Edgar Filing: SANMINA-SCI CORP

form10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark one)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended June 27, 2009
	or
o	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

Sanmina-SCI Corporation

(Exact name of registrant as specified in its charter)

Delaware		77-0228183
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

2700 N. First St., San Jose, CA		95134
(Address of principal executive offices)		(Zip Code)

(408) 964-3500

(Registrant’s telephone number, including area code)

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of July 29, 2009, there were 471,656,611 shares outstanding of the issuer’s common stock, $0.01 par value per share.

SANMINA-SCI CORPORATION

INDEX

		Page
	PART I. FINANCIAL INFORMATION

Item 1.	Interim Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets		3
	Condensed Consolidated Statements of Operations		4
	Condensed Consolidated Statements of Cash Flows		5
	Notes to Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		33
Item 4.	Controls and Procedures		34
	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings		35
Item 1A.	Risk Factors Affecting Operating Results		35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		39
Item 6.	Exhibits		40
Signatures			41

SANMINA-SCI CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

	As of
	June 27,		September 27,
	2009		2008
	(Unaudited)
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	877,613	$	869,801
Accounts receivable, net of allowances of $13,057 and $14,934 at June 27, 2009 and September 27, 2008, respectively		698,504		986,312
Inventories		696,243		813,359
Prepaid expenses and other current assets		85,799		100,399
Assets held for sale		44,459		43,163
Total current assets		2,402,618		2,813,034
Property, plant and equipment, net		577,589		599,908
Other		126,009		117,785
Total assets	$	3,106,216	$	3,530,727
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	710,729	$	908,151
Accrued liabilities		156,832		191,022
Accrued payroll and related benefits		96,377		139,522
Current portion of long-term debt		175,700		—
Total current liabilities		1,139,638		1,238,695
Long-term liabilities:
Long-term debt		1,275,586		1,481,985
Other		124,737		114,089
Total long-term liabilities		1,400,323		1,596,074
Commitments and contingencies (Note 9)
Stockholders’ equity		566,255		695,958
Total liabilities and stockholders’ equity	$	3,106,216	$	3,530,727

See accompanying notes.

SANMINA-SCI CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended						Nine Months Ended
	June 27, 2009			June 28, 2008			June 27, 2009			June 28, 2008
	(Unaudited)
	(In thousands, except per share data)
Net sales	$	1,209,150		$	1,903,253		$	3,823,521		$	5,498,824
Cost of sales		1,133,390			1,763,612			3,595,373			5,105,609
Gross profit		75,760			139,641			228,148			393,215
Operating expenses:
Selling, general and administrative		57,889			77,425			177,931			245,839
Research and development		3,811			5,872			12,723			14,731
Amortization of intangible assets		1,072			1,650			3,745			4,950
Restructuring and integration costs		14,135			13,256			38,944			68,054
Asset impairment		—			1,700			7,182			1,700
Total operating expenses		76,907			99,903			240,525			335,274

Operating income (loss)		(1,147	)		39,738			(12,377	)		57,941

Interest income		761			3,572			6,040			15,018
Interest expense		(29,391	)		(29,961	)		(86,686	)		(96,935	)
Other income (expense), net		2,708			5,895			8,184			5,527
Interest and other expense, net		(25,922	)		(20,494	)		(72,462	)		(76,390	)

Income (loss) from continuing operations before income taxes		(27,069	)		19,244			(84,839	)		(18,449	)
Provision for income taxes		14,057			7,275			19,098			18,972
Net income (loss) from continuing operations		(41,126	)		11,969			(103,937	)		(37,421	)
Income from discontinued operations, net of tax		—			3,359			—			36,251
Net income (loss)	$	(41,126	)	$	15,328		$	(103,937	)	$	(1,170	)

Basic income (loss) per share from:
Continuing operations	$	(0.09	)	$	0.02		$	(0.21	)	$	(0.07	)
Discontinued operations	$	—		$	0.01		$	—		$	0.07
Net income (loss)	$	(0.09	)	$	0.03		$	(0.21	)	$	0.00

Diluted income (loss) per share from:
Continuing operations	$	(0.09	)	$	0.02		$	(0.21	)	$	(0.07	)
Discontinued operations	$	—		$	0.01		$	—		$	0.07
Net income (loss)	$	(0.09	)	$	0.03		$	(0.21	)	$	0.00

Weighted average shares used in computing per share amounts:
Basic		480,307			531,197			501,448			530,546
Diluted		480,307			531,323			501,448			530,546

See accompanying notes.

SANMINA-SCI CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	June 27, 2009			June 28, 2008
	(Unaudited)
	(In thousands)
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net loss	$	(103,937	)	$	(1,170	)
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		67,047			74,738
Stock-based compensation expense		11,524			10,551
Non-cash restructuring costs		3,154			1,777
Provision (recovery) for doubtful accounts, product returns and other net sales adjustments		(1,744	)		1,115
Deferred income taxes		2,895			(73	)
Impairment of assets and long-term investments		10,888			3,469
(Gain)/loss on extinguishment of debt		(13,490	)		2,237
Other, net		(1,426	)		(638	)
Changes in operating assets and liabilities:
Accounts receivable		287,585			42,723
Inventories		142,573			108,769
Prepaid expenses and other assets		16,637			17,006
Accounts payable		(187,524	)		(88,618	)
Accrued liabilities and other long-term liabilities		(82,702	)		25,632
Cash provided by operating activities		151,480			197,518
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Net proceeds from sales/(purchases) of long-term investments		(200	)		4,754
Net proceeds from maturities of short-term investments		—			12,713
Purchases of property, plant and equipment		(55,512	)		(99,313	)
Proceeds from sales of property, plant and equipment		3,589			27,879
Proceeds from sale of business		—			15,243
Cash paid for businesses acquired, net of cash acquired		(29,712	)		(4,264	)
Cash used in investing activities		(81,835	)		(42,988	)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Change in restricted cash		(19,876	)		—
Repayments of long-term debt		(19,597	)		(120,000	)
Repurchases of common stock		(29,246	)		—
Cash used in financing activities		(68,719	)		(120,000	)
Effect of exchange rate changes		6,886			13,610
Increase in cash and cash equivalents		7,812			48,140
Cash and cash equivalents at beginning of period		869,801			933,424
Cash and cash equivalents at end of period	$	877,613		$	981,564
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	61,768		$	72,770
Income taxes (excludes refunds of $1.9 million and $9.4 million for the nine months ended June 27, 2009 and June 28, 2008, respectively)	$	24,086		$	25,283

See accompanying notes.

SANMINA-SCI CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

The accompanying condensed consolidated financial statements of Sanmina-SCI Corporation (“the Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been omitted pursuant to those rules or regulations. The interim condensed consolidated financial statements are unaudited, but reflect all normal recurring and non-recurring adjustments that are, in the opinion of management, necessary for a fair presentation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended September 27, 2008, included in the Company’s 2008 Annual Report on Form 10-K.

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

During 2008, the Company sold its personal computing and associated logistics business (“PC Business”). Unless otherwise noted, the following discussions in the notes to the condensed consolidated financial statements pertain to continuing operations.

Results of operations for the nine months ended June 27, 2009 are not necessarily indicative of the results that may be expected for the full fiscal year. The Company reclassified $16.8 million from accounts receivable, net to accounts payable on the September 27, 2008 condensed consolidated balance sheet to conform to the current presentation. This amount represents net credit balances associated with customer claims and adjustments.

The Company operates on a 52 or 53 week year ending on the Saturday nearest September 30. Fiscal 2009 will be 53 weeks, with the additional week included in the fourth quarter. All references to years relate to fiscal years unless otherwise noted.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard No. 166 (SFAS No. 166), “Accounting for Transfers of Financial Assets an amendment to FASB Statement No. 140”. SFAS No. 166 eliminates the concept of a qualifying special-purpose entity (“QSPE”), creates more stringent conditions for reporting a transfer of a portion of financial assets as a sale, clarifies other sale-accounting criteria, and changes the initial measurement of a transferor’s interest in transferred financial assets. SFAS No. 166 will be effective for the Company in the first quarter of 2011. The Company currently uses a QSPE in conjunction with sales of accounts receivable from customers in the United States. Upon adoption of SFAS 166, the Company will be required to consolidate the QSPE if it is still in existence. The Company plans to implement an accounts receivable sales program that does not require use of a QSPE prior to adoption of this standard.

In April 2009, the FASB issued FASB Staff Positions (FSP) FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments”. This statement requires disclosure of the fair value of financial instruments in interim financial statements as well as the methods and significant assumptions used to estimate the fair value of financial instruments and discussion of changes, if any, to those methods or assumptions during the period. Financial instruments consist of cash and cash equivalents, foreign currency forward and option contracts, interest rate swap agreements, accounts receivable, accounts payable and short and long-term debt obligations. With the exception of certain of the Company's long-term debt obligations as disclosed in Note 8, the fair value of these financial instruments approximates their carrying amount as of June 27, 2009 due to the nature, or short maturity, of these instruments, or the fact that the instruments are recorded at fair value in the condensed consolidated balance sheets. The adoption of this standard did not impact the Company’s financial position or results of operations.

In February 2008, the FASB issued FSP FAS 157-2, “The Effective Date of FASB Statement No. 157”, which delayed the effective date of SFAS 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FSP 157-2 will be effective for the Company in the first quarter of 2010 and is expected to apply only to assets held for sale.

In December 2007, the FASB issued SFAS No. 141(R) (Revised 2007), “Business Combinations”. This statement defines the acquirer as the entity that obtains control of one or more businesses in a business combination, establishes the acquisition date as the date that the acquirer achieves control and requires the acquirer to recognize the assets acquired, liabilities assumed and any noncontrolling interest at their fair values as of the acquisition date. In addition, SFAS No. 141(R) requires expensing of acquisition-related and restructure-related costs, remeasurement of earnout provisions at fair value, measurement of equity securities issued at the date of close of the transaction and capitalization of in-process research and development related intangibles. In April 2009, the FASB issued FSP FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination that Arise from Contingencies”. An acquirer will recognize at fair value, at the acquisition date, an asset acquired or a liability assumed that arises from a contingency if the acquisition date fair value of that asset or liability can be determined during the measurement period. If the acquisition date fair value cannot be determined during the measurement period, an asset or liability shall be recognized at the acquisition date if (i) information available before the end of the measurement period indicates that it is probable that an asset existed or that a liability had been incurred at the acquisition date, and (ii) the amount of the asset or liability can be reasonably estimated. SFAS No. 141(R) and FSP FAS 141(R)-1 are effective for the Company’s business combinations for which the acquisition date is on or after the beginning of 2010.

Note 2. Stock-Based Compensation

Stock compensation expense was as follows:

	Three Months Ended				Nine Months Ended
	June 27, 2009		June 28, 2008		June 27, 2009		June 28, 2008
	(In thousands)
Cost of sales	$	1,316	$	1,571	$	5,181	$	4,852
Selling, general & administrative		1,673		1,565		6,122		5,122
Research and development		47		50		221		227
Continuing operations		3,036		3,186		11,524		10,201
Discontinued operations		—		81		—		350
Total	$	3,036	$	3,267	$	11,524	$	10,551

	Three Months Ended					Nine Months Ended
	June 27, 2009			June 28, 2008		June 27, 2009		June 28, 2008
	(In thousands)
Stock options	$	1,896		$	1,785	$	6,845	$	5,739
Restricted stock awards		(79	)		53		148		110
Restricted stock units		1,219			1,348		4,531		4,352
Continuing operations		3,036			3,186		11,524		10,201
Discontinued operations		—			81		—		350
Total	$	3,036		$	3,267	$	11,524	$	10,551

The Company’s 1999 Stock Plan (“1999 Plan”) was terminated as to future grants on December 1, 2008. Although the 1999 Plan has been terminated, it will continue to govern all awards granted under it prior to its termination date. On January 26, 2009, the Company’s stockholders approved the 2009 Incentive Plan (“2009 Plan”) and the reservation of 45.0 million shares of common stock for issuance thereunder.

At June 27, 2009, an aggregate of 99.7 million shares were authorized for future issuance under the Company's stock plans, which include stock options, stock purchase rights and restricted stock awards and units. A total of 39.5 million shares of common stock were available for grant under the Company's stock plans as of June 27, 2009. Awards under the 2009 plan that expire or are cancelled without delivery of shares generally become available for issuance under the plans.

Stock Options

Assumptions used to estimate the fair value of stock options granted were as follows:

	Three Months Ended						Nine Months Ended
	June 27, 2009			June 28, 2008			June 27, 2009			June 28, 2008
Volatility		79.0	%		62.8	%		78.6	%		60.3	%
Risk-free interest rate		1.91	%		2.80	%		2.08	%		3.19	%
Dividend yield		0	%		0	%		0	%		0	%
Expected life of options	5.0 years			5.0 years			5.0 years			5.0 years

Stock option activity was as follows:

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value of In-The-Money Options
				($)		(Years)		($)
Outstanding, September 27, 2008		46,259,242			5.14		7.31		1,116,547
Granted		6,824,000			0.49
Cancelled/Forfeited/Expired		(4,598,158	)		9.42
Outstanding, December 27, 2008		48,485,084			4.08		7.80		—
Granted		5,710,950			0.30
Cancelled/Forfeited/Expired		(2,494,241	)		3.00
Outstanding, March 28, 2009		51,701,793			3.71		7.78		399,344
Granted		132,500			0.51
Cancelled/Forfeited/Expired		(2,297,573	)		10.67
Outstanding, June 27, 2009		49,536,720			3.38		7.71		558,695
Vested and expected to vest, June 27, 2009		43,952,989			3.60		7.57		446,956
Exercisable, June 27, 2009		23,444,521			5.33		6.49		4,666

The weighted-average grant date fair value of stock options granted during the three and nine months ended June 27, 2009 was $0.33 per share and $0.26 per share, respectively. The weighted-average grant date fair value of stock options granted during the three and nine months ended June 28, 2008 was $0.89 per share and $0.90 per share, respectively. No stock options were exercised during these periods. The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value of in-the-money options that would have been received by the option holders had all option holders exercised their options at the Company’s closing stock price on the date indicated.

As of June 27, 2009, there was $24.6 million of total unrecognized compensation expense related to stock options. This amount is expected to be recognized over a weighted average period of 3.8 years.

Restricted Stock Awards

Activity with respect to the Company’s nonvested restricted stock awards was immaterial for the three and nine months ended June 27, 2009. At June 27, 2009, unrecognized compensation expense related to restricted stock awards was immaterial.

Restricted Stock Units

The Company grants restricted stock units to executive officers, directors and certain management employees. These units vest over periods ranging from one to four years. The units are automatically exchanged for shares of common stock at the vesting date. Compensation expense associated with these units is recognized ratably over the vesting period.

At June 27, 2009, unrecognized compensation expense related to restricted stock units was $5.2 million, and is expected to be recognized over a weighted average period of eight months.

Activity with respect to the Company’s nonvested restricted stock units was as follows:

	Number of Shares			Weighted- Grant Date Fair Value		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
				($)		(Years)		($)
Non-vested restricted stock units at September 27, 2008		4,826,490			3.53		1.15		7,915,444
Vested		(40,000	)		1.63
Cancelled		(78,000	)		3.72
Non-vested restricted stock units at December 27, 2008		4,708,490			3.55		0.91		2,265,835
Granted		1,565,520			0.30
Vested		(1,265,841	)		2.97
Cancelled		(413,083	)		2.57
Non-vested restricted stock units at March 28, 2009		4,595,086			2.68		0.89		1,700,182
Vested		(26,664	)		0.30
Cancelled		(33,500	)		4.80
Non-vested restricted stock units at June 27, 2009		4,534,922			2.68		0.68		1,813,969
Non-vested restricted stock units expected to vest at June 27, 2009		3,491,890			2.68		0.68		1,396,756

Note 3. Income Tax

The provision for income tax expense was $14.1 million and $19.1 million for the three and nine months ended June 27, 2009, respectively, compared to $7.3 million and $19.0 million for the three and nine months ended June 28, 2008. Various factors affect the provision for income tax expense including the geographic composition of pre-tax income/(loss), expected annual pre-tax income/(loss), implementation of tax planning strategies and possible outcomes of audits and other uncertain tax positions. Management carefully monitors these factors and timely adjusts the interim income tax rate accordingly.

As of September 27, 2008, the Company had a long-term liability for net unrecognized tax benefits, including accrued interest, of $25.9 million, all of which, if recognized, would result in a reduction of the Company’s effective tax rate. During the nine months ended June 27, 2009, the Company’s long-term liability for net unrecognized tax benefits increased $13.5 million for current year positions and interest and decreased $8.5 million for prior year positions and $1.6 million for settlements. The Company’s policy is to classify interest and penalties on unrecognized tax benefits as income tax expense.

During the three months ended June 27, 2009, the Company’s long-term liability for unrecognized benefits increased $11.3 million for current year tax positions and interest and decreased $1.7 million for prior year tax positions. It is reasonably possible that the amount recorded by the Company during the three months ended June 27, 2009 could significantly increase or decrease within the next 12 months based on final determinations by the taxing authorities and resolution of any disputes by the Company.

In general, the Company is no longer subject to United States of America federal or state income tax examinations for years before 2003, except to the extent that tax attributes in these years were carried forward to years remaining open for audit, and to examinations for years prior to 2001 in its major foreign jurisdictions.

Note 4. Acquisition

On March 29, 2009, the Company completed its purchase of all outstanding stock of a JDS Uniphase Corp. (“JDSU”) entity and began to provide manufacturing services to JDSU pursuant to an arrangement entered into in conjunction with the acquisition. The business acquired from JDSU manufactures a variety of optical components and modules that are used in JDSU’s optical communication business, which ultimately serves telecommunications service providers, cable operators and network equipment manufacturers. As a result of this purchase, the Company acquired leading-edge optical technology, strengthened its research and development capabilities and expanded its optical capabilities into a low-cost manufacturing region.

Under the FASB issued SFAS No. 141, “Business Combinations”, the total purchase price of $30.0 million was allocated to tangible and identifiable intangible assets based on their estimated fair values. The Company performed a valuation of the net assets acquired as of March 31, 2009 (valuation date) with the assistance of a third party valuation firm. The excess of the fair value of net assets acquired over the purchase price was $2.7M, which was recorded as negative goodwill and subsequently allocated to long-term assets in accordance with SFAS No. 141.

The purchase price was allocated as follows:

	(In thousands)
Current assets	$	38,514
Non-current assets, including intangible assets of $1.0 million		12,671
Current liabilities		(17,705	)
Non-current liabilities		(3,468	)
Total	$	30,012

The condensed consolidated financial statements include the operating results of the acquired business from the date of acquisition. Pro forma results of operations for the quarter ended June 27, 2009 are not presented because the effects were not material to the Company’s financial results.

Note 5. Inventories

Components of inventories were as follows:

	As of
	June 27, 2009		September 27, 2008
	(In thousands)
Raw materials	$	502,933	$	591,119
Work-in-process		100,223		106,784
Finished goods		93,087		115,456
Total	$	696,243	$	813,359

Note 6. Comprehensive Income (Loss)

SFAS No. 130, “Reporting Comprehensive Income”, establishes standards for the reporting of comprehensive income and its components. Comprehensive income includes certain items that are reflected in stockholders’ equity, but not included in net income.

Other comprehensive income (loss), net of tax as applicable, was as follows:

	Three Months Ended					Nine Months Ended
	June 27, 2009			June 28, 2008		June 27, 2009			June 28, 2008
	(In thousands)
Net income (loss)	$	(41,126	)	$	15,328	$	(103,937	)	$	(1,170	)
Other comprehensive income (loss):
Foreign currency translation adjustments		11,290			3,005		3,776			17,967
Unrealized holding gains (losses) on derivative financial instruments		3,254			14,139		(10,543	)		(9,280	)
Minimum pension liability		151			629		(1,403	)		(832	)
Comprehensive income (loss)	$	(26,431	)	$	33,101	$	(112,107	)	$	6,685

The net unrealized gain on derivative financial instruments for the three months ended June 27, 2009 was primarily attributable to a decrease in the fair market value of the Company’s liability under its interest rate swaps, which was primarily caused by changes in the Company’s credit default swap rate.

Accumulated other comprehensive income, net of tax as applicable, consisted of the following:

	As of
	June 27, 2009			September 27, 2008
	(In thousands)
Foreign currency translation adjustments	$	85,619		$	81,843
Unrealized holding losses on derivative financial instruments		(33,350	)		(22,807	)
Unrecognized net actuarial loss and unrecognized transition cost related to pension plans		(4,662	)		(3,259	)
Total	$	47,607		$	55,777

Note 7. Earnings Per Share

Basic and diluted amounts per share are calculated by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period, as follows:

	Three Months Ended					Nine Months Ended
	June 27, 2009			June 28, 2008		June 27, 2009			June 28, 2008
	(In thousands, except per share data)
Numerator:
Net income (loss) from continuing operations	$	(41,126	)	$	11,969	$	(103,937	)	$	(37,421	)
Income from discontinued operations, net of tax		—			3,359		—			36,251
Net income (loss)	$	(41,126	)	$	15,328	$	(103,937	)	$	(1,170	)

Denominator:
Weighted average number of shares
—basic		480,307			531,197		501,448			530,546
—diluted		480,307			531,323		501,448			530,546

Basic income (loss) per share from:
—Continuing operations	$	(0.09	)	$	0.02	$	(0.21	)	$	(0.07	)
—Discontinued operations	$	—		$	0.01	$	—		$	0.07
—Net income (loss)	$	(0.09	)	$	0.03	$	(0.21	)	$	(0.00	)

Diluted income (loss) per share from:
—Continuing operations	$	(0.09	)	$	0.02	$	(0.21	)	$	(0.07	)
—Discontinued operations	$	—		$	0.01	$	—		$	0.07
—Net income (loss)	$	(0.09	)	$	0.03	$	(0.21	)	$	(0.00	)

The following table presents weighted-average dilutive securities that were excluded from the above calculation because their inclusion would have had an anti-dilutive effect:

	Three Months Ended				Nine Months Ended
	June 27, 2009		June 28, 2008		June 27, 2009		June 28, 2008
Dilutive securities:
Employee stock options		45,819,603		47,892,860		46,578,045		45,196,693
Restricted stock awards and units		2,940,146		3,497,591		3,158,268		4,577,421
Total anti-dilutive shares		48,759,749		51,390,451		49,736,313		49,774,114

As of June 27, 2009, all of the Company’s outstanding stock options and restricted stock awards and units were anti-dilutive under SFAS No. 128, “Earnings Per Share”, either because the exercise price was higher than the Company’s stock price, the application of the treasury stock method resulted in an anti-dilutive effect or the Company incurred a net loss. Had the Company reported net income instead of a net loss for the three and nine months ended June 27, 2009, 1.7 million and 0.7 million of the 48.8 million and 49.7 million, respectively, potentially dilutive securities would have been included in the calculation of diluted earnings per share.

Note 8. Debt

The following table presents information regarding the estimated fair value, based on quoted market prices, and carrying amount of the Company’s long-term debt.

	Fair Value			Carrying Amount
	June 27, 2009			June 27, 2009			September 27, 2008
		(In thousands)
$300 Million Senior Floating Rate Notes due 2010 (“2010 Notes”)	$	168,672		$	175,700		$	180,000
6.75% Senior Subordinated Notes due 2013 (“6.75% Notes”)		304,000			400,000			400,000
$300 Million Senior Floating Rate Notes due 2014 (“2014 Notes”)		216,516			270,645			300,000
8.125% Senior Subordinated Notes due 2016		432,000			600,000			600,000
Unamortized Interest Rate Swaps		—			4,941			1,985
Total	$	1,121,188		$	1,451,286		$	1,481,985
Less: current portion (2010 Notes)		(168,672	)		(175,700	)		—
Total long-term debt	$	952,516		$	1,275,586		$	1,481,985

In February and March 2009, the Company repurchased $4.3 million and $29.4 million of its 2010 and 2014 Notes, respectively. Upon repurchase, holders of the notes received $19.6 million, plus accrued interest of $0.3 million. In connection with these repurchases, the Company recorded a gain of $13.5 million, net of unamortized debt issuance costs of $0.6 million, in other income (expense), net on the condensed consolidated statement of operations.

On November 19, 2008, the Company terminated its revolving credit facility and entered into a new credit facility. In connection with the termination of the revolving credit facility, the Company also terminated an interest rate swap associated with its 6.75% Notes. As a result of terminating the swap, the Company was required to discontinue hedge accounting for the terminated swap and the remaining three swaps designated under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, as hedges of the 6.75% Notes. These swaps were being accounted for as fair value hedges. At the date hedge accounting was discontinued, the swaps had a fair value of $5.7 million, which will be amortized as a reduction to interest expense over the remaining life of the debt. During the second quarter of 2009, the Company received termination notices from its remaining counterparties exercising their right pursuant to embedded call options to cancel interest rate swaps, totaling $300 million in aggregate notional principal, associated with the Company’s 6.75% Notes. In connection with the termination of the swaps, the Company received a payment consisting of a call premium of $10.1 million plus accrued interest. During the period from November 22, 2008 through the termination of the swaps (period during which hedge accounting was discontinued), changes in the fair value of the swaps were recorded in other income (expense), net on the condensed consolidated statement of operations and resulted in a $5.7 million gain.

New Credit Facility. During the first quarter of 2009, the Company entered into a Loan, Guaranty and Security Agreement, among the Company, the financial institutions party thereto from time to time as lenders, and Bank of America, N.A., as agent for such lenders.

The new credit facility provides for a $135 million secured revolving credit facility, subject to a reduction of between $25 million and $50 million depending on the amount of the Company’s borrowing base. The new credit facility has an initial $50 million letter of credit sublimit. As of June 27, 2009, no loans and $30.3 million of letters of credit were outstanding under this agreement. The facility may be increased by an additional $200 million upon obtaining additional commitments from the lenders then party to the new credit facility or from new lenders. The new credit facility expires on the earlier of (i) the date that is 90 days prior to the maturity date of the 2010 Notes or the 6.75% Notes, in each case if such notes are not repaid, redeemed, defeased, refinanced or reserved for under the borrowing base under the new credit facility prior to such date or (ii) November 19, 2013 (the “Maturity Date”).

Loans may be advanced under the new credit facility based on eligible accounts receivable and inventory balances. If at any time the aggregate principal amount of the loans outstanding plus the face amount of undrawn letters of credit under the new credit facility exceed the borrowing base then in effect, the Company must make a payment or post cash collateral (in the case of letters of credit) in an amount sufficient to eliminate such excess.

Loans under the new credit facility bear interest, at the Company’s option, at a rate equal to LIBOR or a base rate equal to Bank of America, N.A.’s announced prime rate, in each case plus a spread. A commitment fee accrues on any unused portion of the commitments under the new credit facility at a rate per annum based on usage. Principal, together with accrued and unpaid interest, is due on the Maturity Date.

The Company’s obligations under the new credit facility are secured by (1) all U.S. and Canadian accounts receivable (with automatic lien releases occurring at time of sale of each accounts receivable transaction for those customers included in the U.S. factoring facility); (2) all U.S. and Canadian deposit accounts (except accounts used for collections for certain transactions); (3) all U.S. and Canadian inventory and associated obligations and documents; and (4) a 65% pledge of the capital stock of certain subsidiaries of the Company.

The Company is currently subject to covenants that, among other things, place certain limitations on the Company’s ability to incur additional debt, make investments, pay dividends, and sell assets. The Company was in compliance with these covenants as of June 27, 2009.

Note 9. Commitments and Contingencies

Litigation and other contingencies. From time to time, the Company is a party to litigation, claims and other contingencies, including environmental matters and examinations and investigations by government agencies, which arise in the ordinary course of business. The Company records a contingent liability when it is probable that a loss has been incurred and the amount of loss is reasonably estimable in accordance with SFAS No. 5, “Accounting for Contingencies”, or other applicable accounting standards. As of June 27, 2009, the Company had reserves of $28.8 million for these matters, which the Company believes is adequate. Such reserves are included in accrued liabilities or other long-term liabilities on the condensed consolidated balance sheet.

As of June 27, 2009, the Company was in the process of remediating environmental contamination at one of its sites in the United States of America. The Company expects to incur costs of $10.7 million for assessment, testing and remediation of this site, and intends to sell this site upon completion of its remediation efforts. Actual costs could differ from the amount estimated upon completion of this process. To date, $6.0 million of such costs have been incurred.

On January 14, 2009, one of the Company’s customers, Nortel Networks, filed a petition for reorganization under bankruptcy law. As a result, the Company performed an analysis as of December 27, 2008 to quantify its potential exposure, considering factors such as which legal entities of the customer are included in the bankruptcy reorganization, future demand from Nortel Networks, and administrative and reclamation claim priority. As a result of the analysis, the Company determined that certain accounts receivable may not be collectible and therefore deferred recognition of revenue in the amount of $5.0 million for shipments made in the first quarter of 2009. Additionally, the Company determined that certain inventory balances may not be recoverable and provided a reserve for such inventories in the amount of $5.0 million in the first quarter of 2009. The Company updated its analysis at June 27, 2009 and determined that no additional reserves were necessary. The Company’s estimates are subject to change as additional information becomes available.

Warranty Reserve. The following table presents information with respect to the warranty reserve, which is included in accrued liabilities in the condensed consolidated balance sheets:

	As of
	June 27, 2009			June 28, 2008
	(In thousands)
Beginning balance – end of prior year	$	18,974		$	23,094
Additions to accrual		8,478			17,094
Utilization of accrual		(11,675	)		(17,321	)
Ending balance – current quarter	$	15,777		$	22,867

Note 10. Restructuring Costs

Costs associated with restructuring activities, other than those activities related to business combinations, are accounted for in accordance with SFAS No. 146,”Accounting for Costs Associated with Exit or Disposal Activities”, or SFAS No. 112, “Employers’ Accounting for Postemployment Benefits”, as applicable. Pursuant to SFAS No. 112, restructuring costs related to employee severance are recorded when probable and estimable based on the Company’s policy with respect to severance payments. For restructuring costs other than employee severance accounted for under SFAS No. 112, a liability is recognized in accordance with SFAS No. 146 only when incurred. Costs associated with restructuring activities related to business combinations are accounted for in accordance with EITF 95-3,”Recognition of Liabilities in Connection with a Purchase Business Combination”.

2009 Restructuring Plan

During the first quarter of 2009, the Company initiated a restructuring plan as a result of a slowdown in the global electronics industry and worldwide economy. The plan is designed to improve capacity utilization levels and reduce costs by consolidating manufacturing and other activities in locations with higher efficiencies and lower costs. Costs associated with this plan are expected to include employee severance, costs related to owned and leased facilities and equipment that are no longer in use, and other costs associated with the exit of certain contractual arrangements due to facility closures. Actions taken under the plan are expected to be initiated during 2009 and total costs for this plan are expected to be in the range of $35 million to $40 million. Below is a summary of restructuring costs associated with facility closures and other consolidation efforts implemented under this plan:

	Employee Termination Severance and Related Benefits			Leases and Facilities Shutdown and Consolidation Costs			Impairment of Assets or Redundant Assets
	Cash			Cash			Non-Cash			Total
				(In thousands)
Balance at September 27, 2008	$	—		$	—		$	—		$	—
Charges to operations		7,009			482			—			7,491
Charges utilized		(2,229	)		(482	)		—			(2,711	)
Balance at December 27, 2008		4,780			—			—			4,780
Charges to operations		7,524			1,160			—			8,684
Charges utilized		(5,662	)		(1,160	)		—			(6,822	)
Balance at March 28, 2009		6,642			—			—			6,642
Charges to operations		6,121			3,954			570			10,645
Charges utilized		(6,109	)		(3,583	)		(570	)		(10,262	)
Reversal of accrual		(321	)		—			—			(321	)
Balance at June 27, 2009	$	6,333		$	371		$	—		$	6,704

During the three and nine months ended June 27, 2009, the Company recorded restructuring charges of $5.8 million and $20.3 million, respectively, for employee termination costs, of which $14.0 million has been utilized and $6.3 million is expected to be paid during the remainder of 2009. These costs were provided for approximately 1,200 and 3,000 terminated employees for the three and nine months ended June 27, 2009, respectively.

Restructuring Plans — Prior Years

Below is a summary of restructuring costs associated with facility closures and other consolidation efforts that were implemented in prior years:

	Employee Termination Severance and Related Benefits			Leases and Facilities Shutdown and Consolidation Costs			Impairment of Assets or Redundant Assets
	Cash			Cash			Non-Cash			Total
				(In thousands)
Balance at September 30, 2006	$	21,349		$	9,804		$	—		$	31,153
Charges (recovery) to operations		35,169			11,195			(831	)		45,533
Charges recovered (utilized)		(47,873	)		(12,132	)		831			(59,174	)
Reversal of accrual		(2,505	)		(441	)		—			(2,946	)
Balance at September 29, 2007		6,140			8,426			—			14,566
Charges to operations		64,126			16,519			2,456			83,101
Charges utilized		(45,248	)		(19,765	)		(2,456	)		(67,469	)
Reversal of accrual		(833	)		(892	)		—			(1,725	)
Balance at September 27, 2008		24,185			4,288			—			28,473
Discontinued operations		5,607			—			—			5,607
Balance at September 27, 2008, including discontinued operations		29,792			4,288			—			34,080
Charges to operations		3,222			1,989			644			5,855
Charges utilized		(11,651	)		(2,587	)		(644	)		(14,882	)
Reversal of accrual		(4,067	)		(44	)		—			(4,111	)
Balance at December 27, 2008		17,296			3,646			—			20,942
Charges to operations		2,953			2,905			1,121			6,979
Charges utilized		(11,299	)		(2,839	)		(1,121	)		(15,259	)
Reversal of accrual		(89	)		—			—			(89	)
Balance at March 28, 2009		8,861			3,712			—			12,573
Charges to operations		1,944			925			819			3,688
Charges utilized		(3,673	)		(2,460	)		(819	)		(6,952	)
Reversal of accrual		—			(123	)		—			(123	)
Balance at June 27, 2009	$	7,132		$	2,054		$	—		$	9,186

During the three and nine months ended June 27, 2009, the Company recorded restructuring charges of $1.9 million and $4.0 million, respectively, for employee termination costs. These costs were provided for approximately 400 and 1,600 terminated employees for the three and nine months ended June 27, 2009, respectively. In connection with restructuring actions the Company has already implemented under these restructuring plans, the Company expects to pay remaining facilities related restructuring liabilities of $2.1 million through 2010 and the majority of severance costs of $7.1 million through the remainder of 2009.

All Restructuring Plans

In connection with all of the Company’s restructuring plans, restructuring costs of $15.9 million were accrued as of June 27, 2009, of which $15.7 million was included in accrued liabilities and $0.2 million was included in other long-term liabilities on the condensed consolidated balance sheet.

Note 11. Business Segment, Geographic and Customer Information

SFAS No. 131, “Disclosure about Segments of an Enterprise and Related Information”, establishes standards for reporting information about operating segments, products and services, geographic areas of operations and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker or decision making group in deciding how to allocate resources and in assessing performance. The Company operates in one operating segment.

Geographic information is as follows: