<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K/A
----------------
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
OR
[ ] 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 0-21272
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.)
11 UBI ROAD 1, #07-01/02
MEIBAN INDUSTRIAL BUILDING
SINGAPORE 408723
(65) 844-3366
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK
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 [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of June 1, 2000, 192,572,807 shares of the Registrant's common stock were
outstanding. The aggregate market value of the common stock held by
non-affiliates of the Registrant as of June 1, 2000 was approximately
$11,347,860,828.50.
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<PAGE> 2
PART III of the Registrant's Annual Report on Form 10-K filed with the
Securities and Exchange Commission on June 13, 2000 is amended as follows:
PART III
ITEM 10. DIRECTORS AND OFFICERS
The names, ages and positions of our directors and officers as of June 1,
2000 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Michael E. Marks..................... 49 Chairman of the Board and Chief Executive Officer
Robert R. B. Dykes................... 50 President, Systems Group and Chief Financial Officer
Ronny Nilsson........................ 51 President, Western European Operations
Michael McNamara..................... 43 President, Americas Operations
Ash Bhardwaj......................... 36 President, Asia Pacific Operations
Humphrey Porter...................... 52 President, Central/Eastern European Operations
Steven C. Schlepp.................... 44 President, Multek
Ronald R. Snyder..................... 43 President, Flextronics Semiconductor
Thomas J. Smach...................... 40 Vice President of Finance
Tsui Sung Lam........................ 50 Director
Michael J. Moritz.................... 45 Director
Richard L. Sharp..................... 53 Director
Patrick Foley........................ 68 Director
Chuen Fah Alain Ahkong............... 52 Director
Hui Shing Leong...................... 40 Director
</TABLE>
MICHAEL E. MARKS -- Mr. Marks has been our Chief Executive Officer since
January 1994 and the Chairman of our board of directors since July 1993. He has
been a member of our board of directors since December 1991. From November 1990
to December 1993, Mr. Marks was President and Chief Executive Officer of Metcal,
Inc., a precision heating instrument company. Mr. Marks received a B.A. and an
M.A. from Oberlin College and an M.B.A. from the Harvard Business School.
ROBERT R. B. DYKES -- Mr. Dykes has served as our Chief Financial Officer
since February 1997, and as our President, Systems Group since April 1999. From
February 1997 to April 1999, Mr. Dykes served as our Senior Vice President of
Finance and Administration. Mr. Dykes served as a member of our board of
directors from January 1994 until August 1997. From 1988 to February 1997, Mr.
Dykes served as Executive Vice President, Worldwide Operations and Chief
Financial Officer of Symantec Corporation, an application and system software
products company. Mr. Dykes received a Bachelor of Commerce and Administration
degree from Victoria University in Wellington, New Zealand. Mr. Dykes serves on
the board of directors of Symantec Corporation.
RONNY NILSSON -- Mr. Nilsson has served as our President, Western European
Operations since April 1997. From May 1995 to April 1997, Mr. Nilsson served as
Vice President and General Manager, Supply and Distribution and Vice President,
Procurement of Ericsson Business Networks. From January 1991 to May 1995, Mr.
Nilsson served as Director of Production of the EVOX+RIFA Group, a manufacturer
of components, and Vice President of RIFA AB. Mr. Nilsson received a certificate
in Mechanical Engineering from the Lars Kagg School in Kalmar, Sweden and
certificates from the Swedish Management Institute and the Ericsson Management
Program.
MICHAEL MCNAMARA -- Mr. McNamara has served as our President of Americas
Operations since April 1994. From May 1993 to March 1994, Mr. McNamara served as
President and Chief Executive Officer of Relevant Industries, Inc., which we
acquired in March 1994. From May 1992 to May 1993, Mr. McNamara served as Vice
President, Manufacturing Operations at Anthem Electronics, an electronics
distributor. From April 1987 to May 1992, Mr. McNamara was a Principal of
Pittiglo, Rabin, Todd & McGrath, an operations consulting firm. Mr. McNamara
received a B.S. from the University of Cincinnati and an M.B.A. from Santa Clara
University.
ASH BHARDWAJ -- Mr. Bhardwaj joined Flextronics in 1988. Most recently, Mr.
Bhardwaj served as our Vice President for the China region. Mr. Bhardwaj
received a degree in electrical engineering from Thapar Institute of Engineering
and Technology and an M.B.A. from Southeastern Louisiana University.
<PAGE> 3
HUMPHREY PORTER -- Mr. Porter has served as our President of Central and
Eastern European Operations since October 1997. From July 1994 to October 1997,
Mr. Porter served as President and Chief Executive Officer of Neutronics
Electronics Industries Holding AG, which we acquired in October 1997. Prior to
joining Neutronics, Mr. Porter served in various positions at Philips. Between
1989 and 1994, Mr. Porter served as Industrial Director for Philips Audio
Austria, and between 1984 and 1989, Mr. Porter served as Managing Director of
the Philips Audio factory in Penang, Malaysia. Mr. Porter has a B.Sc. in
production engineering from Trent University.
STEVEN C. SCHLEPP -- Mr. Schlepp has served as our President, Multek since
April 2000 following our acquisition of DII. From June 1996 to April 2000, Mr.
Schlepp served as Senior Vice President of DII and President of Multilayer
Technology, Inc. From January 1991 until June 1996, Mr. Schlepp served as
President of Toppan West Incorporated, a wholly owned subsidiary of Toppan
Printing Ltd.
RONALD R. SNYDER -- Mr. Snyder has served as our President, Flextronics
Semiconductor since April 2000 following our acquisition of DII. From May 1998
to April 2000, Mr. Snyder served as Senior Vice President of DII and President
of DII Semiconductor. From March 1994 until May 1998, Mr. Snyder served as
Senior Vice President of Sales and Marketing of DII. From March 1993 to March
1994, Mr. Snyder served as President of Dovatron Manufacturing Colorado, a
division of Dovatron International, Inc.
THOMAS J. SMACH -- Mr. Smach has served as our Vice President, Finance
since April 2000 following our acquisition of DII. From August 1997 to April
2000, Mr. Smach served as Senior Vice President, Chief Financial Officer, and
Treasurer of DII. From March 1994 to August 1997, Mr. Smach served as Corporate
Controller and Vice President of DII. From 1982 to March 1994, Mr. Smach served
as a certified public accountant with KPMG LLP.
TSUI SUNG LAM -- Mr. Tsui has served as a member of our board of directors
since 1991. From January 1994 to April 1997, Mr. Tsui served as our President
and Chief Operating Officer. From June 1990 to December 1993, Mr. Tsui served as
our Managing Director and Chief Executive Officer. From 1982 to June 1990, Mr.
Tsui served in various positions for Flextronics, Inc., our predecessor,
including Vice President of Asian Operations. Mr. Tsui received Diplomas in
Production Engineering and Management Studies from Hong Kong Polytechnic, and a
Certificate in Industrial Engineering from Hong Kong University.
MICHAEL J. MORITZ -- Mr. Moritz has served as a member of our board of
directors since July 1993. Since 1988, Mr. Moritz has been a General Partner of
Sequoia Capital, a venture capital firm. Mr. Moritz also serves as director of
Yahoo, Inc., Neomagic, Etoys, Webvan, Saba Software, Agile Software,
PlanetRx.com and several privately-held companies.
RICHARD L. SHARP -- Mr. Sharp has served as a member of our board of
directors since July 1993. Mr. Sharp is Chairman of the Board and Chief
Executive Officer of Circuit City Stores, Inc., a consumer electronics and
appliance retailer. Mr. Sharp joined Circuit City as an Executive Vice President
in 1982. He was President from June 1984 to March 1997 and became Chief
Executive Officer in 1986 and Chairman of the Board in 1994. Mr. Sharp also
serves as a director of Fort James Corporation.
PATRICK FOLEY -- Mr. Foley has served as a member of our board of directors
since October 1997. Until January 2000, Mr. Foley served in various positions
with DHL Corporation, Inc. and its major subsidiary, DHL Airways, Inc., a global
document, package and airfreight delivery company, most recently as Chairman,
President and Chief Executive Officer. Mr. Foley joined DHL in September 1988
with more than thirty years experience in hotel and airline industries. Mr.
Foley also serves as a director of Continental Airlines, Inc., Del Monte
Corporation, DHL International, Foundation Health Systems, Inc. and Glenborough
Realty Trust, Inc.
CHUEN FAH ALAIN AHKONG -- Mr. Ahkong has served as a member of our board of
directors since October 1997. Mr. Ahkong is a founder of Pioneer Management
Services Pte. Ltd., a Singapore-based
<PAGE> 4
consultancy firm, and has been the Managing Director of Pioneer since 1990.
Pioneer provides advice to us and other multinational corporations on matters
related to international taxation.
HUI SHING LEONG -- Mr. Hui has served as a member of our board of directors
since October 1997. Since 1996, Mr. Hui has served as Managing Director of CS
Hui Holdings in Malaysia. Between 1984 and 1994, Mr. Hui served as Managing
Director of Samda Plastics Industries Ltd., a plastic injection molding company
in Malaysia. Since 1994, Mr. Hui has also served as a committee member of the
Penang, Malaysia Industrial Council, Vice-Chairman of the SMI Center in Malaysia
and Chairman of the Sub-Committee Plastics Technology Training Center in
Malaysia. Since 1990, Mr. Hui has served as President of the North Malaysian
Small and Medium Enterprises Association.
<PAGE> 5
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934, as amended, requires
our directors and officers, and persons who own more than 10% of our common
stock to file initial reports of ownership and reports of changes in ownership
with the Securities and Exchange Commission and the Nasdaq National Market. Such
persons are required by Securities and Exchange Commission regulations to
furnish us with copies of all Section 16(a) forms that they file.
Based solely on our review of the copies of such forms furnished to us
and written representations from our executive officers and directors, we
believe that all Section 16(a) filing requirements for the fiscal year ended
March 31, 2000 were met, except that the following individuals had late filings
in fiscal 2000: Michael Marks filed late reports on Form 4 for August 1999,
October 1999 and February 2000; Robert R.B. Dykes filed a late report on Form 4
for July 1999; Ash Bhardwaj filed a late report on Form 3; Humphrey Porter filed
a late report on Form 4 for February 1999; and Hui Shing Leong filed a late
report on Form 4 for October 1999.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
paid or accrued by the us for services rendered during fiscal 2000, 1999 and
1998 by the Chief Executive Officer and each of the four most highly compensated
executive officers whose total salary and bonus for fiscal 2000 exceeded
$100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
----------------------------------- ------ --------- --------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Michael E. Marks .................. 2000 $ 450,000 $ 363,750 $ 231,525(1) 300,000 $ 8,350(12)
Chairman and Chief ............ 1999 400,000 339,315 9,617(2) 1,600,000 7,701(13)
Executive Officer ............. 1998 375,000 168,750 205,167(3) 400,000 8,351(14)
Michael McNamara .................. 2000 375,000 201,250 3,867(4) 300,000 4,750(15)
President, .................... 1999 325,000 177,416 22,611(2) 892,000 5,000(15)
Americas Operations ........... 1998 250,000 75,000 14,576(5) 175,864 3,940(15)
Ronny Nilsson ..................... 2000 317,684 129,563 17,436(6) 80,000 34,884(16)
President, Western European ... 1999 315,000 148,859 18,096(7) 160,000 43,497(16)
Operations .................... 1998 268,681 88,251 564,564(8) 440,000(11) 44,501(16)
Robert R.B. Dykes ................. 2000 337,500 156,000 4,599(4) 120,000 3,500(15)
President, Systems Group ...... 1999 300,000 166,008 25,337(2) 220,000 5,000(15)
and Chief Financial Officer ... 1998 250,000 75,000 10,675(2) 550,000 3,750(15)
Humphrey Porter ................... 2000 300,000 195,000 20,000(9) 80,000 36,000(17)
President, Central/Eastern .... 1999 250,000 149,000 21,000(10) 440,000 30,000(16)
European Operations ........... 1998 152,000 104,000 21,000(10) 160,000 18,000(16)
</TABLE>
(1) Includes a vehicle allowance of $3,868 and forgiveness of a promissory note
due to one of our subsidiaries of $200,000 and forgiveness of interest
payment of $26,517 on the promissory note.
(2) Represents payment for a company vehicle.
(3) Includes a vehicle allowance of $7,533, forgiveness of a promissory note
due to one of our subsidiaries of $100,000 and forgiveness of interest
payment of $97,634 on the promissory note.
(4) Represents a vehicle allowance.
(5) Includes a vehicle allowance of $7,200 and forgiveness of interest payment
of $7,376 due on a promissory note payable to one of our subsidiaries.
(6) Represents a vehicle allowance of $10,166 and a housing allowance of
$7,270.
(7) Includes a vehicle allowance of $10,404 and an apartment allowance of
$7,692.
(8) Includes payment of $413,505 pursuant to a Services Agreement dated April
30, 1997 between us and Mr. Nilsson and a payment of $132,322 to pay taxes
due on the payments to Mr. Nilsson under the Services Agreement. Also
includes a vehicle allowance of $10,853 and a housing allowance of $7,884.
(9) Includes a vehicle allowance of $6,000 and a housing allowance of $8,000.
<PAGE> 6
(10) Includes a vehicle allowance of $7,000 and a housing allowance of $14,000.
(11) Includes 220,000 shares subject to previously-granted options that were
repriced in June 1997.
(12) Includes our contributions to our 401(k) plan of $4,750, and life and
disability insurance premium payments of $3,600.
(13) Includes our contributions to our 401(k) plan of $5,000, and life and
disability insurance premium payments of $2,701.
(14) Includes our contributions to our 401(k) plan of $4,750, and life and
disability insurance premium payments of $3,601.
(15) Represents our contributions to our 401(k) plan.
(16) Represents our contributions to a pension retirement fund.
(17) Includes our contributions to a pension retirement fund of $24,000 and life
insurance premium payments of $12,000.
OPTION GRANTS IN FISCAL 2000
The following table sets forth information regarding option grants
during fiscal 2000 to each of our Chief Executive Officer and four other most
highly compensated executive officers. All options were granted pursuant to our
1993 Share Option Plan.
The options shown in the table were granted at fair market value, are
incentive stock options and will expire five years from the date of grant,
subject to earlier termination upon termination of the optionee's employment.
The options become exercisable over a four-year period, with 25% of the shares
vesting on the first anniversary of the date of grant and 1/36th of the shares
vesting for each full calendar month that an optionee renders services to us
thereafter. Each option fully accelerates in the event that, in the 18-month
period following certain mergers or acquisitions of us, the optionee's
employment with us is terminated or his duties are substantially reduced or
changed. Each option includes a limited stock appreciation right pursuant to
which the option will automatically be canceled upon the occurrence of certain
hostile tender offers, in return for a cash distribution from us based on the
tender offer price per share. The exercise price of each option may be paid in
cash or through a cashless exercise procedure involving a same-day sale of the
purchase shares.
In accordance with the rules of the Securities and Exchange Commission,
the table presents the potential realizable values that would exist for the
options at the end of their respective five-year terms. These values are based
on assumed rates of annual compound stock price appreciation of 5% and 10% from
the date the option was granted to the end of the option term. Potential
realizable values are computed by:
- multiplying the number of Ordinary Shares subject to a given option
by $70.44 per share, which was the closing price per Ordinary Share
as reported on the Nasdaq National Market on March 31, 2000, the
last day of trading for fiscal 2000;
- assuming that the aggregate option exercise price derived from the
calculation compounds at the annual 5% or 10% rates should in the
table for the entire five year term of the option; and
- subtracting from that result the aggregate option exercise price.
The assumed 5% and 10% rates of share price appreciation are mandated by
rules of the Securities and Exchange Commission and do not represent our
estimate or projection of future Ordinary Share prices.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
NUMBER OF PERCENT OF VALUE AT ASSUMED ANNUAL
SECURITIES TOTAL OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES PRICE Expiration OPTION TERM
NAME GRANTED IN FISCAL 2000 PER SHARE Date 5% 10%
------- ----------- -------------- --------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Michael E. Marks ...... 300,000 6% $29.00 09/30/2004 $18,270,382 $25,333,297
Michael McNamara ...... 300,000 6 29.00 09/30/2004 18,270,382 25,333,297
Ronny Nilsson ......... 80,000 2 29.00 09/30/2004 4,872,102 6,755,546
Robert R.B. Dykes ..... 120,000 3 29.00 09/30/2004 7,308,153 10,133,319
Humphrey Porter ....... 80,000 2 29.00 09/30/2004 4,872,102 6,755,546
</TABLE>
<PAGE> 7
AGGREGATED OPTION EXERCISED IN FISCAL 2000 AND OPTION VALUES AT MARCH 31, 2000
The following table presents information concerning the exercise of
options during fiscal 2000 by each of our Chief Executive Officer and four other
most highly compensated executive officers, including the aggregate amount of
gains on the date of exercise. The amounts set forth in the column entitled
"Value Realized" represent the fair market value of the Ordinary Shares
underlying the option on the date of exercise less the aggregate exercise price
of the option.
In addition, the table includes the number of shares covered by both
exercisable and unexercisable stock options as of March 31, 2000. Also reported
are values of "in-the-money" options that represent the positive spread between
the respective exercise prices of outstanding stock options and $70.44 per
share, which was the closing price per Ordinary Share as reported on the Nasdaq
National Market on March 31, 2000, the last day of trading for fiscal 2000.
These values, unlike the amounts set forth in the column entitled "Value
Realized," have not been, and may never be, realized.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT MARCH 31, 2000 MARCH 31, 2000
NAME EXERCISE REALIZED VESTED UNVESTED VESTED UNVESTED
----- ----------- ------------ --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michael E. Marks ...... 575,488 $ 23,376,199 2,625,000 1,675,000 $184,898,438 $117,982,813
Michael McNamara ...... 40,000 1,420,000 711,408 920,456 50,109,801 64,834,620
Ronny Nilsson ......... 250,000 14,046,875 680,000 -- 47,897,500 --
Robert R. B. Dykes .... 12,000 280,876 641,709 432,291 45,200,378 30,449,497
Humphrey Porter ....... 233,000 9,322,750 262,500 417,500 18,489,844 29,407,656
</TABLE>
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
Mr. Nilsson. In connection with the acquisition of two manufacturing
facilities from Ericsson Business Networks AB located in Karlskrona, Sweden, we
entered into an Employment and Noncompetition Agreement and a Services Agreement
with Mr. Ronny Nilsson, each dated as of April 30, 1997.
Pursuant to the Employment Agreement, Mr. Nilsson:
- was appointed as our Senior Vice President, Europe for a four-year
period;
- receives an annual salary of $250,000; and
- is entitled to a bonus of up to 45% of his annual salary upon the
successful completion of certain performance criteria.
Pursuant to the Services Agreement, Mr. Nilsson is to perform management
consultation and guidance services to us in consideration for
- an aggregate of $775,000 which was paid between March 31, 1997 and
April 15, 1998; and
- the issuance by us to Mr. Nilsson of an interest-free loan in the
amount of 400,000 kronor ($415,000 as of April 15, 1997, the date of
the issuance of the loan) which was repaid by Mr. Nilsson in two
installments of $210,000 on September 15, 1997 and $205,000 on April
15, 1998.
In connection with Mr. Nilsson's repayment of the interest-free loan, on
April 15, 1998 we paid to Mr. Nilsson as compensation an amount equal to the two
installments paid by Mr. Nilsson.
DIRECTOR COMPENSATION
Each individual who first becomes a non-employee Board member is granted
a stock option to purchase 60,000 Ordinary Shares. After this initial grant, on
the date of each Annual General Meeting, each individual who is
<PAGE> 8
at that time serving as a non-employee director receives a stock option to
purchase 12,000 Ordinary Shares, all pursuant to the automatic option grant
provisions of our 1993 Share Option Plan. Pursuant to this program, Messrs.
Ahkong, Moritz, Sharp, Foley and Hui each received option grants for 12,000
Ordinary Shares in fiscal 2000. In addition, all directors receive reimbursement
of reasonable out-of-pocket expenses incurred in connection with meetings of the
Board of Directors. No non-employee Director receives any cash compensation for
services rendered as a director. No director who is our employee receives
compensation for services rendered as a director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the compensation committee of our Board of Directors
during fiscal 2000 were Mr. Sharp and Mr. Moritz. None of our officers serve on
our compensation committee. No interlocking relationships exist between our
Board of Directors or compensation committee and the board of directors or
compensation committee of any other company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of our previous
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, which might incorporate future filings made by us under
those statutes, the following Compensation Committee Report on Executive
Compensation will not be incorporated by reference into any of those prior
filings; nor will such report be incorporated by reference into any future
filings made by us under those statutes.
The Compensation Committee of the Board of Directors sets the base salary
of our executive officers and approves individual bonus programs for executive
officers. The Committee took no action with respect to executive compensation in
fiscal 2000, other than approving certain year-end bonuses earned in accordance
with a bonus plan previously adopted by the Board of Directors and authorizing
salary increases and option grants to five executive officers. Option grants to
executive officers are made by the Committee, and the Committee has complete
discretion in establishing the terms of each such grant. The following is a
summary of our policies that affect the compensation paid to executive officers,
as reflected in the tables and text set forth elsewhere in this Proxy Statement.
General Compensation Policy. Our overall policy is to offer our executive
officers cash-based and equity-based compensation opportunities based upon their
personal performance, our financial performance and their contribution to that
performance. One of our primary objectives is to have a significant portion of
each officer's compensation contingent upon our performance as well as upon his
or her own level of performance. The principal factors taken into account in
establishing each executive officer's compensation package are summarized below.
Additional factors may be taken into account to a lesser degree, and the
relative weight given to each factor varies with each individual in the
discretion of the Committee. The Committee may in its discretion apply entirely
different factors, such as different measures of financial performance, for
future fiscal years.
Cash-Based Compensation. We set base salary for executive officers on the
basis of personal performance and internal and industry comparability
considerations. Bonuses are paid at the discretion of the Committee. In
determining the amount of the bonus to be paid to each executive officer,
including the Chief Executive Officer, we first establish a percentage of the
officer's base salary as a target bonus. The amount of the actual bonus paid to
the officer can be greater or less than this percentage, and depends on our net
income, the performance of our operations that are under the officer's
supervision and other performance factors, each as compared to budgeted
performance for the period. We also have a 401(k) retirement savings plan for
U.S. employees to which it can contribute a portion of profits and such
contribution is allocated to eligible participants in proportion to their total
compensation for the year relative to the total aggregate compensation for all
eligible participants. We believe that all employees share the responsibility of
achieving profits.
Long-Term Equity-Based Compensation. The Committee intends to make stock
option grants from time to time. Each grant is designed to align the interests
of the executive officer with those of the shareholders and provide each
individual with a significant incentive to manage the company from the
perspective of an owner with an equity stake in the business. Each grant
generally allows the officer to acquire our Ordinary Shares at a fixed price per
share (the market price on the grant date) over a specified period of time (up
to five (5) years), thus providing a return to the officer only if he or she
remains in the our employ and the market price of the shares appreciates over
the option term. The size of the option grant to each executive officer
generally is set at a level that is intended to create a meaningful opportunity
for share ownership based upon the individual's current position with us, but
there is also taken into account the individual's potential for future
responsibility and promotion over the option term, the individual's personal
performance in recent periods and the number of options held by the individual
at the time of grant. The relative weight given to these factors varies with
each individual in the sole discretion of the Committee.
CEO Compensation. Mr. Marks' base salary is based on our expectation of his
personal performance and comparisons to the base salaries of other our executive
officers and in the industry.
With respect to Mr. Marks' base salary, it is our intent to provide him
with a level of stability and certainty each year and not have this particular
component of compensation affected to any significant degree by short-term
company performance factors. However, in recognition of our rapid growth and
corresponding expansion of Mr. Marks' responsibilities, Mr. Marks' base salary
was increased from $400,000 in fiscal 1999 to $450,000 in fiscal 2000. In fiscal
2000, the Committee granted Mr. Marks an option to purchase 300,000 Ordinary
Shares at an exercise price of $29.00 per share. The Committee based its
decision regarding the size of the option grant to Mr. Marks on an analysis of
option grants to CEOs in the industry with similar responsibilities. We also
provided for the acceleration of all Mr. Marks' unvested options in the event
that, following certain mergers or acquisitions by us, Mr. Marks' employment
with us is terminated or his duties are substantially reduced or changed. In
addition, on April 16, 1995, our U.S. subsidiary, Flextronics International USA,
loaned $500,000 to Mr. Marks. During fiscal 2000, Flextronics International USA
forgave the remaining outstanding principal amount on this loan of $200,000,
plus $26,517 in accrued interest on this loan. This forgiveness of the 1995 loan
was based on the Board's subjective judgment that it was appropriate in view of
Mr. Marks' performance in fiscal 2000, including his significant role in the
substantial growth in our net sales and the development and strengthening of
customer relationships with leading OEMs such as Ericsson, Cisco Systems and
Microsoft Corporation, as well as his role in recruiting several new executive
officers and directors.
Deduction Limit for Executive Compensation. Section 162(m) of the Internal
Revenue Code limits federal income tax deductions for compensation paid to the
chief executive officer and the four other most highly compensated officers of a
public company to $1.0 million per year, but contains an exception for
performance-based compensation that satisfies certain conditions.
We believe that stock options granted to our executives qualify for the
performance-based exception to the deduction limit and because it is unlikely
that other compensation payable to any of our executives would exceed the
deduction limit in the near future the Committee has not yet qualified
compensation other than options for the performance-based exception. In
approving the amount and form of compensation for our executives, the Committee
will continue to consider all elements of cost to us of providing that
compensation.
Submitted by the Compensation Committee
of our Board of Directors:
Richard L. Sharp
Michael J. Moritz
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information as of June 30, 2000 regarding
the beneficial ownership of the our Ordinary Shares, by
- each shareholder known to us to be the beneficial owner of more than
5% of our common stock;
- each director;
- each executive officer named in the Summary Compensation Table under
Item 11; and
- all directors and executive officers named in Item 10, as a group.
This table is based upon information supplied by officers, directors and
principal shareholders and Schedules 13D and 13G filed with the Securities and
Exchange Commission. Where information regarding shareholders is based on
Schedules 13D and 13G, the number of shares owned is as of the date for which
information was provided in such schedules.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission that deem shares to be beneficially owned by
any person who has voting or investment power with respect to such shares.
Ordinary Shares subject to options that are currently exercisable or exercisable
within 60 days of June 30, 2000 are deemed to be outstanding and to be
beneficially owned by the person holding such options for the purpose of
computing the percentage ownership of such person but are not treated as
outstanding for the purpose of computing the percentage ownership of any other
person. Unless otherwise indicated below, the persons and entities named in the
table have sole voting and sole investment power with respect to all the shares
beneficially owned, subject to community property laws where applicable.
In the table below, percentage ownership is based upon 198,465,868
Ordinary Shares outstanding as of June 30, 2000.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
NAME OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT
------------------------ ---------------- -------
<S> <C> <C>
5% SHAREHOLDERS
Pilgrim Baxter & Associates, Ltd.(1)..................... 9,896,000 5.0%
825 Duportail Road
Wayne, Pennsylvania 19087
Marsh & McLennan Companies, Inc.(2)...................... 9,843,482 5.0
1166 Avenue of the Americas
New York, New York 10036
FMR Corporation(3)....................................... 9,132,300 4.6
82 Devonshire Street
Boston, Massachusetts 02109
Ronald Baron(4).......................................... 7,190,588 3.6
c/o Baron Capital Management, Inc.
767 Fifth Avenue, 24th Floor
New York, New York 10153
AXA Financial, Inc.(5)................................... 6,735,830 3.4
1290 Avenue of the Americas
New York, New York 10104
EXECUTIVE OFFICERS AND DIRECTORS
Hui Shing Leong(6)....................................... 3,966,900 2.0
Michael E. Marks(7)...................................... 2,492,865 1.2
Richard L. Sharp(8)...................................... 1,594,976 *
Michael McNamara(9)...................................... 671,393 *
Robert R. B. Dykes(10)................................... 591,823 *
Michael J. Moritz(11).................................... 377,768 *
Ronny Nilsson(12)........................................ 350,000 *
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
NAME OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT
------------------------ ---------------- -------
<S> <C> <C>
Tsui Sung Lam(13)........................................ 175,158 *
Humphrey Porter(14)...................................... 92,000 *
Patrick Foley(15)........................................ 77,500 *
Chuen Fah Alain Ahkong(16)............................... 37,500 *
All 15 directors and executive officers as a group 17)... 11,526,608 5.7%
----------- ---------
</TABLE>
* Less than 1%.
(1) Based on information supplied by Pilgrim Baxter & Associates, Ltd. in a
Schedule 13G filed with the Securities and Exchange Commission on February
8, 1999.
(2) Based on information supplied by Marsh & McLennan Companies, Inc. ("Marsh")
in a Schedule 13G filed with the Securities and Exchange Commission on
February 17, 2000, includes 28,074 shares with respect to which The Putnam
Advisory Company, Inc. ("PAC") and Putnam Investments, Inc. ("PI") have
sole investment power. In addition, PAC beneficially owns 435,914 shares,
PI beneficially owns 9,843,482 shares, and Putnam Investment Management,
Inc. ("PIM") beneficially owns 9,407,568 shares. PI, a wholly owned
subsidiary of Marsh, wholly owns PAC and PI. PAC and PI have depository
power over these shares as investment managers.
(3) Based on information supplied by FMR Corp. in a Schedule 13G filed with the
Securities and Exchange Commission on February 14, 2000. FMR Corp. has sole
voting power with respect to 322,600 shares and sole investment power with
respect to 9,132,300 shares. Fidelity Management & Research Company, a
wholly owned subsidiary of FMR Corp., beneficially owns 8,588,600 shares.
Fidelity Management Trust Company, a wholly owned subsidiary of FMR Corp.,
is the beneficial owner of 522,100 shares. The Schedule 13G was filed
jointly by FMR Corp., Edward C. Johnson 3d, Chairman of FMR Corp., and
Abigail P. Johnson, Director of FMR Corp.
(4) Based on information supplied by Mr. Baron in a Schedule 13G filed with the
Securities and Exchange Commission on February 15, 2000, includes 91,400
shares held by the investment advisory clients of Baron Capital Management,
Inc. ("BCM"), a wholly-owned subsidiary of Baron Capital, Inc. ("BCI"), and
6,020,000 shares held by the investment advisory clients of BAMCO, Inc.
("BAMCO") and Baron Asset Fund ("BAF"). BAF is an advisory client of BAMCO.
Pursuant to discretionary agreements, BCM and BAMCO hold the power to vote
and dispose of the shares in the advisory accounts. BCI and BAMCO are
wholly-owned subsidiaries of Baron Capital Group, Inc. ("BCG"). Mr. Baron
owns a controlling interest in BCG, and may be deemed to share power to
vote and dispose of these shares.
(5) Based on information supplied by AXA Financial, Inc. in a Schedule 13G
filed with the Securities and Exchange Commission on February 14, 2000,
includes 6,389,240 shares beneficially owned by Alliance Capital Management
L.P. ("Alliance"), 104,740 shares beneficially owned by Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ"), 230,600 shares beneficially owned
by The Equitable Life Assurance Society of the United States ("TELAS") and
11,250 shares beneficially owned by Wood, Struthers & Winthrop Management
Corporation ("WSW"). AXA Financial, Inc. is the parent holding company of
Alliance, DLJ, TELAS and WSW. AXA beneficially owns a majority of AXA
Financial, Inc. The following entities as a group control AXA: AXA Conseil
Vie Assurance Mutuelle, AXA Assurances I.A.R.D. Mutuelle and AXA Courtage
Assurance Mutuelle.
(6) Includes 2,257,600 shares beneficially owned by Great Empire Limited Trust.
Mr. Hui, the trustee of Great Empire Limited Trust, has voting and
investment power over such shares and may be deemed to beneficially own
such shares. Mr. Hui disclaims beneficial ownership of all such shares
except to the extent of his proportionate interest therein. Includes 6,000
shares subject to options exercisable within 60 days after June 30, 2000
held by Mr. Hui.
(7) Includes 12,000 shares held by the Justin Caine Marks Trust and 12,000
shares held by the Amy G. Marks Trust. Also includes 1,435,683 shares
subject to options exercisable within 60 days after June 30, 2000 held by
Mr. Marks.
(8) Includes 240,000 shares beneficially owned by Bethany Limited Partnership.
Mr. Sharp, the general partner of Bethany Limited Partnership, has voting
and investment power over such shares and may be deemed to beneficially own
such shares. Mr. Sharp disclaims beneficial ownership of all such shares
except to the extent of his proportionate interest therein. Also includes
77,500 shares held by RLS Charitable Remainder Unitrust of which Mr. Sharp
is a co-trustee and 41,500 shares subject to options exercisable within 60
days after June 30, 2000 held by Mr. Sharp.
(9) Represents 671,393 shares subject to options exercisable within 60 days
after June 30, 2000 held by Mr. McNamara.
(10) Includes 577,917 shares subject to options exercisable within 60 days after
June 30, 2000 held by Mr. Dykes.
(11) Includes 320,668 shares held by Sequoia Capital VII, a limited partnership
and 15,600 shares held by Sequoia Technology Partners VII, a limited
partnership. The general partner of Sequoia Capital VII and Sequoia
Technology Partners VII is Sequoia Capital VII-A Management, LLC. Mr.
Moritz is a general partner of Sequoia Capital VII-A Management, LLC. Also
includes 41,500 shares subject to options exercisable within 60 days after
June 30, 2000 held by Mr. Moritz.
(12) Represents 350,000 shares subject to options exercisable within 60 days
after June 30, 2000 held by Mr. Nilsson.
(13) Represents 175,158 shares subject to options exercisable within 60 days
after June 30, 2000 held by Mr. Tsui.
(14) Represents 92,000 shares subject to options exercisable within 60 days
after June 30, 2000 held by Mr. Porter.
(15) Represents 77,500 shares subject to options exercisable within 60 days
after June 30, 2000 held by Mr. Foley.
(16) Represents 37,500 shares subject to options exercisable within 60 days
after June 30, 2000 held by Mr. Ahkong.
(17) Includes 4,148,007 shares subject to options exercisable within 60 days
after June 30, 2000.
<PAGE> 10
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Other than compensation agreements and other arrangements, which are
described in "Item 11. Executive Compensation" and the transactions described
below, during fiscal 2000, there was not, nor is there currently proposed, any
transaction or series of similar transactions to which we were or will be a
party:
- in which the amount involved exceeded or will exceed $60,000, and
- in which any director, executive officer, holder of more than 5% of
our Ordinary Shares or any member of their immediate family had or
will have a direct or indirect material interest.
LOANS TO EXECUTIVE OFFICERS
Mr. Marks. On April 16, 1995, our U.S. subsidiary, Flextronics
International USA, Inc., which we refer to in this section as Flextronics USA,
loaned $500,000 to Mr. Michael Marks, our Chairman of the Board and Chief
Executive Officer. Mr. Marks executed a promissory note in favor of Flextronics
USA that matured on April 16, 2000. During fiscal 1997, Flextronics USA forgave
a total of $200,000 of outstanding principal amount and $26,340 in accrued
interest. During fiscal 1999, Flextronics USA forgave a total of $100,000 of
outstanding principal amount and $97,634 in accrued interest. During fiscal
2000, Flextronics USA forgave the remaining balance of $200,000 of outstanding
principal and $26,516.80 in accrued interest.
On November 6, 1997, Flextronics USA loaned $1.5 million to Mr. Marks.
Mr. Marks executed a promissory note in favor of Flextronics USA that bears
interest at a rate of 7.259% and matures on November 6, 2002. This loan is
secured by certain assets owned by Mr. Marks. During fiscal 2000, Mr. Marks paid
$1,500,000 in principal and $64,999.98 in accrued interest.
Mr. McNamara. On October 22, 1996, Flextronics USA loaned $136,000 to
Mr. Michael McNamara. Mr. McNamara executed a promissory note in favor of
Flextronics USA that bears interest at a rate of 7% and matures on October 22,
2001. The remaining outstanding balance of the loan as of March 31, 2000 was
$169,818.41 (representing $135,900 in principal and $33,918.41 in accrued
interest).
On November 25, 1998, Flextronics USA loaned $130,000 to Mr. McNamara.
Mr. McNamara executed a promissory note in favor of Flextronics USA that bears
interest at a rate of 7.25% and matures on November 25, 2003. The remaining
outstanding balance of the loan as of March 31, 2000 was $142,529.67
(representing $130,000 in principal and $12,529.67 in accrued interest).
Mr. Nilsson. On February 4, 1999, we loaned $410,000 to Mr. Ronny
Nilsson. Mr. Nilsson executed a promissory note in favor of us and the note
matured on March 31, 2000.
Mr. Dykes. On January 15, 1999, Flextronics USA loaned $200,000 to Mr.
Robert Dykes. Mr. Dykes executed a promissory note in favor of Flextronics USA
that bears interest at a rate of 7.25% and matures on January 15, 2004. The
remaining outstanding balance of the loan as of March 31, 2000 was $217,243.30
(representing $200,100 in principal and $17,143.30 in accrued interest).
Mr. Smach. In April, 2000, Flextronics USA loaned $1,000,000 to Mr.
Thomas J. Smach. Mr. Smach executed a Loan and Security Agreement and a
promissory note in favor of Flextronics USA that matures on termination of
employment.
Mr. Snyder. In April, 2000, Flextronics USA loaned $1,000,000 to Mr.
Ronald R. Snyder. Mr. Snyder executed a Loan and Security Agreement and a
promissory note in favor of Flextronics USA that matures on termination of
employment.
TRANSACTION WITH DIRECTOR
<PAGE> 11
We paid approximately $114,980 to Pioneer Management Services Pte. Ltd.,
a tax consulting and planning firm, in fiscal 2000 in connection with tax and
corporate services provided to us related to our Asian operations. Chuen Fah
Alain Ahkong, one of our directors, is a director of Pioneer.
<PAGE> 12
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amended Report to be
signed on its behalf by the undersigned, thereto duly authorized.
Date : July 31, 2000
FLEXTRONICS INTERNATIONAL LTD.
By: /s/ MICHAEL E. MARKS
---------------------------------
Michael E. Marks
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ MICHAEL E. MARKS Chairman of the Board, and July 31, 2000
----------------------------------- Chief Executive Officer
Michael E. Marks (principal executive officer)
/s/ ROBERT R.B. DYKES* President, Systems Group and July 31, 2000
----------------------------------- Chief Financial Officer
Robert R.B. Dykes
/s/ THOMAS J. SMACH* Vice President of Finance July 31, 2000
----------------------------------- (principal financial and
Thomas J. Smach accounting officer)
/s/ TSUI SUNG LAM* Director July 31, 2000
-----------------------------------
Tsui Sung Lam
/s/ MICHAEL J. MORITZ* Director July 31, 2000
-----------------------------------
Michael J. Moritz
/s/ RICHARD L. SHARP* Director July 31, 2000
-----------------------------------
Richard L. Sharp
Director July 31, 2000
-----------------------------------
Patrick Foley
/s/ ALAIN AHKONG* Director July 31, 2000
-----------------------------------
Alain Ahkong
/s/ HUI SHING LEONG* Director July 31, 2000
-----------------------------------
Hui Shing Leong
*By: /s/ MICHAEL E. MARKS
-------------------------------
Michael E. Parks
Attorney-in-fact
</TABLE>
