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) March 26, 2007
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
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(Commission
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(IRS Employer |
| of incorporation)
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File Number)
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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 March 29, 2007, Solectron Corporation (“Solectron”) announced its results of operations for
its fiscal quarter ended March 2, 2007. A copy of the Company’s press release announcing such
results dated March 29, 2007 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 Solectron 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 March 26, 2007, Solectron’s Board of Directors approved the next phase of contemplated
restructuring pursuant to Solectron’s phased approach announced in the first quarter of fiscal
2007. Restructuring and impairment charges related to this phase are estimated to be in a range of
$35-$45 million, of which approximately 90% represents cash expenditures. It is estimated that the
actions under this
restructuring plan will be completed within the next 12 months. This phase of restructuring
is necessary to continue the optimization of Solectron’s global footprint and reduce its cost
structure.
The actions under this second phase of restructuring will involve reducing the workforce by
approximately 1,300-1,500 employees and closing or consolidating approximately 400,000 square feet
of facilities, primarily in North America, as well as Western Europe. The estimated restructuring charges will consist
of approximately (i) $23-$30 million related to severance costs, (ii) $9-$12 million related to
leased facility liabilities and transfer and other exit costs and (iii) an estimated non-cash
charge of $3 million related to disposition of equipment, of which $1 million was impaired at the
end of the second quarter of fiscal 2007.