10-Q

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 November 28, 2003

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ___________ TO _____________

Commission file number 1-11098

SOLECTRON CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	94-2447045
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

777 Gibraltar Drive
Milpitas, California 95035
(Address of principal executive offices including zip code)

(408) 957-8500
(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 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 is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.)

     YES  [x]  NO  [  ]

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

     At December 30, 2003, 836,450,051 shares of Common Stock of the Registrant were outstanding (including approximately 30 million shares of Solectron Global Services Canada, Inc., which are exchangeable on a one-to-one basis for the Registrant’s common stock).

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		Notes to Condensed Consolidated Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures about Market Risk
	Item 4. Controls and Procedures
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
INDEX TO EXHIBITS
EXHIBIT 3.2
EXHIBIT 10.1
EXHIBIT 10.2
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

SOLECTRON CORPORATION

INDEX TO FORM 10-Q

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets at November 30, 2003 and August 31, 2003	3
	Condensed Consolidated Statements of Operations for the three months ended November 30, 2003 and 2002	4
	Condensed Consolidated Statements of Comprehensive Loss for the three months ended November 30, 2003 and 2002	5
	Condensed Consolidated Statements of Cash Flows for the three months ended November 30, 2003 and 2002	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 3. Quantitative and Qualitative Disclosures About Market Risk		37
Item 4. Controls and Procedures		37
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		38
Item 6. Exhibits and Reports on Form 8-K		39
Signatures		41

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SOLECTRON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
(unaudited)

			November 30			August 31
			2003			2003
ASSETS
Current assets:
	Cash, cash equivalents and short-term investments		$	1,371.8		$	1,515.0
	Accounts receivable, net			1,591.3			1,389.1
	Inventories			1,472.4			1,327.3
	Prepaid expenses and other current assets			247.8			270.3
	Current assets of discontinued operations			496.0			452.1
		Total current assets		5,179.3			4,953.8
Property and equipment, net				773.9			781.9
Goodwill				134.6			134.6
Other assets				416.7			396.3
Long-term assets of discontinued operations				193.2			262.9
Total assets			$	6,697.7		$	6,529.5
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Short-term debt		$	959.5		$	973.8
	Accounts payable			1,500.7			1,266.6
	Accrued employee compensation			169.1			161.0
	Accrued expenses			313.2			334.9
	Other current liabilities			164.0			164.7
Current liabilities of discontinued operations				332.4			333.9
		Total current liabilities		3,438.9			3,234.9
Long-term debt				1,832.1			1,817.6
Other long-term liabilities				33.2			32.4
Long-term liabilities of discontinued operations				21.0			22.6
		Total liabilities	$	5,325.2		$	5,107.5
Commitments and contingencies
Stockholders’ equity:
	Common stock			0.8			0.8
	Additional paid-in capital			6,671.1			6,658.2
	Accumulated deficit			(5,160.4	)		(5,040.6	)
	Accumulated other comprehensive losses			(139.0	)		(196.4	)
		Total stockholders’ equity		1,372.5			1,422.0
Total liabilities and stockholders’ equity			$	6,697.7		$	6,529.5

See accompanying notes to condensed consolidated financial statements.

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SOLECTRON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)

			Three Months Ended November 30
			2003			2002
Net sales			$	2,696.8		$	2,668.1
Cost of sales				2,569.3			2,503.1
Gross profit				127.5			165.0
Operating expenses:
	Selling, general and administrative			114.7			158.9
	Restructuring and impairment costs			27.0			94.5
		Operating loss		(14.2	)		(88.4	)
Interest income				2.4			5.2
Interest expense				(43.9	)		(55.3	)
Other income - net				6.0			36.2
Operating loss from continuing operations before income taxes				(49.7	)		(102.3	)
Income tax expense (benefit)				2.5			(35.0	)
		Net loss from continuing operations	$	(52.2	)	$	(67.3	)
Discontinued operations:
Income (loss) from discontinued operations				(67.3	)		2.5
Income tax expense				0.3			6.1
	Loss from discontinued operations			(67.6	)		(3.6	)
	Net loss		$	(119.8	)	$	(70.9	)
Basic and diluted net loss per share
	Continuing operations		$	(0.06	)	$	(0.08	)
	Discontinued operations			(0.08	)		(0.01	)
	Basic and diluted net loss per share		$	(0.14	)	$	(0.09	)
Shares used to compute basic and diluted net loss per share				833.6			825.5

See accompanying notes to condensed consolidated financial statements.

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SOLECTRON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in millions)
(unaudited)

		Three Months Ended November 30
		2003			2002
Net loss		$	(119.8	)	$	(70.9	)
Other comprehensive income (loss):
	Foreign currency translation adjustments		48.7			15.1
	Unrealized loss on investments		8.7			(0.3	)
Comprehensive loss		$	(62.4	)	$	(56.1	)

Accumulated unrealized foreign currency translation losses were $138.0 million at November 30, 2003 and $186.7 million at August 31, 2003. Foreign currency translation adjustments consist of adjustments to consolidate subsidiaries that use the local currency as their functional currency and transaction gains and losses related to intercompany dollar-denominated debt that is not expected to be repaid in the foreseeable future.

See accompanying notes to condensed consolidated financial statements.

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SOLECTRON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)

				Three Months Ended November 30
				2003			2002
Cash flows from operating activities of continuing operations:
	Net loss from continuing operations			$	(52.2	)	$	(67.3	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation and amortization			59.3			67.7
		Amortization of debt issuance costs and accretion of discount on notes payable			16.1			24.6
		Gain on retirement of debt			—			(34.2	)
		Change in the carrying value of property and equipment, goodwill and other long-term assets			0.8			13.3
		Changes in operating assets and liabilities:
			Accounts receivable, net		(202.2	)		(76.5	)
			Inventories		(145.1	)		68.2
			Prepaid expenses and other current assets		17.9			2.0
			Accounts payable		234.1			(17.1	)
			Accrued expenses and other current liabilities		(43.0	)		(39.8	)
		Net cash used in operating activities of continuing operations			(114.3	)		(59.1	)
Cash flows from investing activities of continuing operations:
	Change in restricted cash and cash equivalents				27.0			87.0
	Sales and maturities of short-term investments				11.2			159.0
	Purchases of short-term investments				—			(31.9	)
	Acquisition of manufacturing assets and locations				—			(30.4	)
	Capital expenditures				(37.0	)		(32.7	)
	Proceeds from sale of property and equipment				25.6			12.0
	Advances (to) from discontinued operations				(12.1	)		28.5
	Supply agreement and other				—			47.1
		Net cash provided by investing activities of continuing operations			14.7			238.6

See accompanying notes to condensed consolidated financial statements.

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SOLECTRON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)

			Three Months Ended November 30
			2003			2002
Cash flows from financing activities of continuing operations:
	Repurchase of LYONS			—			(182.0	)
	Net repayment of bank lines of credit and other debt arrangements			(24.4	)		(81.7	)
	Net proceeds from stock issued under option and employee purchase plans			12.6			—
	Other			—			29.9
		Net cash used in financing activities of continuing operations		(11.8	)		(233.8	)
Effect of exchange rate changes on cash and cash equivalents				6.3			13.5
Net decrease in cash and cash equivalents				(105.1	)		(40.8	)
Cash and cash equivalents at beginning of period - continuing operations				1,421.9			1,740.0
Cash and cash equivalents at end of period - continuing operations			$	1,316.8		$	1,699.2
Cash and cash equivalents at beginning of period - discontinued operations			$	36.4		$	41.9
Cash provided by (used in) discontinued operations				11.1			(3.4	)
Cash and cash equivalents at end of period - discontinued operations			$	47.5		$	38.5

See accompanying notes to condensed consolidated financial statements.

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SOLECTRON CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

NOTE 1 — Basis of Presentation and Recent Accounting Pronouncements

Basis of Presentation

The accompanying financial data as of November 30, 2003 and for the three months ended November 30, 2003 and 2002 has been prepared by Solectron, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The August 31, 2003 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. However, Solectron believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in Solectron’s Annual Report on Form 10-K for the fiscal year ended August 31, 2003.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of financial position as of November 30, 2003, the results of operations, comprehensive loss and cash flows for the three months ended November 30, 2003 and 2002 have been made. The results of operations for the three months ended November 30, 2003 are not necessarily indicative of the operating results for the full fiscal year or any future periods.

Solectron’s first quarters of fiscal 2004 and 2003 ended on November 28, 2003 and November 29, 2002, respectively. Solectron’s fiscal year ended on August 29, 2003. For clarity of presentation, Solectron has indicated its first quarters as having ended on November 30 and its fiscal year as having ended on August 31.

Reclassification: Beginning in the first quarter of fiscal 2004, Solectron classified research and development costs differently than in prior periods. Solectron now classifies research and development costs as selling, general and administrative expense. Previously, research and development costs was a separate line item on the condensed consolidated statements of operations. Solectron has revised prior period financial information to conform the expense classifications to the current presentation. Selling, general and administrative expense now includes $4.8 million and $6.7 million of research and development expenses for the first quarters of fiscal 2004 and 2003, respectively. This reclassification did not impact operating loss, net loss or net loss per share for the periods presented.

Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation (“FIN”) No. 46, “Consolidation of Variable Interest Entities,” which requires variable interest entities, previously referred to as special-purpose entities or off-balance sheet structures, to be consolidated by a company if that company is subject to a majority of the risk of loss from the entity’s activities or is entitled to receive a majority of the entity’s returns or both. The consolidation provisions of FIN No. 46 apply immediately to variable interest entities created after January 31, 2003 and to existing entities in the first fiscal year or interim period beginning after December 15, 2003. Certain disclosure provisions apply in financial statements issued after January 31, 2003. Solectron does not expect this interpretation to have a material impact on its synthetic lease arrangements, as variable interest entities were not used in the transactions.

NOTE 2 — Stock-Based Compensation

Employee Stock Plans: As it is permitted by Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” amended by SFAS No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure,” Solectron accounts for its employee stock plans, which generally consist of fixed stock option plans and an employee stock purchase plan, using the intrinsic value method under APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. In general, where the exercise price of options granted under these plans is equal to the market price of the underlying common stock on the grant date, no stock-based employee compensation expense is recognized. In certain situations, under these plans, options to purchase shares of common stock may be granted at less than fair market value, which results in compensation

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expense equal to the difference between the market value on the date of grant and the purchase price. This expense is recognized over the vesting period of the options and included in operations. However, such expense amount has not been significant. The table below sets out the pro forma amounts of net loss and net loss per share that would have resulted for all fiscal periods presented, if Solectron accounted for its employee stock plans under the fair value recognition provisions of SFAS No. 123.

		Three Months Ended November 30
		2003			2002
		(in millions, except per share data)
	Net loss, as reported	$	(119.8	)	$	(70.9	)
	Stock-based employee compensation expense determined under fair value method, net of related tax effects		(16.4	)		(31.2	)
	Pro forma net loss	$	(136.2	)	$	(102.1	)
Net loss per share:
	Basic and diluted - as reported	$	(0.14	)	$	(0.09	)
	Basic and diluted - pro forma	$	(0.16	)	$	(0.12	)

The stock-based employee compensation expense determined under the fair value method, net of related tax effects, included $2.9 million and $4.4 million of expense relating to discontinued operations during the three months ended November 30, 2003 and November 30, 2002, respectively.

For purposes of computing pro forma net loss, the fair value of each option grant and Employee Stock Purchase Plan purchase right is estimated on the date of grant using the Black-Scholes option pricing model. The assumptions used to value the option grants and purchase rights are stated below.

	Three Months Ended November 30
	2003			2002
Expected life of options	3 years			3 years
Expected life of purchase right	6 months			6 months
Volatility		78	%		80	%
Risk-free interest rate	1.02% to 2.45%			1.30% to 2.32%
Dividend yield	zero			zero
Weighted average fair value of grants	$	5.13		$	3.58

During fiscal 2003, Solectron provided a restricted stock award to certain eligible executives. During the three months ended November 30, 2003 and 2002, compensation expense related to the restricted stock awards amounted to approximately $0.6 million and $0, respectively.

NOTE 3 — Inventories

Inventories related to continuing operations as of November 30, 2003 and August 31, 2003, consisted of (in millions):

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	November 30		August 31
	2003		2003
Raw materials	$	964.1	$	906.4
Work-in-process		251.0		220.4
Finished goods		257.3		200.5
Total	$	1,472.4	$	1,327.3

NOTE 4 — Commitments and Contingencies

Lease Obligations

During fiscal 2002, Solectron restructured its synthetic lease agreements relating to four manufacturing sites. The synthetic leases have expiration dates in 2007. At the end of the lease terms, Solectron has an option, subject to certain conditions, to purchase or to cause a third party to purchase the facilities subject to the synthetic leases for the “Termination Value,” which approximates the lessor’s original cost, or may market the property to a third party at a different price. Solectron is entitled to any proceeds from a sale of the properties to third parties in excess of the Termination Value and liable to the lessor for any shortfall. In connection with its restructuring of these synthetic leases, Solectron provided loans to the lessor equaling approximately 85% of its Termination Value. These loans are repayable solely from the sale of the properties to third parties in the future, are subordinated to the amounts payable to the lessor at the end of the synthetic leases, and may be credited against the Termination Value payable if Solectron purchases the properties. The approximate Termination Values and loan amounts were $102 million and $86 million, respectively, as of November 30, 2003.

In addition, cash collateral of $16 million is pledged for the difference between the Termination Values and the loan amounts. Each lease agreement contains various affirmative and financial covenants. A default under a lease, including violation of these covenants, may accelerate the termination date of the arrangement. Prior to the end of the first quarter of fiscal 2004, we amended the minimum cash interest coverage ratio covenant for each of the lease agreements. As a result of these amendments, Solectron was in compliance with all applicable covenants as of November 30, 2003. Monthly lease payments are generally based on the Termination Value and 30-day LIBOR index (1.17% as of November 30, 2003) plus an interest-rate margin, which may vary depending upon Solectron’s Moody’s Investors’ Services and Standard and Poor’s ratings and are allocated between the lessor and Solectron based on the proportion of the loan amount to the total Termination Value for each synthetic lease.

Solectron accounts for these synthetic lease arrangements as operating leases in accordance with SFAS No. 13, “Accounting for Leases,” as amended. Solectron’s loans to the lessor and cash collateral were included in other long-term assets and cash, cash equivalents and short-term investments, respectively, in the condensed consolidated balance sheets.

If Solectron should determine that it is probable that the expected fair value of the property at the end of the lease term will be less than the Termination Value, any expected loss will be recognized on a straight-line basis over the remaining lease term.

Future minimum payments for operating lease obligations related to continuing operations, including the synthetic leases discussed above, are $54 million (for the remaining nine months of fiscal 2004), $28 million, $17 million, $15 million, and $14 million for each of the years in the four-year period ending August 31, 2008 and an aggregate of $51 million for all years subsequent to August 31, 2008 combined.

Legal Proceedings

Solectron is from time to time involved in various litigation and legal matters, including those described below. By describing the particular matters set forth below, Solectron does not intend to imply that the Company or its legal advisors have concluded or believe that the outcome of any of those particular matters is or is not likely to have a material adverse impact upon Solectron’s business or consolidated financial condition.

On September 19, 2002, one of Solectron’s former employees filed a complaint against Solectron in the Superior Court of the State of California, Santa Clara County, asserting two claims for wrongful termination. The case is encaptioned Ronald Sorisho v. Solectron

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Corporation et al., Case No. CV811243. In the complaint, plaintiff alleges that he was wrongfully terminated by Solectron in supposed retaliation for his alleged efforts to ensure that Solectron timely recognized a charge for excess, obsolete and slow moving inventory in the Technology Solutions business unit. Plaintiff’s complaint seeks compensatory damages in an amount “not less than $2.5 million” as well as punitive damages. Solectron believes Mr. Sorisho’s claims of wrongful termination are without merit and intends to vigorously defend itself. Solectron filed a motion with the court challenging the sufficiency of Mr. Sorisho’s complaint, and in response to this motion, Mr. Sorisho filed an amended complaint in which he dropped one of his two original wrongful termination claims, but added a new claim for purported defamation based upon statements attributed to Solectron in a news article regarding Mr. Sorisho’s allegations against Solectron. Solectron tendered the defense of the defamation claim to its insurance carrier and the insurance carrier has assumed the defense of the defamation claim, subject to a reservation of rights. Solectron is also continuing to vigorously defend against Mr. Sorisho’s wrongful termination claim.

On March 6, 2003, a putative shareholder class action lawsuit was filed against Solectron and certain of its officers in the United States District Court for the Northern District of California alleging claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The case is entitled Abrams v. Solectron Corporation et al., Case No. C-03-0986 CRB. The complaint alleged that the defendants issued false and misleading statements in certain press releases and SEC filings issued between September 17, 2001 and September 26, 2002. In particular, plaintiff alleged that the defendants failed to disclose and to properly account for excess and obsolete inventory in the Technology Solutions business unit during the relevant time period. Additional complaints making similar allegations were subsequently filed in the same court, and pursuant to an order entered June 2, 2003, the Court appointed lead counsel and plaintiffs to represent the putative class in a single consolidated action. The Consolidated Amended Complaint, filed September 8, 2003, alleges an expanded class period of June 18, 2001 through September 26, 2002, and purports to add a claim for violation of Section 11 of the Securities Act of 1933 on behalf of a putative class of former shareholders of C-MAC Industries, Inc., who acquired Solectron stock pursuant to the October 19, 2001 Registration Statement filed in connection with Solectron’s acquisition of C-MAC Industries, Inc. In addition, while the initial complaints focused on alleged inventory issues at the Technology Solutions business unit, the Consolidated Amended Complaint adds allegations of inadequate disclosure and failure to properly account for excess and obsolete inventory at the Company’s other business units. The complaint seeks an unspecified amount of damages on behalf of the putative class. Solectron intends to vigorously defend against the consolidated lawsuit. There can be no assurance, however, that the outcome of the lawsuit will be favorable to Solectron or will not have a material adverse effect on Solectron’s business, financial condition and results of operations. In addition, Solectron may be forced to incur substantial litigation expenses in defending this litigation.

On March 21, 2003, Solectron, all the current members of its Board of Directors, and two former officers, were named as defendants in a shareholder derivative lawsuit entitled Lifshitz v. Cannon et al., Case No. CV815693, filed in the Santa Clara County, California Superior Court. The plaintiff alleged that he should be permitted to pursue litigation, purportedly for the benefit of Solectron, against the individual director and officer defendants for alleged mismanagement and waste of corporate assets during the period from May 2001 to the present, purported breaches of fiduciary duty, “constructive fraud,” “abuse of control,” and alleged violations of the California Corporations Code by certain of the individual defendants who sold some of their Solectron stockholdings during the period from September 2001 through September 2002. On May 19, 2003, Solectron and the individual defendants moved to dismiss the Lifshitz complaint. In the meantime, two substantively identical derivative lawsuits, entitled Schactner v. Cannon, et al., Case No. CV817112, and Nims v. Cannon, et al., Case No. CV817158, were filed in the same Court on May 14 and May 15, respectively. Counsel for the plaintiffs in all three suits subsequently advised the Court that they would be filing a consolidated amended complaint, and accordingly, defendants’ motion to dismiss was taken off calendar pending the filing of the consolidated amended complaint combining the three lawsuits. On June 27, 2003, the plaintiffs served their consolidated amended complaint now alleging that “since January of 1999” all of the current members of Solectron’s Board of Directors, as well as four former officers and directors, purportedly breached their fiduciary duties and participated in or permitted “constructive fraud,” “unjust enrichment,” and alleged violations of the California Corporations Code. The consolidated complaint alleged an unspecified amount of compensatory and punitive damages, and sought the relinquishment of all profits realized by those individual defendants who sold Solectron stock during the relevant period, together with statutory penalties under California Corporations Code section 25402 which plaintiff alleged to be applicable to those sales of Solectron stock. Solectron moved to dismiss the Consolidated Amended Complaint because Solectron does not believe plaintiffs have adequately alleged a basis for plaintiffs to appropriate for themselves the duties of Solectron’s Board of Directors under applicable Delaware law, and believes that the consolidated complaint contains various factual errors and legal deficiencies. On October 7, 2003, the California Superior Court granted Solectron’s motion to dismiss, but granted the plaintiffs an opportunity to try to cure the deficiencies in their Consolidated Amended Complaint through a further amended complaint. Solectron anticipates that the plaintiffs will file a further amended complaint within the next 60 days, after which Solectron expects to seek dismissal of that complaint because Solectron does not believe plaintiffs can show a sufficient basis to allow them to appropriate for themselves the duties of Solectron’s Board of Directors under applicable Delaware law. Solectron may be forced to incur substantial litigation expenses in defending this litigation.

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NOTE 5 — Segment Information and Geographic Information

SFAS No. 131 “Disclosure about Segments of an Enterprise and Related Information” established standards for reporting information about operating segments in annual financial statements and requires selected information about operating segments in interim financial reports issued to stockholders. It also established standards for related disclosures about products and services, geographic areas and major customers. Operating segments are defined as components of an enterprise about 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.

Following a comprehensive review of its business strategy, Solectron realigned from a business unit structure to a more integrated organizational structure. Previously, the Company had the following four reportable operating segments: Global Operations, Technology Solutions, Global Services and MicroSystems. The Company is now organized into one operating unit, Worldwide Operations, to deliver integrated solutions to its customers. Worldwide Operations consists of worldwide manufacturing and post-manufacturing services and is supported by the following functions – Worldwide Design and Engineering Services; Worldwide Sales and Account Management; Worldwide Strategy and Marketing; Finance; and Human Resources. Consistent with Solectron’s business strategy, Solectron is in the process of divesting a majority of the assets in the previous Global Services, Technology Solutions and MicroSystems operating segments. These assets being divested are reported as discontinued operations.

Solectron’s chief operating decision maker is the Chief Executive Officer. As a result of Solectron’s organizational realignment, the Chief Executive Officer evaluates financial information on a company-wide basis for purposes of making decisions and assessing financial performance. Accordingly, Solectron revised its presentation of operating and reportable segments from four to one to reflect how the Company now manages its business.

Geographic information for continuing operations as of and for the periods presented is as follows (in millions):

	November 30		August 31
	2003		2003
Long-term assets:
United States	$	459.9	$	428.7
Other North and Latin America		253.8		265.3
Europe		206.6		219.8
Asia Pacific		404.9		399.0
	$	1,325.2	$	1,312.8

	Three Months Ended November 30
	2003		2002
Geographic net sales:
United States	$	763.4	$	869.8
Other North and Latin America		382.5		388.8
Europe		435.3		456.3
Malaysia		395.1		321.6
China		368.9		273.6
Other Asia Pacific		351.6		358.0
	$	2,696.8	$	2,668.1

Certain customers accounted for 10% or more of our net sales. The following table includes these customers and the percentage of net sales attributed to them:

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	Three Months Ended November 30
	2003			2002
Nortel Networks		10.6	%		12.8	%
Cisco Systems		11.4	%		10.4	%

NOTE 6 — Long-Term Debt

Liquid Yield Option Notes (LYONs)

In November 2000, Solectron issued 2.9 million LYONs at an issue price of $524.78 per note, which resulted in gross proceeds to Solectron of approximately $1.5 billion. These notes are unsecured and unsubordinated indebtedness of Solectron. Solectron will pay no interest prior to maturity. Each note has a yield of 3.25% with a maturity value of $1,000 on November 20, 2020. Each note is convertible to common shares at any time by the holder at a conversion rate of 11.7862 shares per note. Holders may require Solectron to purchase all or a portion of their notes on May 20, 2004, November 20, 2005 and 2010, at prices of $587.46, $616.57 and $724.42 per note, respectively, payable in cash or common stock at the option of Solectron. Also, each holder may require Solectron to repurchase all or a portion of such holder’s notes if a change in control of Solectron occurs on or before May 20, 2004. Solectron, at its option, may redeem all or a portion of the notes at any time on or after May 20, 2004. Solectron is amortizing the issuance cost through May 20, 2004. During the first quarter of fiscal 2004, Solectron did not repurchase any portion of these notes. The accreted value of these notes was $939 million as of November 30, 2003 and Solectron may be obligated to purchase these notes on May 20, 2004 for $953 million in cash or common stock or a combination of both. Accordingly, the carrying amount of $939 million was classified as short-term debt as of November 30, 2003.

Adjustable Conversion-Rate Equity Securities (ACES)

During the second quarter of fiscal 2002, Solectron closed its public offering of $1.1 billion, or 44 million units, of 7.25% ACES. Each ACES unit has a stated amount of $25.00 and consists of (a) a contract requiring the holder to purchase, for $25.00, a number of shares of Solectron common stock to be determined on November 15, 2004, based on the average trading price of Solectron’s common stock at that time and certain specified settlement rates ranging from 2.1597 shares of Solectron’s common stock per purchase contract to 2.5484 shares of Solectron’s common stock per purchase contract (subject to certain anti-dilution adjustments); and (b) a $25 principal amount of 7.25% subordinated debenture due 2006. Solectron received gross proceeds of approximately $1.1 billion from the transaction. Solectron allocated $46.9 million to the fair value of the purchase contracts and recorded this amount in additional paid-in capital. The debentures initially were held and pledged for Solectron’s benefit to secure the holders’ obligation to purchase Solectron’s common stock on November 15, 2004. On or about August 15, 2004, the ACES debentures will be remarketed and, if the remarketing is successful, the interest rate will be reset at then current rates as described in the indentures and the proceeds from the remarketing will be used to satisfy the holders’ obligation to purchase Solectron’s common stock in November 2004. If the debentures are not successfully remarketed, the interest rate will not be reset and Solectron may use the pledged debentures to satisfy the holders’ obligation to purchase Solectron’s common stock in November 2004. As of November 30, 2003, the entire carrying amount of these ACES of $1.1 billion was classified as long-term debt.

9.625% Senior Notes

On February 8, 2002, Solectron issued an aggregate principal amount of $500 million of 9.625% senior notes due 2009. Solectron is required to pay interest on the notes in cash on February 15 and August 15 of each year. The indenture governing the terms of these notes contains restrictive provisions, which limit Solectron and its subsidiaries from making distributions on their capital stock, investments, incurring debt, issuing preferred stock and engaging in assets sales, among other provisions.

7.375% Senior Notes

In March 1996, Solectron issued $150 million aggregate principal amount of senior notes. These notes are in denominations and have a maturity value of $1,000 each and are due on March 1, 2006. Interest is payable semiannually at a rate of 7.375% per annum. The notes may not be redeemed prior to maturity.

Solectron obtained amendments related to the minimum cash interest coverage ratio covenants applicable to various debt and lease agreements and as a result of such waivers, Solectron was in compliance with all applicable covenants as of November 30, 2003.

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NOTE 7 — Derivative Instruments

Solectron enters into foreign exchange forward contracts intended to reduce the short-term impact of foreign currency fluctuations on foreign currency receivables, investments and payables. The gains and losses on the foreign exchange forward contracts are intended to largely offset the transaction gains and losses on the foreign currency receivables, investments, and payables recognized in earnings. Solectron does not enter into foreign exchange forward contracts for speculative purposes. Solectron’s foreign exchange forward contracts related to current assets and liabilities are generally three months or less in original maturity.

As of November 30, 2003, Solectron had outstanding foreign exchange forward contracts with a total notional amount of approximately $655 million related to continuing operations.

Solectron also uses interest rate swaps to hedge its mix of short-term and long-term interest rate exposures resulting from Solectron’s debt obligations. During the third quarter of fiscal 2002, Solectron entered into interest rate swap transactions under which it pays variable rates and receives fixed rates. The interest rate swaps have a total notional amount of $1 billion. $500 million relates to the Company’s $1.1 billion ACES and expires on November 15, 2004 and $500 million relates to the 9.625% $500 million senior notes expiring on February 15, 2009. Under each of these swap transactions, Solectron pays an interest rate equal to the 3-month LIBOR rate plus a fixed spread. In exchange, Solectron receives fixed interest rates of 7.25% on the first $500 million and 9.625% on the second $500 million. These swap transactions effectively replace the fixed interest rates that the Company must pay on a portion of its ACES and all its 9.625% senior notes with variable interest rates. These swaps are designated as fair value hedges under SFAS No. 133.

The fair values of the derivatives referred to above were not significant.

For all derivative transactions, Solectron is exposed to counterparty credit risk to the extent that the counter parties may not be able to meet their obligations towards Solectron. To manage the counterparty risk, Solectron limits its derivative transactions to those with major financial institutions. Solectron does not expect to experience any material adverse financial consequences as a result of default by Solectron’s counterparties.

NOTE 8 — Intangible Assets

The Company’s intangible assets, which are classified in other assets in the condensed consolidated balance sheets, are categorized into three main classes: supply agreements, intellectual property agreements and other. The intellectual property agreements resulted from Solectron’s acquisitions of various IBM facilities. The other intangible assets consist of miscellaneous acquisition related costs from Solectron’s various asset purchases.

The following tables summarize the gross amounts and accumulated amortization for each main class as of November 30, 2003 and August 31, 2003 (in millions):

November 30, 2003:

	Supply			Intellectual Property
	Agreements			Agreements			Other			Total
Gross amount	$	228.1		$	108.5		$	126.7		$	463.3
Accumulated amortization		(85.8	)		(48.5	)		(73.2	)		(207.5	)
Prior year impairment		(140.4	)		—			(31.3	)		(171.7	)
Carrying value	$	1.9		$	60.0		$	22.2		$	84.1

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August 31, 2003:

	Supply			Intellectual Property
	Agreements			Agreements			Other			Total
Gross amount	$	228.1		$	108.5		$	126.1		$	462.7
Accumulated amortization		(85.7	)		(45.6	)		(71.5	)		(202.8	)
Impairment		(140.4	)		—			(31.3	)		(171.7	)
Carrying value	$	2.0		$	62.9		$	23.3		$	88.2

The Company expects that its annual amortization expense, reportable as required by SFAS No. 142 for these intangibles, would be approximately $19.0 million for each of the next three fiscal years and $15.9 million for each of the two subsequent fiscal years. Amortization expense for the first quarter of fiscal 2004 was $4.7 million.

NOTE 9 — Discontinued Operations

During the fourth quarter of fiscal 2003 and first quarter of fiscal 2004, as a result of a full review of its portfolio of businesses, Solectron committed to a plan to divest a number of business operations that are outside its core competencies. These businesses are Dy 4 Systems Inc., Kavlico Corporation, C-MAC Microtechnology Holdings Inc., Smart Modular Technologies Inc., Stream International Inc., our 65% interest in US Robotics Corporation, and one additional company that will be disclosed when it is further along in the divestiture process. The divestitures of these companies will allow Solectron to offer a more focused and integrated set of supply chain solutions for its customers.

These businesses each qualify as a discontinued operation component of Solectron under SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Solectron has reported the results of operations and financial position of these businesses in discontinued operations within the statements of operations and the balance sheets for all periods presented. In addition, Solectron has excluded the cash flow activity from these businesses from the statements of cash flows for all periods presented. After these businesses are sold, Solectron will not have any significant continuing involvement in these operations.

The results from discontinued operations were as follows (in millions):

			Three Months Ended November 30
			2003			2002
Net sales			$	535.7		$	468.5
Cost of sales				470.6			396.9
Gross profit				65.1			71.6
	Operating expenses			128.3			72.8
		Operating loss		(63.2	)		(1.2	)
Interest income				0.7			5.0
Interest expense				(0.5	)		(1.2	)
Other expense - net				(4.3	)		(0.1	)
Income (loss) before income taxes				(67.3	)		2.5
Income tax expense				0.3			6.1
		Loss from discontinued operations, net of tax	$	(67.6	)	$	(3.6	)

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The current and non-current assets and liabilities of discontinued operations as of November 30, 2003 and August 31, 2003, were as follows (in millions):

		November 30		August 31
		2003		2003
Cash, cash equivalents and short-term investments		$	47.5	$	36.4
Accounts receivable, net			295.1		276.2
Inventories			137.5		121.4
Prepaid expenses and other current assets			15.9		18.1
	Total current assets of discontinued operations	$	496.0	$	452.1
Property and equipment, net		$	94.8	$	126.5
Goodwill			74.0		112.2
Other assets			24.4		24.2
	Total non-current assets of discontinued operations	$	193.2	$	262.9
Short-term debt		$	5.7	$	6.1
Accounts payable			181.2		168.1
Accrued employee compensation			30.2		41.4
Accrued expenses			44.0		55.2
Other current liabilities			71.3		63.1
	Total current liabilities of discontinued operations	$	332.4	$	333.9
	Total non-current liabilities of discontinued operations	$	21.0	$	22.6

NOTE 10 — Restructuring and Impairment

Beginning in the second quarter of fiscal 2001, Solectron recorded restructuring and impairment costs as it rationalized operations in light of customer demand declines and the economic downturn. The measures, which included reducing the workforce, consolidating facilities and changing the strategic focus of a number of sites, was largely intended to align Solectron’s capacity and infrastructure to anticipated customer demand as well as to rationalize its footprint worldwide. The restructuring and impairment costs include employee severance and benefit costs, costs related to leased facilities that will be abandoned and subleased, owned facilities no longer used by us which will be disposed of, costs related to leased equipment that has been or will be abandoned, and impairment of owned equipment that will be disposed of. For owned facilities and equipment, the impairment loss recognized was based on the fair value less costs to sell, with fair value estimated based on existing market prices for similar assets. Severance and benefit costs and other costs associated with restructuring activities initiated prior to January 1, 2003 were recorded in compliance with Emerging Issues Task Force (EITF) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity.” Severance and benefit costs associated with restructuring activities initiated on or after January 1, 2003 are recorded in accordance with SFAS No. 112, “Employer’s Accounting for Postemployment Benefits,” as Solectron concluded that it had a substantive severance plan. For leased facilities that will be abandoned and subleased, the estimated lease loss accrued represents future lease payments subsequent to abandonment less any estimated sublease income. In order to estimate future sublease income, Solectron works with an independent broker to estimate the length of time until it can sublease a facility and the amount of rent it can expect to receive. Estimates of expected sublease income could change based on factors that affect Solectron’s ability to sublease those facilities such as general economic conditions and the real estate market, among others.

The following summarizes Solectron’s restructuring charges:

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Three months ended November 30, 2003 and 2002

During the three months ended November 30, 2003, Solectron recorded restructuring and impairment costs of $27 million relating to continuing operations. The following table summarizes restructuring charges included in the accompanying condensed consolidated statements of operations (in millions):

	Three Months Ended November 30
	2003			2002		Nature
Impairment of equipment and facilities	$	(2.5	)	$	12.1	non-cash
Severance and benefit costs		10.1			61.2	cash
Loss on leased equipment		0.3			2.9	cash
Loss on leased facilities		4.5			6.5	cash
Other exit costs		14.6			11.8	cash
Total	$	27.0		$	94.5

During the three months ended November 30, 2003 certain equipment and facilities were reclassified from held for sale to held-and-used.

The employee severance and benefit costs included in the restructuring charges recorded in the first quarter of fiscal 2004 related to approximately 850 full-time positions worldwide, all of which have been eliminated. Approximately 68% of the positions were in the Americas region, 24% were in Europe and 8% were in Asia/Pacific.

Fiscal 2003 and 2002

The following table summarizes restructuring charges relating to continuing operations recorded in fiscal 2003 and 2002 (in millions):

	Years ended August 31
	2003		2002		Nature
Impairment of equipment	$	67.4	$	127.8	non-cash
Impairment of facilities		80.0		81.0	non-cash
Impairment of other long-lived assets		26.9		162.5	non-cash
Impairment of equipment, facilities and other	$	174.3	$	371.3
Severance and benefit costs	$	234.0	$	119.8	cash
Loss on leased equipment		2.3		23.8	cash
Loss on leased facilities		24.3		80.3	cash
Other exit costs		34.7		20.7	cash
Total	$	469.6	$	615.9

The employee severance and benefit costs included in the restructuring charges recorded in fiscal 2003 relate to the elimination of approximately 9,500 full-time positions worldwide and all such positions have now been eliminated under this plan. Approximately 57% of the positions eliminated were in the Americas region, 31% were in Europe and 12% were in Asia/Pacific. Facilities and equipment subject to restructuring were primarily located in the Americas and Europe. For leased facilities that will be abandoned and subleased, the lease costs represent future lease payments subsequent to abandonment less estimated sublease income. For owned facilities and equipment, the impairment loss recognized was based on the fair value less costs to sell, with fair value based on estimates of existing market prices for similar assets.

The employee severance and benefit costs included in the restructuring charges recorded in fiscal 2002 related to approximately 15,000 full-time positions worldwide, all of which have been eliminated. Approximately 69% of the positions were in the Americas region, 20% were in Europe and 11% were in Asia/Pacific. The employment reductions primarily affected employees in

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manufacturing and back office support functions. Facilities and equipment subject to restructuring were primarily located in the Americas and Europe.

The following table summarizes the restructuring accrual balance for continuing operations as of November 30, 2003 (in millions):

	Severance			Lease Payments			Lease Payments			Other Exit
	and Benefits			on Facilities			on Equipment			Costs			Total
Balance of accrual at August 31, 2003	$	73.1		$	32.5		$	29.3		$	10.5		$	145.4
Q1FY2004 Provison		10.1			4.5			0.3			14.6			29.5
Q1FY2004 Cash payments		(23.5	)		(1.3	)		(8.8	)		(16.9	)		(50.5	)
Balance of accrual at November 30, 2003	$	59.7		$	35.7		$	20.8		$	8.2		$	124.4

NOTE 11 — Loss Per Share Calculation

The calculation of loss per share for the three months ended November 30, 2003 did not include the weighted average impact of the 19.3 million common shares issuable upon conversion of Solectron’s LYONs, 112.1 million common shares issuable upon conversion of the Company’s ACES and 7.0 million options to purchase common stock, as the effect would have been antidilutive.

The calculation of loss per share for the three months ended November 30, 2002 did not include the weighted average impact of the 38.5 million common shares issuable upon conversion of Solectron’s LYONs, 112.1 million common shares issuable upon conversion of the Company’s ACES and 69.5 million options to purchase common stock, as the effect would have been antidilutive.

NOTE 12 — Income Taxes

SFAS No. 109, “Accounting for Income Taxes,” requires that a valuation allowance be established when it is “more likely than not” that all or a portion of deferred tax assets will not be realized. A review of all available positive and negative evidence needs to be considered, including a company’s performance, the market environment in which the company operates, the utilization of past tax credits, length of carryback and carryforward periods, and existing contracts or sales backlog that will result in future profits, among other factors. It further states that forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years in the jurisdictions to which the deferred tax assets relate. Therefore, cumulative losses weigh heavily in the overall assessment. As a result of the review undertaken after the end of the third quarter of the preceding fiscal year, Solectron concluded that it was appropriate to establish a full valuation allowance for most of the net deferred tax assets arising from its operations in the jurisdictions to which the deferred tax assets relate. The total valuation allowance is approximately $1.4 billion as of November 30, 2003. In addition, Solectron expects to continue to provide a full valuation allowance on future tax benefits until it can demonstrate a sustained level of profitability that establishes its ability to utilize the assets in the jurisdictions to which the assets relate. Solectron incurred net tax expenses in certain countries in which it has profitable operations during the period ended November 30, 2003.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward-Looking Statements

With the exception of historical facts, the statements contained in this quarterly report are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are subject to the safe harbor provisions set forth in the Exchange Act. These forward-looking statements relate to matters including, but not limited to:

• future sales and operating results;

• future prospects and growth;

• the capabilities and capacities of our business operations;

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• any financial or other guidance;

• our shift from business units to a functionally aligned organizational structure;

• our business strategy and our ability to execute on such strategy;

• our ability to successfully divest certain operations;

• the anticipated financial impact of recent and future acquisitions and divestitures;

• the timing and amount of our planned restructuring activities and related estimated cost savings;

• the expansion of our low-cost manufacturing capacity and redirection of our manufacturing operations to lower-cost facilities;

• our ability to weather the current economic downturn with a sustainable long-term cost structure to support improved operating efficiency and margins;

• the anticipated production levels and revenues of manufacturing and supply agreements with customers;

• the potential impact of, and our strategies for addressing, our current litigation and environmental liability exposure; and

• various other forward-looking statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We intend that our forward-looking statements be subject to the safe harbors created by the Exchange Act. The forward-looking statements are generally accompanied by words such as “intend,” “anticipate,” “believe,” “estimate,” “expect” and other similar words and statements. Our forward-looking statements are based on current expectations, forecasts and assumptions and are subject to risks, uncertainties and changes in condition, significance, value and effect, including those discussed under the heading “Risk Factors” in this report and in our reports filed with the Securities and Exchange Commission on Forms 10-K, 8-K, 10-Q, S-3, S-4 and S-8. Such risks, uncertainties and changes in condition, significance, value and effect could cause our actual results to differ materially from our anticipated outcomes. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate. Therefore, we can give no assurance that the results implied by these forward-looking statements will be realized. The inclusion of forward-looking information should not be regarded as a representation by our company or any other person that the future events, plans or expectations contemplated by Solectron will be achieved. Furthermore, past performance in operations and share price is not necessarily indicative of future performance. We disclaim any intention or obligation to update or revise any forward-looking statements contained in the documents incorporated by reference herein, whether as a result of new information, future events or otherwise.

Critical Accounting Policies

Management is required to make judgments, assumptions and estimates that affect the amounts reported when we prepare financial statements and related disclosures in conformity with generally accepted accounting principles in the United States. Note 1, “Summary of Significant Accounting Policies,” to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended August 31, 2003 describes the significant accounting policies and methods used in the preparation of our consolidated financial statements. Estimates are used for, but not limited to, our accounting for contingencies, allowance for doubtful accounts, inventory valuation, goodwill and other intangible asset impairments, restructuring costs, and income taxes. Actual results could differ from these estimates. The following critical accounting policies are impacted significantly by judgments, assumptions and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition

Our net sales from continuing operations are primarily derived from product manufacturing including, but not limited to, PCBA, sub-system and system assembly. We also offer services consisting of repair and warranty services. Revenue from manufacturing services and product sales is generally recognized upon shipment of the manufactured product. Revenue from other services is recognized as the services are performed.

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Loss Contingencies

We are subject to the possibility of various loss contingencies arising in the ordinary course of business. We consider the likelihood and our ability to reasonably estimate the amount of loss in determining the necessity for, and amount of any loss contingencies. Estimated loss contingencies are accrued when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate information available to us to determine whether any such accruals should be adjusted. Such revisions in the estimates of the potential loss contingencies could have a material impact in our results of operations and financial position.

Inventory Valuation

Our inventories are stated at the lower of weighted average cost or market. Our industry is characterized by rapid technological change, short-term customer commitments and rapid changes in demand, as well as any other lower of cost or market considerations. We make provisions for estimated excess and obsolete inventory based on our regular reviews of inventory quantities on hand and the latest forecasts of product demand and production requirements from our customers. Our provisions for excess and obsolete inventory are also impacted by our contractual arrangements with our customers including our ability or inability to re-sell such inventory to them. If actual market conditions or our customers’ product demands are less favorable than those projected or if our customers are unwilling or unable to comply with any contractual arrangements related to excess and obsolete inventory, additional provisions may be required.

Allowance for Doubtful Accounts

We evaluate the collectability of our accounts receivable based on a combination of factors. Where we are aware of circumstances that may impair a specific customer’s ability to meet its financial obligations to us, we record a specific allowance against amounts due to us and thereby reduce the net receivable to the amount we reasonably believe is likely to be collected. For all other customers, we recognize allowances for doubtful accounts based on the length of time the receivables are outstanding, industry and geographic concentrations, the current business environment and our historical experience. If the financial condition of our customers deteriorates or if economic conditions worsen, additional allowances may be required.

Goodwill

We perform a goodwill impairment test annually during the fourth quarter of our fiscal year and more frequently if an event or circumstance indicates that an impairment loss has occurred. Such events or circumstances may include significant adverse changes in the general business climate or a prolonged depressed market capitalization, among others. The tests are performed by determining the fair values of our reporting units using a discounted future cash flow model and comparing those fair values to the carrying values of the reporting units, including goodwill. If the fair value of a reporting unit is less than its carrying value, we then allocate the fair value of the unit to all the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit’s fair value was the purchase price to acquire the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of the goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The process of evaluating the potential impairment of goodwill is subjective and requires judgment at many points during the test including future revenue forecasts, discount rates and various reporting unit allocations.

Intangible Assets

Our intangible assets consist primarily of intellectual property and other intangible assets obtained from asset acquisitions. Intangible assets are evaluated for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Such an asset is considered impaired if the carrying amount of the asset grouping including the intangible asset exceeds the sum of the undiscounted cash flows expected to result from the use and ultimate disposition of the assets. If such assets are considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the assets exceeds fair value determined using a discounted cash flow model. While our cash flow assumptions and estimated useful lives are consistent with our business plans, there is significant judgment involved in determining these cash flows.

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Restructuring and Related Impairment Costs

We have recorded restructuring and impairment costs as we continue to rationalize our operations in light of customer demand declines and the recent economic downturn. These restructuring and impairment charges include employee severance and benefit costs, costs related to leased facilities that will be abandoned and subleased, owned facilities no longer used by us which will be disposed of, costs related to leased equipment that has been or will be abandoned, and impairment of owned equipment that will be disposed of. For owned facilities and equipment, the impairment loss recognized was based on the fair value less costs to sell, with fair value estimated based on existing market prices for similar assets. Severance and benefit costs and other costs associated with restructuring activities initiated prior to January 1, 2003 were recorded in compliance with Emerging Issues Task Force (EITF) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity.” Severance and benefit costs associated with restructuring activities initiated on or after January 1, 2003 are recorded in accordance with SFAS No. 112, “Employer’s Accounting for Postemployment Benefits,” as we concluded that we had a substantive severance plan. For leased facilities that will be abandoned and subleased, the estimated lease loss accrued represents future lease payments subsequent to abandonment less any estimated sublease income. In order to estimate future sublease income, we work with an independent broker to estimate the length of time until we can sublease a facility and the amount of rent we can expect to receive. Our estimates of expected sublease income could change based on factors that affect our ability to sublease those facilities such as general economic conditions and the real estate market, among others.

Income Taxes

We currently have significant deferred tax assets in certain jurisdictions resulting from tax credit carryforwards, net operating losses and other deductible temporary differences, which will reduce taxable income in such jurisdictions in future periods. In previous reporting periods, we had provided valuation allowances for future tax benefits resulting from foreign net operating loss carryforwards and for certain other U.S. and foreign deductible temporary differences where we believed future realizability was in doubt. We had believed it was more likely than not that the remaining net deferred tax assets would be realized principally based upon forecasted taxable income, generally within the twenty-year net operating loss carryforward periods. SFAS No. 109 requires a valuation allowance be established when it is “more likely than not” that all or a portion of deferred tax assets will not be realized, and further provides that it is difficult to conclude that a valuation allowance is not needed when there is negative evidence in the form of cumulative losses in recent years. Therefore, cumulative losses weigh heavily in the overall assessment. We identified several significant developments, which we considered in determining the need for nearly a full valuation allowance recorded in the third quarter of fiscal 2003, including the continuing market conditions, the absence of material growth in quarterly revenue levels, the necessity for further cost reduction actions to attain profitability, and the resulting inability to accurately predict sustainable profit levels in the countries in which the deferred tax assets arose sufficient to establish, to the requisite level of certainty, that we would be able to utilize those deferred tax assets. As a result of our assessment, we increased our total valuation allowance on deferred tax assets arising from continuing operations to approximately $1.4 billion at November 30, 2003. We expect to record a full valuation allowance on future tax benefits until we reach a sustained level of profitability in the countries in which deferred tax assets arise.

Results of Operations

The electronics industry is subject to rapid technological change, product obsolescence and price competition. These and other factors affecting the electronics industry, or any of Solectron’s major customers in particular could materially harm Solectron’s results of operations. See “Risk Factors” for additional factors relating to possible fluctuations of our operating results.

The following table summarizes certain items in the condensed consolidated statements of operations as a percentage of net sales. The financial information and the discussion below should be read in conjunction with the accompanying condensed consolidated financial statements and notes thereto. The discussion following the table is provided separately for continuing and discontinued operations. For all periods presented, our condensed consolidated statements of operations exclude the results from certain operations we plan to divest which have been classified as discontinued operations. Information related to the discontinued operations results is provided separately; following the continuing operations discussion below.

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			Three Months Ended November 30
			2003			2002
Net sales				100.0	%		100.0	%
Cost of sales				95.3			93.8
Gross profit				4.7			6.2
Operating expenses:
	Selling, general and administrative			4.2			6.0
	Restructuring and impairment costs			1.0			3.5
		Operating loss		(0.5	)		(3.3	)
Interest income				0.1			0.2
Interest expense				(1.6	)		(2.1	)
Other income-net				0.2			1.4
Operating loss from continuing operations before income taxes				(1.8	)		(3.8	)
Income tax expense (benefit)				0.1			(1.3	)
		Net loss from continuing operations		(1.9	)%		(2.5	)%
Discontinued operations:
Income (loss) from discontinued operations				(2.5	)		0.1
Income tax expense				—			0.3
		Net loss		(4.4	)%		(2.7	)%

Net Sales – Continuing Operations

Net sales increased to $2.70 billion for the three months ended November 30, 2003 from $2.67 billion in the corresponding period of fiscal 2003. The increase was driven by the Consumer and PC/Computing markets generating approximately $69 million and $48 million, respectively, more in revenue during the first quarter of fiscal 2004. This growth can be attributed to the ramp-up of 3G cell phone business and set-top boxes in the Consumer market, along with strong demand for low-end/mid-range servers and personal computers in the PC/Computing market. The increase in these markets was offset by decreases in the networking and communications markets due to the continuing weakness in the communications infrastructure industries.

International Sales – Continuing Operations

In the three months ended November 30, 2003, our international locations contributed approximately 72% of net sales compared to approximately 67% for the corresponding period of fiscal 2003. Net sales from our international sites, as a percentage of consolidated net sales, have grown primarily in the Asia/Pacific region where we have invested to take advantage of lower cost of operations. Our international operations are subject to various risks of doing business abroad. See “Risk Factors” for additional factors relating to possible fluctuations of our international operating results. While these dynamics have not materially harmed our results of operations, we cannot ensure that there will not be such an impact in the future.

Major Customers – Continuing Operations

Certain customers accounted for 10% or more of our net sales. The following table includes these customers and the percentage of net sales attributed to them:

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	Three Months Ended November 30
	2003			2002
Nortel Networks		10.6	%		12.8	%
Cisco Systems		11.4	%		10.4	%

Our top ten customers accounted for approximately 58% of net sales for the three months ended November 30, 2003 compared to approximately 60% in the corresponding period of fiscal 2003. We are dependent upon continued revenues from the customers listed above as well as our other large customers. Sales to these or any other customers could increase or decrease as a percentage of consolidated net sales either individually or as a group. Consequently, any material decrease in sales to these or other customers could materially harm our results of operations.

We believe that our ability to grow depends on increasing sales to existing customers and on successfully attracting new customers. Customer contracts can be canceled and volume levels can be changed or delayed. The timely replacement of delayed, canceled or reduced orders with new business cannot be ensured. In addition, we cannot assume that any of our current customers will continue to utilize our services. Consequently, our results of operations may be materially adversely affected.

Gross profit – Continuing Operations

Gross profit varies from period to period and is affected by a number of factors, including product mix, production efficiencies, component costs and delivery linearity, product life cycles, unit volumes, expansion and consolidation of manufacturing facilities, utilization of manufacturing capacity, pricing, competition, unanticipated restructuring or inventory charges and new product introductions.

Our gross margin percentage decreased to 4.7% for the three months ended November 30, 2003, compared to 6.2% for the corresponding period in fiscal 2003. Our margins were negatively affected by our sales mix and continued pricing pressure in our industry. We increased sales in the Consumer and PC/Computing markets which yield lower profit margins than other markets. In addition, we have experienced price increases from our suppliers thereby reducing the gross profit contributed by material revenue. Our gross margins have been negatively impacted due to the under-absorption of fixed costs as a consequence of the excess capacity resulting from the recent economic downturn.

Over time, gross margins at the individual sites and for Solectron as a whole may continue to fluctuate. Increases in the systems-build business or turnkey projects, additional costs associated with new projects and price erosion within the electronics industry could harm our gross margins.

Sales of inventory previously written down or written off have not been significant and have not had any material impact on our gross margins to date.

Selling, General and Administrative Expenses – Continuing Operations

Selling, general and administrative (SG&A) expenses decreased $44.2 million or 27.8% for the three months ended November 30, 2003 compared to the corresponding period in fiscal 2003. As a percentage of net sales, SG&A decreased to 4.2% for the three months ended November 30, 2003 compared to 6.0% the corresponding period in fiscal 2003. The decrease was primarily due to headcount and other SG&A expense reductions resulting from our cost containment activities.

Restructuring and Impairment – Continuing Operations

Beginning in the second quarter of fiscal 2001, we initiated the restructuring of our operations in light of the economic downturn. The measures, which included reducing the workforce, consolidating facilities and changing the strategic focus of a number of sites, have been intended to align our capacity and infrastructure to anticipated customer demand, transition our operations to lower cost regions, and rationalize our footprint worldwide. For leased facilities that will be abandoned and subleased, lease costs charged to restructuring expense represent future lease payments subsequent to abandonment less estimated sublease income. For facilities and equipment held for disposal, the impairment loss recognized was based on the fair value less costs to sell with fair value based on estimates of existing market prices for similar assets. We continue to evaluate our cost structure relative to current anticipated revenue levels and to adjust our manufacturing footprint between high cost and low cost areas and may take additional restructuring charges in the future. If our estimates about future restructuring charges prove to be inadequate, our financial condition and results of operations may suffer.

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During the three months ended November 30, 2003, we continued our restructuring activities and total restructuring and impairment costs of $27 million were charged against operations which were related to the closure and consolidation of, and impairment of certain long-lived assets at various manufacturing sites.

See Note 10, “Restructuring and Impairment,” for further discussion of our restructuring activities.

Interest Income – Continuing Operations

Interest income decreased $2.8 million to $2.4 million for the three months ended November 30, 2003 from $5.2 million in the corresponding period in fiscal 2003. The decreases were due to reduced average cash, cash equivalent and short-term investment balances and lower average interest rates in fiscal 2004 as compared to fiscal 2003.

Interest Expense – Continuing Operations

Interest expense decreased $11.4 million to $43.9 million for the three months ended November 30, 2003 from $55.3 million in the corresponding period in fiscal 2003. The decrease was primarily due to the retirement of approximately $1.8 billion aggregate principal amount of our Liquid Yield Option Notes (LYONs) during fiscal 2003.

Other Income - net – Continuing Operations

Other income - net decreased $30.2 million to $6.0 million for the three months ended November 30, 2003 from $36.2 million in the corresponding period in fiscal 2003. For the three months ended November 30, 2002, other income - net primarily consisted of gains on retirement of our LYONs. The following table provides the details of the retirement of our 4.0% LYONs due 2019, 2.75% LYONs due 2020 and our 3.25% LYONs due 2020 in each period presented in the accompanying condensed consolidated financial statements (in millions):

	Three Months Ended November 30
	2003		2002
Principal amount at maturity	$	—	$	390.1
Carrying value	$	—	$	216.2
Cash paid		—		182.0
Gain included in other income-net	$	—	$	34.2

The remaining components of other income - net fluctuate primarily due to foreign currency gains and losses.

Income Taxes – Continuing Operations

Our income tax expense was $2.5 million for the three months ended November 30, 2003 as compared to an income tax benefit of $35 million for the three months ended November 30, 2002. Management’s decision to provide a valuation allowance on certain deferred tax assets resulted in the tax expense incurred in the third quarter of fiscal 2003. Subsequent to the third quarter of fiscal 2003, we established a full valuation allowance for most of the net deferred tax assets arising from operations. Income tax expense that would otherwise be incurred over the next several quarters will be reduced to the extent of offsetting valuation allowance reductions. The company incurred net tax expense in certain countries in which it has profitable operations during the period ended November 30, 2003.

In prior quarters, the effective income tax rate had been largely a function of the balance between income and losses from domestic and international operations. Our international operations, taken as a whole, have been subject to tax at a lower rate than operations in the United States, primarily due to tax holidays granted to several of our overseas sites in Malaysia, Singapore and China. The Malaysian tax holiday is effective through July 2011, subject to some conditions, including maintaining certain levels of research and

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development expenditures. The Singapore tax holiday is effective through March 2011, subject to some conditions. Seven of our China sites have separate tax holiday agreements. Each agreement expires five years from the first profitable year for each site.

Liquidity and Capital Resources – Continuing Operations

Cash and cash equivalents decreased to approximately $1.3 billion at November 30, 2003 from approximately $1.4 billion at August 31, 2003. Our restricted cash and cash equivalents of $35.7 million included in cash, cash equivalents and short-term investments in the accompanying condensed consolidated balance sheets are restricted primarily in connection with the terms of our leasing transactions.

Cash used in operating activities was $114.3 million and $59.1 million during the three months ended November 30, 2003 and November 30, 2002, respectively. The increase in cash used for operating activities in the current fiscal year was primarily due to increases in current assets, including accounts receivable and inventories. In addition, we recognized a gain on the retirement of LYONs debt during the period ended November 30, 2002 which did not occur during the period ended November 30, 2003.

Cash provided by investing activities was $14.7 million and $238.6 million during the three months ended November 30, 2003 and November 30, 2002, respectively. The decrease in cash provided by investing activities is primarily due to reduction of cash provided by short-term investments and restricted cash between the two periods. During the first quarter of fiscal 2003, we reduced our cash investments in order to retire a portion of the LYONs debt. Capital expenditures during the period ended November 30, 2003 primarily related to equipment expenditures supporting increased demand and new programs.

Cash used in financing activities was $11.8 million and $233.8 million during the three months ended November 30, 2003 and November 30, 2002, respectively. The decrease in cash used for financing activities was primarily due to repurchasing a portion of the LYONs debt during the period ended November 30, 2002 which did not occur during the period ending November 30, 2003.

As of November 30, 2003, we had available a $200 million revolving credit facility that expires on February 11, 2004, and a $250 million revolving credit facility that expires on February 14, 2005. Each of our revolving credit facilities is guaranteed by certain of our domestic subsidiaries and secured by the pledge of domestic accounts receivable, inventory and equipment, the pledge of equity interests in certain of our subsidiaries and notes evidencing intercompany debt. Borrowings under the credit facilities bear interest, at our option, at the London Interbank offering rate (LIBOR) plus a margin of 2.125% based on our current senior unsecured debt ratings, or the higher of the Federal Funds Rate plus 1/2 of 1% or Bank of America N.A.’s publicly announced prime rate. As of November 30, 2003, there were no borrowings outstanding under these facilities. We are subject to compliance with certain financial covenants set forth in these facilities including, but not limited to, capital expenditures, consolidated tangible net worth, cash interest coverage, leverage, liquidity, and minimum cash. Prior to the end of the first quarter of fiscal 2004, we amended the minimum cash interest coverage ratio covenant for each of the revolving credit facilities. As a result of these amendments, we were in compliance with all applicable covenants as of November 30, 2003.

On October 28, 2003 Standard and Poor’s downgraded our senior unsecured debt rating to “B+” with a stable outlook. On October 31, 2003 Moody’s downgraded our senior unsecured debt rating to “B1” with a stable outlook. These rating downgrades increase our cost of capital should we borrow under our revolving lines of credit, and may make it more expensive for us to raise additional capital in the future. Such capital raising activities may be on terms that may not be acceptable to us or otherwise not available.

In addition, we had $36.6 million in committed and $236.7 million in uncommitted foreign lines of credit and other bank facilities as of November 30, 2003 relating to continuing operations. A committed line of credit obligates a lender to loan us amounts under the credit facility as long as we adhere to the terms of the credit agreement. An uncommitted line of credit is extended to us at the sole discretion of a lender. The interest rates range from the bank’s prime lending rate to the bank’s prime rate plus 2.0%. As of November 30, 2003, borrowings and guaranteed amounts were $12.1 million under committed and $40.1 million under uncommitted foreign lines of credit. Borrowings are payable on demand. The weighted-average interest rate was 5.6% for committed and 0.6% for uncommitted foreign lines of credit as of November 30, 2003.

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Based on the aggregate amount outstanding on November 30, 2003, holders of our 3.25% LYONs due November 2020 will have the option to require us to repurchase their notes on May 20, 2004 in an amount of $587.46 per $1,000 principal amount for a total of approximately $953 million. Instead of repurchasing these LYONs with cash, we could elect to offer holders our common stock or a combination of our cash and common stock. However, we expect to satisfy such obligation in cash. See “Risk Factors - We Have Significant Debt Leverage and Debt Service Obligations.” Conversely, satisfying these obligations with cash could impair our liquidity.

Our 7.25% subordinated ACES debentures are due November 15, 2006. On or about August 15, 2004, the ACES debentures are scheduled to be remarketed and if the remarketing is successful, the interest rate will be reset at the then current rates as described in the indenture and the proceeds from the remarketing will be used to satisfy the holders’ obligation to purchase our common stock in November 2004. If the debentures are not successfully remarketed, the interest rate will not be reset and we expect to use the pledged debentures to satisfy the holders’ obligation to purchase our common stock in November 2004. In addition, our $500 million aggregate principal amount of 9.625% senior notes is due on February 15, 2009 and our $150 million aggregate principal amount of 7.375% senior notes is due on March 1, 2006.

During fiscal 2002, we restructured our synthetic lease agreements relating to four manufacturing sites. The synthetic leases have expiration dates in 2007. At the end of the lease term, we have an option, subject to certain conditions, to purchase or to cause a third party to purchase the facilities subject to the synthetic leases for the “Termination Value,” which approximates the lessor’s original cost, or we may market the property to a third party at a different price. We are entitled to any proceeds from a sale of the properties to third parties in excess of the Termination Value and liable to the lessor for any shortfall. In connection with the restructuring of these synthetic leases, we provided loans to the lessor equaling approximately 85% of its Termination Value. These loans are repayable solely from the sale of the properties to third parties in the future, are subordinated to the amounts payable to the lessor at the end of the synthetic leases, and may be credited against the Termination Value payable if we purchase the properties. The approximate Termination Values and loan amounts are $102 million and $86 million, respectively, as of November 30, 2003.

In addition, cash collateral of $16 million is pledged for the difference between the Termination Values and the loan amounts. Each synthetic lease agreement contains various affirmative and financial covenants. A default under a lease, including violation of these covenants, may accelerate the termination date of the arrangement. Prior to the end of the first quarter of fiscal 2004, we obtained a waiver to the minimum cash interest coverage ratio covenant for the quarter. As a result of the amendment, we were in compliance with all applicable covenants as of November 30, 2003. Monthly lease payments are generally based on the Termination Value and 30-day LIBOR index (1.17% as of November 30, 2003) plus an interest-rate margin, which may vary depending upon our Moody’s Investors’ Services and Standard and Poor’s ratings, and are allocated between the lessor and us based on the proportion of the loan amount to the total Termination Value for each synthetic lease.

We account for these synthetic lease arrangements as operating leases in accordance with SFAS No. 13, “Accounting for Leases,” as amended. Our loans to the lessor and cash collateral were included in other long-term assets and cash, cash equivalents and short-term investments, respectively, in the condensed consolidated balance sheets. If we should determine that it is probable that the expected fair value of the property at the end of the lease term will be less than the Termination Value, any expected loss will be recognized on a straight-line basis over the remaining lease term.

We believe that our current cash, cash equivalents, short-term investments, lines of credit and cash anticipated to be generated from continuing operations and divestitures of our discontinued operations will satisfy our expected working capital, capital expenditures, debt service and investment requirements through at least the next 12 months.

The following is a summary of certain obligations and commitments as of November 30, 2003 for continuing operations:

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Payments Due by Period
(in millions)

			9 months
	Total		FY04		FY05		FY06		FY07		FY08		Thereafter
Short-term debt (1)	$	973.8	$	973.8	$	—	$	—	$	—	$	—	$	—
Long-term debt (2)		1,833.4		—		35.5		162.4		1,111.0		10.2		514.3
Operating lease		180.0		53.8		28.3		17.2		15.4		14.0		51.3
	$	2,987.2	$	1,027.6	$	63.8	$	179.6	$	1,126.4	$	24.2	$	565.6

(1)	Since the holders of our 3.25% LYONs due November 2020 have the option to require us to repurchase on May 20, 2004 their notes in an amount of $587.46 per $1,000 principal amount at maturity, the payment due includes a total of approximately $953 million from such commitment based on the carrying amount outstanding as of November 30, 2003.
(2)	Assumes a successful remarketing of the ACES in August 2004. In the event of this successful remarketing, we will receive up to $1.1 billion proceeds from the exercise of the stock purchase contracts included in each ACES unit in fiscal 2005. See Note 6, “Long-Term Debt,” for further discussion of our ACES.

In addition, we guarantee committed and uncommitted lines of credit and debt for our continuing operations’ subsidiaries totaling $273.3 million as of November 30, 2003. We also guarantee performance of certain of our continuing operations’ subsidiaries in various transactions such as leases, totaling $243.5 million as of November 30, 2003.

Off-Balance Sheet Arrangements and Contractual Obligations

Our off-balance sheet arrangements consist of our synthetic and operating leases, subsidiary guarantees (leases and subsidiary guarantees are both described in the “Liquidity and Capital Resources” portion of Management’s Discussion and Analysis of Financial Condition and Results of Operations), our interest rate swap instruments related to our long-term debt (described in the “We are exposed to interest rate fluctuations” Risk Factor), and our foreign exchange contracts (described in the “We are exposed to fluctuations in foreign currency exchange rates” Risk Factor).

A tabular presentation of our contractual obligations is provided in the “Liquidity and Capital Resources” portion of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Discontinued Operations

During the fourth quarter of fiscal 2003, as a result of a full review of our portfolio of businesses, we committed to a plan to divest a number of business operations that are no longer part of our strategic plan for the future. In accordance with SFAS No. 144, we have reported the results of operations and financial position of these businesses in discontinued operations within the condensed consolidated statements of operations and balance sheets for all periods presented. As a result of further divestment activity during the first quarter of fiscal 2004, we identified certain additional operations, which were included in continuing operations in fiscal 2003 that now qualify for classification as discontinued operations. The companies that we are in the process of divesting and that are included in discontinued operations are: Dy 4 Systems Inc., Kavlico Corporation, C-MAC Microtechnology Holdings Inc., Smart Modular Technologies Inc., Stream International Inc., our 65% interest in US Robotics Corporation, and one additional company that will be disclosed when it is further along in the divestiture process.

The collective results from all discontinued operations for all periods presented were as follows (in millions):

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				Three Months Ended November 30
				2003			2002
Net sales				$	535.7		$	468.5
Cost of sales					470.6			396.9
Gross profit					65.1			71.6
	Operating expenses				128.3			72.8
			Operating loss		(63.2	)		(1.2	)
Interest income					0.7			5.0
Interest expense					(0.5	)		(1.2	)
Other expense - net					(4.3	)		(0.1	)
Income (loss) before income taxes					(67.3	)		2.5
Income tax expense					0.3			6.1
		Loss from discontinued operations, net of tax		$	(67.6	)	$	(3.6	)

Sales from discontinued operations increased in the first quarter of fiscal 2004 from fiscal 2003 primarily due to an increase in demand that affected all of our operations. Gross profit of discontinued operations decreased $6.5 million or 9.1% for the first quarter of fiscal 2004 compared to the first quarter of fiscal 2003. The decrease is primarily due to continued pricing pressure from our customers that affected all of our operations. Operating expenses increased significantly in the first quarter of fiscal 2004 primarily due to approximately $68 million of restructuring and impairment costs relating to discontinued operations which was recorded in the first quarter of fiscal 2004 while only $7 million was recorded in the first quarter of fiscal 2003.

Recent Developments

On December 3, 2003, we signed a definitive agreement to sell our Dy 4 Systems business to Curtiss-Wright Corporation. The transaction is expected to close in early 2004. Under the terms of the agreement, Curtiss-Wright will acquire Dy 4 for $110 million.

RISK FACTORS

WE ARE EXPOSED TO GENERAL ECONOMIC CONDITIONS, WHICH COULD HAVE A MATERIAL ADVERSE IMPACT ON OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION.

As a result of the recent economic downturn in the U.S. and internationally, and reduced capital spending as well as end-market demand, our customers’ and therefore our sales have declined significantly from prior years. In particular, we depend on the telecommunications and computing industries, where the decline began in the second quarter of fiscal 2001. If there were to be continued or resumed weakness in these industries or any further deterioration in the business or financial condition of our customers, it could have a material adverse impact on our business, operating results and financial condition. In addition, if the economic conditions in the United States and the other markets we serve worsen, we may experience a material adverse impact on our business, operating results and financial condition.

WE HAVE SIGNIFICANT DEBT LEVERAGE AND DEBT SERVICE OBLIGATIONS.

For the first quarter of fiscal 2004 and fiscal 2003, our fixed charges exceeded our earnings from continuing operations by approximately $165 million and $166 million, respectively. The fixed charge excesses are primarily due to our operating losses. We compute the ratio of earnings from continuing operations to fixed charges by dividing earnings available for fixed charges by fixed charges. When the ratio is negative, we report the excess of fixed charges over earnings rather than a negative ratio. The computations include our consolidated subsidiaries. For these ratios, “earnings” represents (1) loss before tax expense (benefit) and before adjustments for minority interests, plus (2) fixed charges (excluding capitalized interest), plus (3) amortization of capitalized interest.

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Fixed charges consist of (1) interest on all indebtedness and amortization of debt discount and expense, plus (2) capitalized interest, plus (3) an interest factor attributable to rentals under operating leases.

As of November 30, 2003, we had approximately $1 billion of short-term indebtedness, primarily consisting of our obligation related to our 3.25% LYONs due 2020 (which are putable to us on May 20, 2004) and approximately $1.8 billion of long-term indebtedness. We will require substantial amounts of cash to fund scheduled payments of principal and interest on this outstanding indebtedness, as well as future capital expenditures and any increased working capital requirements.

We repurchased LYONs with approximately $1.8 billion aggregate principal amount at maturity in fiscal 2003 for approximately $1 billion in cash. We repurchased LYONs with approximately $5.2 billion aggregate principal amount at maturity in fiscal 2002 for approximately $2.8 billion in cash. As a result, we have repurchased substantially all of the 2.75% LYONs due 2020 and the 4.0% LYONs due 2019 leaving only a portion of our 3.25% LYONs due 2020 outstanding. Based on the aggregate amount outstanding on November 30, 2003, holders of our 3.25% LYONs will have the option to require us to repurchase their notes on May 20, 2004 in an amount of $587.46 per $1,000 principal amount for a total of approximately $953 million. While we have the right to satisfy these obligations with shares of our common stock, because this could result in significant dilution to our stockholders, which in turn could significantly reduce our earnings per share, we are likely, given recent prices of our common stock, to choose to satisfy these obligations with cash. Satisfying these obligations with cash, however, could impair our liquidity.

In addition, the entire principal amount of $500 million of our 9.625% senior notes issued in February 2002 is due on February 15, 2009 and the entire $150 million principal amount of our 7.375% senior notes are due on March 1, 2006.

WE MAY NOT BE ABLE TO MEET OUR CASH REQUIREMENTS BECAUSE OF A NUMBER OF FACTORS, MANY OF WHICH ARE BEYOND OUR CONTROL.

Our ability to meet our cash requirements (including our debt service obligations) is dependent upon our future performance, which will be subject to financial, business and other factors affecting our operations, many of which are beyond our control. If we are unable to meet our cash requirements from operations, we would be required to fund these cash requirements by alternative financings. The degree to which we may be leveraged could materially and adversely affect our ability to obtain financing for working capital, acquisitions or other purposes, could make us more vulnerable to industry downturns and competitive pressures, or could limit our flexibility in planning for, or reacting to, changes and opportunities in the electronics manufacturing industry, which may place us at a competitive disadvantage compared to our competitors. There can be no assurance that we will be able to obtain alternative financing, that any such financing would be on acceptable terms, or that we will be permitted to do so under the terms of our existing financing arrangements. In the absence of such financing, our ability to respond to changing business and economic conditions, make future acquisitions, react to adverse operating results, meet our debt service obligations or fund required capital expenditures or increased working capital requirements may be adversely affected.

WE MAY NOT BE ABLE TO SELL EXCESS OR OBSOLETE INVENTORY TO CUSTOMERS OR THIRD PARTIES, WHICH COULD HAVE A MATERIAL ADVERSE IMPACT ON OUR FINANCIAL CONDITION.

The majority of our inventory purchases and commitments are based upon demand forecasts that our customers provide to us. The customers’ forecasts, and any changes to the forecasts, including cancellations, may lead to on-hand inventory quantities and on-order purchase commitments that are in excess of the customers’ revised needs, or that become obsolete.

We generally enter into supply agreements with our significant customers. Under these supply agreements, the extent of our customer’s responsibility for excess or obsolete inventory related to raw materials that were previously purchased or ordered to meet that customer’s demand forecast is defined. If our customers do not comply with their contractual obligations to purchase excess or obsolete inventory back from us and we are unable to use or sell such inventory, our financial condition could be materially harmed. Some of our customers are in the telecommunications industry, an industry that in recent years has experienced declining revenue, large losses, negative cash flows, and several bankruptcies or defaults on borrowing arrangements. There is a risk that these or other customers may not purchase inventory back from us despite contractual obligations, which could harm our financial condition if we are unable to sell the inventory at carrying value. In addition, enforcement of these supply agreements may result in material expenses, delays in payment for inventory and/or disruptions in our customer relationships.

We are responsible for excess and obsolete inventory resulting from inventory purchases in excess of inventory needed to meet customer demand forecasts at the time the purchase commitments were made, as well as any inventory purchases not made pursuant to the customer’s responsibility under our supply agreements. For inventory which is not the customer’s responsibility, provisions are

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made when required to reduce any such excess or obsolete inventory to its estimated net realizable value, based on the quantity of such inventory on hand, our customers’ latest forecasts of production requirements, and our assessment of available disposition alternatives such as use of components on other programs, the ability and cost to return components to the vendor, and our estimates of resale values and opportunities. These assessments are necessarily based upon various assumptions and market conditions which are subject to rapid change, and/or which may ultimately prove to be inaccurate. Any material changes in our assumptions or market conditions could have a significant effect on our estimates of net realizable value, could necessitate material changes in our allowances for excess and obsolete inventory, and could have a material adverse impact on our financial condition. In addition, in the normal course of business, bona fide disagreements may arise over the amount and/or timing of such claims, and in order to avoid litigation expenses, collection risks, or disruption of customer relationships, we may elect to settle such disputes for lesser amounts than we believe we should be entitled to recover. In these instances, we must bear the economic loss of any such excess or obsolete inventory, which could have a material adverse impact on our financial condition. For example, we recorded a charge of $76 million related to excess and obsolete inventory during the second quarter of fiscal 2003, and there can be no assurance that such charges might not be necessary in future periods.

OUR SUBSTANTIAL DEBT COULD HAVE MATERIAL ADVERSE CONSEQUENCES.

Our substantial debt could have material adverse consequences. For example, it could:

• require us to dedicate a substantial portion of our cash flow from operations and other capital resources to debt service, thereby reducing our ability to fund working capital, capital expenditures and other cash requirements;

• increase our vulnerability to adverse economic and industry conditions;

• make it more difficult or impossible for us to make payments on indebtedness or obligations;

• limit our flexibility in planning for, or reacting to, changes and opportunities in, the electronics manufacturing industry, which may place us at a competitive disadvantage compared to our competitors; and

• limit our ability to incur additional debt on commercially reasonable terms, if at all.

We and our subsidiaries may be able to incur substantial indebtedness in the future, including our ability to borrow under our secured credit facilities. If new debt is added to our and our subsidiaries’ current debt levels, the related risks that we and they now face could intensify.

THE AGREEMENTS GOVERNING OUR EXISTING AND FUTURE DEBT CONTAIN AND WILL CONTAIN VARIOUS COVENANTS THAT LIMIT OUR DISCRETION IN THE OPERATION OF OUR BUSINESS.

The agreements and instruments governing our existing and future debt and our secured credit facilities contain and will contain various restrictive covenants that, among other things, require us to comply with or maintain certain financial tests and ratios and restrict our ability to:

• incur debt;

• incur or maintain liens;

• redeem and/or prepay debt;

• make acquisitions of businesses or entities;

• make investments, including loans, guarantees and advances;

• make capital expenditures;

• engage in mergers, consolidations or certain sales of assets;

• engage in transactions with affiliates;

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• pay dividends or engage in stock redemptions; and

• enter into certain restrictive agreements.

Our secured credit facilities are secured by a pledge of all of the capital stock of our material domestic subsidiaries, 65% of the capital stock of certain of our material foreign subsidiaries, certain of our intercompany loans and certain additional assets, including inventory, accounts receivable and equipment of us and our domestic subsidiaries. The covenants governing our secured credit facilities also restrict the operations of certain of our subsidiaries, including, in some cases, limiting the ability of our subsidiaries to make distributions to us.

Our ability to comply with covenants contained in our secured credit facilities and other indebtedness to which we are or may become a party may be affected by events beyond our control, including prevailing economic, financial and industry conditions. Our failure to comply with our debt-related obligations could result in an event of default which, if not cured or waived, could result in an acceleration of our indebtedness and cross-defaults under our other indebtedness, which could have a material adverse effect on our financial condition. We obtained amendments related to the minimum cash interest coverage ratio covenants applicable to various debt and lease agreements as described in “Liquidity and Capital Resources”, and as a result of such waivers, we were in compliance with all applicable covenants as of November 30, 2003.

Even if we are able to comply with all applicable covenants, the restrictions on our ability to operate our business in our sole discretion could harm our business by, among other things, limiting our ability to take advantage of financings, mergers, acquisitions and other corporate opportunities.

MOST OF OUR NET SALES COME FROM A SMALL NUMBER OF CUSTOMERS; IF WE LOSE ANY OF THESE CUSTOMERS, OUR NET SALES COULD DECLINE SIGNIFICANTLY.

Most of our annual net sales come from a small number of our customers. Our ten largest customers accounted for approximately 58% and 60% of net sales from continuing operations in the first quarters of fiscal 2004 and 2003, respectively. Some of these customers individually account for more than ten percent of our annual net sales. Any material delay, cancellation or reduction of orders from these or other major customers could cause our net sales to decline significantly, and we may not be able to reduce the accompanying expenses at the same time. We cannot guarantee that we will be able to retain any of our largest customers or any other accounts, or that we will be able to realize the expected revenues under existing or anticipated supply agreements with these customers. Our business, market share, financial condition and results of operations will continue to depend significantly on our ability to obtain orders from new customers, retain existing customers, realize expected revenues under existing and anticipated supply agreements, as well as on the financial condition and success of our customers and their customers.

Net sales may not improve, and could decline, in future periods if there is continued or resumed weakness in customer demand, particularly in the telecommunications and computing sectors, resulting from worldwide economic conditions. In addition, net sales were adversely affected due to our unwinding of our optical products supply agreement with Lucent during fiscal 2003, which had previously been expected to generate $2 billion in revenues over the original three-year contract period. Sales, gross profit and operating loss from this supply agreement were $92 million, $1 million and $7 million, respectively, in fiscal 2003. Production under this supply agreement substantially ceased in March 2003.

OUR CUSTOMERS MAY CANCEL THEIR ORDERS, CHANGE PRODUCTION QUANTITIES OR LOCATIONS, OR DELAY PRODUCTION.

To remain competitive, EMS companies must provide increasingly rapid product turnaround, at increasingly competitive prices, for their customers. We generally do not have long-term contractual commitments from our top customers. As a result, we cannot guarantee that we will continue to receive any net sales from our customers. Customers may cancel their orders, change production quantities or delay production for a number of reasons. Many of our customers’ industries have recently experienced a significant decrease in demand for their products and services, as well as substantial price competition. The generally uncertain economic condition of several of our customers’ industries has resulted, and may continue to result, in some of our customers delaying purchases on some of the products we manufacture for them, and placing purchase orders for lower volumes of products than previously anticipated. Cancellations, reductions or delays by a significant customer or by a group of customers would seriously harm our results of operations by reducing the volumes of products manufactured by us for the customers and delivered in that period, as well as causing a delay in the repayment of our expenditures for inventory in preparation for customer orders and lower asset utilization

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resulting in lower gross margins. In addition, customers may require that manufacturing of their products be transitioned from one facility to another to achieve cost and other objectives. Such transfers, if unanticipated or not flawlessly executed, can result in various inefficiencies and costs, including excess capacity and overhead at one facility and capacity constraints and related strains on our resources at the other, disruption and delays in product deliveries and sales, deterioration in product quality and customer satisfaction, and increased manufacturing and scrap costs.

OUR STRATEGIC RELATIONSHIPS WITH MAJOR CUSTOMERS CREATE RISKS.

In the past several years, we completed several strategic transactions with OEM customers. Under these arrangements, we generally acquired inventory, equipment and other assets from the OEM, and leased (or in some cases acquired) their manufacturing facilities, while simultaneously entering into multi-year supply agreements for the production of their products. There has been strong competition among EMS companies for these transactions, and this competition may continue to be a factor in customers’ selection of their EMS providers. These transactions contributed to a significant portion of our past revenue growth, as well as to a significant portion of our more recent restructuring charges and goodwill and intangible asset impairments. While we do not anticipate our acquisitions of OEM plants and equipment in the near future to return to the levels at which they occurred in the recent past, there may be occasions on which we determine it to be advantageous to complete acquisitions in selected geographic and/or industry markets. As part of such arrangements, we would typically enter into supply agreements with the divesting OEMs, but such agreements generally do not require any minimum volumes of purchases by the OEM and the actual volume of purchases may be less than anticipated. Arrangements which may be entered into with divesting OEMs typically would involve many risks, including the following:

• we may pay a purchase price to the divesting OEMs that exceed the value we are ultimately able to realize from the future business of the OEM;

• the integration into our business of the acquired assets and facilities may be time-consuming and costly;

• we, rather than the divesting OEM, would bear the risk of excess capacity;

• we may not achieve anticipated cost reductions and efficiencies;

• we may be unable to meet the expectations of the OEM as to volume, product quality, timeliness and cost reductions; and

• if demand for the OEM’s products declines, the OEM may reduce its volume of purchases, and we may not be able to sufficiently reduce the expenses of operating the facility or use the facility to provide services to other OEMs, and we might find it appropriate to close, rather than continue to operate, the facility, and any such actions would require us to incur significant restructuring and/or impairment charges.

As a result of these and other risks, we may be unable to achieve anticipated levels of profitability under such arrangements and they may not result in material revenues or contribute positively to our earnings. Additionally, other OEMs may not wish to obtain logistics or operations management services from us.

IF WE ARE UNABLE TO MANAGE OUR ACQUISITIONS AND DIVESTITURES, AND COST-EFFECTIVELY RUN OUR OPERATIONS AND DISPOSE OF NON-STRATEGIC ASSETS, OUR PROFITABILITY COULD BE ADVERSELY AFFECTED.

Until fiscal 2002, we experienced rapid growth over many years. During fiscal 2002, we completed our acquisition of C-MAC, as well as other smaller transactions. While we may consider future acquisitions of companies and strategic assets on a selective basis, subject to compliance with any restrictions that may exist under certain of our financing instruments, we are presently focused on divestiture activity. We are in the process of divesting certain parts of our current operations that we do not believe to be strategic or synergistic to our primary business focus, and we believe such divestments, if successfully and timely completed at the presently anticipated valuations and without undue disruption of operations, present us with the opportunity to improve our liquidity and reduce our interest and operating expenses.

In order to achieve anticipated revenue and other financial performance targets, we must continue to manage our assets and operations efficiently while simultaneously preparing parts of our operations for divestiture. Our divestiture activities are expected to place a heavy strain on various personnel and management resources, and must be carefully managed in order to avoid or minimize disruptions in the business operations of the affected businesses, customer relations and cash flows, and to enable us to maximize the

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value which we may be able to realize from the divestments. There can be no assurance that such divestment activities will be able to be consummated without an adverse impact on the near-term operations of the affected businesses or on Solectron as a whole. Any failure to successfully manage and consummate the divestments in a timely manner could harm our financial condition and results of operations, as well as adversely impact the realizable value of the divested operations. In addition, there can be no assurance that we will be successful in realizing the presently anticipated benefits from our divestment activities, as such transactions involve significant risks and uncertainties with respect to valuation of the entities to be divested, particularly given the potential disruption of operations inherent in the divestiture process, and may result in significant costs, expenses and charges that may significantly reduce the value which we may realize in connection with the anticipated divestiture transactions. In the event we fail to consummate a divestment, we may need to incur restructuring charges.

Our ability to manage and integrate our acquisitions, as well as any future acquisitions, will require progressive increases in manufacturing and logistics infrastructure, as well as enhancements or upgrades of accounting and other internal management systems and the implementation of a variety of procedures and controls. We cannot guarantee that significant problems in these areas will not occur. Any failure to enhance or expand these systems and implement such procedures and controls in an efficient manner and at a pace consistent with our business activities could harm our financial condition and results of operations. In addition, we may experience inefficiencies from the management of geographically dispersed facilities and incur substantial infrastructure and working capital costs. We incurred approximately $27 million of restructuring and impairment costs relating to continuing operations in the first quarter of fiscal 2004. See also the Risk Factor entitled “If We Incur More Restructuring-Related Charges Than Currently Anticipated, Our Financial Condition and Results of Operations May Suffer.”

POSSIBLE FLUCTUATION OF OPERATING RESULTS FROM QUARTER TO QUARTER AND FACTORS OUT OF OUR CONTROL COULD AFFECT THE MARKET PRICE OF OUR SECURITIES.

Our quarterly earnings and/or stock price may fluctuate in the future due to a number of factors including the following:

• differences in the profitability of the types of manufacturing services we provide. For example, high velocity and low complexity printed circuit boards and systems assembly services have lower gross margins than low volume/complex printed circuit boards and systems assembly services;

• our ability to maximize the hours of use of our equipment and facilities is dependent on the duration of the production run time for each job and customer;

• the amount of automation that we can use in the manufacturing process for cost reduction varies, depending upon the complexity of the product being made;

• our customers’ demand for our products and their ability to take delivery of our products and to make timely payments for delivered products;

• our ability to optimize the ordering of inventory as to timing and amount to avoid holding inventory in excess of immediate production needs;

• our ability to offer technologically advanced, cost-effective, quick response, manufacturing services;

• fluctuations in the availability and pricing of components;

• timing of expenditures in anticipation of increased sales;

• cyclicality in our target markets;

• fluctuations in our market share;

• expenses and disruptions associated with acquisitions and divestitures;

• announcements of operating results and business conditions by our customers;

• announcements by our competitors relating to new customers or technological innovation or new services;

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• economic developments in the electronics industry as a whole;

• credit rating and stock analyst downgrades;

• political and economic developments in countries in which we have operations; and

• general market conditions.

If our operating results in the future are below the expectations of securities analysts and investors, the market price of our outstanding securities could be harmed.

IF WE INCUR MORE RESTRUCTURING-RELATED CHARGES THAN CURRENTLY ANTICIPATED, OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS MAY SUFFER.

In furtherance of the continued implementation of the series of restructuring plans which we have initiated commencing in fiscal 2001, we expect to continue to incur restructuring-related charges in fiscal 2004, primarily to consolidate facilities and reduce our workforce in North America and Europe, although no certainty can be attributed to an amount or the timing of its recognition. We continue to evaluate our cost structure relative to our revenue levels and may take additional restructuring charges in the future. If our estimates about future restructuring charges prove to be inadequate, our financial condition and results of operations may suffer. In addition, if we are unable to successfully move production from higher cost to lower cost facilities without experiencing degradation of quality or timeliness of our service to our customers, our business could be harmed.

WE DEPEND ON LIMITED OR SOLE SOURCE SUPPLIERS FOR CRITICAL COMPONENTS. THE INABILITY TO OBTAIN SUFFICIENT COMPONENTS AS REQUIRED, AND UNDER FAVORABLE PURCHASE TERMS, WOULD CAUSE HARM TO OUR BUSINESS.

We are dependent on certain suppliers, including limited and sole source suppliers, to provide key components used in our products. We have experienced, and may continue to experience, delays in component deliveries, which in turn could cause delays in product shipments and require the redesign of certain products. In addition, if we are unable to procure necessary components under favorable purchase terms, including at favorable prices and with the order lead-times needed for the efficient and profitable operation of our factories, our results of operations could suffer. The electronics industry has experienced in the past, and may experience in the future, shortages in semiconductor devices, including application-specific integrated circuits, DRAM, SRAM, flash memory, certain passive devices such as tantalum capacitors, and other commodities that may be caused by such conditions as overall market demand surges or supplier production capacity constraints. The inability to continue to obtain sufficient components as and when required, or to develop alternative sources as and when required, could cause delays, disruptions or reductions in product shipments or require product redesigns which could damage relationships with current or prospective customers, and increase inventory levels and costs, thereby causing harm to our business.

WE POTENTIALLY BEAR THE RISK OF PRICE INCREASES ASSOCIATED WITH SHORTAGES IN ELECTRONICS COMPONENTS.

At various times, there have been shortages of components in the electronics industry leading to increased component prices. One of the services that we perform for many customers is purchasing electronics components used in the manufacturing of the customers’ products. As a result of this service, we potentially bear the risk of price increases for these components if we are unable to purchase components at the pricing level anticipated to support the margins assumed in our agreements with our customers.

OUR NET SALES COULD DECLINE IF OUR COMPETITORS PROVIDE COMPARABLE MANUFACTURING SERVICES AND IMPROVED PRODUCTS AT A LOWER COST.

We compete with different contract manufacturers, depending on the type of service we provide or the geographic locale of our operations, in an industry which is intensely competitive. These competitors may have greater manufacturing, financial, R&D and/or marketing resources than we have. In addition, we may not be able to offer prices as low as some of our competitors because those competitors may have lower cost structures as a result of their geographic location or the services they provide, or because such competitors are willing to accept business at lower margins in order to utilize more of their excess capacity. In that event, our net sales could decline. We also expect our competitors to continue to improve the performance of their current products or services, to reduce

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their current products or service sales prices and to introduce new products or services that may offer greater value-added performance and improved pricing. Any of these could cause a decline in sales, loss of market acceptance of our products or services and corresponding loss of market share, or profit margin compression.

WE DEPEND ON THE CONTINUING TREND OF OEMS TO OUTSOURCE.

A substantial factor in our past revenue growth was attributable to the transfer of manufacturing and supply-based management activities from our OEM customers. Future growth is partially dependent on new outsourcing opportunities. To the extent that these opportunities are not available, our future growth would be unfavorably impacted.

OUR NON-U.S. LOCATIONS REPRESENT A SIGNIFICANT PORTION OF OUR NET SALES; WE ARE EXPOSED TO RISKS ASSOCIATED WITH OPERATING INTERNATIONALLY.

Approximately 72% and 67% of our net sales from continuing operations came from sites outside the United States during the first quarters of fiscal 2004 and 2003, respectively. As a result of our foreign sales and facilities, our operations are subject to a variety of risks and costs that are unique to international operations, including the following:

• adverse movement of foreign currencies against the U.S. dollar in which our results are reported;

• import and export duties, and value added taxes;

• import and export regulation changes that could erode our profit margins or restrict exports and/or imports;

• potential restrictions on the transfer of funds;

• government and license requirements governing the transfer of technology and products abroad;

• disruption of local labor supply and/or transportation services;

• inflexible employee contracts in the event of business downturns;

• the burden and cost of compliance with import and export regulations and foreign laws; and

• economic and political risks in emerging or developing economies.

We have been granted tax holidays, which are effective through 2011 subject to some conditions, for our Malaysian and Singapore sites. We have also been granted various tax holidays in China. These tax holidays are effective for various terms and are subject to some conditions. It is possible that the current tax holidays will be terminated or modified or that future tax holidays that we may seek will not be granted. If the current tax holidays are terminated or modified, or if additional tax holidays are not granted in the future or when our current tax holidays expire, our future effective income tax rate could increase.

WE ARE EXPOSED TO FLUCTUATIONS IN FOREIGN CURRENCY EXCHANGE RATES.

We enter into foreign exchange forward contracts intended to reduce the short-term impact of foreign currency fluctuations on foreign currency cash, receivables, investments and payables. The gains and losses on the foreign exchange forward contracts are intended to offset the transaction gains and losses on the foreign currency cash, receivables, investments, and payables recognized in earnings. We do not enter into foreign exchange forward contracts for speculative purposes. Our foreign exchange forward contracts related to current assets and liabilities are generally three months or less in original maturity.

As of November 30, 2003, we had outstanding foreign exchange forward contracts with a total notional amount of approximately $655 million related to continuing operations. The change in value of the foreign exchange forward contracts resulting from a hypothetical 10% change in foreign exchange rates would be offset by the remeasurement of the related balance sheet items, the result of which would not be significant.

As of November 30, 2003, the majority of our foreign currency hedging contracts were scheduled to mature in approximately three months and there were no material deferred gains or losses. In addition, our international operations in some instances act as a natural

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hedge because both operating expenses and a portion of sales are denominated in local currency. In these instances, although an unfavorable change in the exchange rate of a foreign currency against the U.S. dollar will result in lower sales when translated to U.S. dollars, operating expenses will also be lower in these circumstances. Although approximately 25% of our net sales from continuing operations in the first quarter of fiscal 2004 were denominated in currencies other than U.S. dollar, we do not believe our total exposure to be significant because of natural hedges.

We have currency exposure arising from both sales and purchases denominated in currencies other than the functional currency of our sites. Fluctuations in the rate of exchange between the currency of the exposure and the functional currency of our sites could seriously harm our business, operating results and financial condition. For example, if there is an increase in the rate at which a foreign currency is exchanged for U.S. dollars, it will require more of the foreign currency to equal a specified amount of U.S. dollars than before the rate increase. In such cases, and if we price our products and services in the foreign currency, we will receive less in U.S. dollars than we did before the rate increase went into effect. If we price our products and services in U.S. dollars and competitors price their products in local currency, an increase in the relative strength of the U.S. dollar could result in our prices being uncompetitive in markets where business is transacted in the local currency.

WE ARE EXPOSED TO INTEREST RATE FLUCTUATIONS.

The primary objective of our investment activities is to preserve principal, while at the same time maximize yields without significantly increasing risk. To achieve this objective, we maintain our portfolio of cash equivalents and short-term investments in a variety of securities, including government and corporate obligations, certificates of deposit and money market funds. As of November 30, 2003, substantially our entire total portfolio was scheduled to mature in less than three months. A hypothetical 10% change in interest rates would not have a material effect on the fair value of our investment portfolios.

As of November 30, 2003, we had no cash equivalents and short-term investments that are subject to interest rate risk (defined as risk of loss of investment fair value due to interest rate movements). The fair value of our cash equivalents and short-term investments approximated the carrying value as of November 30, 2003.

Interest on long-term debt instruments is payable at fixed rates. In addition, the amount of principal to be repaid at maturity is also fixed. During the third quarter of fiscal 2002, we entered into interest rate swap transactions under which we pay variable rates and we receive fixed rates. The interest swaps effectively converted $1 billion of our long-term debt with fixed interest rates into debt with variable rates of interest. Our interest rate swaps have a total notional amount of $1 billion. The first $500 million of swap transactions relate to our 7.25% $1.1 billion ACES and expire on November 15, 2004. The second $500 million of swap transactions relate to our 9.625% $500 million senior notes and expire on February 15, 2009. Under each of these swap transactions; we pay an interest rate equal to the 3-month LIBOR rate plus a fixed spread. In exchange, we receive fixed interest rates of 7.25% on the $500 million related to the ACES and 9.625% on the $500 million related to the senior notes. On November 15, 2002, the original swaps related to the senior notes were settled. This settlement resulted in cash received and a gain of approximately $26 million, which is being amortized over the remaining life of the senior notes. Also on November 15, 2002, Solectron entered into swaps with terms similar to the original swap transactions used to hedge the interest paid on the senior notes and designated the swaps as fair value hedges under SFAS No. 133.

WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OR ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS.

Our ability to effectively compete may be affected by our ability to protect our proprietary information. We (including companies included in discontinued operations) hold a number of patents and possess various other trade secrets and license rights. These patents, trade secrets, and license rights may not provide meaningful protection for our manufacturing processes and equipment innovations, which could result in litigation. Any resulting litigation could be lengthy and costly and could harm our financial condition.

WE COULD BECOME INVOLVED IN INTELLECTUAL PROPERTY DISPUTES.

In the past we have been and may from time to time continue to be, notified of claims that we may be infringing patents, copyrights or other intellectual property rights owned by other parties. In the event of an infringement claim, we may be required to spend a significant amount of money to develop a non-infringing alternative, to obtain licenses, and/or to defend against the claim. We may not be successful in developing such an alternative or obtaining a license on reasonable terms, if at all. Any litigation, even where an infringement claim is without merit, could result in substantial costs and diversion of resources. Accordingly, the resolution or adjudication of intellectual property disputes could have a material adverse effect on our business, financial condition and results of operations.

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FAILURE TO COMPLY WITH ENVIRONMENTAL REGULATIONS COULD HARM OUR BUSINESS.

As a company in the electronics manufacturing services industry, we are subject to a variety of environmental regulations, including those relating to the use, storage, discharge and disposal of hazardous chemicals used during our manufacturing process as well as air quality and water quality regulations, restrictions on water use, and storm water regulations. Although we have never sustained any significant loss as a result of non-compliance with such regulations, any failure by us to comply with environmental laws and regulations could result in liabilities or the suspension of production. In addition, these laws and regulations could restrict our ability to expand our facilities or require us to acquire costly equipment or incur other significant costs to comply with regulations.

We own and lease some contaminated sites (for some of which we have been indemnified by third parties for required remediation), sites for which there is a risk of the presence of contamination, and sites with some levels of contamination for which we may be liable and which may or may not ultimately require any remediation. We have obtained environmental insurance to reduce potential environmental liability exposures posed by some of our operations and facilities. We believe, based on our current knowledge, that the cost of any groundwater or soil clean up that may be required at our facilities would not materially harm our business, financial condition and results of operations. Nevertheless, the process of remediating contamination in soil and groundwater at facilities is costly and cannot be estimated with high levels of confidence, and there can be no assurance that the costs of such activities would not harm our business, financial condition and results of operations in the future.

OUR RATING DOWNGRADES MAKE IT MORE EXPENSIVE FOR US TO BORROW MONEY.

On October 28, 2003 Standard and Poor’s downgraded our senior unsecured debt rating to “B+” with a stable outlook. On October 31, 2003 Moody’s downgraded our senior unsecured debt rating to “B1” with a stable outlook. These rating downgrades increase our cost of capital should we borrow under our revolving lines of credit, and may make it more expensive for us to raise additional capital in the future. Such capital raising activities may be on terms that may not be acceptable to us or otherwise not available.

FAILURE TO ATTRACT AND RETAIN KEY PERSONNEL AND SKILLED ASSOCIATES COULD HURT OUR OPERATIONS.

Our continued success depends to a large extent upon the efforts and abilities of key managerial and technical associates. Losing the services of key personnel could harm us. Our business also depends upon our ability to continue to attract key executives and retain senior managers and skilled associates. Failure to do so could harm our operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

See “Risk Factors – ‘We Are Exposed to Fluctuations in Foreign Currency Exchange Rates,’ and ‘We Are Exposed to Interest Rate Fluctuations,’” for factors related to fluctuations in the exchange rates of foreign currency and fluctuations in interest rates.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Based on their evaluation as of the end of the period covered by this Report, Solectron’s principal executive officer and principal financial officer have concluded that Solectron’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) are effective to ensure that information required to be disclosed by Solectron in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal Controls. There were no changes in Solectron’s internal controls over financial reporting during the first quarter of fiscal 2004 or in other factors that could have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Solectron is from time to time involved in various litigation and legal matters, including those described below. By describing the particular matters set forth below, Solectron does not intend to imply that the Company or its legal advisors have concluded or believe that the outcome of any of those particular matters is or is not likely to have a material adverse impact upon Solectron’s business or financial condition.

On September 19, 2002, one of Solectron’s former employees filed a complaint against Solectron in the Superior Court of the State of California, Santa Clara County, asserting two claims for wrongful termination. The case is encaptioned Ronald Sorisho v. Solectron Corporation et al., Case No. CV811243. In the complaint, plaintiff alleges that he was wrongfully terminated by Solectron in supposed retaliation for his alleged efforts to ensure that Solectron timely recognized a charge for excess, obsolete and slow moving inventory in the Technology Solutions business unit. Plaintiff’s complaint seeks compensatory damages in an amount “not less than $2.5 million” as well as punitive damages. Solectron believes Mr. Sorisho’s claims of wrongful termination are without merit and intends to vigorously defend itself. Solectron filed a motion with the court challenging the sufficiency of Mr. Sorisho’s complaint, and in response to this motion, Mr. Sorisho filed an amended complaint in which he dropped one of his two original wrongful termination claims, but added a new claim for purported defamation based upon statements attributed to Solectron in a news article regarding Mr. Sorisho’s allegations against Solectron. Solectron tendered the defense of the defamation claim to its insurance carrier and the insurance carrier has assumed the defense of the defamation claim, subject to a reservation of rights. Solectron is also continuing to vigorously defend against Mr. Sorisho’s wrongful termination claim.

On March 6, 2003, a putative shareholder class action lawsuit was filed against Solectron and certain of its officers in the United States District Court for the Northern District of California alleging claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The case is entitled Abrams v. Solectron Corporation et al., Case No. C-03-0986 CRB. The complaint alleged that the defendants issued false and misleading statements in certain press releases and SEC filings issued between September 17, 2001 and September 26, 2002. In particular, plaintiff alleged that the defendants failed to disclose and to properly account for excess and obsolete inventory in the Technology Solutions business unit during the relevant time period. Additional complaints making similar allegations were subsequently filed in the same court, and pursuant to an order entered June 2, 2003, the Court appointed lead counsel and plaintiffs to represent the putative class in a single consolidated action. The Consolidated Amended Complaint, filed September 8, 2003, alleges an expanded class period of June 18, 2001 through September 26, 2002, and purports to add a claim for violation of Section 11 of the Securities Act of 1933 on behalf of a putative class of former shareholders of C-MAC Industries, Inc., who acquired Solectron stock pursuant to the October 19, 2001 Registration Statement filed in connection with Solectron’s acquisition of C-MAC Industries, Inc. In addition, while the initial complaints focused on alleged inventory issues at the Technology Solutions business unit, the Consolidated Amended Complaint adds allegations of inadequate disclosure and failure to properly account for excess and obsolete inventory at the Company’s other business units. The complaint seeks an unspecified amount of damages on behalf of the putative class. Solectron intends to vigorously defend against the consolidated lawsuit. There can be no assurance, however, that the outcome of the lawsuit will be favorable to Solectron or will not have a material adverse effect on Solectron’s business, financial condition and results of operations. In addition, Solectron may be forced to incur substantial litigation expenses in defending this litigation.

On March 21, 2003, Solectron, all of the current members of its Board of Directors, and two former officers, were named as defendants in a shareholder derivative lawsuit entitled Lifshitz v. Cannon et al., Case No. CV815693, filed in the Santa Clara County, California Superior Court. The plaintiff alleged that he should be permitted to pursue litigation, purportedly for the benefit of Solectron, against the individual director and officer defendants for alleged mismanagement and waste of corporate assets during the period from May 2001 to the present, purported breaches of fiduciary duty, “constructive fraud,” “abuse of control,” and alleged violations of the California Corporations Code by certain of the individual defendants who sold some of their Solectron stockholdings during the period from September 2001 through September 2002. On May 19, 2003, Solectron and the individual defendants moved to dismiss the Lifshitz complaint. In the meantime, two substantively identical derivative lawsuits, entitled Schactner v. Cannon, et al., Case No. CV817112, and Nims v. Cannon, et al., Case No. CV817158, were filed in the same Court on May 14 and May 15, respectively. Counsel for the plaintiffs in all three suits subsequently advised the Court that they would be filing a consolidated amended complaint, and accordingly, defendants’ motion to dismiss was taken off calendar pending the filing of the consolidated amended complaint combining the three lawsuits. On June 27, 2003, the plaintiffs served their consolidated amended complaint now alleging that “since January of 1999” all of the current members of Solectron’s Board of Directors, as well as four former officers and directors, purportedly breached their fiduciary duties and participated in or permitted “constructive fraud,” “unjust enrichment,” and alleged violations of the California Corporations Code. The consolidated complaint alleged an unspecified amount of compensatory

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and punitive damages, and sought the relinquishment of all profits realized by those individual defendants who sold Solectron stock during the relevant period, together with statutory penalties under California Corporations Code section 25402 which plaintiff alleged to be applicable to those sales of Solectron stock. Solectron moved to dismiss the Consolidated Amended Complaint because Solectron does not believe plaintiffs have adequately alleged a basis for plaintiffs to appropriate for themselves the duties of Solectron’s Board of Directors under applicable Delaware law, and believes that the consolidated complaint contains various factual errors and legal deficiencies. On October 7, 2003, the California Superior Court granted Solectron’s motion to dismiss, but granted the plaintiffs an opportunity to try to cure the deficiencies in their Consolidated Amended Complaint through a further amended complaint. Solectron anticipates that the plaintiffs will file a further amended complaint within the next 60 days, after which Solectron expects to seek dismissal of that complaint because Solectron does not believe plaintiffs can show a sufficient basis to allow them to appropriate for themselves the duties of Solectron’s Board of Directors under applicable Delaware law. Solectron may be forced to incur substantial litigation expenses in defending this litigation.

Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits:

Exhibit No.	Exhibit Description
3.1*	Certificate of Incorporation of the Company, as amended
3.2	Amended and Restated Bylaws of the Company
3.3**	Certificate of Designation Rights, Preferences and Privileges of Series A Participating Preferred Stock of the Company
10.1	Sixth Amendment to Credit Agreement, dated as of November 21, 2003, among Solectron, Goldman Sachs Credit Partners L.P., JPMorgan Chase Bank, The Bank of Novia Scotia, Bank of America, N.A. and certain other lenders
10.2	Third Amendment to Credit Agreement, dated as of November 21, 2003, among Solectron, Bank of America Securities LLC, Goldman Sachs Credit Partners L.P., JP Morgan Chase Bank, The Bank of Novia Scotia, Bank of America, N.A. and certain other lenders
31.1	Certification of Chief Executive Officer Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*	Incorporated by reference from Exhibit 3.1 filed with Solectron’s Form 10-Q for the quarter ended February 28, 2001, Exhibit 3.1 filed with Solectron’s Form 10-Q for the quarter ended February 25, 2000, and Exhibit 3.1 filed with Solectron’s Form 10-Q for the quarter ended February 26, 1999.
**	Incorporated by reference from Exhibit 3.3 filed with Solectron’s Annual Report on Form 10-K for fiscal year ended August 31, 2001.

     (b)  Reports on Form 8-K

On September 25, 2003, Solectron filed a report on Form 8-K with the Securities and Exchange Commission announcing the Company’s results of operations for its fiscal year ended August 31, 2003.

On October 16, 2003, Solectron filed a report on Form 8-K with the Securities and Exchange Commission regarding the press release issued on September 30, 2003 announcing an agreement intended to extend Solectron’s role as an electronics manufacturing services provider to Nortel Networks.

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Solectron Corporation announced the Company’s results of operations for its fiscal year ended August 31, 2003 on September 25, 2003. On November 14, 2003, Solectron filed a report on Form 8-K/A with the Securities and Exchange Commission regarding revisions to the Company’s announcement of results of operations for its fiscal year ended August 31, 2003. In the first revision, sales and cost of sales were adjusted downward by $35.9 million resulting in no gross profit impact. The second revision appropriately classifies $292.5 million between the “goodwill impairment” and “restructuring and impairment costs” line items within its statement of operations for the twelve-month period ended August 31, 2003. This revision reduces “goodwill impairment” and increases “restructuring and impairment costs” each by $292.5 million. These specific line items are the only affected information and operating loss is not affected as both line items are within operating expenses.

On December 18, 2003, Solectron filed a report on Form 8-K with the Securities and Exchange Commission announcing the Company’s results of operations for its fiscal quarter ended November 30, 2003.

40

SOLECTRON CORPORATION

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SOLECTRON CORPORATION (Registrant)
Date: January 12, 2004
	By	/s/ Kiran Patel
		Kiran Patel Executive Vice President, Chief Financial Officer (Principal Financial Officer)
	By	/s/ Warren Ligan
		Warren Ligan Corporate Vice President, Corporate Controller (Principal Accounting Officer)

41

INDEX TO EXHIBITS

Exhibit No.	Exhibit Description
3.1*	Certificate of Incorporation of the Company, as amended
3.2	Amended and Restated Bylaws of the Company
3.3**	Certificate of Designation Rights, Preferences and Privileges of Series A Participating Preferred Stock of the Company
10.1	Sixth Amendment to Credit Agreement, dated as of November 21, 2003, among Solectron, Goldman Sachs Credit Partners L.P., JPMorgan Chase Bank, The Bank of Novia Scotia, Bank of America, N.A. and certain other lenders
10.2	Third Amendment to Credit Agreement, dated as of November 21, 2003, among Solectron, Bank of America Securities LLC, Goldman Sachs Credit Partners L.P., JP Morgan Chase Bank, The Bank of Novia Scotia, Bank of America, N.A. and certain other lenders
31.1	Certification of Chief Executive Officer Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*	Incorporated by reference from Exhibit 3.1 filed with Solectron’s Form 10-Q for the quarter ended February 28, 2001, Exhibit 3.1 filed with Solectron’s Form 10-Q for the quarter ended February 25, 2000, and Exhibit 3.1 filed with Solectron’s Form 10-Q for the quarter ended February 26, 1999.
**	Incorporated by reference from Exhibit 3.3 filed with Solectron’s Annual Report on Form 10-K for fiscal year ended August 31, 2001.

EX-3.2 3 f95481exv3w2.txt EXHIBIT 3.2 Exhibit 3.2 AMENDED AND RESTATED BYLAWS OF SOLECTRON CORPORATION Effective as of November 17, 2003 TABLE OF CONTENTS

PAGE ---- ARTICLE I CORPORATE OFFICES.......................................................................................... 1 1.1 REGISTERED OFFICE.................................................................................. 1 1.2 OTHER OFFICES...................................................................................... 1 ARTICLE II MEETINGS OF STOCKHOLDERS.................................................................................. 1 2.1 PLACE OF MEETINGS.................................................................................. 1 2.2 ANNUAL MEETING..................................................................................... 1 2.3 SPECIAL MEETINGS................................................................................... 1 2.4 NOTICE OF STOCKHOLDERS' MEETINGS................................................................... 2 2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS.................................... 2 2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE....................................................... 3 2.7 QUORUM............................................................................................. 4 2.8 ADJOURNED MEETING; NOTICE.......................................................................... 4 2.9 VOTING............................................................................................. 4 2.10 WAIVER OF NOTICE................................................................................... 5 2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING............................................ 5 2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS........................................ 6 2.13 PROXIES............................................................................................ 6 2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE.............................................................. 6 2.15 CONDUCT OF BUSINESS................................................................................ 7 ARTICLE III DIRECTORS................................................................................................ 7 3.1 POWERS............................................................................................. 7 3.2 NUMBER OF DIRECTORS................................................................................ 7 3.3 ELECTION QUALIFICATION AND TERM OF OFFICE OF DIRECTORS............................................. 7 3.4 RESIGNATION AND VACANCIES.......................................................................... 8 3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE........................................................... 9 3.6 FIRST MEETINGS..................................................................................... 9 3.7 REGULAR MEETINGS................................................................................... 9 3.8 SPECIAL MEETINGS; NOTICE........................................................................... 9 3.9 QUORUM............................................................................................. 10 3.10 WAIVER OF NOTICE................................................................................... 10 3.11 ADJOURNED MEETING; NOTICE.......................................................................... 10 3.12 CONDUCT OF BUSINESS................................................................................ 10 3.13 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.................................................. 11 3.14 FEES AND COMPENSATION OF DIRECTORS................................................................. 11

i TABLE OF CONTENTS (CONTINUED)

PAGE ---- 3.15 APPROVAL OF LOANS TO EMPLOYEES OTHER THAN EXECUTIVE OFFICERS....................................... 11 3.16 REMOVAL OF DIRECTORS............................................................................... 11 3.17 ADVISORY DIRECTORS................................................................................. 12 ARTICLE IV COMMITTEES................................................................................................ 12 4.1 COMMITTEES OF DIRECTORS............................................................................ 12 4.2 COMMITTEE MINUTES.................................................................................. 13 4.3 MEETINGS AND ACTION OF COMMITTEES.................................................................. 13 ARTICLE V OFFICERS................................................................................................... 13 5.1 OFFICERS........................................................................................... 13 5.2 ELECTION OF OFFICERS............................................................................... 13 5.3 REMOVAL AND RESIGNATION OF OFFICERS................................................................ 14 5.4 CHAIRMAN OF THE BOARD.............................................................................. 14 5.5 PRESIDENT.......................................................................................... 14 5.6 VICE PRESIDENTS.................................................................................... 14 5.7 SECRETARY.......................................................................................... 14 5.8 CHIEF FINANCIAL OFFICER............................................................................ 15 ARTICLE VI INDEMNITY................................................................................................. 15 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS.......................................................... 15 6.2 INDEMNIFICATION OF OTHERS.......................................................................... 16 6.3 INSURANCE.......................................................................................... 16 6.4 PAYMENT OF EXPENSES IN ADVANCE..................................................................... 16 6.5 INDEMNITY NOT EXCLUSIVE............................................................................ 16 6.6 CONFLICTS.......................................................................................... 17 ARTICLE VII RECORDS AND REPORTS...................................................................................... 17 7.1 MAINTENANCE AND INSPECTION OF RECORDS.............................................................. 17 7.2 INSPECTION BY DIRECTORS............................................................................ 17 7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS..................................................... 18 7.4 SUBSIDIARY CORPORATIONS............................................................................ 18 ARTICLE VIII GENERAL MATTERS......................................................................................... 18 8.1 STOCK CERTIFICATES; PARTLY PAID SHARES............................................................. 18 8.2 LOST CERTIFICATES.................................................................................. 19 8.3 CONSTRUCTION; DEFINITIONS.......................................................................... 19 8.4 DIVIDENDS.......................................................................................... 19 8.5 FISCAL YEAR........................................................................................ 19 8.6 SEAL............................................................................................... 20

ii TABLE OF CONTENTS (CONTINUED)

PAGE ---- 8.7 TRANSFER OF STOCK.................................................................................. 20 8.8 STOCK TRANSFER AGREEMENTS.......................................................................... 20 8.9 REGISTERED STOCKHOLDERS............................................................................ 20 8.10 EXECUTION OF CONTRACTS............................................................................. 20 ARTICLE IX AMENDMENTS................................................................................................ 21 ARTICLE X DISSOLUTION................................................................................................ 21 ARTICLE XI CUSTODIAN................................................................................................. 21 11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES........................................................ 21 11.2 DUTIES OF CUSTODIAN................................................................................ 22

iii AMENDED AND RESTATED BYLAWS OF SOLECTRON CORPORATION ARTICLE I CORPORATE OFFICES 1.1 REGISTERED OFFICE The registered office of the corporation in the State of Delaware shall be in the City of Wilmington, County of New Castle, State of Delaware. The name of the registered agent of the corporation at such location is CT Corporation. 1.2 OTHER OFFICES The Board of Directors may at any time establish other offices at any place or places where the corporation is qualified to do business. ARTICLE II MEETINGS OF STOCKHOLDERS 2.1 PLACE OF MEETINGS Meetings of stockholders shall be held at the principal executive office of the corporation, within or outside the State of Delaware, unless some other appropriate and convenient location be designated for that purpose from time to time by the Board of Directors. 2.2 ANNUAL MEETING Annual meetings of the Stockholders shall be held, each year, at the time and on the day as designated by resolution of the Board of Directors. At the annual meeting, the stockholders shall elect a Board of Directors, consider reports of the affairs of the corporation and transact such other business as may be properly brought before the meeting. 2.3 SPECIAL MEETINGS A special meeting of the stockholders may be called at any time by the Board of Directors, the Chairman of the Board, the President, the Secretary, or holders of shares entitled to cast not less than ten (10) percent of the votes at the meeting. Except as next provided, notice shall be given as for the annual meeting. Upon receipt of a written request addressed to the Chairman, President, or Secretary, mailed or delivered personally to such officer by any person (other than the Board) entitled to call a special meeting of stockholders, such officer shall cause notice to be given, to the stockholders entitled to vote, that a meeting will be held at a time requested by the person or persons calling the meeting, not less than twenty five nor more than sixty days after the receipt of such request. 2.4 NOTICE OF STOCKHOLDERS' MEETINGS All notices of meetings with stockholders shall be in writing and shall be sent or otherwise given in accordance with Section 2.6 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, date, and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Notice of meetings, annual or special, shall be given in writing not less than ten (10) nor more than sixty (60) days before the date of the meeting, to stockholders entitled to vote thereat by the Secretary or an assistant secretary, or if there be no such officer, or in the case of his neglect or refusal, by any director or stockholder. Such notices or any reports shall be given personally or by mail or other means of written communication and shall be sent to the stockholder's address appearing on the books of the corporation, or supplied by him to the corporation for the purpose of notice. Notice of any meeting of stockholders shall specify the place, the day and the hour of meeting, and (1) in case of a special meeting, the general nature of the business to be transacted and no other business may be transacted, or (2) in the case of an annual meeting, those matters which the Board at date of mailing, intends to present for action by the stockholders. At any meetings where directors are to be elected, notice shall include the names of the nominees, if any, intended at date of Notice to be presented by management for election. If a shareholder supplies no address, notice shall be deemed to have been given to him if mailed to the place where the principal executive office of the Company, inside or outside the State of Delaware, is situated, or published at least once in some newspaper of general circulation in the County of said principal office. 2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS To be properly brought before an annual meeting or special meeting, nominations for the election of director or other business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly -2- brought before the meeting by a stockholder. For such nominations or other business to be considered properly brought before the meeting by a stockholder such stockholder must have given timely notice and in proper form of his intent to bring such business before such meeting. To be timely, such stockholder's notice must be delivered to or mailed and received by the Secretary of the corporation not less than ninety (90) days prior to the meeting; provided, however, that in the event that less than one-hundred (100) days notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. To be in proper form, a stockholder's notice to the secretary shall set forth: (i) the name and address of the stockholder who intends to make the nominations or propose the business and, as the case may be, the name and address of the person or persons to be nominated or the nature of the business to be proposed; (ii) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote at such meeting and, if applicable, intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice or introduce the business specified in the notice; (iii) if applicable, a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (iv) such other information regarding each nominee or each matter of business to be proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated, or intended to be nominated, or the matter been proposed, or intended to be proposed by the Board of Directors; and (v) if applicable, the consent of each nominee to serve as director of the corporation if so elected. The chairman of the meeting may refuse to acknowledge the nomination of any person or the proposal of any business not made in compliance with the foregoing procedure. 2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE Written notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation. An affidavit of the Secretary or an assistant secretary or of the transfer agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. -3- 2.7 QUORUM The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed. If a quorum be initially present, the stockholders may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum, if any action taken is approved by a majority of the stockholders required initially to constitute a quorum. When a quorum is present or represented at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provisions of the statutes or of the certificate of incorporation, a different vote is required, in which case such express provision shall govern and control the decision of the question. 2.8 ADJOURNED MEETING; NOTICE When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than forty-five (45) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 2.9 VOTING The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.12 and Section 2.14 of these bylaws, subject to the provisions of Sections 217 and 218 of the General Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgers and joint owners of stock and to voting trusts and other voting agreements). Except as may otherwise be provided in the certificate of incorporation or the last paragraph of this Section 2.9, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder. -4- At a stockholders' meeting at which directors are to be elected, or at elections held under special circumstances, a stockholder shall be entitled to cumulate votes (i.e., cast for any candidate a number of votes greater than the number of votes which such stockholder normally is entitled to cast). Each holder of stock of any class or series who elects to cumulate votes shall be entitled to as many votes as equals the number of votes which (absent this provision as to cumulative voting) he would be entitled to cast for the election of directors with respect to his shares of stock multiplied by the number of directors to be elected by him, and he may cast all of such votes for a single director or may distribute them among the number to be voted for, or for any two or more of them, as he may see fit, so long as the name of the candidate for director shall have been placed in nomination prior to the voting and the stockholder, or any other holder of the same class or series of stock, has given notice at the meeting prior to the voting of the intention to cumulate votes. 2.10 WAIVER OF NOTICE Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the certificate of incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice unless so required by the certificate of incorporation or these bylaws. 2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING Unless otherwise provided in the certificate of incorporation, any action required by this chapter to be taken at any annual or special meeting of stockholders of a corporation, or any action that may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. If the action which is consented to is such as would have required the filing of a certificate under any section of the General Corporation Law of Delaware if such action had been voted on by stockholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of stockholders, that written notice and written consent have been given as provided in Section 228 of the General Corporation Law of Delaware. -5- 2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or entitled to express consent or dissent to corporate action in writing without a meeting (if otherwise permitted by these bylaws and the corporation's certificate of incorporation), or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall be not more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. If the Board of Directors does not so fix a record date, the fixing of such record date shall be governed by the provisions of Section 213 of the General Corporation Law of Delaware. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. 2.13 PROXIES Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him by a written proxy, signed by the stockholder and filed with the Secretary, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholder's name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the stockholder or the stockholder's attorney-in-fact. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212(e) of the General Corporation Law of Delaware. 2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders or the books of the corporation, or to vote in person or by proxy at any meeting of stockholders and of the number of shares held by each such stockholder. -6- 2.15 CONDUCT OF BUSINESS Meetings of stockholders shall be presided over by the Chairman of the Board, if any, or in his absence by the President, or in his absence by a Vice President, or in the absence of the foregoing persons by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting. The chairman of any meeting of stockholders shall determine the order of business and the procedures at the meeting, including such matters as the regulation of the manner of voting and conduct of business. ARTICLE III DIRECTORS 3.1 POWERS Subject to the provisions of the General Corporation Law of Delaware and any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors. Each director shall exercise such powers and otherwise perform such duties in good faith, in the manner such director believes to be in the best interests of the corporation, and with such care, including reasonable inquiry, using ordinary prudence, as a person in a like position would use under similar circumstances. 3.2 NUMBER OF DIRECTORS The Board of Directors shall consist of nine (9) members. The number of directors may be changed (subject to the provisions of Section 3.16) by an amendment to this bylaw, duly adopted by the Board of Directors or by the stockholders, or by a duly adopted amendment to the certificate of incorporation. 3.3 ELECTION QUALIFICATION AND TERM OF OFFICE OF DIRECTORS Except as provided in Section 3.4 of these bylaws, at each annual meeting of stockholders, directors of the corporation shall be elected to hold office until the expiration of the term for which they are elected, and until their successors have been duly elected and qualified; except that if any such election shall not be so held, such election shall take place at a stockholders' meeting called and held in accordance with the Delaware General Corporation Law. The term of office of a director shall begin immediately after election. -7- Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws, wherein other qualifications for directors may be prescribed. Election of directors need not be by written ballot unless a stockholder demands election by written ballot at the meeting and before voting begins. 3.4 RESIGNATION AND VACANCIES Any director may resign at any time upon written notice to the corporation. Any vacancy occurring in the Board of Directors because of resignation or death of a director may be filled by a majority of the remaining members of the Board of Directors, although such majority is less than a quorum, or by a sole remaining director, and each director so elected shall hold office until his successor is elected at the next succeeding annual meeting of stockholders at which the class to which the directorship belongs is to be elected or at a special meeting called for that purpose. Unless otherwise provided in the certificate of incorporation or these bylaws: (i) Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. (ii) Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected. If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the General Corporation Law of Delaware. If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten (10) percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the General Corporation Law of Delaware as far as applicable. -8- 3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE The Board of Directors of the corporation may hold meetings, both regular and special, either within or outside the State of Delaware, at such place as is designated in the notice of the meeting. Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. Accurate minutes of any meeting of the Board of Directors or any committee thereof shall be maintained by the Secretary or other office designated for that purpose. 3.6 FIRST MEETINGS The first meeting of each newly elected Board of Directors shall be held immediately following the adjournment of the annual meetings of the stockholders. 3.7 REGULAR MEETINGS Regular meetings of the Board of Directors may be held without notice at the corporate offices or such other place, within or without the State of Delaware, at such time and place as the Board designates. 3.8 SPECIAL MEETINGS; NOTICE Special meetings of the Board may be called at any time by the President or, if he is absent or unable or refuses to act, by any vice president or the Secretary or by any two directors, or by one director if only one is provided. At least forty-eight (48) hours notice of the time and place of special meetings shall be delivered personally to the directors or personally communicated to them by a corporate officer by telephone or telegraph. If the notice is sent to a director by letter, it shall be addressed to him at his address as it is shown upon the records of the corporation (or if it is not so shown on such records or is not readily ascertainable, at the place in which the meetings of the directors are regularly held). In case such notice is mailed, it shall be deposited in the United States mail, postage prepaid, in the place in which the principal executive office of the corporation is located, at least four (4) days prior to the time of the holding of the meeting. Such mailing, telegraphing, telephoning or delivery as above provided shall be due, legal and personal notice to such director. When all of the directors are present at any directors' meeting, however called or noticed, and either (i) sign a written consent thereto on the records of such meeting, or (ii) if a majority of the directors is present and if those not present sign a waiver of notice of such meeting or a consent to holding the meeting or an approval of the minutes thereof, whether prior to or after the holding of -9- such meeting, which said waiver, consent or approval shall be filed with the Secretary of the corporation or (iii) if a director attends a meeting without notice, but without protesting, prior thereto or at its commencement, the lack of notice to him, then the transactions thereof are as valid as if had at a meeting regularly called and noticed. 3.9 QUORUM A majority of the number of directors as fixed by the certificate of incorporation or bylaws, shall be necessary to constitute a quorum for the transaction of business, and the action of a majority of the directors present at any meeting at which there is a quorum, when duly assembled, is valid as a corporate act; provided that a minority of the directors, in the absence of a quorum, may adjourn from time to time, but may not transact any business. A meeting at which a quorum is initially present may continue to transact business, notwithstanding the withdrawal of directors, if any action taken is approved by a majority of the required quorum for such meeting. 3.10 WAIVER OF NOTICE Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the certificate of incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors, or members of a committee of directors, need be specified in any written waiver of notice unless so required by the certificate of incorporation or these bylaws. 3.11 ADJOURNED MEETING; NOTICE Notice of the time and place of holding an adjourned meeting need not be given to absent directors if the time and place be fixed at the meeting adjourned and held within twenty-four (24) hours, but if adjourned more than twenty-four (24) hours, notice shall be given to all directors not present at the time of the adjournment. 3.12 CONDUCT OF BUSINESS Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in his absence by the President, or in their absence by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting. The chairman of any meeting shall determine the order of business and the procedures at the meeting. -10- 3.13 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board or committee. 3.14 FEES AND COMPENSATION OF DIRECTORS Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board of Directors shall have the authority to fix the compensation of directors. 3.15 APPROVAL OF LOANS TO EMPLOYEES OTHER THAN EXECUTIVE OFFICERS The corporation shall not, directly or indirectly, loan or arrange for the loan of money, or otherwise be involved in any new extension of credit, or any renewal of any pre-existing loan or extension of credit, to any Director or Executive Officer of the corporation or any of its subsidiaries. The corporation may lend money to, or guarantee any obligation of, or otherwise assist any other employee of the corporation or of its subsidiaries whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in this section shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute. In addition, nothing in the foregoing shall be construed as nullifying any pre-existing loan or credit arrangements which may have been entered into with any Director or Executive Officer prior to the July 30, 2002 enactment of Section 402 of the Sarbanes-Oxley Act of 2002, but no such pre-existing arrangements shall be renewed, nor material modifications made to any term thereof. 3.16 REMOVAL OF DIRECTORS Unless otherwise restricted by statute, by the certificate of incorporation or by these bylaws, any director or the entire Board of Directors may be removed with or without cause by the holders of a majority of the shares then entitled to vote at an election of directors; provided, however, that, so long as stockholders of the corporation are entitled to cumulative voting, no individual director may be removed without cause (unless the entire board is removed) if the number of votes cast against such removal would be sufficient to elect the director if then cumulatively voted at an election of the class of directors of which the director is a part. Whenever the holders of any class or series are entitled to elect one or more directors by the certificate of incorporation, such director or directors may be removed without cause only if there are sufficient votes by the holders of the outstanding shares of that class or series. A vacancy created by the removal of a director may be filled only by the approval of the stockholders. -11- No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director's term of office. 3.17 ADVISORY DIRECTORS The Board of Directors from time to time may elect one or more persons to be Advisory Directors who shall not by such appointment be members of the Board of Directors. Advisory Directors shall be available from time to time to perform special assignments specified by the President, to attend meetings of the Board of Directors upon invitation and to furnish consultation to the Board. The period during which the title shall be held may be prescribed by the Board of Directors. If no period is prescribed, the title shall be held at the pleasure of the Board. ARTICLE IV COMMITTEES 4.1 COMMITTEES OF DIRECTORS The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, with each committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors or in the bylaws of the corporation, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) amend the certificate of incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Section 151(a) of the General Corporation Law of Delaware, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation), (ii) adopt an agreement of merger or consolidation under Sections 251 or 252 of the General Corporation Law of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, (iv) recommend to the stockholders a dissolution of the corporation or a revocation of a dissolution, or (v) amend the bylaws of the corporation; and, unless the board resolution establishing the committee, the bylaws or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of Delaware. -12- 4.2 COMMITTEE MINUTES Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. 4.3 MEETINGS AND ACTION OF COMMITTEES Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Article III of these bylaws, Section 3.5 (place of meetings and meetings by telephone), Section 3.7 (regular meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum), Section 3.10 (waiver of notice), Section 3.11 (adjournment and notice of adjournment), Section 3.12 (conduct of business) and Section 3.13 (action without a meeting), with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board of Directors and its members; provided, however, that the time of regular meetings of committees may also be called by resolution of the Board of Directors and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board of Directors may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws. ARTICLE V OFFICERS 5.1 OFFICERS The officers of the corporation shall be chairman of the board or a president or both, a secretary, and a chief financial officer. The corporation may also have, at the discretion of the Board of Directors, one or more vice presidents, one or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of Section 5.2 of these bylaws. Any number of offices may be held by the same person. 5.2 ELECTION OF OFFICERS Except as otherwise provided in this Section 5.2 or as authorized by resolution of the Board of Directors, the officers of the corporation shall be chosen annually by the Board of Directors, and each shall hold his office until he shall resign or shall be removed or otherwise disqualified to serve, or his successor shall be elected and qualified. The Board of Directors may appoint such officers and agents of the business as the Board of Directors determines to be appropriate, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board of Directors may from time to time determine. Any vacancy occurring in any office of the corporation shall be filled in the manner prescribed in these Bylaws for regular appointments to such office. -13- 5.3 REMOVAL AND RESIGNATION OF OFFICERS Any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board of Directors at any regular or special meeting of the Board or, except in the case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors or, in the case of an officer appointed by the President, by the President. Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. 5.4 CHAIRMAN OF THE BOARD The Chairman of the Board, if such an officer be elected, shall, if present, preside at meetings of the Board of Directors and exercise and perform such other powers and duties as may from time to time be assigned to him by the Board of Directors or as may be prescribed by these bylaws. 5.5 PRESIDENT Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an officer, the President, unless otherwise determined by the Board of Directors, shall be the chief executive officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction, and control of the business and the officers of the corporation. He shall preside at all meetings of the stockholders and, in the absence or nonexistence of a chairman of the board, at all meetings of the Board of Directors. He shall have the general powers and duties of management usually vested in the office of president of a corporation and shall have such other powers and duties as may be prescribed by the Board of Directors or these bylaws. 5.6 VICE PRESIDENTS In the absence or disability of the President, the Vice Presidents, if any, in order of their rank as fixed by the Board of Directors or, if not ranked, a Vice President designated by the Board of Directors, shall perform all the duties of the President and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors, these bylaws, the President or the Chairman of the Board. 5.7 SECRETARY The Secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the Board of Directors may direct, a book of minutes of all meetings and actions of directors, committees of directors, and stockholders. The minutes shall -14- show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors' meetings or committee meetings, the number of shares present or represented at stockholders' meetings, and the proceedings thereof. The Secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation's transfer agent or registrar, as determined by resolution of the Board of Directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors required to be given by law or by these bylaws. He shall keep the seal of the corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by these bylaws. 5.8 CHIEF FINANCIAL OFFICER The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained in accordance with generally accepted accounting principles, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares. The books of account shall at all reasonable times be open to inspection by any director. The Chief Financial Officer shall deposit all monies and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board of Directors, shall render to the President and directors, whenever they request it, an account of all of his transactions as Chief Financial Officer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or these bylaws. ARTICLE VI INDEMNITY 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS The corporation shall, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware, indemnify each of its directors and officers against expenses (including attorneys' fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.1, a "director" or "officer" of the corporation includes any person (i) who is or was a director or officer of the corporation, (ii) who is -15- or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, including, without limitation, any direct or indirect subsidiary of the corporation, or (iii) who was a director or officer of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation. 6.2 INDEMNIFICATION OF OTHERS The corporation shall have the power, to the extent and in the manner permitted by the General Corporation Law of Delaware, to indemnify each of its employees and agents (other than directors and officers) against expenses (including attorneys' fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.2, an "employee" or "agent" of the corporation (other than a director or officer) includes any person (i) who is or was an employee or agent of the corporation, (ii) who is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including, without limitation, any direct or indirect subsidiary of the corporation, or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation. 6.3 INSURANCE The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of the General Corporation Law of Delaware and this Section 6. 6.4 PAYMENT OF EXPENSES IN ADVANCE Expenses incurred in defending any civil or criminal action or proceeding for which indemnification is required pursuant to Section 6.1, or for which indemnification is permitted pursuant to Section 6.2 following authorization thereof by the Board of Directors, may be paid by the corporation in advance of the final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of the indemnified party to repay such amount if it shall ultimately be determined that the indemnified party is not entitled to be indemnified as authorized in this Section 6. 6.5 INDEMNITY NOT EXCLUSIVE The indemnification provided by this Section 6 shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to -16- action in another capacity while holding such office, to the extent that such additional rights to indemnification are authorized in the certificate of incorporation. 6.6 CONFLICTS No indemnification or advance shall be made under this Section 6, except where such indemnification or advance is mandated by law or the order, judgment or decree of any court of competent jurisdiction, in any circumstance where it appears: (a) That it would be inconsistent with a provision of the certificate of incorporation, these bylaws, a resolution of the stockholders or an agreement in effect at the time of the accrual of the alleged cause of the action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or (b) That it would be inconsistent with any condition expressly imposed by a court in approving a settlement. ARTICLE VII RECORDS AND REPORTS 7.1 MAINTENANCE AND INSPECTION OF RECORDS The corporation shall, either at its principal executive office or at such place or places as designated by the Board of Directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books, and other records. Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation's stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in Delaware or at its principal place of business. 7.2 INSPECTION BY DIRECTORS Any director shall have the right to examine the corporation's stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the -17- corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper. 7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS The Chairman of the Board, the President, any Vice President, the Chief Financial Officer, the Secretary, or any other person authorized by the Board of Directors or the President or a Vice President, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority. 7.4 SUBSIDIARY CORPORATIONS Shares of this corporation owned by a subsidiary shall not be entitled to vote on any matter. A subsidiary for these purposes is defined as a corporation, the shares of which possessing more than 25% of the total combined voting power of all classes of shares entitled to vote, are owned directly or indirectly through one or more subsidiaries. ARTICLE VIII GENERAL MATTERS 8.1 STOCK CERTIFICATES; PARTLY PAID SHARES The shares of a corporation shall be represented by certificates, provided that the Board of Directors of the corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates and, upon request, every holder of uncertificated shares, shall be entitled to have a certificate signed by, or in the name of the corporation by the Chairman of the Board of Directors, or the President or Vice President, and by the Chief Financial Officer or the secretary of such corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. -18- The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon. 8.2 LOST CERTIFICATES Except as provided in this Section 8.2, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and canceled at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares. 8.3 CONSTRUCTION; DEFINITIONS Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the Delaware General Corporation Law shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term "person" includes both a corporation and a natural person. 8.4 DIVIDENDS The directors of the corporation, subject to any restrictions contained in the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock pursuant to the General Corporation Law of Delaware. Dividends may be paid in cash, in property, or in shares of the corporation's capital stock. The directors of the corporation may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. 8.5 FISCAL YEAR The fiscal year of the corporation shall be fixed by resolution of the Board of Directors and may be changed by the Board of Directors. -19- 8.6 SEAL The corporation may adopt a corporate seal, which may be altered at pleasure, and may use the same by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. 8.7 TRANSFER OF STOCK Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction in its books. 8.8 STOCK TRANSFER AGREEMENTS The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the General Corporation Law of Delaware. 8.9 REGISTERED STOCKHOLDERS The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 8.10 EXECUTION OF CONTRACTS The Board of Directors, except as in the Bylaws otherwise provided, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation. Such authority may be general or confined to specific instances. Unless so authorized by the Board of Directors, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or agreement, or to pledge its credit, or to render it liable for any purpose or to any amount, except as provided in Sec. 142 of Delaware General Corporation Law. -20- ARTICLE IX AMENDMENTS The original or other bylaws of the corporation may be adopted, amended or repealed by a majority of the stockholders entitled to vote; provided, however, that the corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal bylaws. Whenever an amendment or new bylaw is adopted, it shall be copied in the book of bylaws with the original bylaws, in the appropriate place. If any bylaw is repealed, the fact of repeal with the date of the meeting at which the repeal was enacted or written assent was filed shall be stated in said book. ARTICLE X DISSOLUTION If it should be deemed advisable in the judgment of the Board of Directors of the corporation that the corporation should be dissolved, the Board, after the adoption of a resolution to that effect by a majority of the whole Board at any meeting called for that purpose, shall cause notice to be mailed to each stockholder entitled to vote thereon of the adoption of the resolution and of a meeting of stockholders to take action upon the resolution. At the meeting a vote shall be taken for and against the proposed dissolution. If a majority of the outstanding stock of the corporation entitled to vote thereon votes for the proposed dissolution, then a certificate stating that the dissolution has been authorized in accordance with the provisions of Section 275 of the General Corporation Law of Delaware and setting forth the names and residences of the directors and officers shall be executed, acknowledged, and filed and shall become effective in accordance with Section 103 of the General Corporation Law of Delaware. Upon such certificate's becoming effective in accordance with Section 103 of the General Corporation Law of Delaware, the corporation shall be dissolved. ARTICLE XI CUSTODIAN 11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES The Court of Chancery, upon application of any stockholder, may appoint one or more persons to be custodians and, if the corporation is insolvent, to be receivers, of and for the corporation when: -21- (i) at any meeting held for the election of directors the stockholders are so divided that they have failed to elect successors to directors whose terms have expired or would have expired upon qualification of their successors; or (ii) the business of the corporation is suffering or is threatened with irreparable injury because the directors are so divided respecting the management of the affairs of the corporation that the required vote for action by the Board of Directors cannot be obtained and the stockholders are unable to terminate this division; or (iii) the corporation has abandoned its business and has failed within a reasonable time to take steps to dissolve, liquidate or distribute its assets. 11.2 DUTIES OF CUSTODIAN The custodian shall have all the powers and title of a receiver appointed under Section 291 of the General Corporation Law of Delaware, but the authority of the custodian shall be to continue the business of the corporation and not to liquidate its affairs and distribute its assets, except when the Court of Chancery otherwise orders and except in cases arising under Sections 226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware. -22- CERTIFICATE OF ADOPTION OF AMENDED AND RESTATED BYLAWS OF SOLECTRON CORPORATION Certificate by Secretary of Adoption by Incorporator The undersigned hereby certifies that he is the duly elected, qualified, and acting Secretary of Solectron Corporation and that the foregoing Amended and Restated Bylaws, comprising twenty-two (22) pages, were adopted as the Bylaws of the corporation on November 17, 2003, by the Board of Directors. IN WITNESS WHEREOF, the undersigned has hereunto set his hand and affixed the corporate seal this 17th day of November 2003. Michael F. Grady, Secretary EX-10.1 4 f95481exv10w1.txt EXHIBIT 10.1 EXHIBIT 10.1 SIXTH AMENDMENT TO CREDIT AGREEMENT This SIXTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered into as of November 21, 2003, among SOLECTRON CORPORATION, a Delaware corporation (the "Borrower"), SOLECTRON CORPORATION, a Delaware corporation (the "Borrower"), GOLDMAN SACHS CREDIT PARTNERS L.P. ("GSCP"), as sole lead arranger, sole book runner and co-syndication agent, JPMORGAN CHASE BANK ("JPMorgan"), as co-syndication agent, THE BANK OF NOVA SCOTIA ("Scotiabank"), as documentation agent, the lenders party hereto (each, a "Lender," and collectively, the "Lenders"), and BANK OF AMERICA, N.A., as Administrative Agent. The Borrower, GSCP, JPMorgan, Scotiabank, the Lenders, and the Administrative Agent entered into a Three-Year Credit Agreement dated as of February 14, 2002, which agreement was amended by an Amendment Agreement dated as of June 18, 2002, a Second Amendment Agreement dated as of August 19, 2002, a Third Amendment Agreement dated as of February 13, 2003, a Fourth Amendment Agreement dated as of July 9, 2003, and a Fifth Amendment and Waiver dated as of August 27, 2003 (as in effect as of the date of this Amendment, the "Credit Agreement"). The Borrower has requested that the Lenders agree to certain amendments to the Credit Agreement, and the Lenders party hereto have agreed to such request, subject to the terms and conditions of this Amendment. In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows: 1. Definitions; References; Interpretation. (a) Unless otherwise specifically defined herein, each term used herein (including in the Recitals hereof) which is defined in the Credit Agreement shall have the meaning assigned to such term in the Credit Agreement. (b) As used herein, "Amendment Documents" means this Amendment, the Consent and Agreement related hereto and the Credit Agreement (as amended by this Amendment). (c) Each reference to "this Agreement," "hereof," "hereunder," "herein" and "hereby" and each other similar reference contained in the Credit Agreement, and each reference to "the Credit Agreement" and each other similar reference in the other Loan Documents, shall from and after the Effective Date refer to the Credit Agreement as amended hereby. (d) The rules of interpretation set forth in Sections 1.02 and 1.05 of the Credit Agreement shall be applicable to this Amendment. 2. Amendments to Credit Agreement. Subject to the terms and conditions hereof, the Credit Agreement is amended as follows, effective as of the Effective Date: (a) The defined term "Applicable Rate" in Section 1.01 of the Credit Agreement shall be 1 amended by replacing the table contained therein with the following table:

APPLICABLE UTILIZATION APPLICABLE APPLICABLE FEE RATE UTILIZATION LIBO RATE (USAGE FEE RATE DEBT RATINGS APPLICABLE AND LETTERS GREATER THAN (USAGE EQUAL PRICING S&P/ FACILITY FEE OF CREDIT 33% BUT LESS TO OR GREATER LEVEL MOODY'S RATE FEE RATE THAN 66%) THAN 66%) - ------- ----------------- ------------- ------------ --------------- -------------- 1 BBB/Baa2 17.5 bps 70.0 bps 12.5 bps 12.5 bps (or higher) 2 BBB-/Baa3 25.0 bps 100.0 bps 25.0 bps 25.0 bps 3 BB+/Ba1 30.0 bps 120.0 bps 25.0 bps 25.0 bps 4 BB/Ba2 40.0 bps 135.0 bps 50.0 bps 50.0 bps 5 BB-/Ba3 62.5 bps 175.0 bps 50.0 bps 100.0 bps 6 B+/B1 75.0 bps 212.5 bps 50.0 bps 100.0 bps (or lower)

(b) The defined term "Borrowing Base Date" in Section 1.01 of the Credit Agreement is amended in its entirety to read as follows: "Borrowing Base Date" means November 24, 2003. (c) Section 6.16 of the Credit Agreement is amended in its entirety to read as follows: 6.16 BORROWING BASE CERTIFICATE. The Borrower shall deliver to the Administrative Agent, on the date of delivery of the first Loan Notice under this Agreement after the occurrence of the Borrowing Base Date, (a) a completed Borrowing Base Certificate and (b) full and complete reports with respect to the Receivables of the Borrower and its U.S. Subsidiaries, including information as to concentration, aging, identity of Receivables Debtors, letters of credit securing Receivables, disputed Receivables and other matters, as the Administrative Agent shall reasonably request. After (i) the Borrowing Base Date, and (ii) the extension of a Revolving Loan hereunder, the Borrower shall deliver to the Administrative Agent, as soon as available but in any event by no later than ten Business Days after the end of each calendar month, a completed Borrowing Base Certificate, together with the related collateral reports described above. Without limiting any other provisions of the Loan Documents, if the Minimum Capital Raise has not been consummated on or before October 31, 2003, the Borrower shall cooperate 2 fully with and permit access by the Agent-Related Persons and their consultants from after that date for purposes of auditing the Receivables in connection with the implementation of the Borrowing Base and pay to Administrative Agent upon demand all reasonable costs and expenses of such audit. (d) Clause (iii) of Section 7.13(b) of the Credit Agreement is amended to read as follows: (iii) an amount equal to (A) 50% of the aggregate increases in Shareholders' Equity of the Borrower and its Subsidiaries after November 30, 2002, by reason of the issuance and sale of Capital Stock of the Borrower (including upon any conversion of debt securities of the Borrower (other than ACES) into such Capital Stock) during any fiscal quarter of the Borrower ending subsequent to November 30, 2002, plus (B) 100% of the aggregate increases in Shareholders' Equity of the Borrower and its Subsidiaries after November 30, 2002, by reason of the conversion of ACES into Capital Stock during any fiscal quarter of the Borrower ending subsequent to November 30, 2002. (e) Clause (i) of Section 7.13(c) of the Credit Agreement shall be amended by replacing the table contained therein with the following table:

FISCAL QUARTER ENDING MINIMUM RATIO - --------------------- ------------- November 30, 2003 1.85 to 1.00 February 29, 2004 2.20 to 1.00 May 31, 2004 2.70 to 1.00 August 31, 2004 3.00 to 1.00 November 30, 2004 3.50 to 1.00

(f) Clause (ii) of Section 7.13(e) of the Credit Agreement is amended in its entirety to read as follows: ... (ii) (1) on or prior to February 11, 2004, the sum of (X) $700,000,000.00, (Y) the aggregate Outstanding Amount of Revolving Loans and L/C Obligations and (Z) the 364-Day Outstanding Amount, and (2) after February 11, 2004, the sum of (X) $500,000,000.00 and (Y) the aggregate Outstanding Amount of Revolving Loans and L/C Obligations. (g) If the Borrower shall have consummated a Minimum Capital Raise on or before January 30, 2004, effective the date upon which the Borrower shall notify the Administrative Agent thereof, references in the Credit Agreement to the Borrowing Base, Borrowing Base Date and related definitions and provisions shall be disregarded and deemed to be deleted from the Credit Agreement. 3 (h) Schedule 3 to the Compliance Certificate attached to the Credit Agreement as Exhibit C, is amended and restated in its entirety to read as set forth in Annex 1 hereto. 3. Representations and Warranties. The Borrower hereby represents and warrants to the Administrative Agent and the Lenders as follows: (a) No Default or Event of Default has occurred and is continuing (or would result from the amendment of the Credit Agreement contemplated hereby). (b) The execution, delivery and performance by the Borrower of the Amendment Documents have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, or notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable. (c) The Amendment Documents constitute the legal, valid and binding obligations of the Borrower, enforceable against it in accordance with their respective terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditor's rights generally and by equitable principles (regardless of whether enforcement is sought in equity or at law). (d) All representations and warranties of the Borrower contained in the Credit Agreement are true and correct in all material respects (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct as of such earlier date and except that this subsection (d) shall be deemed instead to refer to the last day of the most recent quarter and year for which financial statements have then been delivered in respect of the representation and warranty made in Section 5.05 of the Credit Agreement and to take into account any amendments to the Schedules to the Credit Agreement and other disclosures made in writing by the Borrower to the Administrative Agent and the Lenders after the Closing Date and approved by the Administrative Agent and the Required Lenders). (e) There has occurred since August 27, 2003, no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect. (f) The Borrower is entering into this Amendment on the basis of its own investigation and for its own reasons, without reliance upon the Administrative Agent and the Lenders or any other Person. (g) The Borrower's obligations under the Credit Agreement and under the other Loan Documents are not subject to any defense, counterclaim, set-off, right of recoupment, abatement or other claim. 4. Conditions of Effectiveness. (a) The effectiveness of Section 2 of this Amendment shall be subject to the satisfaction of each of the following conditions precedent: 4 (1) The Administrative Agent shall have received from the Borrower and the Required Lenders a duly executed original (or, if elected by the Administrative Agent, an executed facsimile copy) of this Amendment. (2) The Administrative Agent shall have received the consent of the Subsidiaries of the Borrower party to the Pledge Agreement, the Interco Subordination Agreement, the Security Agreement or the Guaranty, in form and substance satisfactory to the Administrative Agent, in their capacities as such, to the execution and delivery hereof by the Borrower. (3) The Administrative Agent shall have received evidence of payment by the Borrower of all fees, costs and expenses due and payable as of the date hereof hereunder and under the Credit Agreement, including any fees arising under or referenced in Section 5 of this Amendment and any costs and expenses payable under Section 6(g) of this Amendment (including the Administrative Agent's Attorney Costs, to the extent invoiced on or prior to the date hereof). (4) The Administrative Agent shall have received from the Borrower, in form and substance satisfactory to the Administrative Agent, copies of the resolutions passed by the board of directors of the Borrower, certified as of the date hereof by the Secretary or an Assistant Secretary of the Borrower, authorizing the execution, delivery and performance of this Amendment, together with such incumbency certificates and/or other certificates of Responsible Officers of the Borrower, as the Administrative Agent may require to establish the identities of and verify the authority and capacity of each Responsible Officer thereof authorized to act as such in connection with this Amendment and each other Loan Document to which the Borrower is a party. (5) The Administrative Agent shall have received all other documents it or the Required Lenders may reasonably request relating to any matters relevant hereto, all in form and substance satisfactory to the Administrative Agent. (6) The Effective Date shall have occurred on or before 5:00 p.m. (Pacific time) November 21, 2003. (b) For purposes of determining compliance with the conditions specified in Section 4(a), each Lender that has executed this Amendment shall be deemed to have consented to, approved or accepted, or to be satisfied with, each document or other matter either sent, or made available for inspection, by the Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to such Lender. (c) From and after the Effective Date, the Credit Agreement is amended as set forth herein. Except as expressly amended pursuant hereto, the Credit Agreement shall remain unchanged and in full force and effect and is hereby ratified and confirmed in all respects. (d) The Administrative Agent will notify the Borrower and the Lenders of the occurrence of the Effective Date. 5 5. Fees. The Borrower shall pay (through the Administrative Agent) to each Lender that executes and delivers this Amendment by no later than 12:00 p.m. (Pacific time) on November 21, 2003, a non-refundable amendment fee equal to 0.05% of such Lender's Revolving Loan Commitment as of the Effective Date. Such amendment fee shall be fully-earned upon becoming due and payable, shall not be refundable for any reason whatsoever and shall be in addition to any fee, cost or expense otherwise payable by the Borrower pursuant to the Credit Agreement or this Amendment. 6. Miscellaneous. (a) The Borrower acknowledges and agrees that the execution and delivery by the Administrative Agent and the Lenders of this Amendment shall not be deemed to create a course of dealing or an obligation to execute similar waivers or amendments under the same or similar circumstances in the future. (b) This Amendment shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns. (c) This Amendment shall be governed by and construed in accordance with the law of the State of New York (including Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York), provided that the Administrative Agent and the Lenders shall retain all rights arising under Federal law. (d) This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Each of the parties hereto understands and agrees that this document (and any other document required herein) may be delivered by any party thereto either in the form of an executed original or an executed original sent by facsimile transmission to be followed promptly by mailing of a hard copy original, and that receipt by the Administrative Agent of a facsimile transmitted document purportedly bearing the signature of a Lender or the Borrower shall bind such Lender or the Borrower, respectively, with the same force and effect as the delivery of a hard copy original. Any failure by the Administrative Agent to receive the hard copy executed original of such document shall not diminish the binding effect of receipt of the facsimile transmitted executed original of such document of the party whose hard copy page was not received by the Administrative Agent. (e) This Amendment and the other Amendment Documents contain the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein. This Amendment supersedes all prior drafts and communications with respect hereto. This Amendment may not be amended except in accordance with the provisions of Section 10.01 of the Credit Agreement. (f) If any term or provision of this Amendment shall be deemed prohibited by or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Amendment, the Credit Agreement or the Loan Documents. 6 (g) The Borrower agrees to pay or reimburse Bank of America (including in its capacities as Collateral Agent and as Administrative Agent), GSCP, JPMorgan and Scotiabank upon demand, for all reasonable costs and expenses (including reasonable Attorney Costs) incurred by Bank of America (including in its capacities as Collateral Agent and as Administrative Agent), GSCP, JPMorgan and Scotiabank in connection with the development, preparation, negotiation, execution and delivery of the Amendment Documents. 7 [Signature pages and Exhibits follow - Not Attached] 8 EX-10.2 5 f95481exv10w2.txt EXHIBIT 10.2 EXHIBIT 10.2 THIRD AMENDMENT TO CREDIT AGREEMENT This THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered into as of November 21, 2003, among SOLECTRON CORPORATION, a Delaware corporation (the "Borrower"), BANC OF AMERICA SECURITIES LLC ("BAS"), as joint lead arranger and joint book runner, GOLDMAN SACHS CREDIT PARTNERS L.P. ("GSCP"), as joint lead arranger, joint book runner and co-syndication agent, JPMORGAN CHASE BANK ("JPMorgan"), as co-syndication agent, THE BANK OF NOVA SCOTIA ("Scotiabank"), as documentation agent, the lenders party hereto (each, a "Lender," and collectively, the "Lenders"), and BANK OF AMERICA, N.A., as Administrative Agent. The Borrower, BAS, GSCP, JPMorgan, Scotiabank, the Lenders, and the Administrative Agent entered into an Amended and Restated 364-Day Credit Agreement dated as of February 13, 2003 which agreement was amended by a First Amendment Agreement dated as of July 9, 2003 and a Second Amendment and Waiver dated as of August 27, 2003 ("Second Amendment," and as in effect as of the date of this Amendment, the "Credit Agreement"). The Borrower has requested that the Lenders agree to certain amendments to the Credit Agreement, and the Lenders party hereto have agreed to such request, subject to the terms and conditions of this Amendment. In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows: 1. Definitions; References; Interpretation. (a) Unless otherwise specifically defined herein, each term used herein (including in the Recitals hereof) which is defined in the Credit Agreement shall have the meaning assigned to such term in the Credit Agreement. (b) As used herein, "Amendment Documents" means this Amendment, the Consent and Agreement related hereto and the Credit Agreement (as amended by this Amendment). (c) Each reference to "this Agreement," "hereof," "hereunder," "herein" and "hereby" and each other similar reference contained in the Credit Agreement, and each reference to "the Credit Agreement" and each other similar reference in the other Loan Documents, shall from and after the Effective Date refer to the Credit Agreement as amended hereby. (d) The rules of interpretation set forth in Sections 1.02 and 1.05 of the Credit Agreement shall be applicable to this Amendment. 2. Amendments to Credit Agreement. Subject to the terms and conditions hereof, the Credit Agreement is amended as follows, effective as of the Effective Date: (a) The defined term "Applicable Rate" in Section 1.01 of the Credit Agreement shall be amended by replacing the table contained therein with the following table: 1

APPLICABLE UTILIZATION APPLICABLE FEE RATE UTILIZATION (USAGE FEE RATE DEBT RATINGS APPLICABLE GREATER THAN (USAGE EQUAL PRICING S&P/ FACILITY FEE APPLICABLE 33% BUT LESS TO OR GREATER LEVEL MOODY'S RATE LIBO RATE THAN 66%) THAN 66%) - ------- ----------------- ------------ --------------- ------------- --------------- 1 BBB/Baa2 12.5 bps 75.0 bps 12.5 bps 12.5 bps (or higher) 2 BBB-/Baa3 20.0 bps 105.0 bps 25.0 bps 25.0 bps 3 BB+/Ba1 25.0 bps 125.0 bps 25.0 bps 25.0 bps 4 BB/Ba2 30.0 bps 145.0 bps 50.0 bps 50.0 bps 5 BB-/Ba3 62.5 bps 175.0 bps 50.0 bps 100.0 bps 6 B+/B1 75.0 bps 212.5 bps 50.0 bps 100.0 bps (or lower)

(b) The defined term "Borrowing Base Date" in Section 1.01 of the Credit Agreement is amended in its entirety to read as follows: "Borrowing Base Date" means November 24, 2003. (c) The defined term "Maturity Date" in Section 1.01 of the Credit Agreement is amended in its entirety to read as follows: "Maturity Date" means February 11, 2004. (d) Section 6.16 of the Credit Agreement is amended in its entirety to read as follows: 6.16 BORROWING BASE CERTIFICATE. The Borrower shall deliver to the Administrative Agent, on the date of delivery of the first Loan Notice under this Agreement after the occurrence of the Borrowing Base Date, (a) a completed Borrowing Base Certificate and (b) full and complete reports with respect to the Receivables of the Borrower and its U.S. Subsidiaries, including information as to concentration, aging, identity of Receivables Debtors, letters of credit securing Receivables, disputed Receivables and other matters, as the Administrative Agent shall reasonably request. After (i) the Borrowing Base Date, and (ii) the extension of a Revolving Loan hereunder, the Borrower shall deliver to the Administrative Agent, as soon as available but in any event by no later than ten Business Days after the end of each calendar month, a completed Borrowing Base Certificate, 2 together with the related collateral reports described above. Without limiting any other provisions of the Loan Documents, if the Minimum Capital Raise has not been consummated on or before October 31, 2003, the Borrower shall cooperate fully with and permit access by the Agent-Related Persons and their consultants from after that date for purposes of auditing the Receivables in connection with the implementation of the Borrowing Base and pay to Administrative Agent upon demand all reasonable costs and expenses of such audit. (e) Clause (iii) of Section 7.13(b) of the Credit Agreement is amended to read as follows: (iii) an amount equal to (A) 50% of the aggregate increases in Shareholders' Equity of the Borrower and its Subsidiaries after November 30, 2002, by reason of the issuance and sale of Capital Stock of the Borrower (including upon any conversion of debt securities of the Borrower (other than ACES) into such Capital Stock) during any fiscal quarter of the Borrower ending subsequent to November 30, 2002, plus (B) 100% of the aggregate increases in Shareholders' Equity of the Borrower and its Subsidiaries after November 30, 2002, by reason of the conversion of ACES into Capital Stock during any fiscal quarter of the Borrower ending subsequent to November 30, 2002. (f) Clause (i) of Section 7.13(c) of the Credit Agreement shall be amended by replacing the table contained therein with the following table:

FISCAL QUARTER ENDING MINIMUM RATIO - --------------------- ------------- November 30, 2003 1.85 to 1.00

(g) Clause (ii) of Section 7.13(e) of the Credit Agreement is amended by replacing "$500,000,000.00" with "$700,000,000.00". (h) References in the Credit Agreement to the Borrowing Base, Borrowing Base Date and related definitions and provisions, which were deemed to be deleted from the Credit Agreement pursuant to the Second Amendment, shall be reinstated in full (except as expressly amended herein); provided, however, that if the Borrower shall have consummated a Minimum Capital Raise on or before January 30, 2004, effective the date upon which the Borrower shall notify the Administrative Agent thereof, references in the Credit Agreement to the Borrowing Base, Borrowing Base Date and related definitions and provisions shall again be disregarded and deemed to be deleted from the Credit Agreement. (i) Schedule 3 to the Compliance Certificate attached to the Credit Agreement as Exhibit C, is amended and restated in its entirety to read as set forth in Annex 1 hereto. 3. Representations and Warranties. The Borrower hereby represents and warrants to the Administrative Agent and the Lenders as follows: 3 (a) No Default or Event of Default has occurred and is continuing (or would result from the amendment of the Credit Agreement contemplated hereby). (b) The execution, delivery and performance by the Borrower of the Amendment Documents have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, or notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable. (c) The Amendment Documents constitute the legal, valid and binding obligations of the Borrower, enforceable against it in accordance with their respective terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditor's rights generally and by equitable principles (regardless of whether enforcement is sought in equity or at law). (d) All representations and warranties of the Borrower contained in the Credit Agreement are true and correct in all material respects (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct as of such earlier date and except that this subsection (d) shall be deemed instead to refer to the last day of the most recent quarter and year for which financial statements have then been delivered in respect of the representation and warranty made in Section 5.05 of the Credit Agreement and to take into account any amendments to the Schedules to the Credit Agreement and other disclosures made in writing by the Borrower to the Administrative Agent and the Lenders after the Closing Date and approved by the Administrative Agent and the Required Lenders). (e) There has occurred since August 27, 2003, no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect. (f) The Borrower is entering into this Amendment on the basis of its own investigation and for its own reasons, without reliance upon the Administrative Agent and the Lenders or any other Person. (g) The Borrower's obligations under the Credit Agreement and under the other Loan Documents are not subject to any defense, counterclaim, set-off, right of recoupment, abatement or other claim. 4. Conditions of Effectiveness. (a) The effectiveness of Section 2 of this Amendment shall be subject to the satisfaction of each of the following conditions precedent: (1) The Administrative Agent shall have received from the Borrower and each Lender a duly executed original (or, if elected by the Administrative Agent, an executed facsimile copy) of this Amendment. (2) The Administrative Agent shall have received the consent of the Subsidiaries of the Borrower party to the Pledge Agreement, the Interco Subordination Agreement, the 4 Security Agreement or the Guaranty, in form and substance satisfactory to the Administrative Agent, in their capacities as such, to the execution and delivery hereof by the Borrower. (3) The Administrative Agent shall have received evidence of payment by the Borrower of all fees, costs and expenses due and payable as of the date hereof hereunder and under the Credit Agreement, including any fees arising under or referenced in Section 5 of this Amendment and any costs and expenses payable under Section 6(g) of this Amendment (including the Administrative Agent's Attorney Costs, to the extent invoiced on or prior to the date hereof). (4) The Administrative Agent shall have received from the Borrower, in form and substance satisfactory to the Administrative Agent, copies of the resolutions passed by the board of directors of the Borrower, certified as of the date hereof by the Secretary or an Assistant Secretary of the Borrower, authorizing the execution, delivery and performance of this Amendment, together with such incumbency certificates and/or other certificates of Responsible Officers of the Borrower, as the Administrative Agent may require to establish the identities of and verify the authority and capacity of each Responsible Officer thereof authorized to act as such in connection with this Amendment and each other Loan Document to which the Borrower is a party. (5) The Administrative Agent shall have received all other documents it or the Required Lenders may reasonably request relating to any matters relevant hereto, all in form and substance satisfactory to the Administrative Agent. (6) The Effective Date shall have occurred on or before 5:00 p.m. (Pacific time) November 21, 2003. (b) For purposes of determining compliance with the conditions specified in Section 4(a), each Lender that has executed this Amendment shall be deemed to have consented to, approved or accepted, or to be satisfied with, each document or other matter either sent, or made available for inspection, by the Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to such Lender. (c) From and after the Effective Date, the Credit Agreement is amended as set forth herein. Except as expressly amended pursuant hereto, the Credit Agreement shall remain unchanged and in full force and effect and is hereby ratified and confirmed in all respects. (d) The Administrative Agent will notify the Borrower and the Lenders of the occurrence of the Effective Date. 5. Fees. The Borrower shall pay (through the Administrative Agent) to each Lender that executes and delivers this Amendment by no later than 12:00 p.m. (Pacific time) on November 21, 2003, a non-refundable amendment fee equal to 0.05% of such Lender's Revolving Loan Commitment as of the Effective Date. Such amendment fee shall be fully-earned upon becoming due and payable, shall not be refundable for any reason whatsoever and shall be in addition to 5 any fee, cost or expense otherwise payable by the Borrower pursuant to the Credit Agreement or this Amendment. 6. Miscellaneous. (a) The Borrower acknowledges and agrees that the execution and delivery by the Administrative Agent and the Lenders of this Amendment shall not be deemed to create a course of dealing or an obligation to execute similar waivers or amendments under the same or similar circumstances in the future. (b) This Amendment shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns. (c) This Amendment shall be governed by and construed in accordance with the law of the State of New York (including Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York), provided that the Administrative Agent and the Lenders shall retain all rights arising under Federal law. (d) This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Each of the parties hereto understands and agrees that this document (and any other document required herein) may be delivered by any party thereto either in the form of an executed original or an executed original sent by facsimile transmission to be followed promptly by mailing of a hard copy original, and that receipt by the Administrative Agent of a facsimile transmitted document purportedly bearing the signature of a Lender or the Borrower shall bind such Lender or the Borrower, respectively, with the same force and effect as the delivery of a hard copy original. Any failure by the Administrative Agent to receive the hard copy executed original of such document shall not diminish the binding effect of receipt of the facsimile transmitted executed original of such document of the party whose hard copy page was not received by the Administrative Agent. (e) This Amendment and the other Amendment Documents contain the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein. This Amendment supersedes all prior drafts and communications with respect hereto. This Amendment may not be amended except in accordance with the provisions of Section 10.01 of the Credit Agreement. (f) If any term or provision of this Amendment shall be deemed prohibited by or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Amendment, the Credit Agreement or the Loan Documents. (g) The Borrower agrees to pay or reimburse Bank of America (including in its capacities as Collateral Agent and as Administrative Agent), GSCP, JPMorgan and Scotiabank upon demand, for all reasonable costs and expenses (including reasonable Attorney Costs) incurred by Bank of America (including in its capacities as Collateral Agent and as Administrative Agent), GSCP, JPMorgan and Scotiabank in connection with the development, preparation, negotiation, execution and delivery of the Amendment Documents. 6 [Signature pages and Exhibits follow - Not Attached] 7 EX-31.1 6 f95481exv31w1.htm EXHIBIT 31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302(a) OF

THE SARBANES–OXLEY ACT OF 2002

I, Michael Cannon, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Solectron Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 12, 2004

/s/ Michael Cannon

Michael Cannon

President and Chief Executive Officer

EX-31.2 7 f95481exv31w2.htm EXHIBIT 31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302(a) OF

THE SARBANES–OXLEY ACT OF 2002

I, Kiran Patel, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Solectron Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 12, 2004

/s/ Kiran Patel

Kiran Patel

Executive Vice President and Chief Financial Officer

EX-32.1 8 f95481exv32w1.htm EXHIBIT 32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Cannon, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Solectron Corporation on Form 10-Q for the three-month period ended November 28, 2003 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Solectron Corporation.

Date: January 12, 2004

/s/ Michael Cannon
Michael Cannon
President and Chief Executive Officer

EX-32.2 9 f95481exv32w2.htm EXHIBIT 32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Kiran Patel, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Solectron Corporation on Form 10-Q for the three-month period ended November 28, 2003 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Solectron Corporation.

Date: January 12, 2004

/s/ Kiran Patel
Kiran Patel
Executive Vice President and Chief Financial Officer

-----END PRIVACY-ENHANCED MESSAGE-----

EX-3.2

                                                                     Exhibit 3.2

                              AMENDED AND RESTATED

                                     BYLAWS

                                       OF

                              SOLECTRON CORPORATION

                        Effective as of November 17, 2003



                                TABLE OF CONTENTS



                                                                                                                        PAGE
                                                                                                                        ----
                                                                                                                     
ARTICLE I CORPORATE OFFICES..........................................................................................     1

         1.1      REGISTERED OFFICE..................................................................................     1
         1.2      OTHER OFFICES......................................................................................     1

ARTICLE II MEETINGS OF STOCKHOLDERS..................................................................................     1

         2.1      PLACE OF MEETINGS..................................................................................     1
         2.2      ANNUAL MEETING.....................................................................................     1
         2.3      SPECIAL MEETINGS...................................................................................     1
         2.4      NOTICE OF STOCKHOLDERS' MEETINGS...................................................................     2
         2.5      ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS....................................     2
         2.6      MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.......................................................     3
         2.7      QUORUM.............................................................................................     4
         2.8      ADJOURNED MEETING; NOTICE..........................................................................     4
         2.9      VOTING.............................................................................................     4
         2.10     WAIVER OF NOTICE...................................................................................     5
         2.11     STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING............................................     5
         2.12     RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS........................................     6
         2.13     PROXIES............................................................................................     6
         2.14     LIST OF STOCKHOLDERS ENTITLED TO VOTE..............................................................     6
         2.15     CONDUCT OF BUSINESS................................................................................     7

ARTICLE III DIRECTORS................................................................................................     7

         3.1      POWERS.............................................................................................     7
         3.2      NUMBER OF DIRECTORS................................................................................     7
         3.3      ELECTION QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.............................................     7
         3.4      RESIGNATION AND VACANCIES..........................................................................     8
         3.5      PLACE OF MEETINGS; MEETINGS BY TELEPHONE...........................................................     9
         3.6      FIRST MEETINGS.....................................................................................     9
         3.7      REGULAR MEETINGS...................................................................................     9
         3.8      SPECIAL MEETINGS; NOTICE...........................................................................     9
         3.9      QUORUM.............................................................................................    10
         3.10     WAIVER OF NOTICE...................................................................................    10
         3.11     ADJOURNED MEETING; NOTICE..........................................................................    10
         3.12     CONDUCT OF BUSINESS................................................................................    10
         3.13     BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING..................................................    11
         3.14     FEES AND COMPENSATION OF DIRECTORS.................................................................    11


                                        i


                                TABLE OF CONTENTS
                                   (CONTINUED)



                                                                                                                        PAGE
                                                                                                                        ----
                                                                                                                     
         3.15     APPROVAL OF LOANS TO EMPLOYEES OTHER THAN EXECUTIVE OFFICERS.......................................    11
         3.16     REMOVAL OF DIRECTORS...............................................................................    11
         3.17     ADVISORY DIRECTORS.................................................................................    12

ARTICLE IV COMMITTEES................................................................................................    12

         4.1      COMMITTEES OF DIRECTORS............................................................................    12
         4.2      COMMITTEE MINUTES..................................................................................    13
         4.3      MEETINGS AND ACTION OF COMMITTEES..................................................................    13

ARTICLE V OFFICERS...................................................................................................    13

         5.1      OFFICERS...........................................................................................    13
         5.2      ELECTION OF OFFICERS...............................................................................    13
         5.3      REMOVAL AND RESIGNATION OF OFFICERS................................................................    14
         5.4      CHAIRMAN OF THE BOARD..............................................................................    14
         5.5      PRESIDENT..........................................................................................    14
         5.6      VICE PRESIDENTS....................................................................................    14
         5.7      SECRETARY..........................................................................................    14
         5.8      CHIEF FINANCIAL OFFICER............................................................................    15

ARTICLE VI INDEMNITY.................................................................................................    15

         6.1      INDEMNIFICATION OF DIRECTORS AND OFFICERS..........................................................    15
         6.2      INDEMNIFICATION OF OTHERS..........................................................................    16
         6.3      INSURANCE..........................................................................................    16
         6.4      PAYMENT OF EXPENSES IN ADVANCE.....................................................................    16
         6.5      INDEMNITY NOT EXCLUSIVE............................................................................    16
         6.6      CONFLICTS..........................................................................................    17

ARTICLE VII RECORDS AND REPORTS......................................................................................    17

         7.1      MAINTENANCE AND INSPECTION OF RECORDS..............................................................    17
         7.2      INSPECTION BY DIRECTORS............................................................................    17
         7.3      REPRESENTATION OF SHARES OF OTHER CORPORATIONS.....................................................    18
         7.4      SUBSIDIARY CORPORATIONS............................................................................    18

ARTICLE VIII GENERAL MATTERS.........................................................................................    18

         8.1      STOCK CERTIFICATES; PARTLY PAID SHARES.............................................................    18
         8.2      LOST CERTIFICATES..................................................................................    19
         8.3      CONSTRUCTION; DEFINITIONS..........................................................................    19
         8.4      DIVIDENDS..........................................................................................    19
         8.5      FISCAL YEAR........................................................................................    19
         8.6      SEAL...............................................................................................    20


                                        ii


                                TABLE OF CONTENTS
                                   (CONTINUED)



                                                                                                                        PAGE
                                                                                                                        ----
                                                                                                                     
         8.7      TRANSFER OF STOCK..................................................................................    20
         8.8      STOCK TRANSFER AGREEMENTS..........................................................................    20
         8.9      REGISTERED STOCKHOLDERS............................................................................    20
         8.10     EXECUTION OF CONTRACTS.............................................................................    20

ARTICLE IX AMENDMENTS................................................................................................    21

ARTICLE X DISSOLUTION................................................................................................    21

ARTICLE XI CUSTODIAN.................................................................................................    21

         11.1     APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES........................................................    21
         11.2     DUTIES OF CUSTODIAN................................................................................    22


                                       iii


                              AMENDED AND RESTATED
                                     BYLAWS
                                       OF
                              SOLECTRON CORPORATION

                                    ARTICLE I

                                CORPORATE OFFICES

1.1      REGISTERED OFFICE

         The registered office of the corporation in the State of Delaware shall
be in the City of Wilmington, County of New Castle, State of Delaware. The name
of the registered agent of the corporation at such location is CT Corporation.

1.2      OTHER OFFICES

         The Board of Directors may at any time establish other offices at any
place or places where the corporation is qualified to do business.

                                   ARTICLE II

                            MEETINGS OF STOCKHOLDERS

2.1      PLACE OF MEETINGS

         Meetings of stockholders shall be held at the principal executive
office of the corporation, within or outside the State of Delaware, unless some
other appropriate and convenient location be designated for that purpose from
time to time by the Board of Directors.

2.2      ANNUAL MEETING

         Annual meetings of the Stockholders shall be held, each year, at the
time and on the day as designated by resolution of the Board of Directors.

         At the annual meeting, the stockholders shall elect a Board of
Directors, consider reports of the affairs of the corporation and transact such
other business as may be properly brought before the meeting.

2.3      SPECIAL MEETINGS

         A special meeting of the stockholders may be called at any time by the
Board of Directors, the Chairman of the Board, the President, the Secretary, or
holders of shares entitled to cast not less



than ten (10) percent of the votes at the meeting. Except as next provided,
notice shall be given as for the annual meeting.

         Upon receipt of a written request addressed to the Chairman, President,
or Secretary, mailed or delivered personally to such officer by any person
(other than the Board) entitled to call a special meeting of stockholders, such
officer shall cause notice to be given, to the stockholders entitled to vote,
that a meeting will be held at a time requested by the person or persons calling
the meeting, not less than twenty five nor more than sixty days after the
receipt of such request.

2.4      NOTICE OF STOCKHOLDERS' MEETINGS

         All notices of meetings with stockholders shall be in writing and shall
be sent or otherwise given in accordance with Section 2.6 of these bylaws not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote at such meeting. The notice shall specify
the place, date, and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called.

         Notice of meetings, annual or special, shall be given in writing not
less than ten (10) nor more than sixty (60) days before the date of the meeting,
to stockholders entitled to vote thereat by the Secretary or an assistant
secretary, or if there be no such officer, or in the case of his neglect or
refusal, by any director or stockholder.

         Such notices or any reports shall be given personally or by mail or
other means of written communication and shall be sent to the stockholder's
address appearing on the books of the corporation, or supplied by him to the
corporation for the purpose of notice.

         Notice of any meeting of stockholders shall specify the place, the day
and the hour of meeting, and (1) in case of a special meeting, the general
nature of the business to be transacted and no other business may be transacted,
or (2) in the case of an annual meeting, those matters which the Board at date
of mailing, intends to present for action by the stockholders. At any meetings
where directors are to be elected, notice shall include the names of the
nominees, if any, intended at date of Notice to be presented by management for
election.

         If a shareholder supplies no address, notice shall be deemed to have
been given to him if mailed to the place where the principal executive office of
the Company, inside or outside the State of Delaware, is situated, or published
at least once in some newspaper of general circulation in the County of said
principal office.

2.5      ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS

         To be properly brought before an annual meeting or special meeting,
nominations for the election of director or other business must be (a) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the Board of Directors, (b) otherwise properly brought before the
meeting by or at the direction of the Board of Directors, or (c) otherwise
properly

                                      -2-


brought before the meeting by a stockholder. For such nominations or other
business to be considered properly brought before the meeting by a stockholder
such stockholder must have given timely notice and in proper form of his intent
to bring such business before such meeting. To be timely, such stockholder's
notice must be delivered to or mailed and received by the Secretary of the
corporation not less than ninety (90) days prior to the meeting; provided,
however, that in the event that less than one-hundred (100) days notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the tenth day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made. To be in
proper form, a stockholder's notice to the secretary shall set forth:

                  (i)      the name and address of the stockholder who intends
         to make the nominations or propose the business and, as the case may
         be, the name and address of the person or persons to be nominated or
         the nature of the business to be proposed;

                  (ii)     a representation that the stockholder is a holder of
         record of stock of the corporation entitled to vote at such meeting
         and, if applicable, intends to appear in person or by proxy at the
         meeting to nominate the person or persons specified in the notice or
         introduce the business specified in the notice;

                  (iii)    if applicable, a description of all arrangements or
         understandings between the stockholder and each nominee and any other
         person or persons (naming such person or persons) pursuant to which the
         nomination or nominations are to be made by the stockholder;

                  (iv)     such other information regarding each nominee or each
         matter of business to be proposed by such stockholder as would be
         required to be included in a proxy statement filed pursuant to the
         proxy rules of the Securities and Exchange Commission had the nominee
         been nominated, or intended to be nominated, or the matter been
         proposed, or intended to be proposed by the Board of Directors; and

                  (v)      if applicable, the consent of each nominee to serve
         as director of the corporation if so elected.

         The chairman of the meeting may refuse to acknowledge the nomination of
any person or the proposal of any business not made in compliance with the
foregoing procedure.

2.6      MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

         Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the Secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.

                                      -3-


2.7      QUORUM

         The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum is not present or represented at any
meeting of the stockholders, then the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present or represented. At such adjourned meeting at
which a quorum is present or represented, any business may be transacted that
might have been transacted at the meeting as originally noticed.

         If a quorum be initially present, the stockholders may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders required initially to constitute a quorum.

         When a quorum is present or represented at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provisions of the statutes or
of the certificate of incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of the question.

2.8      ADJOURNED MEETING; NOTICE

         When a meeting is adjourned to another time or place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than forty-five (45) days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the meeting.

2.9      VOTING

         The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.12 and Section 2.14
of these bylaws, subject to the provisions of Sections 217 and 218 of the
General Corporation Law of Delaware (relating to voting rights of fiduciaries,
pledgers and joint owners of stock and to voting trusts and other voting
agreements).

         Except as may otherwise be provided in the certificate of incorporation
or the last paragraph of this Section 2.9, each stockholder shall be entitled to
one vote for each share of capital stock held by such stockholder.

                                      -4-


         At a stockholders' meeting at which directors are to be elected, or at
elections held under special circumstances, a stockholder shall be entitled to
cumulate votes (i.e., cast for any candidate a number of votes greater than the
number of votes which such stockholder normally is entitled to cast). Each
holder of stock of any class or series who elects to cumulate votes shall be
entitled to as many votes as equals the number of votes which (absent this
provision as to cumulative voting) he would be entitled to cast for the election
of directors with respect to his shares of stock multiplied by the number of
directors to be elected by him, and he may cast all of such votes for a single
director or may distribute them among the number to be voted for, or for any two
or more of them, as he may see fit, so long as the name of the candidate for
director shall have been placed in nomination prior to the voting and the
stockholder, or any other holder of the same class or series of stock, has given
notice at the meeting prior to the voting of the intention to cumulate votes.

2.10     WAIVER OF NOTICE

         Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.

2.11     STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING

         Unless otherwise provided in the certificate of incorporation, any
action required by this chapter to be taken at any annual or special meeting of
stockholders of a corporation, or any action that may be taken at any annual or
special meeting of such stockholders, may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, is signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted.

         Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the General
Corporation Law of Delaware if such action had been voted on by stockholders at
a meeting thereof, then the certificate filed under such section shall state, in
lieu of any statement required by such section concerning any vote of
stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.

                                      -5-


2.12     RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS

         In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof or entitled to express consent or dissent to corporate action in writing
without a meeting (if otherwise permitted by these bylaws and the corporation's
certificate of incorporation), or entitled to receive payment of any dividend or
other distribution or allotment of any rights or entitled to exercise any rights
in respect of any change, conversion or exchange of stock or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall be not more than sixty (60) nor less than ten (10) days before
the date of such meeting, nor more than sixty (60) days prior to any other
action.

         If the Board of Directors does not so fix a record date, the fixing of
such record date shall be governed by the provisions of Section 213 of the
General Corporation Law of Delaware.

         A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.

2.13     PROXIES

         Each stockholder entitled to vote at a meeting of stockholders may
authorize another person or persons to act for him by a written proxy, signed by
the stockholder and filed with the Secretary, but no such proxy shall be voted
or acted upon after three (3) years from its date, unless the proxy provides for
a longer period. A proxy shall be deemed signed if the stockholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the stockholder or the stockholder's
attorney-in-fact. The revocability of a proxy that states on its face that it is
irrevocable shall be governed by the provisions of Section 212(e) of the General
Corporation Law of Delaware.

2.14     LIST OF STOCKHOLDERS ENTITLED TO VOTE

         The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list of stockholders or the books of the
corporation, or to vote in person or by proxy at any meeting of stockholders and
of the number of shares held by each such stockholder.

                                      -6-


2.15     CONDUCT OF BUSINESS

         Meetings of stockholders shall be presided over by the Chairman of the
Board, if any, or in his absence by the President, or in his absence by a Vice
President, or in the absence of the foregoing persons by a chairman designated
by the Board of Directors, or in the absence of such designation by a chairman
chosen at the meeting. The Secretary shall act as secretary of the meeting, but
in his absence the chairman of the meeting may appoint any person to act as
secretary of the meeting. The chairman of any meeting of stockholders shall
determine the order of business and the procedures at the meeting, including
such matters as the regulation of the manner of voting and conduct of business.

                                   ARTICLE III

                                    DIRECTORS

3.1      POWERS

         Subject to the provisions of the General Corporation Law of Delaware
and any limitations in the certificate of incorporation or these bylaws relating
to action required to be approved by the stockholders or by the outstanding
shares, the business and affairs of the corporation shall be managed and all
corporate powers shall be exercised by or under the direction of the Board of
Directors.

         Each director shall exercise such powers and otherwise perform such
duties in good faith, in the manner such director believes to be in the best
interests of the corporation, and with such care, including reasonable inquiry,
using ordinary prudence, as a person in a like position would use under similar
circumstances.

3.2      NUMBER OF DIRECTORS

         The Board of Directors shall consist of nine (9) members. The number of
directors may be changed (subject to the provisions of Section 3.16) by an
amendment to this bylaw, duly adopted by the Board of Directors or by the
stockholders, or by a duly adopted amendment to the certificate of
incorporation.

3.3      ELECTION QUALIFICATION AND TERM OF OFFICE OF DIRECTORS

         Except as provided in Section 3.4 of these bylaws, at each annual
meeting of stockholders, directors of the corporation shall be elected to hold
office until the expiration of the term for which they are elected, and until
their successors have been duly elected and qualified; except that if any such
election shall not be so held, such election shall take place at a stockholders'
meeting called and held in accordance with the Delaware General Corporation Law.
The term of office of a director shall begin immediately after election.

                                      -7-


         Directors need not be stockholders unless so required by the
certificate of incorporation or these bylaws, wherein other qualifications for
directors may be prescribed. Election of directors need not be by written ballot
unless a stockholder demands election by written ballot at the meeting and
before voting begins.

3.4      RESIGNATION AND VACANCIES

         Any director may resign at any time upon written notice to the
corporation. Any vacancy occurring in the Board of Directors because of
resignation or death of a director may be filled by a majority of the remaining
members of the Board of Directors, although such majority is less than a quorum,
or by a sole remaining director, and each director so elected shall hold office
until his successor is elected at the next succeeding annual meeting of
stockholders at which the class to which the directorship belongs is to be
elected or at a special meeting called for that purpose.

         Unless otherwise provided in the certificate of incorporation or these
bylaws:

                  (i)      Vacancies and newly created directorships resulting
         from any increase in the authorized number of directors elected by all
         of the stockholders having the right to vote as a single class may be
         filled by a majority of the directors then in office, although less
         than a quorum, or by a sole remaining director.

                  (ii)     Whenever the holders of any class or classes of stock
         or series thereof are entitled to elect one or more directors by the
         provisions of the certificate of incorporation, vacancies and newly
         created directorships of such class or classes or series may be filled
         by a majority of the directors elected by such class or classes or
         series thereof then in office, or by a sole remaining director so
         elected.

         If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder may apply to the Court of Chancery for a decree summarily
ordering an election as provided in Section 211 of the General Corporation Law
of Delaware.

         If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.

                                      -8-


3.5      PLACE OF MEETINGS; MEETINGS BY TELEPHONE

         The Board of Directors of the corporation may hold meetings, both
regular and special, either within or outside the State of Delaware, at such
place as is designated in the notice of the meeting.

         Unless otherwise restricted by the certificate of incorporation or
these bylaws, members of the Board of Directors, or any committee designated by
the Board of Directors, may participate in a meeting of the Board of Directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.

         Accurate minutes of any meeting of the Board of Directors or any
committee thereof shall be maintained by the Secretary or other office
designated for that purpose.

3.6      FIRST MEETINGS

         The first meeting of each newly elected Board of Directors shall be
held immediately following the adjournment of the annual meetings of the
stockholders.

3.7      REGULAR MEETINGS

         Regular meetings of the Board of Directors may be held without notice
at the corporate offices or such other place, within or without the State of
Delaware, at such time and place as the Board designates.

3.8      SPECIAL MEETINGS; NOTICE

         Special meetings of the Board may be called at any time by the
President or, if he is absent or unable or refuses to act, by any vice president
or the Secretary or by any two directors, or by one director if only one is
provided.

         At least forty-eight (48) hours notice of the time and place of special
meetings shall be delivered personally to the directors or personally
communicated to them by a corporate officer by telephone or telegraph. If the
notice is sent to a director by letter, it shall be addressed to him at his
address as it is shown upon the records of the corporation (or if it is not so
shown on such records or is not readily ascertainable, at the place in which the
meetings of the directors are regularly held). In case such notice is mailed, it
shall be deposited in the United States mail, postage prepaid, in the place in
which the principal executive office of the corporation is located, at least
four (4) days prior to the time of the holding of the meeting. Such mailing,
telegraphing, telephoning or delivery as above provided shall be due, legal and
personal notice to such director.

         When all of the directors are present at any directors' meeting,
however called or noticed, and either (i) sign a written consent thereto on the
records of such meeting, or (ii) if a majority of the directors is present and
if those not present sign a waiver of notice of such meeting or a consent to
holding the meeting or an approval of the minutes thereof, whether prior to or
after the holding of

                                      -9-


such meeting, which said waiver, consent or approval shall be filed with the
Secretary of the corporation or (iii) if a director attends a meeting without
notice, but without protesting, prior thereto or at its commencement, the lack
of notice to him, then the transactions thereof are as valid as if had at a
meeting regularly called and noticed.

3.9      QUORUM

         A majority of the number of directors as fixed by the certificate of
incorporation or bylaws, shall be necessary to constitute a quorum for the
transaction of business, and the action of a majority of the directors present
at any meeting at which there is a quorum, when duly assembled, is valid as a
corporate act; provided that a minority of the directors, in the absence of a
quorum, may adjourn from time to time, but may not transact any business. A
meeting at which a quorum is initially present may continue to transact
business, notwithstanding the withdrawal of directors, if any action taken is
approved by a majority of the required quorum for such meeting.

3.10     WAIVER OF NOTICE

         Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the certificate of
incorporation or these bylaws.

3.11     ADJOURNED MEETING; NOTICE

         Notice of the time and place of holding an adjourned meeting need not
be given to absent directors if the time and place be fixed at the meeting
adjourned and held within twenty-four (24) hours, but if adjourned more than
twenty-four (24) hours, notice shall be given to all directors not present at
the time of the adjournment.

3.12     CONDUCT OF BUSINESS

         Meetings of the Board of Directors shall be presided over by the
Chairman of the Board, if any, or in his absence by the President, or in their
absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting. The chairman of any
meeting shall determine the order of business and the procedures at the meeting.

                                      -10-


3.13     BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

         Unless otherwise restricted by the certificate of incorporation or
these bylaws, any action required or permitted to be taken at any meeting of the
Board of Directors, or of any committee thereof, may be taken without a meeting
if all members of the Board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the Board or committee.

3.14     FEES AND COMPENSATION OF DIRECTORS

         Unless otherwise restricted by the certificate of incorporation or
these bylaws, the Board of Directors shall have the authority to fix the
compensation of directors.

3.15     APPROVAL OF LOANS TO EMPLOYEES OTHER THAN EXECUTIVE OFFICERS

         The corporation shall not, directly or indirectly, loan or arrange for
the loan of money, or otherwise be involved in any new extension of credit, or
any renewal of any pre-existing loan or extension of credit, to any Director or
Executive Officer of the corporation or any of its subsidiaries. The corporation
may lend money to, or guarantee any obligation of, or otherwise assist any other
employee of the corporation or of its subsidiaries whenever, in the judgment of
the directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the Board of
Directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section shall be deemed to deny, limit
or restrict the powers of guaranty or warranty of the corporation at common law
or under any statute. In addition, nothing in the foregoing shall be construed
as nullifying any pre-existing loan or credit arrangements which may have been
entered into with any Director or Executive Officer prior to the July 30, 2002
enactment of Section 402 of the Sarbanes-Oxley Act of 2002, but no such
pre-existing arrangements shall be renewed, nor material modifications made to
any term thereof.

3.16     REMOVAL OF DIRECTORS

         Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire Board of Directors
may be removed with or without cause by the holders of a majority of the shares
then entitled to vote at an election of directors; provided, however, that, so
long as stockholders of the corporation are entitled to cumulative voting, no
individual director may be removed without cause (unless the entire board is
removed) if the number of votes cast against such removal would be sufficient to
elect the director if then cumulatively voted at an election of the class of
directors of which the director is a part. Whenever the holders of any class or
series are entitled to elect one or more directors by the certificate of
incorporation, such director or directors may be removed without cause only if
there are sufficient votes by the holders of the outstanding shares of that
class or series. A vacancy created by the removal of a director may be filled
only by the approval of the stockholders.

                                      -11-


         No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of such director's term
of office.

3.17     ADVISORY DIRECTORS

         The Board of Directors from time to time may elect one or more persons
to be Advisory Directors who shall not by such appointment be members of the
Board of Directors. Advisory Directors shall be available from time to time to
perform special assignments specified by the President, to attend meetings of
the Board of Directors upon invitation and to furnish consultation to the Board.
The period during which the title shall be held may be prescribed by the Board
of Directors. If no period is prescribed, the title shall be held at the
pleasure of the Board.

                                   ARTICLE IV

                                   COMMITTEES

4.1      COMMITTEES OF DIRECTORS

         The Board of Directors may, by resolution passed by a majority of the
whole Board, designate one or more committees, with each committee to consist of
one or more of the directors of the corporation. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board of Directors or in the bylaws of the corporation, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers that may require it; but no
such committee shall have the power or authority to (i) amend the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the Board of Directors as provided in Section 151(a) of the General
Corporation Law of Delaware, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, (iv)
recommend to the stockholders a dissolution of the corporation or a revocation
of a dissolution, or (v) amend the bylaws of the corporation; and, unless the
board resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware.

                                      -12-


4.2      COMMITTEE MINUTES

         Each committee shall keep regular minutes of its meetings and report
the same to the Board of Directors when required.

4.3      MEETINGS AND ACTION OF COMMITTEES

         Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings and meetings by telephone), Section 3.7 (regular
meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum),
Section 3.10 (waiver of notice), Section 3.11 (adjournment and notice of
adjournment), Section 3.12 (conduct of business) and Section 3.13 (action
without a meeting), with such changes in the context of those bylaws as are
necessary to substitute the committee and its members for the Board of Directors
and its members; provided, however, that the time of regular meetings of
committees may also be called by resolution of the Board of Directors and that
notice of special meetings of committees shall also be given to all alternate
members, who shall have the right to attend all meetings of the committee. The
Board of Directors may adopt rules for the government of any committee not
inconsistent with the provisions of these bylaws.

                                    ARTICLE V

                                    OFFICERS

5.1      OFFICERS

         The officers of the corporation shall be chairman of the board or a
president or both, a secretary, and a chief financial officer. The corporation
may also have, at the discretion of the Board of Directors, one or more vice
presidents, one or more assistant secretaries, and any such other officers as
may be appointed in accordance with the provisions of Section 5.2 of these
bylaws. Any number of offices may be held by the same person.

5.2      ELECTION OF OFFICERS

         Except as otherwise provided in this Section 5.2 or as authorized by
resolution of the Board of Directors, the officers of the corporation shall be
chosen annually by the Board of Directors, and each shall hold his office until
he shall resign or shall be removed or otherwise disqualified to serve, or his
successor shall be elected and qualified.

         The Board of Directors may appoint such officers and agents of the
business as the Board of Directors determines to be appropriate, each of whom
shall hold office for such period, have such authority, and perform such duties
as are provided in these bylaws or as the Board of Directors may from time to
time determine. Any vacancy occurring in any office of the corporation shall be
filled in the manner prescribed in these Bylaws for regular appointments to such
office.

                                      -13-


5.3      REMOVAL AND RESIGNATION OF OFFICERS

         Any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the Board of Directors at any regular or
special meeting of the Board or, except in the case of an officer chosen by the
Board of Directors, by any officer upon whom such power of removal may be
conferred by the Board of Directors or, in the case of an officer appointed by
the President, by the President.

         Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective.

5.4      CHAIRMAN OF THE BOARD

         The Chairman of the Board, if such an officer be elected, shall, if
present, preside at meetings of the Board of Directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
Board of Directors or as may be prescribed by these bylaws.

5.5      PRESIDENT

         Subject to such supervisory powers, if any, as may be given by the
Board of Directors to the Chairman of the Board, if there be such an officer,
the President, unless otherwise determined by the Board of Directors, shall be
the chief executive officer of the corporation and shall, subject to the control
of the Board of Directors, have general supervision, direction, and control of
the business and the officers of the corporation. He shall preside at all
meetings of the stockholders and, in the absence or nonexistence of a chairman
of the board, at all meetings of the Board of Directors. He shall have the
general powers and duties of management usually vested in the office of
president of a corporation and shall have such other powers and duties as may be
prescribed by the Board of Directors or these bylaws.

5.6      VICE PRESIDENTS

         In the absence or disability of the President, the Vice Presidents, if
any, in order of their rank as fixed by the Board of Directors or, if not
ranked, a Vice President designated by the Board of Directors, shall perform all
the duties of the President and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the President. The Vice Presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the Board of Directors, these bylaws,
the President or the Chairman of the Board.

5.7      SECRETARY

         The Secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the Board of
Directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and stockholders. The minutes shall

                                      -14-


show the time and place of each meeting, whether regular or special (and, if
special, how authorized and the notice given), the names of those present at
directors' meetings or committee meetings, the number of shares present or
represented at stockholders' meetings, and the proceedings thereof.

         The Secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the Board of
Directors, a share register, or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.

         The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the Board of Directors required to be given by law or
by these bylaws. He shall keep the seal of the corporation, if one be adopted,
in safe custody and shall have such other powers and perform such other duties
as may be prescribed by the Board of Directors or by these bylaws.

5.8      CHIEF FINANCIAL OFFICER

         The Chief Financial Officer shall keep and maintain, or cause to be
kept and maintained in accordance with generally accepted accounting principles,
adequate and correct books and records of accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings
and shares. The books of account shall at all reasonable times be open to
inspection by any director.

         The Chief Financial Officer shall deposit all monies and other
valuables in the name and to the credit of the corporation with such
depositaries as may be designated by the Board of Directors. He shall disburse
the funds of the corporation as may be ordered by the Board of Directors, shall
render to the President and directors, whenever they request it, an account of
all of his transactions as Chief Financial Officer and of the financial
condition of the corporation, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or these bylaws.

                                   ARTICLE VI

                                    INDEMNITY

6.1      INDEMNIFICATION OF DIRECTORS AND OFFICERS

         The corporation shall, to the maximum extent and in the manner
permitted by the General Corporation Law of Delaware, indemnify each of its
directors and officers against expenses (including attorneys' fees), judgments,
fines, settlements, and other amounts actually and reasonably incurred in
connection with any proceeding, arising by reason of the fact that such person
is or was an agent of the corporation. For purposes of this Section 6.1, a
"director" or "officer" of the corporation includes any person (i) who is or was
a director or officer of the corporation, (ii) who is

                                      -15-


or was serving at the request of the corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise,
including, without limitation, any direct or indirect subsidiary of the
corporation, or (iii) who was a director or officer of a corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.

6.2      INDEMNIFICATION OF OTHERS

         The corporation shall have the power, to the extent and in the manner
permitted by the General Corporation Law of Delaware, to indemnify each of its
employees and agents (other than directors and officers) against expenses
(including attorneys' fees), judgments, fines, settlements, and other amounts
actually and reasonably incurred in connection with any proceeding, arising by
reason of the fact that such person is or was an agent of the corporation. For
purposes of this Section 6.2, an "employee" or "agent" of the corporation (other
than a director or officer) includes any person (i) who is or was an employee or
agent of the corporation, (ii) who is or was serving at the request of the
corporation as an employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, including, without limitation, any direct or
indirect subsidiary of the corporation, or (iii) who was an employee or agent of
a corporation which was a predecessor corporation of the corporation or of
another enterprise at the request of such predecessor corporation.

6.3      INSURANCE

         The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of the General Corporation Law of Delaware and this Section 6.

6.4      PAYMENT OF EXPENSES IN ADVANCE

         Expenses incurred in defending any civil or criminal action or
proceeding for which indemnification is required pursuant to Section 6.1, or for
which indemnification is permitted pursuant to Section 6.2 following
authorization thereof by the Board of Directors, may be paid by the corporation
in advance of the final disposition of such action or proceeding upon receipt of
an undertaking by or on behalf of the indemnified party to repay such amount if
it shall ultimately be determined that the indemnified party is not entitled to
be indemnified as authorized in this Section 6.

6.5      INDEMNITY NOT EXCLUSIVE

         The indemnification provided by this Section 6 shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in an official capacity and as to

                                      -16-


action in another capacity while holding such office, to the extent that such
additional rights to indemnification are authorized in the certificate of
incorporation.

6.6      CONFLICTS

         No indemnification or advance shall be made under this Section 6,
except where such indemnification or advance is mandated by law or the order,
judgment or decree of any court of competent jurisdiction, in any circumstance
where it appears:

         (a)      That it would be inconsistent with a provision of the
certificate of incorporation, these bylaws, a resolution of the stockholders or
an agreement in effect at the time of the accrual of the alleged cause of the
action asserted in the proceeding in which the expenses were incurred or other
amounts were paid, which prohibits or otherwise limits indemnification; or

         (b)      That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.

                                   ARTICLE VII

                               RECORDS AND REPORTS

7.1      MAINTENANCE AND INSPECTION OF RECORDS

         The corporation shall, either at its principal executive office or at
such place or places as designated by the Board of Directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books, and other records.

         Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.

7.2      INSPECTION BY DIRECTORS

         Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the

                                      -17-


corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.

7.3      REPRESENTATION OF SHARES OF OTHER CORPORATIONS

         The Chairman of the Board, the President, any Vice President, the Chief
Financial Officer, the Secretary, or any other person authorized by the Board of
Directors or the President or a Vice President, is authorized to vote,
represent, and exercise on behalf of this corporation all rights incident to any
and all shares of any other corporation or corporations standing in the name of
this corporation. The authority granted herein may be exercised either by such
person directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.

7.4      SUBSIDIARY CORPORATIONS

         Shares of this corporation owned by a subsidiary shall not be entitled
to vote on any matter. A subsidiary for these purposes is defined as a
corporation, the shares of which possessing more than 25% of the total combined
voting power of all classes of shares entitled to vote, are owned directly or
indirectly through one or more subsidiaries.

                                  ARTICLE VIII

                                 GENERAL MATTERS

8.1      STOCK CERTIFICATES; PARTLY PAID SHARES

         The shares of a corporation shall be represented by certificates,
provided that the Board of Directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the Board of
Directors, every holder of stock represented by certificates and, upon request,
every holder of uncertificated shares, shall be entitled to have a certificate
signed by, or in the name of the corporation by the Chairman of the Board of
Directors, or the President or Vice President, and by the Chief Financial
Officer or the secretary of such corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate has
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of issue.

                                      -18-


         The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, or upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.

8.2      LOST CERTIFICATES

         Except as provided in this Section 8.2, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.

8.3      CONSTRUCTION; DEFINITIONS

         Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.

8.4      DIVIDENDS

         The directors of the corporation, subject to any restrictions contained
in the certificate of incorporation, may declare and pay dividends upon the
shares of its capital stock pursuant to the General Corporation Law of Delaware.
Dividends may be paid in cash, in property, or in shares of the corporation's
capital stock.

         The directors of the corporation may set apart out of any of the funds
of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve.

8.5      FISCAL YEAR

         The fiscal year of the corporation shall be fixed by resolution of the
Board of Directors and may be changed by the Board of Directors.

                                      -19-


8.6      SEAL

         The corporation may adopt a corporate seal, which may be altered at
pleasure, and may use the same by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced.

8.7      TRANSFER OF STOCK

         Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.

8.8      STOCK TRANSFER AGREEMENTS

         The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Delaware.

8.9      REGISTERED STOCKHOLDERS

         The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.

8.10     EXECUTION OF CONTRACTS

         The Board of Directors, except as in the Bylaws otherwise provided, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the corporation. Such
authority may be general or confined to specific instances. Unless so authorized
by the Board of Directors, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or agreement, or to pledge its
credit, or to render it liable for any purpose or to any amount, except as
provided in Sec. 142 of Delaware General Corporation Law.

                                      -20-


                                   ARTICLE IX

                                   AMENDMENTS

         The original or other bylaws of the corporation may be adopted, amended
or repealed by a majority of the stockholders entitled to vote; provided,
however, that the corporation may, in its certificate of incorporation, confer
the power to adopt, amend or repeal bylaws upon the directors. The fact that
such power has been so conferred upon the directors shall not divest the
stockholders of the power, nor limit their power to adopt, amend or repeal
bylaws.

         Whenever an amendment or new bylaw is adopted, it shall be copied in
the book of bylaws with the original bylaws, in the appropriate place. If any
bylaw is repealed, the fact of repeal with the date of the meeting at which the
repeal was enacted or written assent was filed shall be stated in said book.

                                    ARTICLE X

                                   DISSOLUTION

         If it should be deemed advisable in the judgment of the Board of
Directors of the corporation that the corporation should be dissolved, the
Board, after the adoption of a resolution to that effect by a majority of the
whole Board at any meeting called for that purpose, shall cause notice to be
mailed to each stockholder entitled to vote thereon of the adoption of the
resolution and of a meeting of stockholders to take action upon the resolution.

         At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the corporation entitled
to vote thereon votes for the proposed dissolution, then a certificate stating
that the dissolution has been authorized in accordance with the provisions of
Section 275 of the General Corporation Law of Delaware and setting forth the
names and residences of the directors and officers shall be executed,
acknowledged, and filed and shall become effective in accordance with Section
103 of the General Corporation Law of Delaware. Upon such certificate's becoming
effective in accordance with Section 103 of the General Corporation Law of
Delaware, the corporation shall be dissolved.

                                   ARTICLE XI

                                    CUSTODIAN

11.1     APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES

         The Court of Chancery, upon application of any stockholder, may appoint
one or more persons to be custodians and, if the corporation is insolvent, to be
receivers, of and for the corporation when:

                                      -21-


                  (i)      at any meeting held for the election of directors the
         stockholders are so divided that they have failed to elect successors
         to directors whose terms have expired or would have expired upon
         qualification of their successors; or

                  (ii)     the business of the corporation is suffering or is
         threatened with irreparable injury because the directors are so divided
         respecting the management of the affairs of the corporation that the
         required vote for action by the Board of Directors cannot be obtained
         and the stockholders are unable to terminate this division; or

                  (iii)    the corporation has abandoned its business and has
         failed within a reasonable time to take steps to dissolve, liquidate or
         distribute its assets.

11.2     DUTIES OF CUSTODIAN

         The custodian shall have all the powers and title of a receiver
appointed under Section 291 of the General Corporation Law of Delaware, but the
authority of the custodian shall be to continue the business of the corporation
and not to liquidate its affairs and distribute its assets, except when the
Court of Chancery otherwise orders and except in cases arising under Sections
226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware.

                                      -22-


                             CERTIFICATE OF ADOPTION

                                       OF

                         AMENDED AND RESTATED BYLAWS OF
                              SOLECTRON CORPORATION

              Certificate by Secretary of Adoption by Incorporator

         The undersigned hereby certifies that he is the duly elected,
qualified, and acting Secretary of Solectron Corporation and that the foregoing
Amended and Restated Bylaws, comprising twenty-two (22) pages, were adopted as
the Bylaws of the corporation on November 17, 2003, by the Board of Directors.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand and
affixed the corporate seal this 17th day of November 2003.

                                         Michael F. Grady, Secretary

EX-10.1

                                                                    EXHIBIT 10.1

                       SIXTH AMENDMENT TO CREDIT AGREEMENT

                  This SIXTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is
entered into as of November 21, 2003, among SOLECTRON CORPORATION, a Delaware
corporation (the "Borrower"), SOLECTRON CORPORATION, a Delaware corporation (the
"Borrower"), GOLDMAN SACHS CREDIT PARTNERS L.P. ("GSCP"), as sole lead arranger,
sole book runner and co-syndication agent, JPMORGAN CHASE BANK ("JPMorgan"), as
co-syndication agent, THE BANK OF NOVA SCOTIA ("Scotiabank"), as documentation
agent, the lenders party hereto (each, a "Lender," and collectively, the
"Lenders"), and BANK OF AMERICA, N.A., as Administrative Agent.

                  The Borrower, GSCP, JPMorgan, Scotiabank, the Lenders, and the
Administrative Agent entered into a Three-Year Credit Agreement dated as of
February 14, 2002, which agreement was amended by an Amendment Agreement dated
as of June 18, 2002, a Second Amendment Agreement dated as of August 19, 2002, a
Third Amendment Agreement dated as of February 13, 2003, a Fourth Amendment
Agreement dated as of July 9, 2003, and a Fifth Amendment and Waiver dated as of
August 27, 2003 (as in effect as of the date of this Amendment, the "Credit
Agreement").

                  The Borrower has requested that the Lenders agree to certain
amendments to the Credit Agreement, and the Lenders party hereto have agreed to
such request, subject to the terms and conditions of this Amendment.

                  In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:

1.       Definitions; References; Interpretation.

         (a) Unless otherwise specifically defined herein, each term used herein
(including in the Recitals hereof) which is defined in the Credit Agreement
shall have the meaning assigned to such term in the Credit Agreement.

         (b) As used herein, "Amendment Documents" means this Amendment, the
Consent and Agreement related hereto and the Credit Agreement (as amended by
this Amendment).

         (c) Each reference to "this Agreement," "hereof," "hereunder," "herein"
and "hereby" and each other similar reference contained in the Credit Agreement,
and each reference to "the Credit Agreement" and each other similar reference in
the other Loan Documents, shall from and after the Effective Date refer to the
Credit Agreement as amended hereby.

         (d) The rules of interpretation set forth in Sections 1.02 and 1.05 of
the Credit Agreement shall be applicable to this Amendment.

2.       Amendments to Credit Agreement. Subject to the terms and conditions
hereof, the Credit Agreement is amended as follows, effective as of the
Effective Date:

         (a) The defined term "Applicable Rate" in Section 1.01 of the Credit
Agreement shall be

                                       1


amended by replacing the table contained therein with the following table:



                                                                        APPLICABLE
                                                                       UTILIZATION          APPLICABLE
                                                     APPLICABLE          FEE RATE          UTILIZATION
                                                      LIBO RATE           (USAGE             FEE RATE
               DEBT RATINGS         APPLICABLE       AND LETTERS       GREATER THAN        (USAGE EQUAL
PRICING            S&P/            FACILITY FEE       OF CREDIT        33% BUT LESS        TO OR GREATER
 LEVEL           MOODY'S              RATE            FEE RATE          THAN 66%)           THAN 66%)
- -------     -----------------     -------------     ------------      ---------------     --------------
                                                                           

   1             BBB/Baa2           17.5 bps           70.0 bps          12.5 bps            12.5 bps
               (or higher)

   2            BBB-/Baa3           25.0 bps          100.0 bps          25.0 bps            25.0 bps

   3             BB+/Ba1            30.0 bps          120.0 bps          25.0 bps            25.0 bps

   4              BB/Ba2            40.0 bps          135.0 bps          50.0 bps            50.0 bps

   5             BB-/Ba3            62.5 bps          175.0 bps          50.0 bps           100.0 bps

   6              B+/B1             75.0 bps          212.5 bps          50.0 bps           100.0 bps
               (or lower)


         (b) The defined term "Borrowing Base Date" in Section 1.01 of the
Credit Agreement is amended in its entirety to read as follows:

                  "Borrowing Base Date" means November 24, 2003.

         (c) Section 6.16 of the Credit Agreement is amended in its entirety to
read as follows:

                           6.16 BORROWING BASE CERTIFICATE. The Borrower shall
                  deliver to the Administrative Agent, on the date of delivery
                  of the first Loan Notice under this Agreement after the
                  occurrence of the Borrowing Base Date, (a) a completed
                  Borrowing Base Certificate and (b) full and complete reports
                  with respect to the Receivables of the Borrower and its U.S.
                  Subsidiaries, including information as to concentration,
                  aging, identity of Receivables Debtors, letters of credit
                  securing Receivables, disputed Receivables and other matters,
                  as the Administrative Agent shall reasonably request. After
                  (i) the Borrowing Base Date, and (ii) the extension of a
                  Revolving Loan hereunder, the Borrower shall deliver to the
                  Administrative Agent, as soon as available but in any event by
                  no later than ten Business Days after the end of each calendar
                  month, a completed Borrowing Base Certificate, together with
                  the related collateral reports described above. Without
                  limiting any other provisions of the Loan Documents, if the
                  Minimum Capital Raise has not been consummated on or before
                  October 31, 2003, the Borrower shall cooperate

                                       2


                  fully with and permit access by the Agent-Related Persons and
                  their consultants from after that date for purposes of
                  auditing the Receivables in connection with the implementation
                  of the Borrowing Base and pay to Administrative Agent upon
                  demand all reasonable costs and expenses of such audit.

         (d) Clause (iii) of Section 7.13(b) of the Credit Agreement is amended
to read as follows:

                  (iii) an amount equal to (A) 50% of the aggregate increases in
         Shareholders' Equity of the Borrower and its Subsidiaries after
         November 30, 2002, by reason of the issuance and sale of Capital Stock
         of the Borrower (including upon any conversion of debt securities of
         the Borrower (other than ACES) into such Capital Stock) during any
         fiscal quarter of the Borrower ending subsequent to November 30, 2002,
         plus (B) 100% of the aggregate increases in Shareholders' Equity of the
         Borrower and its Subsidiaries after November 30, 2002, by reason of the
         conversion of ACES into Capital Stock during any fiscal quarter of the
         Borrower ending subsequent to November 30, 2002.

         (e) Clause (i) of Section 7.13(c) of the Credit Agreement shall be
amended by replacing the table contained therein with the following table:



FISCAL QUARTER ENDING                 MINIMUM RATIO
- ---------------------                 -------------
                                   
November 30, 2003                      1.85 to 1.00

February 29, 2004                      2.20 to 1.00

May 31, 2004                           2.70 to 1.00

August 31, 2004                        3.00 to 1.00

November 30, 2004                      3.50 to 1.00


         (f) Clause (ii) of Section 7.13(e) of the Credit Agreement is amended
in its entirety to read as follows:

         ... (ii) (1) on or prior to February 11, 2004, the sum of (X)
         $700,000,000.00, (Y) the aggregate Outstanding Amount of Revolving
         Loans and L/C Obligations and (Z) the 364-Day Outstanding Amount, and
         (2) after February 11, 2004, the sum of (X) $500,000,000.00 and (Y) the
         aggregate Outstanding Amount of Revolving Loans and L/C Obligations.

         (g) If the Borrower shall have consummated a Minimum Capital Raise on
or before January 30, 2004, effective the date upon which the Borrower shall
notify the Administrative Agent thereof, references in the Credit Agreement to
the Borrowing Base, Borrowing Base Date and related definitions and provisions
shall be disregarded and deemed to be deleted from the Credit Agreement.

                                       3


         (h) Schedule 3 to the Compliance Certificate attached to the Credit
Agreement as Exhibit C, is amended and restated in its entirety to read as set
forth in Annex 1 hereto.

3.       Representations and Warranties. The Borrower hereby represents and
warrants to the Administrative Agent and the Lenders as follows:

         (a) No Default or Event of Default has occurred and is continuing (or
would result from the amendment of the Credit Agreement contemplated hereby).

         (b) The execution, delivery and performance by the Borrower of the
Amendment Documents have been duly authorized by all necessary corporate and
other action and do not and will not require any registration with, consent or
approval of, or notice to or action by, any Person (including any Governmental
Authority) in order to be effective and enforceable.

         (c) The Amendment Documents constitute the legal, valid and binding
obligations of the Borrower, enforceable against it in accordance with their
respective terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting creditor's rights generally and by equitable principles
(regardless of whether enforcement is sought in equity or at law).

         (d) All representations and warranties of the Borrower contained in the
Credit Agreement are true and correct in all material respects (except to the
extent such representations and warranties expressly refer to an earlier date,
in which case they shall be true and correct as of such earlier date and except
that this subsection (d) shall be deemed instead to refer to the last day of the
most recent quarter and year for which financial statements have then been
delivered in respect of the representation and warranty made in Section 5.05 of
the Credit Agreement and to take into account any amendments to the Schedules to
the Credit Agreement and other disclosures made in writing by the Borrower to
the Administrative Agent and the Lenders after the Closing Date and approved by
the Administrative Agent and the Required Lenders).

         (e) There has occurred since August 27, 2003, no event or circumstance
that has resulted or could reasonably be expected to result in a Material
Adverse Effect.

         (f) The Borrower is entering into this Amendment on the basis of its
own investigation and for its own reasons, without reliance upon the
Administrative Agent and the Lenders or any other Person.

         (g) The Borrower's obligations under the Credit Agreement and under the
other Loan Documents are not subject to any defense, counterclaim, set-off,
right of recoupment, abatement or other claim.

4.       Conditions of Effectiveness.

         (a) The effectiveness of Section 2 of this Amendment shall be subject
to the satisfaction of each of the following conditions precedent:

                                       4


                  (1) The Administrative Agent shall have received from the
Borrower and the Required Lenders a duly executed original (or, if elected by
the Administrative Agent, an executed facsimile copy) of this Amendment.

                  (2) The Administrative Agent shall have received the consent
of the Subsidiaries of the Borrower party to the Pledge Agreement, the Interco
Subordination Agreement, the Security Agreement or the Guaranty, in form and
substance satisfactory to the Administrative Agent, in their capacities as such,
to the execution and delivery hereof by the Borrower.

                  (3) The Administrative Agent shall have received evidence of
payment by the Borrower of all fees, costs and expenses due and payable as of
the date hereof hereunder and under the Credit Agreement, including any fees
arising under or referenced in Section 5 of this Amendment and any costs and
expenses payable under Section 6(g) of this Amendment (including the
Administrative Agent's Attorney Costs, to the extent invoiced on or prior to the
date hereof).

                  (4) The Administrative Agent shall have received from the
Borrower, in form and substance satisfactory to the Administrative Agent, copies
of the resolutions passed by the board of directors of the Borrower, certified
as of the date hereof by the Secretary or an Assistant Secretary of the
Borrower, authorizing the execution, delivery and performance of this Amendment,
together with such incumbency certificates and/or other certificates of
Responsible Officers of the Borrower, as the Administrative Agent may require to
establish the identities of and verify the authority and capacity of each
Responsible Officer thereof authorized to act as such in connection with this
Amendment and each other Loan Document to which the Borrower is a party.

                  (5) The Administrative Agent shall have received all other
documents it or the Required Lenders may reasonably request relating to any
matters relevant hereto, all in form and substance satisfactory to the
Administrative Agent.

                  (6) The Effective Date shall have occurred on or before 5:00
p.m. (Pacific time) November 21, 2003.

         (b) For purposes of determining compliance with the conditions
specified in Section 4(a), each Lender that has executed this Amendment shall be
deemed to have consented to, approved or accepted, or to be satisfied with, each
document or other matter either sent, or made available for inspection, by the
Administrative Agent to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to such Lender.

         (c) From and after the Effective Date, the Credit Agreement is amended
as set forth herein. Except as expressly amended pursuant hereto, the Credit
Agreement shall remain unchanged and in full force and effect and is hereby
ratified and confirmed in all respects.

         (d) The Administrative Agent will notify the Borrower and the Lenders
of the occurrence of the Effective Date.

                                       5


5.       Fees. The Borrower shall pay (through the Administrative Agent) to each
Lender that executes and delivers this Amendment by no later than 12:00 p.m.
(Pacific time) on November 21, 2003, a non-refundable amendment fee equal to
0.05% of such Lender's Revolving Loan Commitment as of the Effective Date. Such
amendment fee shall be fully-earned upon becoming due and payable, shall not be
refundable for any reason whatsoever and shall be in addition to any fee, cost
or expense otherwise payable by the Borrower pursuant to the Credit Agreement or
this Amendment.

6.       Miscellaneous.

         (a) The Borrower acknowledges and agrees that the execution and
delivery by the Administrative Agent and the Lenders of this Amendment shall not
be deemed to create a course of dealing or an obligation to execute similar
waivers or amendments under the same or similar circumstances in the future.

         (b) This Amendment shall be binding upon and inure to the benefit of
the parties hereto and thereto and their respective successors and assigns.

         (c) This Amendment shall be governed by and construed in accordance
with the law of the State of New York (including Sections 5-1401 and 5-1402 of
the General Obligations Law of the State of New York), provided that the
Administrative Agent and the Lenders shall retain all rights arising under
Federal law.

         (d) This Amendment may be executed in any number of counterparts, each
of which shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument. Each of the parties hereto
understands and agrees that this document (and any other document required
herein) may be delivered by any party thereto either in the form of an executed
original or an executed original sent by facsimile transmission to be followed
promptly by mailing of a hard copy original, and that receipt by the
Administrative Agent of a facsimile transmitted document purportedly bearing the
signature of a Lender or the Borrower shall bind such Lender or the Borrower,
respectively, with the same force and effect as the delivery of a hard copy
original. Any failure by the Administrative Agent to receive the hard copy
executed original of such document shall not diminish the binding effect of
receipt of the facsimile transmitted executed original of such document of the
party whose hard copy page was not received by the Administrative Agent.

         (e) This Amendment and the other Amendment Documents contain the entire
and exclusive agreement of the parties hereto with reference to the matters
discussed herein. This Amendment supersedes all prior drafts and communications
with respect hereto. This Amendment may not be amended except in accordance with
the provisions of Section 10.01 of the Credit Agreement.

         (f) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment, the
Credit Agreement or the Loan Documents.

                                       6


         (g) The Borrower agrees to pay or reimburse Bank of America (including
in its capacities as Collateral Agent and as Administrative Agent), GSCP,
JPMorgan and Scotiabank upon demand, for all reasonable costs and expenses
(including reasonable Attorney Costs) incurred by Bank of America (including in
its capacities as Collateral Agent and as Administrative Agent), GSCP, JPMorgan
and Scotiabank in connection with the development, preparation, negotiation,
execution and delivery of the Amendment Documents.

                                       7


              [Signature pages and Exhibits follow - Not Attached]

                                       8

EX-10.2

                                                                    EXHIBIT 10.2

                       THIRD AMENDMENT TO CREDIT AGREEMENT

                  This THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is
entered into as of November 21, 2003, among SOLECTRON CORPORATION, a Delaware
corporation (the "Borrower"), BANC OF AMERICA SECURITIES LLC ("BAS"), as joint
lead arranger and joint book runner, GOLDMAN SACHS CREDIT PARTNERS L.P.
("GSCP"), as joint lead arranger, joint book runner and co-syndication agent,
JPMORGAN CHASE BANK ("JPMorgan"), as co-syndication agent, THE BANK OF NOVA
SCOTIA ("Scotiabank"), as documentation agent, the lenders party hereto (each, a
"Lender," and collectively, the "Lenders"), and BANK OF AMERICA, N.A., as
Administrative Agent.

                  The Borrower, BAS, GSCP, JPMorgan, Scotiabank, the Lenders,
and the Administrative Agent entered into an Amended and Restated 364-Day Credit
Agreement dated as of February 13, 2003 which agreement was amended by a First
Amendment Agreement dated as of July 9, 2003 and a Second Amendment and Waiver
dated as of August 27, 2003 ("Second Amendment," and as in effect as of the date
of this Amendment, the "Credit Agreement").

                  The Borrower has requested that the Lenders agree to certain
amendments to the Credit Agreement, and the Lenders party hereto have agreed to
such request, subject to the terms and conditions of this Amendment.

                  In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:

1.       Definitions; References; Interpretation.

         (a) Unless otherwise specifically defined herein, each term used herein
(including in the Recitals hereof) which is defined in the Credit Agreement
shall have the meaning assigned to such term in the Credit Agreement.

         (b) As used herein, "Amendment Documents" means this Amendment, the
Consent and Agreement related hereto and the Credit Agreement (as amended by
this Amendment).

         (c) Each reference to "this Agreement," "hereof," "hereunder," "herein"
and "hereby" and each other similar reference contained in the Credit Agreement,
and each reference to "the Credit Agreement" and each other similar reference in
the other Loan Documents, shall from and after the Effective Date refer to the
Credit Agreement as amended hereby.

         (d) The rules of interpretation set forth in Sections 1.02 and 1.05 of
the Credit Agreement shall be applicable to this Amendment.

2.       Amendments to Credit Agreement. Subject to the terms and conditions
hereof, the Credit Agreement is amended as follows, effective as of the
Effective Date:

         (a) The defined term "Applicable Rate" in Section 1.01 of the Credit
Agreement shall be amended by replacing the table contained therein with the
following table:

                                       1




                                                                        APPLICABLE
                                                                        UTILIZATION         APPLICABLE
                                                                         FEE RATE          UTILIZATION
                                                                          (USAGE             FEE RATE
               DEBT RATINGS        APPLICABLE                           GREATER THAN      (USAGE EQUAL
PRICING            S&P/           FACILITY FEE        APPLICABLE        33% BUT LESS       TO OR GREATER
 LEVEL           MOODY'S              RATE            LIBO RATE          THAN 66%)           THAN 66%)
- -------     -----------------     ------------     ---------------     -------------     ---------------
                                                                          
   1             BBB/Baa2           12.5 bps           75.0 bps          12.5 bps            12.5 bps
               (or higher)

   2            BBB-/Baa3           20.0 bps          105.0 bps          25.0 bps            25.0 bps

   3             BB+/Ba1            25.0 bps          125.0 bps          25.0 bps            25.0 bps

   4              BB/Ba2            30.0 bps          145.0 bps          50.0 bps            50.0 bps

   5             BB-/Ba3            62.5 bps          175.0 bps          50.0 bps           100.0 bps

   6              B+/B1             75.0 bps          212.5 bps          50.0 bps           100.0 bps
               (or lower)


         (b) The defined term "Borrowing Base Date" in Section 1.01 of the
Credit Agreement is amended in its entirety to read as follows:

                  "Borrowing Base Date" means November 24, 2003.

         (c) The defined term "Maturity Date" in Section 1.01 of the Credit
Agreement is amended in its entirety to read as follows:

                  "Maturity Date" means February 11, 2004.

         (d) Section 6.16 of the Credit Agreement is amended in its entirety to
read as follows:

                           6.16 BORROWING BASE CERTIFICATE. The Borrower shall
                  deliver to the Administrative Agent, on the date of delivery
                  of the first Loan Notice under this Agreement after the
                  occurrence of the Borrowing Base Date, (a) a completed
                  Borrowing Base Certificate and (b) full and complete reports
                  with respect to the Receivables of the Borrower and its U.S.
                  Subsidiaries, including information as to concentration,
                  aging, identity of Receivables Debtors, letters of credit
                  securing Receivables, disputed Receivables and other matters,
                  as the Administrative Agent shall reasonably request. After
                  (i) the Borrowing Base Date, and (ii) the extension of a
                  Revolving Loan hereunder, the Borrower shall deliver to the
                  Administrative Agent, as soon as available but in any event by
                  no later than ten Business Days after the end of each calendar
                  month, a completed Borrowing Base Certificate,

                                       2


                  together with the related collateral reports described above.
                  Without limiting any other provisions of the Loan Documents,
                  if the Minimum Capital Raise has not been consummated on or
                  before October 31, 2003, the Borrower shall cooperate fully
                  with and permit access by the Agent-Related Persons and their
                  consultants from after that date for purposes of auditing the
                  Receivables in connection with the implementation of the
                  Borrowing Base and pay to Administrative Agent upon demand all
                  reasonable costs and expenses of such audit.

         (e) Clause (iii) of Section 7.13(b) of the Credit Agreement is amended
to read as follows:

                  (iii) an amount equal to (A) 50% of the aggregate increases in
         Shareholders' Equity of the Borrower and its Subsidiaries after
         November 30, 2002, by reason of the issuance and sale of Capital Stock
         of the Borrower (including upon any conversion of debt securities of
         the Borrower (other than ACES) into such Capital Stock) during any
         fiscal quarter of the Borrower ending subsequent to November 30, 2002,
         plus (B) 100% of the aggregate increases in Shareholders' Equity of the
         Borrower and its Subsidiaries after November 30, 2002, by reason of the
         conversion of ACES into Capital Stock during any fiscal quarter of the
         Borrower ending subsequent to November 30, 2002.

         (f) Clause (i) of Section 7.13(c) of the Credit Agreement shall be
amended by replacing the table contained therein with the following table:



FISCAL QUARTER ENDING                 MINIMUM RATIO
- ---------------------                 -------------
                                   
November 30, 2003                      1.85 to 1.00


         (g) Clause (ii) of Section 7.13(e) of the Credit Agreement is amended
by replacing "$500,000,000.00" with "$700,000,000.00".

         (h) References in the Credit Agreement to the Borrowing Base, Borrowing
Base Date and related definitions and provisions, which were deemed to be
deleted from the Credit Agreement pursuant to the Second Amendment, shall be
reinstated in full (except as expressly amended herein); provided, however, that
if the Borrower shall have consummated a Minimum Capital Raise on or before
January 30, 2004, effective the date upon which the Borrower shall notify the
Administrative Agent thereof, references in the Credit Agreement to the
Borrowing Base, Borrowing Base Date and related definitions and provisions shall
again be disregarded and deemed to be deleted from the Credit Agreement.

         (i) Schedule 3 to the Compliance Certificate attached to the Credit
Agreement as Exhibit C, is amended and restated in its entirety to read as set
forth in Annex 1 hereto.

3.       Representations and Warranties. The Borrower hereby represents and
warrants to the Administrative Agent and the Lenders as follows:

                                       3


         (a) No Default or Event of Default has occurred and is continuing (or
would result from the amendment of the Credit Agreement contemplated hereby).

         (b) The execution, delivery and performance by the Borrower of the
Amendment Documents have been duly authorized by all necessary corporate and
other action and do not and will not require any registration with, consent or
approval of, or notice to or action by, any Person (including any Governmental
Authority) in order to be effective and enforceable.

         (c) The Amendment Documents constitute the legal, valid and binding
obligations of the Borrower, enforceable against it in accordance with their
respective terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting creditor's rights generally and by equitable principles
(regardless of whether enforcement is sought in equity or at law).

         (d) All representations and warranties of the Borrower contained in the
Credit Agreement are true and correct in all material respects (except to the
extent such representations and warranties expressly refer to an earlier date,
in which case they shall be true and correct as of such earlier date and except
that this subsection (d) shall be deemed instead to refer to the last day of the
most recent quarter and year for which financial statements have then been
delivered in respect of the representation and warranty made in Section 5.05 of
the Credit Agreement and to take into account any amendments to the Schedules to
the Credit Agreement and other disclosures made in writing by the Borrower to
the Administrative Agent and the Lenders after the Closing Date and approved by
the Administrative Agent and the Required Lenders).

         (e) There has occurred since August 27, 2003, no event or circumstance
that has resulted or could reasonably be expected to result in a Material
Adverse Effect.

         (f) The Borrower is entering into this Amendment on the basis of its
own investigation and for its own reasons, without reliance upon the
Administrative Agent and the Lenders or any other Person.

         (g) The Borrower's obligations under the Credit Agreement and under the
other Loan Documents are not subject to any defense, counterclaim, set-off,
right of recoupment, abatement or other claim.

4.       Conditions of Effectiveness.

         (a) The effectiveness of Section 2 of this Amendment shall be subject
to the satisfaction of each of the following conditions precedent:

                  (1) The Administrative Agent shall have received from the
Borrower and each Lender a duly executed original (or, if elected by the
Administrative Agent, an executed facsimile copy) of this Amendment.

                  (2) The Administrative Agent shall have received the consent
of the Subsidiaries of the Borrower party to the Pledge Agreement, the Interco
Subordination Agreement, the

                                       4


Security Agreement or the Guaranty, in form and substance satisfactory to the
Administrative Agent, in their capacities as such, to the execution and delivery
hereof by the Borrower.

                  (3) The Administrative Agent shall have received evidence of
payment by the Borrower of all fees, costs and expenses due and payable as of
the date hereof hereunder and under the Credit Agreement, including any fees
arising under or referenced in Section 5 of this Amendment and any costs and
expenses payable under Section 6(g) of this Amendment (including the
Administrative Agent's Attorney Costs, to the extent invoiced on or prior to the
date hereof).

                  (4) The Administrative Agent shall have received from the
Borrower, in form and substance satisfactory to the Administrative Agent, copies
of the resolutions passed by the board of directors of the Borrower, certified
as of the date hereof by the Secretary or an Assistant Secretary of the
Borrower, authorizing the execution, delivery and performance of this Amendment,
together with such incumbency certificates and/or other certificates of
Responsible Officers of the Borrower, as the Administrative Agent may require to
establish the identities of and verify the authority and capacity of each
Responsible Officer thereof authorized to act as such in connection with this
Amendment and each other Loan Document to which the Borrower is a party.

                  (5) The Administrative Agent shall have received all other
documents it or the Required Lenders may reasonably request relating to any
matters relevant hereto, all in form and substance satisfactory to the
Administrative Agent.

                  (6) The Effective Date shall have occurred on or before 5:00
p.m. (Pacific time) November 21, 2003.

         (b) For purposes of determining compliance with the conditions
specified in Section 4(a), each Lender that has executed this Amendment shall be
deemed to have consented to, approved or accepted, or to be satisfied with, each
document or other matter either sent, or made available for inspection, by the
Administrative Agent to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to such Lender.

         (c) From and after the Effective Date, the Credit Agreement is amended
as set forth herein. Except as expressly amended pursuant hereto, the Credit
Agreement shall remain unchanged and in full force and effect and is hereby
ratified and confirmed in all respects.

         (d) The Administrative Agent will notify the Borrower and the Lenders
of the occurrence of the Effective Date.

5.       Fees. The Borrower shall pay (through the Administrative Agent) to each
Lender that executes and delivers this Amendment by no later than 12:00 p.m.
(Pacific time) on November 21, 2003, a non-refundable amendment fee equal to
0.05% of such Lender's Revolving Loan Commitment as of the Effective Date. Such
amendment fee shall be fully-earned upon becoming due and payable, shall not be
refundable for any reason whatsoever and shall be in addition to

                                       5


any fee, cost or expense otherwise payable by the Borrower pursuant to the
Credit Agreement or this Amendment.

6.       Miscellaneous.

         (a) The Borrower acknowledges and agrees that the execution and
delivery by the Administrative Agent and the Lenders of this Amendment shall not
be deemed to create a course of dealing or an obligation to execute similar
waivers or amendments under the same or similar circumstances in the future.

         (b) This Amendment shall be binding upon and inure to the benefit of
the parties hereto and thereto and their respective successors and assigns.

         (c) This Amendment shall be governed by and construed in accordance
with the law of the State of New York (including Sections 5-1401 and 5-1402 of
the General Obligations Law of the State of New York), provided that the
Administrative Agent and the Lenders shall retain all rights arising under
Federal law.

         (d) This Amendment may be executed in any number of counterparts, each
of which shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument. Each of the parties hereto
understands and agrees that this document (and any other document required
herein) may be delivered by any party thereto either in the form of an executed
original or an executed original sent by facsimile transmission to be followed
promptly by mailing of a hard copy original, and that receipt by the
Administrative Agent of a facsimile transmitted document purportedly bearing the
signature of a Lender or the Borrower shall bind such Lender or the Borrower,
respectively, with the same force and effect as the delivery of a hard copy
original. Any failure by the Administrative Agent to receive the hard copy
executed original of such document shall not diminish the binding effect of
receipt of the facsimile transmitted executed original of such document of the
party whose hard copy page was not received by the Administrative Agent.

         (e) This Amendment and the other Amendment Documents contain the entire
and exclusive agreement of the parties hereto with reference to the matters
discussed herein. This Amendment supersedes all prior drafts and communications
with respect hereto. This Amendment may not be amended except in accordance with
the provisions of Section 10.01 of the Credit Agreement.

         (f) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment, the
Credit Agreement or the Loan Documents.

         (g) The Borrower agrees to pay or reimburse Bank of America (including
in its capacities as Collateral Agent and as Administrative Agent), GSCP,
JPMorgan and Scotiabank upon demand, for all reasonable costs and expenses
(including reasonable Attorney Costs) incurred by Bank of America (including in
its capacities as Collateral Agent and as Administrative Agent), GSCP, JPMorgan
and Scotiabank in connection with the development, preparation, negotiation,
execution and delivery of the Amendment Documents.

                                       6


              [Signature pages and Exhibits follow - Not Attached]

                                       7

EX-31.1

Exhibit 31.1

EX-31.2

Exhibit 31.2

EX-32.1

Exhibit 32.1

EX-32.2

Exhibit 32.2