Mike McNamara, CEO Paul Reed, CFO November, 2008€¦ · In addition, this presentation uses...

11

Design. Build. Ship. Service.

Mike McNamara, CEO

Paul Reed, CFO

November, 2008

22

Risks and Non-GAAP Disclosures

This presentation contains forward-looking statements within the meaning of U.S. securities laws, including statements related to revenue and earnings guidance; future cash flows, ROIC, SG&A and capital expense levels; our expectations regarding our business in the current economic environment; the expected benefits from our geographically diversified business and our broad-based product, services and component technologies offerings; expected improvements in inventory management; and our expectations regarding our ability to generate expected free cash flow. These forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from those anticipated by these statements. Information about these risks is noted on slide 65 of this presentation and in the Risk Factors and MD&A sections of our latest annual report, as amended, and in our latest Form 10-Q filed with the SEC, as well as in our other SEC filings. These forward-looking statements are based on our current expectations and we assume no obligation to update these forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements.

In addition, this presentation uses non-GAAP financial measures. Please refer to the schedules to our earnings press releases for our most recent quarter and our 2008 fiscal year and the GAAP vs. Non-GAAP Reconciliation in the Investors section of our website, which contain the reconciliation to the most directly comparable GAAP measures.

33

Schedule of Today’s Activities

12:00 – 2:00 Flextronics Presentations (Webcast) Hudson TheatreMike McNamara, CEOPaul Read, CFO

2:00 – 2:30 Q&A

2:45 – 4:30 Business Unit/Segment PresentationsTradeshow style – Gallery 8

4:30 – 5:30 Cocktail Reception

44

Agenda

• Industry and Flextronics Overview

• Strategy on Building the Business

• High Level Overview on each Segment and

Business Unit

• Near Term Challenges

• Finance Presentation

• Summary

55

Significant Scale in Operations

• ~ 225,000 employees • ~ 20,000 in logistics/services• ~ 100,000 in China

• 30 countries • ~ 28M square feet• 11 major manufacturing/product

technologies

66

Service.

Significant Breadth and Depth of Services

Ship.Build.Design.

Industrial Design

System Architecture

Mechanical Design

Embedded System Design

Software Systems

Product Launch/NPI

DFx Services

PCB/Flex Circuits

Camera Modules

LCD Displays

Cables

Machining

Plastics

Metal Fabrication

SMT Assembly

System Integration & Final Test

Build-to-Order

Configure-to-Order

Distribution and Direct Fulfillment

Outbound Logistics and Hubbing

Repair/ Refurbishment & Warranty Support

Service Parts Logistics

Remarketing

Retail Technical Services

Asset Recovery

Reverse Logistics

77

Revenue Growth is Significant

FY 06 FY 07 FY 08 LTM*

$36,000$35,000$34,000$33,000$32,000$31,000$30,000$29,000$28,000$27,000$26,000$25,000$24,000$23,000$22,000$21,000$20,000$19,000$18,000$17,000$16,000$15,000$14,000$13,000

23%

46%

($ In Millions)

$34,100

$15,288

$18,854

$27,558

* Amount reflects last twelve months ended September 26, 2008

88

We Operate a Seven Segment Strategy…

COMPUTING2

INDUSTRIAL4

AUTOMOTIVE 1

MOBILE 7

MEDICAL6

INFRASTRUCTURE5

CONSUMER DIGITAL3

99

MECHANICALS TECHNOLOGY SOLUTIONS6

...and Six Business Units that Scale Across all Segments

RETAIL TECHNICAL SERVICES5

GLOBAL SERVICES4

FLEXPOWER 3

VISTA POINT TECHNOLOGIES2

MULTEK1

1010

Most Revenue is Generated in Multi-Technology Industrial Parks

1111

Power Supplies (>500W)

Touch Displays

Machining

Rigid Flex Boards

Small LCD Displays

Chargers

Power Supplies (<300W)

Materials

Flex Circuit Boards

Camera modules

Mobile phone plastics

Hard tool sheet metal

Soft tool sheet metal

Tooling

General Plastics

20072006 20082005200420032002200120001999199819971996Printed Circuit Boards

We have built very Broad Based Vertical Capabilities

1212

This Industry will Outperform the Electronics Industry

($ In Millions)

In-House 2.8% CAGR

EMS 6.2% CAGR

ODM 5.6% CAGR

TOTALS

$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$02007 2008 2009 2010 2011 2012

$1,029,317 $1,060,630 $1,064,443 $1,083,399 $1,118,430 $1,181,072 $141,394 $150,811 $156,300 $164,169 $175,391 $191,298 $98,594 $104,472 $107,386 $112,193 $119,558 $129,699

$1,269,305 $1,315,913 $1,328,129 $1,359,761 $1,413,378 $1,502,069

Source: Technology Forecasters Inc., September 2008

1313

7.9%

11.5%

7.8%

11.1%

Outsourcing Penetration Rates will grow

19.4% 19.9% 20.3% 20.9% 21.4%

Source: Technology Forecasters Inc.

18.9%8.1%

11.8%

8.2%

12.1%

8.5%

12.4%

8.6%

12.7%

2007 2008 2009 2010 2011 2012

ODM

EMS

25%

20%`

15%

10%

5%

0

1414

Strategy for Building the Business

1515

Three levels of diversification necessary to perform in this market

2008

2006

1616

We have had a deliberate, consistent strategy over the last several years

I. Compete on market segments to be faster and more accurate

II. Broaden the available market by expanding product categories

III. Continue to develop and expand our vertical capabilities

IV. Increase scale

Operate an internal culture that delivers a competitive advantage

1717


COMPUTING2

INDUSTRIAL4

AUTOMOTIVE 1

MOBILE 7

MEDICAL6

INFRASTRUCTURE5

CONSUMER DIGITAL

3

An outstanding success

• Better understanding on how to add value to the customer

• Allowed us to clearly understand our competitors and how to achieve competitive advantage

• Distributed the work load of acquisitions that enhanced execution

• Added tremendous scalability and executive depth

1818


• Continually worked to expand the available market

• These products alone increased the available market by over 35%

KEY PRODUCTS ADDED OVER THE LAST 2 YEARS

LCD TVsSmart phones

Notebooks Desktops

ODM serversDisposable medical products

Aerospace/Defense Solar equipment

1919


• Enhances penetration of EMS business

• Every vertical is set up to compete on the open market

KEY VERTICAL CAPABILITES ADDED OVER THE LAST 2

YEARS

MachiningLCD Displays

Power SystemsChargers

Large format stampingTouch displays

Solar equipment machining

2020

Market Position by Revenue CY06 ($B)

Hon Hai $40.6

Flextronics $17.7Solectron $11.1Jabil $11.1Sanmina-SCI $10.0Celestica $ 8.8

Quanta $16.5Compel $11.8Inventec $ 7.9Wistron $6.8


Hon Hai $60.3

Flextronics $33.4

Jabil $12.9Celestica $ 7.7Sanmina-SCI $ 7.6

Quanta $25.3Compel $12.9Inventec $10.6Wistron $13.0


Hon Hai $60.3

Flextronics $33.4




Hon Hai $40.6



IV. Increase scale

Source: Citibank data, October 2008

2121


Hon Hai $40.6




Hon Hai $60.3

Flextronics $33.4




Hon Hai $60.3

Flextronics $33.4




Hon Hai $40.6



IV. Increase scale


16%/88% increase

2222


Hon Hai $40.6




Hon Hai $60.3

Flextronics $33.4




Hon Hai $60.3

Flextronics $33.4




Hon Hai $40.6



IV. Increase scale

6% decline


16%/88% increase

2323


Hon Hai $40.6




Hon Hai $60.3

Flextronics $33.4




Hon Hai $60.3

Flextronics $33.4




Hon Hai $40.6



IV. Increase scale

6% decline

43% increase


16%/88% increase

2424

Market Diversity

Vertical Diversity

Geographic Diversity

Flextronics

Hon Hai

Jabil

Sanmina

Celestica

We have made Great Progress in our Diversification Initiatives

2525

Much More Balanced Portfolio of Business

Fiscal Year 2007 Fiscal Year 2009

Consumer Digital 20.9%

Industrial, Automotive, Medical 15.0%

Infrastructure 24.9%

Computing 11.7%

Industrial, Automotive, Medical 10.2%

Mobile 32.3%

Consumer Digital 14.8%

Mobile 21.7%

Infrastructure 31.7%

Computing 16.7%

2626

Sept FY07

Sony EricssonDell

EricssonH-P

NortelMotorolaMicrosoft

XeroxKyocera

Casio

- S/E and Nortel combined were 35% of total Flex business

- Top 10 were 67% of total revenue

Top 10 Customer List

Sept FY09

Sony EricssonCiscoH-P

NortelMicrosoftSun MicroEricssonMotorola

KodakSony

- S/E and Nortel 18% of business

- Top 10 are 52% of total revenue

2727

2008 Revenue % Market Position

Industrial $23B 8% #1

Networking $18B 6% #1Peripherals (Printing & Imaging) $17B 6% #2

Automotive $4B 1% #1

Telecommunications $15B 5% #1

Consumer Devices $79B 27% #2

Medical $9B 3% #1

Servers and Storage $22B 8% #1

Computers $106B 36% #9

Source: IDC 2008

Worldwide EMS and ODM Projected Revenueby Product Category

2828




IV. Increase scaleOperate an internal culture that delivers a

competitive advantage

The objective: achieve product, geographic and vertical diversification

We have had a deliberate, consistent strategy over the last several years

2929

High level overview on each Segment and Business Unit

3030

$12.0

$10.0

$8.0

$6.0

$4.0

$2.0

$0

($ In Billions)

$4.7B

$9.0B

FY07 FY08 LTM *

$11.7B

• Outstanding worldwide competitive positioning

• Revenue (ex acquisition) decreased due to portfolio pruning

• Nortel revenues decreased from 9% to 4% over the last 4 quarters

• Specific objective of asset velocity prioritized over revenue growth

REV

ENU

E

FlexInfrastructure


3131

• Several Tier 1 notebook projects awarded includes mainstream and high end notebooks

• Server design projects on track

• Penetration in this segment is above expectations

• Need to demonstrate profitability in this new business

• Good penetration into the EMS business continues

FlexComputing

$6.0

$5.0

$4.0

$3.0

$2.0

$1.0

$0

($ In Billions)

$2.2B

$3.7B

FY07 FY08 LTM*

$5.6B

REV

ENU

E


3232

• Expect roughly flat revenue for this year:

• Cameras • TVs • Copiers• Printers • Gaming • MP3s

• Virtually all products have been declining

• New wins have enabled flat revenue

• Very advanced vertically integrated TV factory added in Hungary

• First Flex-designed TVs went into production this year

FlexConsumerDigital

($ In Billions)

$3.9B

$5.0B

FY07 FY08 LTM*

$5.2B

REV

ENU

E

$6.0

$5.0

$4.0

$3.0

$2.0

$1.0

$0


3333

• Should have roughly flat revenue in FY09

• New wins have offset softening demand

• Good progress into smartphone market• China market

• Significant churn in the portfolio impacting profitability

• Continue to have a very strong, experienced capability to design, launch and build phones worldwide

FlexMobile

$8.0

$7.0

$6.0

$5.0

$4.0

$3.0

$2.0

$1.0

$0

($ In Billions)

$6.1B$6.4B $6.8B

FY07 FY08 LTM*

REV

ENU

E


3434

• Strong profit and revenue growth in FY09

• Significant portfolio expansion this year

• Softness in revenue in many areas, but offset by new wins

• Very broad footprint and vertical expansion should enable continued growth

FlexIndustrial

$4.0

$3.0

$2.0

$1.0

$0

($ In Billions)

$1.1B

$2.1B

FY07 FY08** LTM*

$2.9B

REV

ENU

E


3535

• Superb progress on positioning and growing this business

• 20% organic revenue growth• Diversified product portfolio • Multiple dedicated medical campuses

• Avail acquisition for disposable medical devices a strong portfolio addition

• Very good pipeline and medical companies’ interest in outsourcing increasing

FlexMedical

($ In Billions)

$0.3B

$0.5B

FY07 FY08 LTM*

$0.8B

REV

ENU

E

$1.0

$0.8

$0.6

$0.4

$0.2

$0


3636

• Very broad ODM portfolio

• Superb progress building this business from virtually nothing 2 years ago

• Extremely challenging market environment, but revenues are stable

• Strong pipeline of business, but highly uncertain environment

FlexAutomotive

$1.0

$0.8

$0.6

$0.4

$0.2

$0

($ In Billions)

$0.3B

$0.6B

FY07 FY08 LTM*

0.8B

REV

ENU

E


3737

• Have expanded into 3 major product categories:

• Flex Circuits• Materials• Rigid PCBs

• Main business of high end multi-layer boards and cell phone boards continues as world class

• Excellent progress on Flex vertical integration

• Difficult demand and pricing environment

Multek

($ In Billions)

$0.65B$0.74B

FY07 FY08 LTM*

$0.84B

REV

ENU

E

$1.0

$0.8

$0.6

$0.4

$0.2

$0


3838

• Two major product categories; LCD displays and camera modules

• Significant impact from slowing cell phone revenue

• Limited progress on LCD displays

• New camera module design wins show exceptional progress in design capabilities

VistaPoint

($ In Billions)

$0.56B$0.60B

FY07 FY08 LTM*

$0.80B

REV

ENU

E

$1.0

$0.8

$0.6

$0.4

$0.2

$0


3939

• Exciting progress building this business

• Expanded into chargers, (#1 position in the world) and have added multiple tier 1 customers

• Adding power capability in India and Brazil

• Added new IP and capability in the >500W area and have achieved many new design wins

• Mid-range also expanding rapidly

• Know-how and IP creating a real competitive advantage

FlexPower

$300

$250

$200

$150

$100

$50

$0

($ In Millions)

$50M

$70M

$247M

FY07 FY08 LTM*

REV

ENU

E


4040

• Very, very strong portfolio of services and excellent competitive positioning

• Broad, worldwide footprint

• Investing in IT to further enhance value proposition

• Last mile solution for all segments

Global Services

$2.00

$1.75

$1.50

$1.25

$1.00

$0.75

$0.50

$0.25

$0

($ In Billions)

$0.70B

$1.20B

$1.70B

FY07 FY08 LTM*

Note: Excludes: RTS Revenue, Repair In MFG Sites, Remarketing

REV

ENU

E


4141

• Created new business unit and making strong progress on future growth

• Over 5,000 people in retail stores across the U.S.

• Awarded new program in Europe with Tier 1 retailer

• High margins and exceptional ROIC

Retail Technical Services (RTS)

$300

$250

$200

$150

$100

$50

$0

($ In Millions)

$192M

$211M$230M

FY07 FY08 LTM*

REV

ENU

E


4242

Near Term Challenges

4343

Expectations over the near term

• We expect a very difficult environment

• We are proactively controlling expenses

• Our business strategy over the last few years was built to

outperform in a tough environment

• Our footprint has been significantly adjusted already due to

SLR rationalization

• Credit is a major concern with customers and suppliers – we

are aggressively monitoring and addressing daily

4444

Expectations over the near term

• We expect significant reductions in inventory levels during a

slow period

• Heavy focus on Lean in all company operations to grind out

waste

• We will operate to ensure we come out of the downturn

stronger -- and look forward to the benefits -- as others come

out weaker

4545

Strategic DirectionFinance Presentation

4646

Creation of market/segment approach

Growth opportunities in non- traditional segments

OEM-EMS relationship evolves to equilibrium

Targeted acquisitions

Operations generate cash

Lower maintenance capex

Strong asset utilization

Stable and growing margins; emphasis on ROIC

Emergence of large scale Taiwanese competitors

OEMs engaging multiple EMS providers

Small players exit or find niches

Rapid revenue growth

Primarily contract manufacturing

Build footprint and vertical capabilities through acquisitions

Higher margins; negative cash flows

Significant funding requirements for working capital and acquisitions

Heavy investment: Capex > Depreciation

Low barriers to entry

Many competitors

Low market penetration

Optimization of global footprint; Trim high-cost capacity

Enhance vertical capabilities

Downturn accelerated Phase II

Heavy restructuring charges

Generating free cash flow

Lower margins

Reduced Investment levels: Capex < Depreciation

Rising barriers to entry for EMS players

Smaller players begin to struggle

Supply base consolidation

Business Characteristics

Financial Characteristics

Competitive Characteristics

Flextronics Evolution

1993 2001 2006Revenue

Phase I: Build

Phase II: Restructure

Phase III: Scale

4747

Flextronics Evolution – Revenue$ in Millions

2008 LTMFY2001 FY2006

Phase III: Scale


Phase I: Build

490 1,498723 2,578

6,9593,953

12,110

14,479

13,329

13,035 15,288

15,731 18,854

27,558

34,057$35,000

$30,000

$25,000

$20,000

$15,000

$10,000

$5,000

4848

Flextronics Evolution – Adjusted Operating Margin

FY2001 FY2006 2008 LTM

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

Phase III: Scale


Phase I: Build10.1%

8.3%

3.3%3.2%

3.0%

3.1%3.1%

2.3%2.0%

5.1%

6.3%6.4%

4.6%

4.4%

3.2 %

Note: Graph reflects certain non-GAAP measures, and excludes certain amounts that are included in the most directly comparable measures under GAAP. Non-GAAP results exclude intangible amortization, stock based compensation expense, restructuring and other charges. Please refer to the schedules to the respective earnings press release, and the GAAP vs. Non-GAAP reconciliation in the Investors section of our website, which contain the reconciliation to the most directly comparable GAAP measures.

4949

Flextronics Evolution – Adjusted SG&A as a % of Revenue

Phase III: Scale


Phase I: Build

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

10.3%

9.3%

3.2%

2.6%

2.7%

2.7%

3.0%3.3%

3.2%3.3%

6.1%6.6%

7.6%

3.6%

4.6%

FY2001 FY2006 2008 LTMNote: Graph reflects certain non-GAAP measures, and excludes certain amounts that are included in the most directly comparable measures under GAAP. Non-GAAP results exclude intangible amortization, stock based compensation expense, restructuring and other charges. Please refer to the schedules to the respective earnings press release, and the GAAP vs. Non-GAAP reconciliation in the Investors section of our website, which contain the reconciliation to the most directly comparable GAAP measures.

5050

Flextronics Evolution – Free Cash Flow$ in Millions

Phase III: Scale


Phase I: Build

(30)

(42)

(50)

(134)

(161)

(497)

(1,181)

529399

6

435298

(293)

793

715

($1,500)

($1,000)

($500)

$500

$1,000

0

FY02 – FY05 $1.4B Generated

FY2001 FY2006 2008 LTMNote: Free cash flow defined as "Net cash flow from operating activities" less "Purchases of property and equipment, net of dispositions" as shown on our Consolidated Statements of Cash Flows. Please refer to the GAAP vs. Non-GAAP reconciliation in the Investors section of our website, which contains the reconciliation to the most directly comparable GAAP measures.

5151

Flextronics Evolution – Acquisition Cash Payments$ in Millions

FY2001 FY2006 2008 LTM

Phase III: Scale


Phase I: Build

$100

$200

$300

$400

$500

$600

$700

$800

7.8

90.3

62.3

335.5

469.0

17.2

(223.6)*

130.2*

120.0

710.8

509.7

397.9235.3

629.2

799.8

$0($100)($200)($300)

*Net of divestiture income

5252

Flextronics Evolution – PP&E as a % of Revenue

Phase III: Scale

Phase II: Restructuring

Phase I: Build

24.5%23.3% 23.3%

15.6%

10.6% 10.6%

7.6%

8.9%10.4%11.2%

14.7%

15.1%

19.0%

22.9%

21.2%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

FY2001 FY2006 2008 LTM

5353

$34.1B

Our Strategy is Working

$15.3B$18.9B

$27.6B

$35,000

$30,000

$25,000

$20,000

$15,000

$10,000

$5,000

$0

REV

ENU

E $1.11

$0.69$0.80

$1.02

FY06 FY07 FY08 LTM

$1.75

$1.50

$1.25

$1.00

$0.75

$0.50

$0.25

$0

NO

N-G

AA

P D

ILU

TED

EPS

$ in Millions

Note: Non-GAAP diluted EPS is a non-GAAP financial measure, which excludes certain amounts that are included in the most directly comparable measures under GAAP, including restructuring and other charges, charges associated with distressed customers, stock-based compensation expense, and intangible amortization. Please refer to the schedules to the respective earnings press release, and the GAAP vs. Non-GAAP reconciliation in the Investors section of our website, which contain the reconciliation to the most directly comparable GAAP measures.

5454

Adjusted EPS is a non-GAAP financial measure, which excludes certain amounts that are included in the most directly comparable measures under GAAP, including restructuring and other charges, charges associated with distressed customers, stock-based compensation expense, and intangible amortization.Please refer to the schedules to the respective earnings press release, and the GAAP vs. Non-GAAP reconciliation in the Investors section of our website, which contain the reconciliation to the most directly comparable GAAP measures.

$0.30

$0.25

$0.20

$0.15

$0.10

$0.05

$0.00

Historical Adjusted Diluted EPS

JUN 08MAR 08JUN 06 SEP 06 DEC 06 MAR 07 JUN 07 SEP 07 DEC 07 SEP 08

$0.20

$0.17

$0.23

$0.20 $0.20

$0.16

$0.22

$0.18

$0.30

$0.23

$0.26

$0.20

$0.24

$0.20

$0.27

$0.22

Current Quarter Prior Quarter

$0.28

$0.24

$0.18$0.17

Calendar year periods

5555

Strong Cash Flow Generation

EBITDA is a non-GAAP financial measure and is defined as earnings before interest expense, taxes, depreciation and amortization and is adjusted to exclude restructuring and other charges that are included in the most directly comparable measures under GAAP. EBITDA is reconciled to net income from continuing operations in the GAAP vs. Non-GAAP reconciliation in the Investors section of our website. Free cash is defined as "Net cash flow from operating activities" less "Purchases of property and equipment, net of dispositions" as shown on our Consolidated Statements of Cash Flows. Please refer to the GAAP vs. Non-GAAP reconciliation in the Investors section of our website, which contains the reconciliation to the most directly comparable GAAP measure.

Cash flow from

operations

EBITDA

Free cash flow

FY07FY06 LTMFY08

735.6

854.0

1,249.7

1,538.8

0

$ 200

$ 400

$ 600

$ 800

$1,000

$1,200

$1,400

$1,600

549.4 276.4

1,042.8

1,274.9

($ 200)

($ 400)

298.2

(293.0)

715.3

793.1

$ in Millions

5656

1214

12

1513

11

21

25 26

21

Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08

Cas

h C

onve

rsio

n C

ycle

in D

ays

Cash Conversion Cycle – Quarter Trends

30

25

20

15

10

0

Solectron acquisitioncompleted on 10/1/07

The Company’s cash conversion cycle metric is based on a non-GAAP financial measure, which is non-GAAP gross profit. This financial measure excludes restructuring and other charges, charges associated with distressed customers, and stock-based compensation, which are attributable to cost of sales. The Company’s cash conversion cycle metric is reconciled to the same performance measure using the nearest GAAP measure, which is GAAP gross profit, in the GAAP vs. Non-GAAP reconciliation in the Investors section of our website.


5757

Turnover Ratios – Quarter Trends

75

60

45

30

15

0

Solectron acquisitioncompleted on 10/1/07

The Company’s turnover metrics are based on non-GAAP financial measures, which are based on non-GAAP gross profit, which excludes restructuring and other charges, charges associated with distressed customers, and stock-based compensation, which are attributable to cost of sales. The turnover metrics are reconciled to the same performance measure using the nearest GAAP measure, which is GAAP gross profit, in the GAAP vs. Non-GAAP reconciliation in the Investors section of our website.

72 7166

7467 68

6270

65 65

47 5046

5347 46 47

53 50 49

37 35 3236

33 33 3642 41

37

Sep-07 Dec-07 Mar-08 Jun-08 Sep-08Mar-07Sep-06 Jun-07Dec-06Jun-06AP Turn (Days)Inventory Turn (Days)AR Turn (Days)

Day

s


5858

Current Credit Ratings

Moody’s Ba1

S&P BB+

Cash

Total Debt

Net Debt

Liquidity(1)

Debt/EBITDA (2)

Fixed Charge Coverage Ratio(3)

Sep-08

Solid Financial Condition$ in Millions

3.28

2.79

$1,701

$3,443

$1,742

$3,194

(1) Liquidity is defined as cash plus the amount available under our revolving credit facility.

(2) Debt to EBITDA is calculated as total debt divided by EBITDA for the last twelve months ended September 26, 2008. EBITDA is defined as earnings before interest expense, taxes, depreciation and amortization, and adjusted for certain non-cash charges and one time cash charges. Maximum requirement of 4.0 to 1.0.

(3) Fixed Charge Coverage Ratio is calculated as EBITDA divided by the sum of net interest expense plus current portion of Indebtedness of the Company. EBITDA is defined as earnings before interest expense, taxes, depreciation and amortization, and adjusted for certain non-cash charges and one time cash charges. Minimum requirement of 1.50 to 1.0.

Covenant Requirements

Maximum of 4.0 to 1.0

Minimum of 1.50 to 1.0

5959

$200$500

$700

$3,194

$4,000

$3,000

$2,000

$1,000

$0

Significant Debt Maturities by Calendar Year

$195

$500

Senior Subordinated Notes

Term LoanConvertible Junior Subordinated Notes

Convertible Subordinated Notes

$400

$1,205$1,607

Liquidity 2008 2009 2010 2011 2012 2013 2014 2015

Revolver

$402

6060

Historical Goodwill Vs. Share Price

$6.0

$4.0

$2.0

$0.0

$12.00

$8.00

$4.00

$0

$5.6B$6.0B$6.0B$5.8B

Sep 08 Current*Mar 08 Jun 08

$3.06

$9.39 $9.47

$7.71

• Anticipate a significant non-cash charge having a material impact on Dec 08 quarterly GAAP financial results

• Non-cash charge is not anticipated to affect liquidity or the Company’s financial covenants

• The amount of the charge could affect our ability in the short term to repurchase our shares and some of our debt

* As of November 14, 2008

Goo

dwill

(in

$ B

illio

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Shar

e Pr

ice


6161

December Quarter Fiscal Year 2009 Guidance - UpdateRevenue($ in millions)

Earnings Per Share

$9,000

$8,000

Dec-08E$5,000

$7,000

$5,500

$6,000

$6,500

$7,500

$8,000

$8,500

$9,000

Quarterly Revenue Forecast – Extended Bottom Range

$7,500

$0.27

$0.21

$0.30

$0.25

$0.20

$0.15

$0.10

$0.05

$0

$0.15

Dec-08E

Quarterly Adjusted EPS Forecast – Extended Bottom Range

Non-GAAP financial measures exclude after-tax restructuring and other charges, stock-based compensation expense, and intangible amortization, that are included in the most directly comparable measures under GAAP. GAAP earnings per diluted share are expected to be lower than the guidance provided herein by approximately $0.06 reflecting quarterly intangible amortization and stock-based compensation expense.

6262

Flextronics Financial Model

Revenue Growth > 10%

Operating Margin 3.5 – 4.0%

SG&A 2.0 - 2.5%

Cash Conversion Cycle Days 15 – 20 Days

Return on Invested Capital > 15%

6363

Strategic DirectionSummary

6464

Summary

• We are in a difficult environment and we will adjust to it real time

• We are pleased with our liquidity, cash flow generation and capital structure

• We have scale and competitive advantage• In all key geographies• Virtually every product category

• Our capabilities are built and our major investment period is over

• Well positioned for continued growth• Focus on internal efficiencies• Focus on improving asset velocity

• Use of cash from our activities will be used to:

• Pay down debt• Repurchase shares• Improve liquidity

6565

Risk Factors

RISKS INCLUDE:• That future revenue and earnings may not be achieved as expected.• Potential impairment of our intangible assets, including goodwill.• The risks to our particular electronics and technology sector of economic instability and a slowdown in consumer spending,

particularly given the current economic slowdown.• The effects of customer or supplier bankruptcies or insolvency. • The effects that current credit and market conditions could have on the liquidity and financial condition of customers or suppliers,

including any impact on their ability to meet contractual obligations to us on terms and conditions previously negotiated • Our dependence on industries that continually produce technologically advanced projects with short life cycles. • Our ability to respond to changes in economic trends, to fluctuations in demand for customers’ products and to the short term nature

of our customers’ commitments.• Competition in our industry, particularly from ODM suppliers in Asia.• Our dependence on a small number of customers for the majority of our sales and our reliance on strategic relationships with major

customers. • The challenges of effectively managing our operations, including our ability to manage manufacturing processes, control costs and

manage changes in our operations.• The challenges of integrating acquired companies and assets. • Not obtaining anticipated new customer programs, or if we do obtain them, that they may not contribute to our revenue or profitability

as expected or at all.• Our ability to utilize available and recently expanded manufacturing capacity.• The risk of future restructuring charges that could be material to our financial condition and results of operations.• Our ability to design and quickly introduce world-class components products that offer significant price and/or performance

advantages over competitive products.• The impact on our margins and profitability resulting from substantial investments, start-up and integration costs in our components,

design and ODM businesses; and production difficulties, especially with new products.• Changes in government regulations and tax laws including any effects related to the expiration of tax holidays .• Not realizing expected returns from our retained interests in divested businesses.• Our exposure to potential litigation relating to intellectual property rights, product warranty and product liability. • Our dependence on the continued trend of outsourcing by OEMs.• Supply shortages of required electronic components.• The challenges of international operations, including fluctuations in exchange rates beyond hedged boundaries leading to

unexpected charges.• Our dependence on our key personnel.• Our ability to comply with environmental laws.

Further information concerning these and other risk factors that could cause actual results to differ materially from those in the forward looking statements is contained in the Risk Factors and Management’s Discussion and Analysis sections of our reports on forms 10-Q, 10-K, as amended, and 8-K as well as the other reports that we file with the US. Securities and Exchange Commission.

6666

Thank you

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