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Filed pursuant to Rule 424(b)(5)
Registration No. 333-87139
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 24, 1999)
8,600,000 ORDINARY SHARES
[FLEXTRONICS INTERNATIONAL LOGO]
ORDINARY SHARES
-------------------------
Flextronics International Ltd. is offering 8,600,000 ordinary shares in a
firm commitment underwriting. On February 24, 2000, the last reported sale price
of the ordinary shares on the Nasdaq National Market was $61 17/64 per share.
-------------------------
The ordinary shares are listed on the Nasdaq National Market under the
symbol "FLEX."
-------------------------
INVESTING IN THE ORDINARY SHARES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE S-4 OF THIS PROSPECTUS SUPPLEMENT.
-------------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
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<S> <C> <C>
Offering Price.............................................. $59.00 $507,400,000
Discounts and Commissions to Underwriter.................... $ 1.50 $ 12,900,000
Offering Proceeds to Flextronics............................ $57.50 $494,500,000
</TABLE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus supplement is truthful or complete. Any representation to the
contrary is a criminal offense.
Banc of America Securities LLC expects to deliver the ordinary shares to
investors on February 29, 2000.
BANC OF AMERICA SECURITIES LLC
-------------------------------
February 24, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prospectus Supplement
Forward-Looking Statements.................................. S-1
Prospectus Supplement Summary............................... S-2
Risk Factors................................................ S-4
Dividends................................................... S-11
Use of Proceeds............................................. S-11
Price Range of Ordinary Shares.............................. S-12
Capitalization.............................................. S-13
Underwriter................................................. S-14
Legal Matters............................................... S-15
Prospectus
About This Prospectus....................................... 2
Where You Can Find More Information......................... 2
Forward-Looking Statements.................................. 3
The Company................................................. 4
Enforcement of Civil Liabilities............................ 4
Risk Factors................................................ 4
Use of Proceeds............................................. 4
Description of Capital Shares............................... 5
Taxation.................................................... 7
Plan of Distribution........................................ 9
Legal Matters............................................... 10
Experts..................................................... 10
</TABLE>
The number of ordinary shares to be outstanding after the offering is based
on the number of ordinary shares outstanding as of December 31, 1999 on a pro
forma basis to give effect to the acquisition of The DII Group, Inc. This number
excludes a total of 27,490,347 ordinary shares subject to outstanding options or
reserved for issuance under share option plans and share purchase plans of
Flextronics and DII.
In this prospectus supplement and in the accompanying prospectus,
references to "U.S. dollars" and "$" are to United States currency and
references to "Singapore dollars" and "S$" are to Singapore currency. All
information pertaining to share and per share amounts in this prospectus
supplement reflects the two-for-one stock split effected as a bonus issue, the
Singapore equivalent of a stock dividend, paid on December 22, 1999. All
information pertaining to share and per share amounts in the accompanying
prospectus does not reflect this stock split.
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FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus, including the
documents incorporated by reference in the prospectus, contain forward-looking
statements regarding our plans, expectations, estimates and beliefs. Our actual
results could differ materially from those discussed in, or implied by, these
forward-looking statements. Forward-looking statements are identified by words
such as "believes," "anticipates," "expects," "intends," "plans," "will," "may"
and other similar expressions. In addition, any statements that refer to
expectations, projections or other characterizations of future events or
circumstances are forward-looking statements. Forward-looking statements in
these documents include, but are not necessarily limited to, those relating to:
- our ability to carry out our strategies;
- our expected growth in sales;
- the planned expansion of our facilities;
- potential acquisitions;
- adoption of outsourcing by original equipment manufacturers;
- our ability to become an integral part of our customers' operations;
- our ability to win new customer contracts;
- our ability to implement our new management information system;
- tax matters;
- currency fluctuations;
- our planned opening of an industrial park in Brazil; and
- our planned acquisition of The DII Group, Inc.
Factors that could cause actual results or conditions to differ from those
anticipated by these and other forward-looking statements include those more
fully described in "Risk Factors."
You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus. We have not authorized anyone to
provide you with different information. We are not making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. You
should assume that the information appearing in this prospectus supplement is
accurate as of the date on the front cover of this prospectus supplement only.
Our business, financial condition, results of operations and prospects may have
changed since that date.
S-1
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PROSPECTUS SUPPLEMENT SUMMARY
You should read the following summary together with the more detailed
information appearing elsewhere in this prospectus supplement and in the
accompanying prospectus, including the documents incorporated by reference in
the prospectus.
THE COMPANY
Flextronics is a leading provider of advanced electronics manufacturing
services to original equipment manufacturers, or OEMs, primarily in the
telecommunications and networking, consumer electronics and computer industries.
We provide a wide range of integrated services, from initial product design to
volume production and fulfillment. Our manufacturing services range from printed
circuit board fabrication and assembly to complete product assembly and test. We
believe that we have developed particular strengths in advanced interconnect,
miniaturization and packaging technologies, and in the engineering and
manufacturing of wireless communications products employing radio frequency
technology. In addition, we provide advanced engineering services, including
product design, PCB layout, quick-turn prototyping and test development.
Throughout the production process, we offer logistics services, such as
materials procurement, inventory management, packaging and distribution.
Through a combination of internal growth and acquisitions, based on our
revenues, we have become the fourth largest provider of electronics
manufacturing services, with revenues of $2.0 billion in fiscal 1999 and $2.7
billion for the nine months ended December 31, 1999. We believe that our size,
global presence and expertise enable us to win large outsourced manufacturing
programs from leading multinational OEMs. We offer a complete and flexible
manufacturing solution that provides accelerated time-to-market and
time-to-volume production, as well as reduced production costs. By working
closely with customers throughout the design, manufacturing and distribution
process, and by offering highly responsive services, we believe that we can
become an integral part of our customers' operations.
Our customers include industry leaders such as Cisco, Compaq, Ericsson,
Hewlett-Packard, Lucent, Microsoft, Motorola, Nokia, Nortel Networks, Philips
and 3Com. Due to our focus on high growth technology sectors, our prospects are
influenced by certain major trends, such as the buildout of the communications
and Internet infrastructure, the proliferation of wireless devices and other
trends in electronics technologies. In addition, our growth is driven by the
accelerating pace at which leading OEMs are adopting outsourcing as a core
business strategy.
On November 22, 1999, we announced the signing of a definitive merger
agreement with The DII Group, Inc. Under the agreement, DII stockholders will
receive 1.61 Flextronics ordinary shares for each share of DII common stock.
Based on the shares of DII common stock outstanding on February 1, 2000, we will
issue approximately 59,191,450 ordinary shares to DII stockholders. We intend to
account for this merger as a pooling of interests. The merger is subject to
approval by Flextronics shareholders and DII stockholders, as well as regulatory
approval. We expect to complete the merger in April 2000.
DII is a leading global provider of electronics design and manufacturing
services to OEMs primarily in the telecommunications, data communications,
high-end computing and medical devices industries. DII provides a comprehensive
set of integrated design and manufacturing services, from initial product design
to volume production and order fulfillment. DII's manufacturing services range
from printed circuit board fabrication and assembly to complete product assembly
and test. In addition, DII provides advanced engineering services, including
semiconductor design, printed circuit board design, printed circuit board layout
and quick-turn prototyping and test development. Throughout the production
process, DII offers logistics services, such as materials procurement, inventory
management and distribution.
S-2
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THE OFFERING
Ordinary shares.............. 8,600,000 shares
Ordinary shares to be
outstanding after the
offering................... 182,530,832 shares
Use of proceeds.............. The net proceeds will be used to fund the
further expansion of our business, including
additional working capital and capital
expenditures and general corporate purposes. We
may use a portion of the net proceeds for
strategic acquisitions or investments.
Nasdaq National Market
symbol..................... FLEX
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RISK FACTORS
This offering involves a high degree of risk. You should carefully consider
the risks described below and the other information in this prospectus
supplement and the accompanying prospectus, including the information
incorporated by reference in the accompanying prospectus, and the risk factors
contained in these documents before deciding to invest in our ordinary shares.
RISKS RELATED TO FLEXTRONICS
IF WE DO NOT MANAGE EFFECTIVELY THE EXPANSION OF OUR OPERATIONS, OUR BUSINESS
MAY BE HARMED.
We have grown rapidly in recent periods, and this growth may not continue.
Internal growth will require us to develop new customer relationships and expand
existing ones, improve our operational and information systems and further
expand our manufacturing capacity.
We plan to increase our manufacturing capacity by expanding our facilities
and by adding new equipment. This expansion involves significant risks. For
example:
- we may not be able to attract and retain the management personnel and
skilled employees necessary to support expanded operations;
- we may not efficiently and effectively integrate new operations, expand
existing ones and manage geographically dispersed operations;
- we may incur cost overruns;
- we may encounter construction delays, equipment delays or shortages,
labor shortages and disputes and production start-up problems that could
adversely affect our growth and our ability to meet customers' delivery
schedules; and
- we may not be able to obtain funds for this expansion, and we may not be
able to obtain loans or operating leases with attractive terms.
In addition, we expect to incur new fixed operating expenses associated
with our expansion efforts, including substantial increases in depreciation
expense and rental expense, that will increase our cost of sales. If our
revenues do not increase sufficiently to offset these expenses, our operating
results would be adversely affected. Our expansion, both through acquisitions
and internal growth, has contributed to our incurring significant merger-related
expenses and experiencing volatility in our operating results and may continue
to do so in the future.
WE MAY ENCOUNTER DIFFICULTIES WITH ACQUISITIONS, WHICH COULD HARM OUR BUSINESS.
We have completed a number of acquisitions of businesses and facilities and
expect to continue to pursue growth through acquisitions in the future.
Acquisitions involve a number of risks and challenges, including:
- diversion of management's attention;
- the need to integrate acquired operations;
- potential loss of key employees and customers of the acquired companies;
- lack of experience operating in the geographic market of the acquired
business; and
- an increase in our expenses and working capital requirements.
S-4
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To integrate acquired operations, we must implement our management
information systems and operating systems and assimilate and manage the
personnel of the acquired operations. The difficulties of this integration may
be further complicated by geographic distances. The integration of acquired
businesses may not be successful and could result in disruption to other parts
of our business.
Any of these and other factors could adversely affect our ability to
achieve anticipated levels of profitability for acquired operations or realize
other anticipated benefits of an acquisition. Furthermore, any future
acquisitions may require additional debt or equity financing, which could
increase our leverage or be dilutive to our existing shareholders. No assurance
can be given that we will consummate any acquisitions in the future.
WE HAVE NEW CUSTOMER RELATIONSHIPS FROM WHICH WE ARE NOT YET RECEIVING
SIGNIFICANT REVENUES, AND ORDERS FROM THESE CUSTOMERS MAY NOT REACH ANTICIPATED
LEVELS.
We have recently announced major new customer relationships and new
manufacturing programs for existing customers from which we anticipate
significant future sales. However, similar to our other customer relationships,
there are no volume purchase commitments under these new relationships and
programs, and the revenues we actually achieve may not meet our expectations. In
anticipation of future activities under these programs, we are incurring
substantial expenses as we add personnel and manufacturing capacity and procure
materials. Our operating results will be adversely affected if sales do not
develop to the extent and within the time frame that we anticipate. Finally, if
we are unable to achieve the increases in our manufacturing capacity necessary
to support these new and expanded relationships in a timely manner, or are
unable to implement the infrastructure to support these expanded operations, we
will not achieve the sales that we expect from these new and expanded
relationships.
OUR CUSTOMER REQUIREMENTS AND OPERATING RESULTS VARY SIGNIFICANTLY.
Electronics manufacturing service providers must provide increasingly rapid
product turnaround for their customers. We generally are not able to obtain
firm, long-term purchase commitments from our customers, and we continue to
experience reduced lead times in customer orders. Customers may cancel their
orders, change production quantities or delay production for a number of
reasons. Cancellations, reductions or delays by a significant customer or by a
group of customers would adversely affect our results of operations.
In addition to the variable nature of our operating results due to the
short-term nature of our customers' commitments, other factors may contribute to
significant fluctuations in our results of operations. These factors include:
- the timing of customer orders;
- the volume of these orders relative to our capacity;
- market acceptance of customers' new products;
- changes in demand for customers' products and product obsolescence;
- the timing of our expenditures in anticipation of future orders;
- our effectiveness in managing manufacturing processes;
- changes in the cost and availability of labor and components;
- changes in our product mix;
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- changes in economic conditions;
- local factors and events that may affect our production volume, such as
local holidays; and
- seasonality in customers' product requirements.
One of our significant end-markets is the consumer electronics market. This
market exhibits particular strength towards the end of the year in connection
with the holiday season. As a result, we have experienced relative strength in
revenues in our third fiscal quarter.
We make significant decisions, including the levels of business that we
will seek and accept, production schedules, component procurement commitments,
personnel needs and other resource requirements, based on our estimates of
customer requirements. The short-term nature of our customers' commitments and
the possibility of rapid changes in demand for their products reduces our
ability to estimate accurately future customer requirements. On occasion,
customers may require rapid increases in production, which can strain our
resources and reduce margins. Although we have increased our manufacturing
capacity and plan further increases, we may not have sufficient capacity at any
given time to meet our customers' demands. In addition, because many of our
costs and operating expenses are relatively fixed, a reduction in customer
demand can adversely affect our gross margins and operating income.
A MAJORITY OF OUR SALES COMES FROM A SMALL NUMBER OF CUSTOMERS; IF WE LOSE ANY
OF THESE CUSTOMERS, OUR SALES COULD DECLINE SIGNIFICANTLY.
Sales to our five largest customers have represented a majority of our net
sales in recent periods. Our five largest customers accounted for approximately
55% of consolidated net sales in the nine months ended December 31, 1999, and
62% in fiscal 1999. Our largest customers during fiscal 1999 were Philips,
Ericsson and Cisco, accounting for approximately 16%, 15% and 11%, respectively,
of consolidated net sales. The identity of our principal customers has varied
from year to year, and our principal customers may not continue to purchase
services from us at current levels, if at all. Significant reductions in sales
to any of these customers, or the loss of other major customers, would have a
material and adverse effect on us. We may not be able to replace expired,
canceled or reduced contracts with new business in a timely manner. See "-- Our
customer requirements and operating results vary significantly" on page S-5.
WE DEPEND UPON THE ELECTRONICS INDUSTRY WHICH CONTINUALLY PRODUCES
TECHNOLOGICALLY ADVANCED PRODUCTS WITH SHORT LIFE CYCLES; OUR INABILITY TO
CONTINUALLY MANUFACTURE THESE PRODUCTS ON A COST-EFFECTIVE BASIS WOULD HARM OUR
BUSINESS.
Factors affecting the electronics industry in general could have a material
and adverse effect on our customers and, as a result, on us. These factors
include:
- the inability of our customers to adapt to rapidly changing technology
and evolving industry standards, which results in short product life
cycles;
- the inability of our customers to develop and market their products, some
of which are new and untested. If customers' products become obsolete or
fail to gain widespread commercial acceptance, our business may be
materially and adversely affected; and
- recessionary periods in our customers' markets.
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THERE MAY BE SHORTAGES OF, AND PRICE CHANGES IN, REQUIRED ELECTRONIC COMPONENTS.
A substantial majority of our net sales is derived from turnkey
manufacturing in which we are responsible for procuring materials. This
arrangement typically results in our bearing the risk of component price
changes. Accordingly, component price changes could adversely affect our
operating results. At various times, there have been shortages of some of the
electronic components that we use, and suppliers of some components have lacked
sufficient capacity to meet the demand for these components. In recent months,
component shortages have become more prevalent in our industry. In some cases,
supply shortages could curtail production of products using a particular
component and could result in manufacturing and shipping delays.
OUR INDUSTRY IS EXTREMELY COMPETITIVE.
The electronics manufacturing services industry is extremely competitive
and includes hundreds of companies, several of which have achieved substantial
market share. In addition, current and prospective customers also evaluate our
capabilities against the merits of internal production. Some of our competitors,
including Solectron and SCI Systems, have substantially greater market shares
than we, and substantially greater manufacturing, financial, research and
development and marketing resources. In recent years, many participants in the
industry, including us, have substantially expanded their manufacturing
capacity. If overall demand for electronics manufacturing services should
decrease, this increased capacity could result in substantial pricing pressures,
which could adversely affect our operating results.
WE ARE SUBJECT TO THE RISK OF INCREASED TAXES.
We have structured our operations in a manner designed to maximize income
in countries where tax incentives have been extended to encourage foreign
investment or where income tax rates are low. Our taxes could increase if these
tax incentives are not renewed upon expiration or tax rates applicable to us are
increased. Substantially all of the products manufactured by our Asian
subsidiaries are sold to customers based in North America and Europe. We believe
that profits from our Asian operations are not sufficiently connected to
jurisdictions in North America or Europe to give rise to income taxation there.
However, tax authorities in North America and Europe could challenge the manner
in which profits are allocated among our subsidiaries, and we may not prevail in
any such challenge. If the profits recognized by our subsidiaries in
jurisdictions where taxes are lower became subject to income taxes in other
jurisdictions, our worldwide effective tax rate could increase. In addition, the
acquisition of DII and subsequent transactions may cause our effective tax rate
to increase.
WE CONDUCT OPERATIONS IN A NUMBER OF COUNTRIES AND ARE SUBJECT TO RISKS OF
INTERNATIONAL OPERATIONS.
The geographical distances between Asia, the Americas and Europe create a
number of logistical and communications challenges. Our manufacturing operations
are located in a number of countries, including Austria, Brazil, China, the
Czech Republic, Finland, France, Germany, Hungary, Italy, Malaysia, Mexico,
Sweden, the United Kingdom and the United States. As a result, we are affected
by economic and political conditions in those countries, including:
- fluctuations in the value of currencies;
- changes in labor conditions;
S-7
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- longer payment cycles;
- greater difficulty in collecting accounts receivable;
- burdens and costs of compliance with a variety of foreign laws;
- political and economic instability;
- increases in duties and taxation;
- imposition of restrictions on currency conversion or the transfer of
funds;
- limitations on imports or exports;
- expropriation of private enterprises; and
- reversal of the current policies, including favorable tax and lending
policies, encouraging foreign investment or foreign trade by our host
countries.
The attractiveness of our services to our U.S. customers can be affected by
changes in U.S. trade policies, such as "most favored nation" status and trade
preferences for certain Asian nations. In addition, some countries in which we
operate, such as Brazil, Mexico and Malaysia, have experienced periods of slow
or negative growth, high inflation, significant currency devaluations and
limited availability of foreign exchange. Furthermore, in countries such as
Mexico and China, governmental authorities exercise significant influence over
many aspects of the economy, and their actions could have a significant effect
on us. Finally, we could be adversely affected by inadequate infrastructure,
including lack of adequate power and water supplies, transportation, raw
materials and parts in countries in which we operate.
Risks Relating to China. Under its current leadership, the Chinese
government has been pursuing economic reform policies. However, the Chinese
government may not continue to pursue these policies, and these policies may not
be successful even if pursued. In addition, China does not have a comprehensive
and highly developed system of laws, and enforcement of laws and contracts is
uncertain. The United States annually reconsiders the renewal of most favored
nation trading status of China. China's loss of most favored nation status could
adversely affect us by increasing the cost to U.S. customers of products
manufactured by us in China.
Risks Relating to Mexico. The Mexican government exercises significant
influence over many aspects of the Mexican economy and its action could have a
significant effect on private sector entities in general and us in particular.
Risks Relating to Hungary. Hungary has undergone significant political and
economic change in recent years. Political, economic, social and other
developments, and changes in laws could have a material and adverse effect on
our business. Annual inflation and interest rates in Hungary have historically
been much higher than those in Western Europe. Exchange rate policies have not
always allowed for the free conversion of currencies at the market rate. Laws
and regulations in Hungary have been, and continue to be, substantially revised
during its transition to a market economy. As a result, laws and regulations may
be applied inconsistently. Also in some circumstances, it may not be possible to
obtain the legal remedies provided for under those laws and regulations in a
reasonably timely manner, if at all.
Risks Relating to Brazil. During the past several years, the Brazilian
economy has been affected by significant intervention by the Brazilian
government. The Brazilian government has changed monetary, credit, tariff and
other policies to influence the course of Brazil's economy. The Brazilian
government's actions to control inflation and effect
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other policies have often involved wage, price and exchange controls as well as
other measures such as freezing bank accounts and imposing capital controls.
WE ARE SUBJECT TO RISKS OF CURRENCY FLUCTUATIONS AND HEDGING OPERATIONS.
A significant portion of our business is conducted in the Swedish krona,
European euro and Brazilian real. In addition, some of our costs, such as
payroll and rent, are denominated in currencies such as the Austrian schilling,
the British pound, the Chinese renminbi, the German deutsche mark, the Hong Kong
dollar, the Hungarian forint, the Malaysian ringgit, the Mexican peso and the
Singapore dollar, as well as the krona, the euro and the real. In recent years,
the Hungarian forint, Brazilian real and Mexican peso have experienced
significant devaluations, and in January 1999 the Brazilian real experienced
further significant devaluations. Changes in exchange rates between these and
other currencies and the U.S. dollar will affect our cost of sales, operating
margins and revenues. We cannot predict the impact of future exchange rate
fluctuations. We use financial instruments, primarily forward purchase
contracts, to hedge Japanese yen, European euro, U.S. dollar and other foreign
currency commitments arising from trade accounts payable and fixed purchase
obligations. Because we hedge only fixed obligations, we do not expect that
these hedging activities will have a material effect on our results of
operations or cash flows. However, our hedging activities may be unsuccessful,
and we may change or reduce our hedging activities in the future. As a result,
we may experience significant unexpected expenses from fluctuations in exchange
rates.
WE DEPEND ON OUR KEY PERSONNEL.
Our success depends to a large extent upon the continued services of our
key executives and skilled personnel. Generally our employees are not bound by
employment or non-competition agreements, and there can be no assurance that we
will retain our officers and key employees. We could be materially and adversely
affected by the loss of key personnel.
WE ARE SUBJECT TO ENVIRONMENTAL COMPLIANCE RISKS.
We are subject to various federal, state, local and foreign environmental
laws and regulations, including those governing the use, storage, discharge and
disposal of hazardous substances in the ordinary course of our manufacturing
process. In addition, we are responsible for cleanup of contamination at some of
our current and former manufacturing facilities. If more stringent compliance or
cleanup standards under environmental laws or regulations are imposed, or the
results of our future testing and analyses at our operating facilities indicate
that we are responsible for the release of hazardous substances, we may be
subject to additional remediation liability. Further, there can be no assurance
that additional environmental matters will not arise in the future at sites
where no problem is currently known or at sites that we may acquire in the
future.
THE MARKET PRICE OF OUR ORDINARY SHARES IS VOLATILE.
The stock market in recent years has experienced significant price and
volume fluctuations that have affected the market prices of technology
companies. These fluctuations have often been unrelated to, or
disproportionately impacted by, the operating performance of these companies.
The market for our ordinary shares may be subject to similar fluctuations.
Factors such as fluctuations in our operating results, announcements of
technological innovations or events affecting other companies in the electronics
industry, currency fluctuations and general market conditions may have a
significant effect on the market price of our ordinary shares.
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WE ARE SUBJECT TO RISKS FROM THE YEAR 2000 ISSUE.
We are aware of the issues associated with programming code in existing
computer systems. The Year 2000 computer issue refers to a condition in computer
software where a two-digit field rather than a four-digit field is used to
distinguish a calendar year. While we have not experienced material Year 2000
problems to date, some computer programs may be unable to function, and we may
experience errors or interruptions due to the Year 2000 problem. Such an
uncorrected condition could significantly interfere with the conduct of our
business, could result in disruption of our operations, and could subject us to
potentially significant legal liabilities.
RISKS RELATED TO THE ACQUISITION OF DII
INTEGRATION OF FLEXTRONICS AND DII WILL BE DIFFICULT.
Merging Flextronics and DII involves technological, operational and
personnel-related risks. The integration process will be complex, time-consuming
and expensive, and will disrupt the business of the combined company after the
merger if it is not completed in a timely and efficient manner. If the merger is
approved, the combined company will utilize common information and
communications systems, facilities, operating procedures, financial controls and
human resources practices. We may encounter difficulties, costs and delays
involved in integrating these operations, including:
- integrating the information, communications and other operational systems
of our companies may be more challenging, expensive and time-consuming
than we anticipate;
- potential difficulties in coordinating and integrating geographically
separated organizations;
- loss of key employees that we do not anticipate losing;
- the attention of our management team may be diverted from other ongoing
business concerns more than we anticipate; and
- our business cultures may be more difficult to integrate than we
anticipate.
FAILURE OF THE MERGER TO QUALIFY AS A POOLING OF INTERESTS WOULD HARM THE
FINANCIAL RESULTS OF THE COMBINED COMPANY.
If the merger does not qualify for the pooling-of-interests method of
accounting, the future reported earnings of the combined company would be harmed
due to amortization of goodwill and other intangible assets, which would likely
harm the trading price of our ordinary shares. The availability of
pooling-of-interests accounting treatment for this merger depends upon
circumstances and events occurring after the effective time of the merger. For
example, there must not be any significant changes in the business of the
combined company, including significant dispositions of assets, for a period of
two years following completion of the merger. Affiliates of Flextronics and DII
must not sell any shares of either company's stock, except in limited amounts,
until the day that the combined company publicly announces financial results
covering at least thirty days of combined operations after the effective time of
the merger. If the effective time of the merger occurs on April 3, 2000, we
expect that these combined financial results would be published in July 2000. If
affiliates of either company sell shares in excess of the limited exception
prior to that time, the merger may not qualify for accounting as a pooling of
interests.
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FAILURE TO RETAIN KEY EMPLOYEES COULD DIMINISH THE BENEFITS OF THE MERGER.
The successful combination of Flextronics and DII will depend in part on
the retention of key personnel. Flextronics and DII cannot assure you that they
will be able to retain key personnel.
WE MAY HAVE LESS CAPITAL RESOURCES AVAILABLE TO US TO FINANCE OUR GROWTH.
As a result of our proposed acquisition of DII, we anticipate that we will
be required to purchase DII's 8.5% Senior Subordinated Notes due 2007 at a cost
of 101% of the principal amount of the notes, which is $150.0 million. In
addition, as a result of the merger, DII's outstanding term and revolving credit
facilities may terminate unless the consents of the lenders are obtained. As a
result, we anticipate that we will be required to repay $84.0 million of the
outstanding borrowings under the facilities. We will also lose the ability to
make any further borrowings under these facilities. We may have less capital
resources available to us to finance our growth following the acquisition of DII
than the two companies combined had prior to the merger.
WE EXPECT TO INCUR SIGNIFICANT CHARGES RELATED TO THE MERGER.
In connection with the proposed acquisition of DII, we expect to incur
charges to operations of approximately $57.8 million, including $34.0 million
for investment banking and financial advisory fees and costs of $10.0 million
associated with the closing of duplicate facilities.
DIVIDENDS
Since inception, we have not declared or paid any cash dividends on our
ordinary shares, and our credit facility prohibits the payment of cash dividends
without the lenders' prior consent. The terms of our senior subordinated notes
also restrict our ability to pay cash dividends. We anticipate that all earnings
in the foreseeable future will be retained to finance the continuing development
of our business.
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the 8,600,000 ordinary
shares offered by us hereby will be approximately $494.1 million, at the public
offering price of $59.00 per share, and after deducting the underwriting
discounts and commissions and estimated offering expenses of $400,000. The net
proceeds will be used to fund the further expansion of our business, including
additional working capital and capital expenditures, and for general corporate
purposes. We may use a portion of the net proceeds for strategic acquisitions or
investments. However, we currently do not have any agreements or commitments to
make any material acquisitions or investments. Until the net proceeds have been
used, they will be invested in short-term marketable securities.
S-11
<PAGE> 14
PRICE RANGE OF ORDINARY SHARES
The ordinary shares are traded on the Nasdaq National Market under the
symbol "FLEX." On February 24, 2000, the closing sale price of the ordinary
shares was $61 17/64 per share. The following table shows the high and low
closing sale prices of our ordinary shares since the beginning of our 1998
fiscal year. The share prices below have been adjusted to give effect to
two-for-one stock splits by means of bonus issues, the Singapore equivalent of
stock dividends, paid on January 11, 1999 and December 22, 1999.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
FISCAL YEAR 1998
First quarter............................................. $ 6.75 $ 4.38
Second quarter............................................ 11.91 6.59
Third quarter............................................. 12.03 8.13
Fourth quarter............................................ 11.97 7.44
FISCAL YEAR 1999
First quarter............................................. 12.78 9.09
Second quarter............................................ 11.75 5.66
Third quarter............................................. 21.41 7.28
Fourth quarter............................................ 25.50 16.56
FISCAL YEAR 2000
First quarter............................................. 29.13 21.13
Second quarter............................................ 33.81 22.06
Third quarter............................................. 46.19 29.00
Fourth quarter (through February 24, 2000)................ 66.63 40.38
</TABLE>
S-12
<PAGE> 15
CAPITALIZATION
The following table sets forth the unaudited capitalization of Flextronics
as of December 31, 1999 on an actual basis, on a pro forma basis to give effect
to the acquisition of DII and on an as adjusted pro forma basis to give effect
to the sale of the 8,600,000 ordinary shares offered by this prospectus
supplement at the public offering price of $59.00 per share and after deducting
the underwriting discounts and commissions and the estimated offering expenses
payable by us, and the application of the estimated net proceeds.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
---------------------------------------
AS ADJUSTED
ACTUAL PRO FORMA PRO FORMA
---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Bank borrowings and current portion of
long-term debt and capital lease
obligations................................ $177,431 $185,348 $185,348
========== ========== ==========
Long-term debt and capital lease obligations,
excluding current portion.................. 233,229 233,911 233,911
Shareholders' equity:
Ordinary shares, S$0.01 par value;
250,000,000 shares authorized,
114,999,213 shares issued and
outstanding; 173,930,832 shares issued
and outstanding pro forma; 182,530,832
shares issued and outstanding as
adjusted pro forma(1)................... 711 1,067 1,119
Additional paid-in capital................. 887,846 1,293,762 1,787,810
Retained earnings.......................... 153,126 246,745 246,745
Accumulated other comprehensive income..... 48,691 45,446 45,446
---------- ---------- ----------
Total shareholders' equity......... 1,090,374 1,587,020 2,081,120
---------- ---------- ----------
Total capitalization............... $1,323,603 $1,820,931 $2,315,031
========== ========== ==========
</TABLE>
- ---------------
(1) Based on the number of ordinary shares actually outstanding as of December
31, 1999. Excludes a total of 27,490,347 ordinary shares subject to
outstanding options or reserved for issuance under share option plans and
share purchase plans of Flextronics and DII.
S-13
<PAGE> 16
UNDERWRITER
Subject to the terms and conditions of the underwriting agreement dated
February 24, 2000, Banc of America Securities LLC has agreed to purchase from
Flextronics an aggregate of 8,600,000 ordinary shares at the public offering
price less the underwriting discounts and commissions set forth on the cover
page of this prospectus supplement.
The underwriting agreement provides that the obligations of Banc of America
Securities to purchase the ordinary shares offered by this prospectus supplement
are subject to conditions. Banc of America Securities is obligated to purchase
all of the ordinary shares offered by this prospectus supplement if any of the
shares are purchased.
Banc of America Securities proposes to offer the ordinary shares to the
public at the public offering price set forth on the cover page of this
prospectus supplement. After the initial offering, the offering price may be
changed by Banc of America Securities.
Flextronics has agreed to indemnify Banc of America Securities against
certain liabilities, including liabilities under the Securities Act of 1933.
We have agreed not to offer, sell, contract to sell or otherwise dispose
of, or enter into any transaction which is designed to, or could be expected to,
result in the disposition of any portion of ordinary shares for a period of 90
days after the date of this prospectus supplement without the prior written
consent of Banc of America Securities, except that we may issue, and grant
options to purchase ordinary shares under existing share option and share
purchase plans. Banc of America Securities' consent may be given at any time
without public notice.
In order to facilitate the offering of the ordinary shares, Banc of America
Securities may engage in transactions that stabilize, maintain or otherwise
affect the market price of the ordinary shares. Any of these activities may
maintain the market price of our ordinary shares at a level above that which
might otherwise prevail in the open market. Banc of America Securities is not
required to engage in these activities and, if commenced, may end any of these
activities at any time.
In connection with this offering, Banc of America Securities may engage in
passive market making transactions in the ordinary shares on the Nasdaq National
Market immediately prior to the commencement of sales in this offering, in
accordance with Rule 103 of Regulation M. Passive market making consists of
displaying bids on the Nasdaq National Market that are limited by the bid prices
of independent market makers and completing purchases in response to order flow
at prices limited by such bids. Net purchases by a passive market maker on each
day are limited to a specified percentage of the passive market maker's average
daily trading volume in the ordinary shares during a specified period and must
be discontinued for any day in which such limit is reached. Passive market
making may stabilize the market price of the ordinary shares at a level above
that which might otherwise prevail and, if commenced, may be discontinued at any
time.
S-14
<PAGE> 17
LEGAL MATTERS
The validity of the ordinary shares offered by this prospectus supplement
has been passed upon for us by Allen & Gledhill, Singapore and for Banc of
America Securities LLC by Arfat Selvam & Gunasingham, Singapore. Certain United
States legal matters in connection with this offering will be passed upon for us
by Fenwick & West LLP, Palo Alto, California, and for Banc of America Securities
LLC by Howard, Rice, Nemerovski, Canady, Falk & Rabkin, a Professional
Corporation, San Francisco, California.
S-15
<PAGE> 18
PROSPECTUS
FLEXTRONICS INTERNATIONAL LTD.
ORDINARY SHARES
-------------------------
By this prospectus, we may offer up to 14,400,000 ordinary shares. We will
provide specific terms for the sale of the ordinary shares in supplements to
this prospectus. You should read this prospectus and any prospectus supplement
carefully before you invest.
The ordinary shares are quoted on the Nasdaq National Market under the
symbol "FLEX." On September 13, 1999, the closing sale price of the ordinary
shares was $65.8125 per share.
-------------------------
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" IN THE
SUPPLEMENT TO THIS PROSPECTUS.
-------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is September 24, 1999.
<PAGE> 19
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
About This Prospectus....................................... 2
Where You Can Find More Information......................... 2
Forward-Looking Statements.................................. 3
The Company................................................. 4
Enforcement of Civil Liabilities............................ 4
Risk Factors................................................ 4
Use of Proceeds............................................. 4
Description of Capital Shares............................... 5
Taxation.................................................... 7
Plan of Distribution........................................ 9
Legal Matters............................................... 10
Experts..................................................... 10
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, we may
sell up to 14,400,000 ordinary shares in one or more offerings. This prospectus
provides you with a general description of the ordinary shares we may offer.
Each time we sell ordinary shares, we will provide a prospectus supplement that
will contain specific information about the terms of that offering. The
prospectus supplement may also add, update or change information contained in
this prospectus. You should read both this prospectus and any prospectus
supplement together with additional information described under the heading
"Where You Can Find More Information." The registration statement that contains
this prospectus, including the exhibits to the registration statement, contains
additional information about us and the securities offered under this
prospectus. That registration statement can be read at the SEC web site or at
the SEC offices mentioned under the heading "Where You Can Find More
Information." We may only use this prospectus to sell securities if it is
accompanied by a prospectus supplement. We are only offering these securities in
states where the offer is permitted.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available on the SEC's
website at "http://www.sec.gov."
2
<PAGE> 20
The SEC allows us to "incorporate by reference" information from other
documents that we file with them, which means that we can disclose important
information by referring to those documents. The information incorporated by
reference is considered to be part of this prospectus, and information that we
file later with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below, and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 prior to the sale of all the shares covered
by this prospectus:
- our Annual Report on Form 10-K for the fiscal year ended March 31, 1999;
- our Quarterly Report on Form 10-Q for the quarter ended June 25, 1999;
and
- the description of our ordinary shares contained in our Registration
Statement on Form 8-A dated January 31, 1994.
You may request a copy of these filings, at no cost, by writing or
telephoning us at:
Flextronics International Ltd.
2245 Lundy Drive
San Jose, California 95131
Attention: Laurette F. Slawson
Treasurer and Director of Investor Relations
Telephone: (408) 428-1300
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement, other than any information
superseded by a later document filed with the SEC and incorporated by reference
in this prospectus. We have not authorized anyone else to provide you with
different information. The selling shareholders may not make an offer of these
shares in any state where the offer is not permitted. You should not assume that
the information in this prospectus or any supplement is accurate as of any date
other than the date on the front of those documents.
FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. This Act provides a "safe
harbor" for forward-looking statements to encourage companies to provide
prospective information about themselves so long as they identify these
statements as forward-looking and provide meaningful cautionary statements
identifying important factors that could cause actual results to differ from the
projected results. All statements other than statements of historical fact we
make in this prospectus, prospectus supplement or in any document incorporated
by reference are forward-looking. In particular, the statements herein regarding
industry prospects and our future results of operations or financial position
are forward-looking statements. Forward-looking statements reflect our current
expectations and are inherently uncertain. Our actual results may differ
significantly from our expectations. The section entitled "Risk Factors" that
appears in our Annual Report on Form 10-K for the year ended March 31, 1999 and
in the prospectus supplement accompanying this prospectus describe some, but not
all, of the factors that could cause these differences.
3
<PAGE> 21
THE COMPANY
Flextronics is a leading provider of advanced electronics manufacturing
services to original equipment manufacturers in the telecommunications,
networking, computer, consumer electronics and medical device industries. We
provide a wide range of integrated services, from initial product design to
volume production and fulfillment. Our manufacturing services range from printed
circuit board fabrication and assembly to complete product assembly and test. We
believe that we have developed particular strengths in advanced interconnect,
miniaturization and packaging technologies. In addition, we provide advanced
engineering services, including product design, PCB layout, quickturn
prototyping and test development. Throughout the production process, we offer
logistics services, such as materials procurement, inventory management,
packaging and distribution. Our principal executive offices are located at 514
Chai Chee Lane, #04-13, 1 Bedok Industrial Estate, Singapore 469029 and our
telephone number is 65-449-5255.
ENFORCEMENT OF CIVIL LIABILITIES
We are incorporated in Singapore under the Companies Act. Some of our
directors and executive officers reside in Singapore. All or a substantial
portion of the assets of such persons, and a substantial portion of our assets,
are located outside the United States. As a result, it may not be possible for
persons purchasing ordinary shares to effect service of process within the
United States upon such persons or Flextronics or to enforce against them, in
the United States courts, judgments obtained in such courts predicated upon the
civil liability provisions of the federal securities laws of the United States.
We have been advised by our Singapore legal advisors, Allen & Gledhill, that
there is doubt as to the enforceability in Singapore, either in original actions
or in actions for the enforcement of judgments of United States courts, of civil
liabilities predicated upon the federal securities laws of the United States.
RISK FACTORS
An investment in the ordinary shares involves a high degree of risk. You
should carefully consider the information contained under the heading "Risk
Factors" in the applicable supplement to this prospectus before investing in the
ordinary shares.
USE OF PROCEEDS
Unless otherwise indicated in the applicable supplement to this prospectus,
the net proceeds from the sale of ordinary shares offered under this prospectus
will be added to our general funds and may be used to:
- meet our working capital requirements;
- fund capital expenditures;
- repay debt; and
- finance acquisitions of other assets and companies.
Until the net proceeds have been used, they will be invested in short-term
marketable securities.
4
<PAGE> 22
DESCRIPTION OF CAPITAL SHARES
The following is a brief summary of the more important rights of holders of
ordinary shares under Singapore law and our Articles of Association (the
"Articles"). This summary is not complete. Our Articles and our Memorandum of
Association also are exhibits to the registration statement of which this
prospectus forms a part. The Articles and the Memorandum of Association can be
obtained from our SEC filings as described under the heading "Where You Can Find
More Information" and also at our San Jose, California office and at our
registered office in Singapore.
ORDINARY SHARES
Our authorized capital consists of 250,000,000 ordinary shares, par value
S$0.01, of which 49,953,237 shares were outstanding on September 10, 1999. The
Articles enable us in certain circumstances to issue shares with preferential,
deferred or other special rights or restrictions as our directors may determine.
All of our outstanding shares are fully paid and our shareholders are not
subject to any calls on such shares. The shares offered hereby, when issued,
will also be fully paid and investors will not be subject to any calls on such
shares. All of our shares are in registered form, and the shares offered hereby
also will be in registered form. Except in the circumstances permitted by the
Singapore Companies Act, we can neither purchase our outstanding shares nor
grant any financial assistance for the acquisition of our shares.
NEW SHARES
New shares may only be issued with the prior approval of our shareholders
in a general meeting. Such approval, if granted, will lapse at the next Annual
General Meeting or, if earlier, the expiration of the period within which the
next Annual General Meeting is required to be held. At our 1999 Annual General
Meeting, our shareholders provided our directors with general authority to issue
new ordinary shares prior to our next Annual General Meeting. Subject to this,
and the provisions of the Singapore Companies Act and our Articles, our
directors may allot and issue new shares on such terms as they may think fit.
SHAREHOLDERS
Only persons who are registered in our books are recognized as shareholders
and absolute owners of the shares. On September 10, 1999, there were
approximately 392 holders of ordinary shares. We may, on giving not less than 14
days' notice, close the register of members for any time or times but the
register may not be closed for more than 30 days in any calendar year. Such
closure is normally made for the purpose of determining shareholders'
entitlement to receive dividends and other distributions and would, in the usual
case, not exceed 10 days.
TRANSFER OF SHARES
Subject to applicable securities laws, the ordinary shares are freely
transferable, and may be transferred by a duly signed instrument of transfer in
a form approved by our directors. The directors may decline to register any
transfer unless, among other things, it has been duly stamped and is presented
for registration together with the share certificate and such other evidence of
title as they may require. We will replace lost or destroyed certificates for
shares upon notice to us and upon, among other things, the applicant furnishing
such evidence and indemnity as the directors may require.
5
<PAGE> 23
SHAREHOLDERS' MEETINGS
We are required to hold an Annual General Meeting in each year. Our
directors may convene an Extraordinary General Meeting whenever they think fit
and they must do so upon the request in writing of shareholders representing not
less than one-tenth of the total voting rights of all shareholders. In addition,
two or more shareholders holding not less than one-tenth of our issued share
capital may call a meeting. Unless otherwise required by law or by the Articles,
voting at general meetings is by ordinary resolution, requiring an affirmative
vote of a simple majority of the votes cast at a meeting of which at least 14
days' written notice is given. An ordinary resolution suffices, for example, in
respect of appointments of directors. A special resolution, requiring an
affirmative vote of at least 75% of the votes cast at the meeting of which at
least 21 days' written notice is given, is necessary for certain matters under
Singapore law, such as an alteration of the Articles.
VOTING RIGHTS
Voting at any meeting of shareholders is by a show of hands unless a poll
is duly demanded. If voting is by a show of hands, every shareholder who is
present in person or by proxy at the meeting has one vote. On a poll every
shareholder who is present in person or by proxy has one vote for every share
held by him. A poll may be demanded by the chairman of the meeting or by not
less than three members present in person or by proxy and entitled to vote or by
shareholders present in person or by proxy and representing in the aggregate not
less than one-tenth of the total voting rights of all shareholders having the
right to attend and vote at the meeting. There are no limitations imposed by the
laws of Singapore or by the Articles on the right of nonresident shareholders to
hold or vote ordinary shares, other than the limitations described below under
"Takeovers," which are applicable to all of our shareholders.
DIVIDENDS
Since inception, we have not declared or paid any cash dividends and our
current loan agreement prohibits the payment of cash dividends without the
lenders' prior consent. We anticipate that all earnings in the foreseeable
future will be retained to finance our business.
BONUS AND RIGHTS ISSUES
We may, with the approval by our shareholders in a general meeting,
capitalize any reserves or profits and distribute them as bonus shares to our
shareholders in proportion to their shareholdings. At our 1999 Annual General
Meeting, our shareholders authorized our directors, at any time on or before
June 30, 2000, to distribute one bonus share for each outstanding ordinary
share. Our directors may also issue to shareholders rights to take up additional
shares, in proportion to their shareholdings. Such rights would be subject to
any conditions attached to such issue.
TAKEOVERS
The acquisition of our shares is regulated by the Singapore Companies Act
(Chapter 50) and the Singapore Code on Takeovers and Mergers (the "Takeovers
Code"). Any person (or parties acting in concert) acquiring an interest in 25%
or more of the voting rights in us is obliged to extend a takeover offer for the
remaining voting shares in accordance with the provisions of the Takeovers Code.
An offer for consideration other than cash must be accompanied by a cash
alternative at not less than the highest price
6
<PAGE> 24
(excluding stamp duty and commission) paid by the offeror or parties acting in
concert with him for shares of that class within the preceding 12 months. A
mandatory takeover offer is also required to be made if a person holding between
25% and 50% of the voting rights, either on his own or together with parties
acting in concert with him, acquires additional shares representing more than 3%
of the voting rights in any 12-month period.
LIQUIDATION OR OTHER RETURN OF CAPITAL
On a winding-up or other return of our capital, subject to any special
rights attaching to any other class of shares, holders of ordinary shares will
be entitled to participate in any surplus assets in proportion to their
shareholdings.
INDEMNITY
As permitted by the laws of Singapore, the Articles provide that, subject
to the Singapore Companies Act, our directors and officers will be indemnified
by us against any liability incurred by them in defending any proceedings,
whether civil or criminal, which relate to anything done or omitted to have been
done as our officer, director or employee and in which judgment is given in
their favor or in which they are acquitted or in connection with any application
under any statute for relief from liability in respect thereof in which relief
is granted by the court. Directors and officers may not be indemnified by us
against any liability to us for negligence, default, breach of duty or breach of
trust.
TRANSFER AGENT
Our transfer agent is Boston EquiServe, P.O. Box 8040, Boston,
Massachusetts 02266-8040.
TAXATION
This summary of Singapore and U.S. tax considerations is based on current
law and is provided for general information. The discussion does not purport to
deal with all aspects of taxation that may be relevant to particular
shareholders in light of their investment or tax circumstances, or to certain
types of shareholders, including insurance companies, tax-exempt organizations,
regulated investment companies, financial institutions or broker-dealers, and
shareholders that are not U.S. shareholders (as defined below) subject to
special treatment under the U.S. federal income tax laws. U.S. shareholders
should consult their own tax advisors regarding the particular tax consequences
to such shareholders of any investment in the ordinary shares.
INCOME TAXATION UNDER SINGAPORE LAW
Under current provisions of the Income Tax Act, Chapter 134 of Singapore,
corporate profits are taxed at a rate equal to 26%. Under Singapore's taxation
system, the tax paid by a company is deemed paid by its shareholders. Thus, the
shareholders receive dividends net of the tax paid by us. Dividends received by
either a resident or a nonresident of Singapore are not subject to withholding
tax. Shareholders are taxed on the cash amount of the dividend plus the amount
of corporate tax paid by us. The tax paid by us will be available to
shareholders as a tax credit to offset the Singapore income tax liability on
their overall income, including the gross amount of dividends. No tax treaty
currently exists between the Republic of Singapore and the U.S.
7
<PAGE> 25
Under current Singapore tax law there is no tax on capital gains, and,
thus, any profits from the disposal of shares are not taxable in Singapore
unless the vendor is regarded as carrying on a trade in shares in Singapore, in
which case, the disposal profits would be taxable as trade profits rather than
capital gains.
There is no stamp duty payable in respect of the holding and disposition of
shares, or the acquisition of newly issued shares. When outstanding shares are
acquired in Singapore, stamp duty is payable on the instrument of transfer of
the shares at the rate of S$2 for every S$1,000 of the market value of the
shares. The stamp duty is borne by the purchaser unless there is an agreement to
the contrary. Where the instrument of transfer is executed outside of Singapore,
stamp duty must be paid if the instrument of transfer is received in Singapore.
Under our Articles of Association, our directors are authorized to refuse to
register a transfer unless the instrument of transfer has been duly stamped.
INCOME TAXATION UNDER UNITED STATES LAW
Individual shareholders that are U.S. citizens or resident aliens (as
defined in the Internal Revenue Code), corporations or partnerships or other
entities created or organized under the laws of the United States, or any
political subdivision thereof, and certain trusts and estates ("U.S.
shareholders") will, upon the sale or exchange of a share, recognize gain or
loss for U.S. income tax purposes in an amount equal to the difference between
the amount realized and the U.S. shareholder's tax basis in such a share. If
paid in currency other than U.S. dollars, the U.S. dollar amount realized (as
determined on the trade date) is determined by translating the foreign currency
into U.S. dollars at the spot rate in effect on the settlement date of the sale
in the case of a U.S. shareholder that is a cash basis taxpayer. An accrual
basis taxpayer may elect to use the spot rate in effect on the settlement date
of the sale by filing a statement with the U.S. shareholder's first return in
which the election is effective clearly indicating that the election has been
made. Such an election must be applied consistently from year to year and cannot
be changed without the consent of the Internal Revenue Service. Such gain or
loss will be capital gain or loss if the share was a capital asset in the hands
of the U.S. shareholder and will not be short-term capital gain or loss if the
share has been held for more than one year. If a U.S. shareholder receives any
currency other than U.S. dollars on the sale of a share, such U.S. shareholder
may recognize ordinary income or loss as a result of currency fluctuations
between the date of such sale and the date such sale proceeds are converted into
U.S. dollars.
U.S. shareholders will be required to report as income for U.S. income tax
purposes the amount of any dividend received from us to the extent paid out of
our current or accumulated earnings and profits, as determined under current
U.S. income tax principles. If over 50% of our stock, by vote or value, were
owned by U.S. shareholders who individually held 10% or more of our voting
stock, the U.S. shareholders potentially would be required to include in income
a portion or all of their pro rata share of our earnings and profits and the
earnings and profits of our non-U.S. subsidiaries. If 50% or more of our assets
during a taxable year produced or were held for the production of passive
income, as defined in Section 1297(b) of the Internal Revenue Code (for example,
certain forms of dividends, interest and royalties), or 75% or more of our gross
income for a taxable year was passive income, adverse U.S. tax consequences
could result to our U.S. shareholders.
Shareholders that are not U.S. shareholders ("non-U.S. shareholders") will
not be required to report for U.S. federal income tax purposes the amount of any
dividend
8
<PAGE> 26
received from us. Non-U.S. shareholders, upon the sale or exchange of a share,
would generally not be required to recognize gain or loss for U.S. federal
income tax purposes.
ESTATE TAXATION
In the case of an individual who is not domiciled in Singapore, a Singapore
estate tax is imposed on the value of all movable and immovable properties
situated in Singapore. Our ordinary shares are considered to be situated in
Singapore. Thus, an individual shareholder who is not domiciled in Singapore at
the time of his or her death will be subject to Singapore estate tax on the
value of any such shares held by the individual upon the individual's death.
Such a shareholder will be required to pay Singapore estate tax to the extent
that the value of the shares (or in aggregate with any other assets subject to
Singapore estate tax) exceeds S$600,000. Any excess will be taxed at a rate
equal to 5% on the first S$12,000,000 of the individual's Singapore chargeable
assets and thereafter at a rate equal to 10%. An individual shareholder who is a
U.S. citizen or resident (for U.S. estate tax purposes) also will have the value
of the shares included in the individual's gross estate for U.S. estate tax
purposes. An individual shareholder generally will be entitled to a tax credit
against the shareholder's U.S. estate tax to the extent the individual
shareholder actually pays Singapore estate tax on the value of the shares;
however, the tax credit is generally limited to the percentage of the U.S.
estate tax attributable to the inclusion of the value of the shares included in
the shareholder's gross estate for U.S. estate tax purposes, adjusted further by
a pro rata apportionment of available exemptions.
PLAN OF DISTRIBUTION
We may sell the securities (1) through underwriters or dealers, (2) through
agents, or (3) directly to one or more purchasers. The applicable prospectus
supplement will describe the terms of the offering of the securities, including:
- the name or names of any underwriters, if any;
- the purchase price of the securities and the proceeds we will receive
from the sale;
- any underwriting discounts and other items constituting underwriters'
compensation;
- any initial public offering price;
- any discounts or concessions allowed or reallowed or paid to dealers; and
- any securities exchange or market on which the securities may be listed.
Only underwriters named in the prospectus supplement are underwriters of
the securities offered by the prospectus supplement.
If underwriters are used in the sale, they will acquire the securities for
their own account and may resell them from time to time in one or more
transactions at a fixed public offering price or at varying prices determined at
the time of sale. We may offer the securities to the public through underwriting
syndicates represented by managing underwriters or by underwriters without a
syndicate. Subject to certain conditions, the underwriters will be obligated to
purchase all the securities of the series offered by the prospectus supplement.
Any public offering price and any discounts or concessions allowed or reallowed
or paid to dealers may change from time to time.
We may sell securities directly or through agents we designate from time to
time. We will name any agent involved in the offering and sale of securities and
we will describe any commissions we will pay the agent in the prospectus
supplement. Unless the prospectus
9
<PAGE> 27
supplement states otherwise, our agent will act on a best-efforts basis for the
period of its appointment.
We may authorize agents or underwriters to solicit offers by certain types
of institutional investors to purchase securities from us at the public offering
price set forth in the prospectus supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
We will describe the conditions to these contracts and the commissions we must
pay for solicitation of these contracts in the prospectus supplement.
We may provide agents and underwriters with indemnification against certain
civil liabilities, including liabilities under the Securities Act, or
contribution with respect to payments that the agents or underwriters may make
with respect to such liabilities. Agents and underwriters may engage in
transactions with, or perform services for, us in the ordinary course of
business.
All securities we offer other than common stock will be new issues of
securities with no established trading market. Any underwriters may make a
market in these securities, but will not be obligated to do so and may
discontinue any market making at any time without notice. We cannot guarantee
the liquidity of the trading markets for any securities.
LEGAL MATTERS
Allen & Gledhill, Singapore will provide us with an opinion as to the
legality of the ordinary shares. Counsel for any underwriters named in the
applicable prospectus supplement will provide an opinion as to certain legal
matters relating to the ordinary shares.
EXPERTS
Our consolidated financial statements appearing in our Annual Report (Form
10-K) for the year ended March 31, 1999 have been audited by Arthur Andersen
LLP, independent public accountants as indicated in their report therein. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing. Our future financial statements and the reports thereon
of Arthur Andersen LLP also will be incorporated by reference in this prospectus
in reliance upon the authority of that firm as experts in giving those reports
to the extent said firm has audited those financial statements and consented to
the use of their reports thereon.
10
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8,600,000 Shares
FlextronicsLogo
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PROSPECTUS SUPPLEMENT
FEBRUARY 24, 2000
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BANC OF AMERICA SECURITIES LLC
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