##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended May 28, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 000-51771
 SMART MODULAR TECHNOLOGIES (WWH), INC.
  Cayman Islands
    
    20-2509518(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification Number)
 39870 Eureka Drive, Newark, California 94560
 (510) 623-1231
 
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




---



##### 



SMART MODULAR TECHNOLOGIES (WWH), INC.
 INDEX TO QUARTERLY REPORT
 TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 4. Controls and Procedures
    
    
    29PART II. OTHER INFORMATION
    
    
    30Item 1. Legal Proceedings
    
    
    30Item 1A. Risk Factors
    
    
    30Item 6. Exhibits
    
    
    31SIGNATURES
    
    
    32Exhibit 31.1Exhibit 31.2Exhibit 32
   2




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)
 May 28,
    
    
    August 28,2010
    
    
    2009(In thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    105,981
    
    
    $
    147,658Accounts receivable, net of allowances of
$1,574 and $1,591 as of May 28, 2010 and
August 28, 2009, respectively
    
    
    212,426
    
    
    
    130,953Inventories
    
    
    110,191
    
    
    
    63,115Prepaid expenses and other current assets
    
    
    29,222
    
    
    
    12,628Total current assets
    
    
    457,820
    
    
    
    354,354Property and equipment, net
    
    
    44,045
    
    
    
    36,263Goodwill
    
    
    1,061
    
    
    
    1,061Other intangible assets, net
    
    
    6,700
    
    
    
    7,475Other non-current assets
    
    
    7,497
    
    
    
    4,585Total assets
    
    $
    517,123
    
    
    $
    403,738LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    146,783
    
    
    $
    68,928Accrued expenses
    
    
    29,512
    
    
    
    16,615Total current liabilities
    
    
    176,295
    
    
    
    85,543Long-term debt
    
    
    55,072
    
    
    
    81,250Other long-term liabilities
    
    
    441
    
    
    
    2,120Total liabilities
    
    $
    231,808
    
    
    $
    168,913Commitments and contingenciesShareholders equity:Ordinary shares, $0.00016667 par value;
600,000,000 shares authorized; 62,574,528
and 61,904,788 shares issued and outstanding
as of May 28, 2010 and August 28, 2009,
respectively
    
    
    10
    
    
    
    10Additional paid-in capital
    
    
    116,029
    
    
    
    109,264Accumulated other comprehensive income
    
    
    12,467
    
    
    
    4,333Retained earnings
    
    
    156,809
    
    
    
    121,218Total shareholders equity
    
    
    285,315
    
    
    
    234,825Total liabilities and shareholders equity
    
    $
    517,123
    
    
    $
    403,738
   3




---



##### Table of Contents



SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedMay 28,
    
    
    May 29,
    
    
    May 28,
    
    
    May 29,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands, except per share data)Net sales
    
    $
    201,235
    
    
    $
    91,645
    
    
    $
    484,438
    
    
    $
    341,509Cost of sales (1)
    
    
    155,738
    
    
    
    73,008
    
    
    
    368,162
    
    
    
    272,989Gross profit
    
    
    45,497
    
    
    
    18,637
    
    
    
    116,276
    
    
    
    68,520Operating expenses:Research and development (1)
    
    
    6,657
    
    
    
    4,478
    
    
    
    17,606
    
    
    
    15,056Selling, general and administrative (1)
    
    
    16,340
    
    
    
    13,585
    
    
    
    44,037
    
    
    
    41,834Restructuring charges
    
    
    
    
    
    
    989
    
    
    
    
    
    
    
    2,810Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,416Total operating expenses
    
    
    22,997
    
    
    
    19,052
    
    
    
    61,643
    
    
    
    70,116Income (loss) from operations
    
    
    22,500
    
    
    
    (415
    )
    
    
    54,633
    
    
    
    (1,596
    )Interest expense, net
    
    
    (837
    )
    
    
    (1,629
    )
    
    
    (3,663
    )
    
    
    (5,079
    )Other income (expense), net
    
    
    608
    
    
    
    26
    
    
    
    5,125
    
    
    
    (631
    )Total other income (expense)
    
    
    (229
    )
    
    
    (1,603
    )
    
    
    1,462
    
    
    
    (5,710
    )Income (loss) before provision for
income taxes
    
    
    22,271
    
    
    
    (2,018
    )
    
    
    56,095
    
    
    
    (7,306
    )Provision for income taxes
    
    
    7,354
    
    
    
    368
    
    
    
    20,504
    
    
    
    3,808Net income (loss)
    
    $
    14,917
    
    
    $
    (2,386
    )
    
    $
    35,591
    
    
    $
    (11,114
    )Net income (loss) per share, basic
    
    $
    0.24
    
    
    $
    (0.04
    )
    
    $
    0.57
    
    
    $
    (0.18
    )Net income (loss) per share, diluted
    
    $
    0.23
    
    
    $
    (0.04
    )
    
    $
    0.55
    
    
    $
    (0.18
    )Shares used in computing net income
(loss) per ordinary share
    
    
    62,463
    
    
    
    61,738
    
    
    
    62,216
    
    
    
    61,640Shares used in computing net income
(loss) per diluted share
    
    
    65,502
    
    
    
    61,738
    
    
    
    64,843
    
    
    
    61,640(1)   Stock-based compensation by category:Cost of sales
    
    $
    192
    
    
    $
    137
    
    
    $
    511
    
    
    $
    525Research and development
    
    
    378
    
    
    
    404
    
    
    
    982
    
    
    
    1,286Selling, general and administrative
    
    
    1,338
    
    
    
    949
    
    
    
    3,900
    
    
    
    3,266
   4




---



##### Table of Contents



SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedMay 28,
    
    
    May 29,
    
    
    May 28,
    
    
    May 29,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands)Net income (loss)
    
    $
    14,917
    
    
    $
    (2,386
    )
    
    $
    35,591
    
    
    $
    (11,114
    )Other comprehensive income (loss):Net changes in unrealized gain
(loss) on derivative instruments
accounted for as cash flow hedges
    
    
    161
    
    
    
    207
    
    
    
    1,149
    
    
    
    (144
    )Foreign currency translation
    
    
    8,079
    
    
    
    3,692
    
    
    
    6,985
    
    
    
    (19,021
    )Comprehensive income (loss)
    
    $
    23,157
    
    
    $
    1,513
    
    
    $
    43,725
    
    
    $
    (30,279
    )
   5




---



##### Table of Contents



SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
 Nine Months EndedMay 28,
    
    
    May 29,2010
    
    
    2009(In thousands)Cash flows from operating activities:Net income (loss)
    
    $
    35,591
    
    
    $
    (11,114
    )Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:Depreciation and amortization
    
    
    11,779
    
    
    
    9,586Stock-based compensation
    
    
    5,393
    
    
    
    5,077Changes in allowances for accounts receivable and sales returns
    
    
    (19
    )
    
    
    (402
    )Amortization of debt issuance costs
    
    
    861
    
    
    
    764Loss on sale of assets
    
    
    430
    
    
    
    672Gain on early repayment of long-term debt
    
    
    (1,178
    )
    
    
    Loss on display business divestiture
    
    
    486
    
    
    
    Goodwill impairment
    
    
    
    
    
    
    10,416Non cash restructuring credit
    
    
    
    
    
    
    (7
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (79,732
    )
    
    
    67,755Inventories
    
    
    (46,314
    )
    
    
    4,587Prepaid expenses and other assets
    
    
    (17,465
    )
    
    
    480Accounts payable
    
    
    74,277
    
    
    
    (37,860
    )Accrued expenses and other liabilities
    
    
    11,755
    
    
    
    (5,359
    )Net cash (used in) provided by operating activities
    
    
    (4,136
    )
    
    
    44,595Cash flows from investing activities:Capital expenditures
    
    
    (15,384
    )
    
    
    (11,683
    )Cash deposits on equipment
    
    
    (2,157
    )
    
    
    (418
    )Net proceeds from display business divestiture
    
    
    2,181
    
    
    
    Proceeds from sale of property and equipment
    
    
    326
    
    
    
    60Payment for contingent consideration
    
    
    
    
    
    
    (6,562
    )Net cash used in investing activities
    
    
    (15,034
    )
    
    
    (18,603
    )Cash flows from financing activities:Repayment of long-term debt
    
    
    (25,000
    )
    
    
    Repurchase of ordinary shares
    
    
    
    
    
    
    (84
    )Proceeds from issuance of ordinary shares from stock option exercises
    
    
    1,384
    
    
    
    498Net cash (used in) provided by financing activities
    
    
    (23,616
    )
    
    
    414Effect of exchange rate changes on cash and cash equivalents
    
    
    1,111
    
    
    
    (3,171
    )Net (decrease) increase in cash and cash equivalents
    
    
    (41,675
    )
    
    
    23,235Cash and cash equivalents at beginning of period
    
    
    147,658
    
    
    
    115,994Cash and cash equivalents at end of period
    
    $
    105,981
    
    
    $
    139,229Supplemental disclosures of cash flow information:Cash paid during the year:Interest
    
    $
    4,217
    
    
    $
    5,573Taxes
    
    
    19,361
    
    
    
    4,108Non-cash activities information:Change in fair value of derivative instruments
    
    $
    1,149
    
    
    $
    (144
    )
   6




---



##### Table of Contents



SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 NOTE 1  Basis of Presentation and Principles of Consolidation
 Basis of Presentation
    Generally Accepted Accounting Principles FASB
Accounting Standards Codification
 Product and Service Revenue
 Revenue Recognition
   7




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedMay 28,
    
    
    May 29,
    
    
    May 28,
    
    
    May 29,2010
    
    
    2009
    
    
    2010
    
    
    2009Service revenue
    
    $
    10,751
    
    
    $
    7,953
    
    
    $
    28,493
    
    
    $
    28,927Cost of sales  service (1)
    
    
    259,310
    
    
    
    136,070
    
    
    
    624,304
    
    
    
    466,193Gross billings for services
    
    
    270,061
    
    
    
    144,023
    
    
    
    652,797
    
    
    
    495,120Plus: Product net sales
    
    
    190,484
    
    
    
    83,692
    
    
    
    455,945
    
    
    
    312,582Gross billings to customers
    
    $
    460,545
    
    
    $
    227,715
    
    
    $
    1,108,742
    
    
    $
    807,702Product net sales
    
    $
    190,484
    
    
    $
    83,692
    
    
    $
    455,945
    
    
    $
    312,582Service revenue
    
    
    10,751
    
    
    
    7,953
    
    
    
    28,493
    
    
    
    28,927Net sales
    
    $
    201,235
    
    
    $
    91,645
    
    
    $
    484,438
    
    
    $
    341,509
 
 (1)
    
    Represents cost of sales associated with service revenue reported on a net basis. Recent Accounting Pronouncements
  Accounting for Transfers of Financial Assets
(FASB Statement No. 166, Accounting for Transfers of Financial Assets)
 Improvements to Financial Reporting by
Enterprises Involved with Variable Interest Entities (FASB Statement No. 167, Amendments to FASB
Interpretation No. 46 (R))
 Revenue
Recognition (Topic 605)  Multiple-Deliverable Revenue Arrangements Revenue Recognition-Multiple Element
Arrangements
 Software (Topic 985)  Certain Revenue
Arrangements that Include Software Elements Software-Revenue Recognition
 Financial Instruments,
  8




---



##### Table of Contents



Business Combinations
 NOTE 2  Stock-Based Compensation
 Compensation  Stock
Compensation
  Stock Options
   Option Exchange
    Summary of Assumptions and Activity for Stock Options
 .
 Nine Months EndedMay 28,
    
    
    May 29,2010
    
    
    2009Stock options:Expected term (years)
    
    
    4.7
    
    
    
    5.3Expected volatility
    
    
    78
    %
    
    
    58
    %Risk-free interest rate
    
    
    2.18
    %
    
    
    2.01
    %Expected dividends
    
    
    
    
    
    
    
  9




---



##### Table of Contents



WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregatePrice Per
    
    
    Term
    
    
    IntrinsicShares
    
    
    Share
    
    
    (Years)
    
    
    ValueOptions outstanding at August 28, 2009
    
    
    8,796
    
    
    $
    4.99Options granted
    
    
    3,003
    *
    
    
    5.51Options exercised
    
    
    (667
    )
    
    
    2.08Options forfeited and cancelled
    
    
    (2,856)
    **
    
    
    8.14Options outstanding at May 28, 2010 (1)
    
    
    8,275
    
    
    $
    4.33
    
    
    
    7.1
    
    
    $
    18,521Options exercisable at May 28, 2010
    
    
    4,384
    
    
    $
    3.84
    
    
    
    6.0
    
    
    $
    12,719Options vested and expected to vest at May 28, 2010
    
    
    7,958
    
    
    $
    4.30
    
    
    
    7.0
    
    
    $
    18,072
 *
    
    Includes new options granted (1,864) in connection with the Option Exchange.**
    
    Includes options cancelled (2,450) in connection with the Option Exchange.(1)
    
    Summation may not compute precisely due to rounding.   Weighted AverageGrant Date FairShares
    
    
    Value Per ShareNon-vested stock options at August 28, 2009
    
    
    3,738
    
    
    $
    2.87Non-vested stock options granted
    
    
    3,003
    *
    
    
    2.77Vested stock options
    
    
    (1,403
    )
    
    
    2.51Non-vested stock options forfeited and cancelled
    
    
    (1,447
    )**
    
    
    4.13Non-vested stock options at May 28, 2010
    
    
    3,891
    
    
    $
    2.53
 *
    
    Includes new options granted (1,864) in connection with the Option Exchange.**
    
    Includes unvested options cancelled (1,040) in connection with the Option Exchange.  Restricted Share Units (RSUs)
       10




---



##### Table of Contents



WeightedAverageGrant Date
    
    
    AggregateFair Value
    
    
    IntrinsicShares
    
    
    Per Share
    
    
    ValueAwards outstanding at August 28, 2009
    
    
    68
    
    
    $
    2.95Awards granted
    
    
    1,114
    
    
    
    5.88Awards vested
    
    
    (5
    )
    
    
    2.84Awards forfeited and cancelled
    
    
    (15
    )
    
    
    5.20Awards outstanding at May 28, 2010
    
    
    1,162
    
    
    $
    5.75
    
    
    $
    7,135
   NOTE 3  Goodwill and Other Intangible Assets, net
 Intangibles  Goodwill and Other
     11




---



##### Table of Contents



Weighted
    
    
    Value at
    
    
    As of May 28, 2010
    
    
    As of August 28, 2009Avg. Life
    
    
    Date of
    
    
    Accumulated
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying(years)
    
    
    Acquisition
    
    
    Amortization
    
    
    Value
    
    
    Amortization
    
    
    ValueAmortized intangible assets:Customer relationships
    
    
    10
    
    
    $
    3,700
    
    
    $
    832
    
    
    $
    2,868
    
    
    $
    555
    
    
    $
    3,145Technology
    
    
    7
    
    
    
    2,800
    
    
    
    900
    
    
    
    1,900
    
    
    
    600
    
    
    
    2,200Company trade name
    
    
    20
    
    
    
    2,040
    
    
    
    230
    
    
    
    1,810
    
    
    
    153
    
    
    
    1,887Leasehold interest
    
    
    3
    
    
    
    260
    
    
    
    183
    
    
    
    77
    
    
    
    122
    
    
    
    138Non-compete agreement
    
    
    2
    
    
    
    220
    
    
    
    220
    
    
    
    
    
    
    
    165
    
    
    
    55Product names
    
    
    9
    
    
    
    60
    
    
    
    15
    
    
    
    45
    
    
    
    10
    
    
    
    50Total
    
    
    11
    
    
    $
    9,080
    
    
    $
    2,380
    
    
    $
    6,700
    
    
    $
    1,605
    
    
    $
    7,475
   Fiscal Year:
    
    AmountRemainder of fiscal 2010
    
    $
    2402011
    
    
    9362012
    
    
    8792013
    
    
    8792014
    
    
    879Thereafter
    
    
    2,887Total
    
    $
    6,700
 NOTE 4  Net Income (Loss) Per Share
   Three Months Ended
    
    
    Nine Months EndedMay 28,
    
    
    May 29,
    
    
    May 28,
    
    
    May 29,2010
    
    
    2009
    
    
    2010
    
    
    2009Numerator:Net income (loss)
    
    $
    14,917
    
    
    $
    (2,386
    )
    
    $
    35,591
    
    
    $
    (11,114
    )Denominator:Weighted average ordinary shares, basic
    
    
    62,463
    
    
    
    61,738
    
    
    
    62,216
    
    
    
    61,640Effect of dilutive securities:Stock options and RSUs
    
    
    3,039
    
    
    
    
    
    
    
    2,627
    
    
    
    Weighted average ordinary shares, diluted
    
    
    65,502
    
    
    
    61,738
    
    
    
    64,843
    
    
    
    61,640Net income (loss) per ordinary share, basic
    
    $
    0.24
    
    
    $
    (0.04
    )
    
    $
    0.57
    
    
    $
    (0.18
    )Net income (loss) per ordinary share, diluted
    
    $
    0.23
    
    
    $
    (0.04
    )
    
    $
    0.55
    
    
    $
    (0.18
    )
   12




---



##### Table of Contents



NOTE 5  Balance Sheet Details
 Inventories
  May 28,
    
    
    August 28,2010
    
    
    2009Raw materials
    
    $
    46,530
    
    
    $
    20,207Work-in-process
    
    
    14,929
    
    
    
    4,716Finished goods
    
    
    48,732
    
    
    
    38,192Total inventories *
    
    $
    110,191
    
    
    $
    63,115
 
 *
    
    As of May 28, 2010 and August 28, 2009, 38% and 47%, respectively, of total
inventories represented inventory held under service arrangements. Property and Equipment, Net
  May 28,
    
    
    August 28,2010
    
    
    2009Buildings
    
    $
    
    
    
    $
    539Office furniture, software, computers and equipment
    
    
    5,331
    
    
    
    5,409Manufacturing equipment
    
    
    73,842
    *
    
    
    56,926Leasehold improvements
    
    
    17,869
    
    
    
    16,89397,042
    
    
    
    79,767Less: accumulated depreciation and amortization
    
    
    52,997
    *
    
    
    43,504Property and equipment, net
    
    $
    44,045
    
    
    $
    36,263
 
 *
    
    The Company reduced the useful life of certain manufacturing equipment with
net book value of $2.4 million as of May 28, 2010 to reflect its updated estimate of
the remaining useful life. This will result in additional quarterly depreciation
expense of $0.6 million beginning the quarter ending May 28, 2010 and will continue
through December 2010. NOTE 6  Income Taxes
  Three Months Ended
    
    
    Nine Months EndedMay 28,
    
    
    May 29,
    
    
    May 28,
    
    
    May 29,2010
    
    
    2009
    
    
    2010
    
    
    2009Current
    
    $
    7,364
    
    
    $
    371
    
    
    $
    20,535
    
    
    $
    3,850Deferred
    
    
    (10
    )
    
    
    (3
    )
    
    
    (31
    )
    
    
    (42
    )Total
    
    $
    7,354
    
    
    $
    368
    
    
    $
    20,504
    
    
    $
    3,808
  Three Months Ended
    
    
    Nine Months EndedMay 28,
    
    
    May 29,
    
    
    May 28,
    
    
    May 29,2010
    
    
    2009
    
    
    2010
    
    
    2009U.S. loss
    
    $
    (2,296
    )
    
    $
    (2,515
    )
    
    $
    (8,290
    )
    
    $
    (22,902
    )Non-U.S. income
    
    
    24,567
    
    
    
    497
    
    
    
    64,385
    
    
    
    15,596Total
    
    $
    22,271
    
    
    $
    (2,018
    )
    
    $
    56,095
    
    
    $
    (7,306
    )
  13




---



##### Table of Contents



NOTE 7  Indebtedness
    Financial Instruments
   14




---



##### Table of Contents



NOTE 8  Fair Value Measurements
 Fair Value Measurements
and Disclosures,
   
    
    Level 1. Valuations based on quoted prices in active markets for identical assets or
liabilities that an entity has the ability to access. The Companys Level 1 assets include
money market funds and certificates of deposit that are classified as cash equivalents.
    
    Level 2. Valuations based on quoted prices for similar assets or liabilities, quoted prices
for identical assets or liabilities in markets that are not active, or other inputs that are
observable or can be corroborated by observable data for substantially the full term of the
assets and liabilities. The Companys Level 2 liabilities as of August 28, 2009 included its
variable-to-fixed interest rate swap which expired in April 2010. Thus, the Company had no
Level 2 liabilities as of May 28, 2010.
    
    Level 3. Valuations based on inputs that are supported by little or no market activity and
that are significant to the fair value of the assets or liabilities. The Company does not
have any assets or liabilities measured under Level 3.
  15




---



##### Table of Contents



Quoted Prices in
    
    
    Observable/Active Markets
    
    
    Unobservablefor Identical
    
    
    Inputs
    
    
    SignificantAssets or
    
    
    Corroborated by
    
    
    UnobservableLiabilities
    
    
    Market Data
    
    
    InputsLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalBalances as of May 28, 2010:Assets:Cash from checking and savings accounts
    
    $
    65.0
    
    
    $
    
    
    
    $
    
    
    
    $
    65.0Money market funds
    
    
    36.0
    
    
    
    
    
    
    
    
    
    
    
    36.0Certificates of deposit
    
    
    5.0
    
    
    
    
    
    
    
    
    
    
    
    5.0Total assets measured at fair value (1)
    
    $
    106.0
    
    
    $
    
    
    
    $
    
    
    
    $
    106.0Liabilities:Current variable-to-fixed interest rate swap
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total liabilities measured at fair value
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Balances as of August 28, 2009:Assets:Cash from checking and savings accounts
    
    $
    44.5
    
    
    $
    
    
    
    $
    
    
    
    $
    44.5Money market funds
    
    
    79.2
    
    
    
    
    
    
    
    
    
    
    
    79.2Certificates of deposit
    
    
    24.0
    
    
    
    
    
    
    
    
    
    
    
    24.0Total assets measured at fair value (1)
    
    $
    147.7
    
    
    $
    
    
    
    $
    
    
    
    $
    147.7Liabilities:Current variable-to-fixed interest rate swap
    
    $
    
    
    
    $
    (1.3
    )
    
    $
    
    
    
    $
    (1.3
    )Total liabilities measured at fair value
    
    $
    
    
    
    $
    (1.3
    )
    
    $
    
    
    
    $
    (1.3
    )
 
 (1)
    
    Included in cash and cash equivalents on the Companys consolidated balance sheet. Derivative Instruments
 Derivatives and Hedging
 NOTE 9  Commitments and Contingencies
 Product Warranty and Indemnities
   16




---



##### Table of Contents



Nine Months EndedMay 28,2010Balance of accrual at August 28, 2009
    
    $
    694Warranty claims
    
    
    (548
    )Provision for product warranties *
    
    
    987Balance of accrual at May 28, 2010
    
    $
    1,133
 
 *
    
    The Company recorded a $0.4 million warranty reserve for a new product launch in the three
months ended May 28, 2010.   Legal Matters
  Tessera
  
 
 
  17




---



##### Table of Contents



Ring Technology
  Contingencies
 Brazil ICMS Assessment
   18




---



##### Table of Contents



Prepaid ICMS Taxes in Brazil
    NOTE 10  Segment and Geographic Information
   Three Months Ended
    
    
    Nine Months EndedMay 28,
    
    
    May 29,
    
    
    May 28,
    
    
    May 29,2010
    
    
    2009
    
    
    2010
    
    
    2009Geographic net sales:U.S.
    
    $
    59,040
    
    
    $
    43,388
    
    
    $
    150,094
    
    
    $
    148,462Other Americas
    
    
    94,391
    
    
    
    22,524
    
    
    
    212,202
    
    
    
    92,580Asia
    
    
    38,178
    
    
    
    19,771
    
    
    
    94,054
    
    
    
    63,773Europe
    
    
    9,626
    
    
    
    5,962
    
    
    
    28,088
    
    
    
    36,694Total
    
    $
    201,235
    
    
    $
    91,645
    
    
    $
    484,438
    
    
    $
    341,509
 Three Months Ended
    
    
    Nine Months EndedMay 28,
    
    
    May 29,
    
    
    May 28,
    
    
    May 29,2010
    
    
    2009
    
    
    2010
    
    
    2009Product net sales
    
    $
    190,484
    
    
    $
    83,692
    
    
    $
    455,945
    
    
    $
    312,582Service revenue
    
    
    10,751
    
    
    
    7,953
    
    
    
    28,493
    
    
    
    28,927Net sales
    
    $
    201,235
    
    
    $
    91,645
    
    
    $
    484,438
    
    
    $
    341,509
  19




---



##### Table of Contents



May 28,
    
    
    August 28,2010
    
    
    2009Property and equipment, net:U.S.
    
    $
    6,412
    
    
    $
    7,724Other Americas
    
    
    30,024
    
    
    
    22,654Asia
    
    
    7,560
    
    
    
    5,845Europe
    
    
    49
    
    
    
    40Total
    
    $
    44,045
    
    
    $
    36,263
 NOTE 11  Major Customers
  Percent of Net SalesThree Months Ended
    
    
    Nine Months EndedMay 28,
    
    
    May 29,
    
    
    May 28,
    
    
    May 29,2010
    
    
    2009
    
    
    2010
    
    
    2009Customer A
    
    
    21
    %
    
    
    24
    %
    
    
    22
    %
    
    
    30
    %Customer B
    
    
    15
    %
    
    
    14
    %
    
    
    16
    %
    
    
    13
    %Customer C
    
    
    15
    %
    
    
    *
    
    
    
    14
    %
    
    
    *
 *
    
    Less than 10%  NOTE 12  Restructuring
  NOTE 13 Other Income (Expense), Net
  Three Months Ended
    
    
    Nine Months EndedMay 28,
    
    
    May 29,
    
    
    May 28,
    
    
    May 29,2010
    
    
    2009
    
    
    2010
    
    
    2009Foreign currency gains (losses)
    
    $
    385
    
    
    $
    (167
    )
    
    $
    338
    
    
    $
    (869
    )Gain on legal settlement*
    
    
    
    
    
    
    
    
    
    
    3,044
    
    
    
    Gain on early repayment of long-term debt
    
    
    
    
    
    
    
    
    
    
    1,178
    
    
    
    Other
    
    
    223
    
    
    
    193
    
    
    
    565
    
    
    
    238Total other income (expense), net
    
    $
    608
    
    
    $
    26
    
    
    $
    5,125
    
    
    $
    (631
    )
 
 *
    
    In December 2009, the Company received this settlement as a non-active
participant class member in a class action against certain component suppliers initiated
in 2002.  20




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   Overview
     21




---



##### Table of Contents



Key Business Metrics
  Net Sales
  Cost of Sales
  Research and Development Expenses
  Selling, General and Administrative Expenses
  Critical Accounting Policies
   Revenue Recognition
    22




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedMay 28,
    
    
    May 29,
    
    
    May 28,
    
    
    May 29,2010
    
    
    2009
    
    
    2010
    
    
    2009Service revenue
    
    $
    10,751
    
    
    $
    7,953
    
    
    $
    28,493
    
    
    $
    28,927Cost of sales  service (1)
    
    
    259,310
    
    
    
    136,070
    
    
    
    624,304
    
    
    
    466,193Gross billings for services
    
    
    270,061
    
    
    
    144,023
    
    
    
    652,797
    
    
    
    495,120Plus: Product net sales
    
    
    190,484
    
    
    
    83,692
    
    
    
    455,945
    
    
    
    312,582Gross billings to customers
    
    $
    460,545
    
    
    $
    227,715
    
    
    $
    1,108,742
    
    
    $
    807,702Product net sales
    
    $
    190,484
    
    
    $
    83,692
    
    
    $
    455,945
    
    
    $
    312,582Service revenue
    
    
    10,751
    
    
    
    7,953
    
    
    
    28,493
    
    
    
    28,927Net sales
    
    $
    201,235
    
    
    $
    91,645
    
    
    $
    484,438
    
    
    $
    341,509
 
 (1)
    
    Represents cost of sales associated with service revenue reported on a net basis. Accounts Receivable
   Inventory Valuation
  Restructuring Charges
   23




---



##### Table of Contents



Income Taxes
    Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed
  Impairment of Goodwill
 Intangibles  Goodwill and Other
  Stock-Based Compensation
 Compensation  Stock Compensation
  24




---



##### Table of Contents



Results of Operations
  Three Months Ended(1)
    
    
    Nine Months Ended(1)May 28,
    
    
    % of
    
    
    May 29,
    
    
    % of
    
    
    May 28,
    
    
    % of
    
    
    May 29,
    
    
    % of2010
    
    
    sales
    
    
    2009
    
    
    sales
    
    
    2010
    
    
    sales
    
    
    2009
    
    
    salesNet sales
    
    $
    201.2
    
    
    
    100
    %
    
    $
    91.6
    
    
    
    100
    %
    
    $
    484.4
    
    
    
    100
    %
    
    $
    341.5
    
    
    
    100
    %Cost of sales
    
    
    155.7
    
    
    
    77
    %
    
    
    73.0
    
    
    
    80
    %
    
    
    368.2
    
    
    
    76
    %
    
    
    273.0
    
    
    
    80
    %Gross profit
    
    
    45.5
    
    
    
    23
    %
    
    
    18.6
    
    
    
    20
    %
    
    
    116.3
    
    
    
    24
    %
    
    
    68.5
    
    
    
    20
    %Research and development
    
    
    6.7
    
    
    
    3
    %
    
    
    4.5
    
    
    
    5
    %
    
    
    17.6
    
    
    
    4
    %
    
    
    15.1
    
    
    
    4
    %Selling, general and administrative
    
    
    16.3
    
    
    
    8
    %
    
    
    13.6
    
    
    
    15
    %
    
    
    44.0
    
    
    
    9
    %
    
    
    41.8
    
    
    
    12
    %Restructuring charges
    
    
    
    
    
    
    
    
    
    
    1.0
    
    
    
    1
    %
    
    
    
    
    
    
    
    
    
    
    2.8
    
    
    
    1
    %Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.4
    
    
    
    3
    %Total operating expenses
    
    
    23.0
    
    
    
    11
    %
    
    
    19.1
    
    
    
    21
    %
    
    
    61.6
    
    
    
    13
    %
    
    
    70.1
    
    
    
    21
    %Income (loss) from operations
    
    
    22.5
    
    
    
    11
    %
    
    
    (0.4
    )
    
    
    0
    %
    
    
    54.6
    
    
    
    11
    %
    
    
    (1.6
    )
    
    
    0
    %Interest expense, net
    
    
    (0.8
    )
    
    
    0
    %
    
    
    (1.6
    )
    
    
    -2
    %
    
    
    (3.7
    )
    
    
    -1
    %
    
    
    (5.1
    )
    
    
    -1
    %Other income (expense), net
    
    
    0.6
    
    
    
    0
    %
    
    
    0.0
    
    
    
    0
    %
    
    
    5.1
    
    
    
    1
    %
    
    
    (0.6
    )
    
    
    0
    %Total other income (expense)
    
    
    (0.2
    )
    
    
    0
    %
    
    
    (1.6
    )
    
    
    -1
    %
    
    
    1.5
    
    
    
    0
    %
    
    
    (5.7
    )
    
    
    -2
    %Income (loss) before provision for income taxes
    
    
    22.3
    
    
    
    11
    %
    
    
    (2.0
    )
    
    
    -2
    %
    
    
    56.1
    
    
    
    12
    %
    
    
    (7.3
    )
    
    
    -2
    %Provision for income taxes
    
    
    7.4
    
    
    
    4
    %
    
    
    0.4
    
    
    
    0
    %
    
    
    20.5
    
    
    
    4
    %
    
    
    3.8
    
    
    
    1
    %Net income (loss)
    
    $
    14.9
    
    
    
    7
    %
    
    $
    (2.4
    )
    
    
    -3
    %
    
    $
    35.6
    
    
    
    7
    %
    
    $
    (11.1
    )
    
    
    -3
    %
 
 (1)
    
    Summations may not compute precisely due to rounding. Three and Nine Months Ended May 28, 2010 as Compared to the Three and Nine Months Ended May
29, 2009
 Net Sales
  Cost of Sales
    Gross Profit
   25




---



##### Table of Contents



Research and Development Expenses
  Selling, General and Administrative Expenses
   Restructuring Charges and Goodwill Impairment
  Interest Expense, Net
   Other Income (Expense), net
    26




---



##### Table of Contents



Provision for Income Taxes
  Liquidity and Capital Resources
  Debt Service
  Senior Secured Floating Rate Exchange Notes Due April 2012 (the Notes as referenced above).
 Senior Secured Revolving Line of Credit Facility
 Capital Expenditures
   27




---



##### Table of Contents



Sources and Uses of Funds
     Historical Trends
  Cash Flows from Operating Activities.
  Cash Flows from Investing Activities .
 Cash Flows from Financing Activities .
  28




---



##### Table of Contents



Contractual Obligations
  Off-Balance Sheet Arrangements
   Inflation
  Recent Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Foreign Exchange Risks
  Interest Rate Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
 Changes in Internal Control Over Financial Reporting
  29




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  Changes
in, or interpretations of, tax regulations or rates, or changes in the geographic dispersion
of our revenues, or changes in other tax benefits, may adversely affect our income, value-added and
other taxes which may adversely affect our results of operations, cash flow and financial condition.
     30




---



##### Table of Contents



Item 6. Exhibits
  Exhibit No.
    
    Exhibit Title31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232
    
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
  31




---



##### Table of Contents



SMART MODULAR TECHNOLOGIES (WWH), INC.
 
 SIGNATURES
  SMART MODULAR TECHNOLOGIES (WWH), INC.By:
    /s/ IAIN MACKENZIEName:
    Iain MacKenzieTitle:
    President and Chief Executive Officer

(Principal Executive Officer)By:
    /s/ BARRY ZWARENSTEINName:
    Barry ZwarensteinTitle:
    Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)Date: July 2, 2010  32




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Exhibit Title31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232
    
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
  33