UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT
REPORT
(Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934)
Date of Report (Date of earliest event reported) October 2, 2006
SOLECTRON CORPORATION
(Exact name of registrant as specified in charter)
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| Delaware
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1-11098
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94-2447045 |
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.) |
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| 847 Gibraltar Drive, Milpitas, California
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95035 |
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| (Address of principal executive offices)
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(Zip Code) |
Registrant’s telephone number, including area code: (408) 957-8500
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425). |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12). |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)). |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)). |
TABLE OF CONTENTS
ITEM 2.02 Results of Operations and Financial Condition
On October 5, 2006, Solectron Corporation (“Solectron”) announced its results of operations
for its fiscal quarter and fiscal year ended August 25, 2006. A copy of the Company’s press release
announcing such results dated October 5, 2006 is attached hereto as Exhibit 99.1. This Form 8-K and
the attached exhibit are furnished with the Securities and Exchange Commission (“SEC”).
Solectron includes the use of a non-GAAP financial measure in the attached exhibit. In
accordance with Item 10(e)(i) of Regulation S-K, Solectron is required to provide a statement
disclosing the reasons why management believes that presentation of non-GAAP financial measures
provides useful information to investors regarding the Company’s results of operations.
Solectron management evaluates and makes certain operating decisions (e.g. inventory
management, site locations, personnel decisions) using various operating measures. These measures
are generally based on the revenues and certain costs of its operations, such as cost of goods sold
and selling, general and administrative expenses. One such measure is non-GAAP net income (loss),
which is a non-GAAP financial measure under Section 101 of Regulation G under the Securities
Exchange Act of 1934, as amended. This measure consists of GAAP net income (loss) from continuing
operations excluding, as applicable, restructuring charges (severance and benefits, excess
facilities and asset-related charges), amortization of intangible assets, stock compensation
expense, investment related losses (gains), impairment charges for goodwill, intangible assets and
other long-lived assets, and losses (gains) on the extinguishment of debt and other debt-related
charges. Non-GAAP net income (loss) is adjusted by the amount of additional taxes or tax benefit
that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the
company’s tax liability.
Management believes it is useful to exclude restructuring charges in measuring Solectron’s
operations. Solectron has dramatically reduced headcount and facilities in recent years. As a
result, Solectron’s GAAP statements of operations have included significant charges related to such
restructurings. Furthermore, management believes amortization of intangible assets, stock
compensation expense, investment related losses (gains), impairment charges for goodwill,
intangible assets and other long-lived assets, and losses (gains) on the extinguishment of debt and
other debt-related charges, are infrequent events, which make the results less comparable between
reporting periods.
Management believes that non-GAAP net income (loss) provides useful supplemental information
to management and investors regarding the performance of the company’s business operations and
facilitates comparisons to our historical operating results. Management also uses this information
internally for forecasting and budgeting. Non-GAAP financial measures should not be considered as a
substitute for measures of financial performance prepared in accordance with GAAP. Investors and
potential investors are encouraged to review the reconciliation of non-GAAP financial measures
contained within the attached press release with their most directly comparable GAAP financial
results.
ITEM 2.05 Costs Associated with Exit or Disposal Activities
On October 2, 2006, Solectron’s Board of Directors approved a restructuring plan with
estimated charges of $50-$60 million, of which approximately 90% represents cash expenditures. It
is estimated that the restructuring actions under the plan will be completed within the next 12
months. The restructuring plan is necessary to optimize our global footprint and reduce our cost
structure. These restructuring actions will involve reducing the workforce by approximately 1,400
employees and closing or consolidating
approximately 700,000 square feet of facilities in Western Europe and North America. The
estimated restructuring charges will consist of approximately (i) $32-$39 million related to
severance costs, (ii) $10-$13 million related to leased facility liabilities and transfer and other
exit costs and (iii) an estimated non-cash charge of $8 million related to disposition of
facilities and equipment, of which $3.1 million was impaired at the end of fiscal year 2006.