tax	(13,960		)	(23,210		)	(28,137		)	51,347			(13,960		)
Unrealized gain (loss) on derivative instruments and other, net of zero tax	1,097			1			1,097			(1,098		)	1,097
Comprehensive income (loss)	$	132,294		$	(50,855	)	$	(57,385	)	$	108,240		$	132,294

Condensed Consolidating Statements of Comprehensive Income (Loss) for the Nine-Month Period Ended December 31, 2014

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net income (loss)	$	465,689		$	72,987		$	467,182		$	(540,169	)	$	465,689
Other comprehensive income (loss):
Foreign currency translation adjustments, net of zero tax	(24,982		)	134,273			108,504			(242,777		)	(24,982		)
Unrealized gain (loss) on derivative instruments and other, net of zero tax	(14,505		)	(6,164		)	(14,505		)	20,669			(14,505		)
Comprehensive income (loss)	$	426,202		$	201,096		$	561,181		$	(762,277	)	$	426,202

Condensed Consolidating Statements of Comprehensive Income (Loss) for the Nine-Month Period Ended December 31, 2013

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net income (loss)	$	322,619		$	(99,978	)	$	(57,998	)	$	157,976		$	322,619
Other comprehensive income (loss):
Foreign currency translation adjustments, net of zero tax	(43,457		)	(87,375		)	(94,550		)	181,925			(43,457		)
Unrealized gain (loss) on derivative instruments and other, net of zero tax	516			3,425			515			(3,940		)	516
Comprehensive income (loss)	$	279,678		$	(183,928	)	$	(152,033	)	$	335,961		$	279,678

Condensed Consolidating Statements of Cash Flows for the Nine-Month Period Ended December 31, 2014

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Net cash provided by (used in) operating activities	$	(4,319	)	$	369,594		$	304,149		$	—		669,424
Cash flows from investing activities:
Purchases of property and equipment, net of proceeds from disposal	—			(76,042		)	(88,340		)	(12		)	(164,394		)
Acquisition of businesses, net of cash acquired	—			(20,092		)	(32,547		)	—			(52,639		)
Proceeds from divesture of business, net of cash held in divested business	—			—			(5,493		)	—			(5,493		)
Investing cash flows from (to) affiliates	(1,163,617		)	(2,455,910		)	805,143			2,814,384			—
Other investing activities, net	(1,500		)	(10,597		)	580			—			(11,517		)
Net cash provided by (used in) investing activities	(1,165,117		)	(2,562,641		)	679,343			2,814,372			(234,043		)
Cash flows from financing activities:
Proceeds from bank borrowings and long-term debt	223,000			—			11,523			—			234,523
Repayments of bank borrowings, long-term debt and capital lease obligations	(245,500		)	(1,686		)	(4,151		)	—			(251,337		)
Payments for repurchases of ordinary shares	(290,752		)	—			—			—			(290,752		)
Net proceeds from issuance of ordinary shares	12,341			—			—			—			12,341
Financing cash flows from (to) affiliates	1,575,271			2,180,326			(941,225		)	(2,814,372		)	—
Other financing activities, net	—			—			(29,135		)	—			(29,135		)
Net cash provided by (used in) financing activities	1,274,360			2,178,640			(962,988		)	(2,814,372		)	(324,360		)
Effect of exchange rates on cash and cash equivalents	(137,117		)	(5,893		)	145,482			—			2,472
Net increase (decrease) in cash and cash equivalents	(32,193		)	(20,300		)	165,986			—			113,493
Cash and cash equivalents, beginning of period	638,714			210,462			744,552			—			1,593,728
Cash and cash equivalents, end of period	$	606,521		$	190,162		$	910,538		$	—		$	1,707,221

Condensed Consolidating Statements of Cash Flows for the Nine-Month Period Ended December 31, 2013

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

Net cash provided by (used in) operating activities	$	477,036		$	(1,062,723	)	$	1,704,001		$	(7	)	$	1,118,307
Cash flows from investing activities:
Purchases of property and equipment, net of proceeds from disposal	—			(184,907		)	(276,246		)	—			(461,153		)
Acquisition of businesses, net of cash acquired	—			(61,587		)	(176,444		)	—			(238,031		)
Proceeds from divestiture of business, net of cash held in divested business	—			—			4,599			—			4,599
Investing cash flows from (to) affiliates	(306,254		)	(307,423		)	(3,512,640		)	4,126,317			—
Other investing activities, net	—			(832		)	(11,235		)	—			(12,067		)
Net cash provided by (used in) investing activities	(306,254		)	(554,749		)	(3,971,966		)	4,126,317			(706,652		)
Cash flows from financing activities:
Proceeds from bank borrowings and long-term debt	1,003,000			277			17			—			1,003,294
Repayments of bank borrowings, long-term debt and capital lease obligations	(489,365		)	(1,068		)	(28,116		)	—			(518,549		)
Payments for early retirement of long-term debt	(503,423		)	(41,417		)	—			—			(544,840		)
Payments for repurchases of ordinary shares	(362,693		)	—			—			—			(362,693		)
Net proceeds from issuance of ordinary shares	21,106			—			—			—			21,106
Financing cash flows from (to) affiliates	(29,135		)	1,537,804			2,617,641			(4,126,310		)	—
Other financing activities, net	—			—			46,298			—			46,298
Net cash provided by (used in) financing activities	(360,510		)	1,495,596			2,635,840			(4,126,310		)	(355,384		)
Effect of exchange rates on cash and cash equivalents	53,341			546			(80,000		)	—			(26,113		)
Net decrease (increase) in cash and cash equivalents	(136,387		)	(121,330		)	287,875			—			30,158
Cash and cash equivalents, beginning of period	740,515			226,372			620,200			—			1,587,087
Cash and cash equivalents, end of period	$	604,128		$	105,042		$	908,075		$	—		$	1,617,245