##### 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 March 2, 2007
 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.
 (Exact name of registrant as specified in its charter)
 Cayman Islands
    
    20-2509518(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)4211 Starboard DriveFremont, CA
    
    94538(Address of Principal Executive Offices)
    
    (Zip Code)
 (510) 623-1231
Registrants Telephone Number, Including Area Code
 
 þ o
  o o þ
 o þ




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##### 



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
    
    
    16Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4. Controls and Procedures
    
    
    25PART II. OTHER INFORMATION
    
    
    26Item 1. Legal Proceedings
    
    
    26Item 1A. Risk Factors
    
    
    26Item 4. Submission of Matters to a Vote of Security Holders
    
    
    27Item 6. Exhibits
    
    
    28SIGNATURES
    
    
    29EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 February 28,
    
    
    August 31,2007
    
    
    2006(In thousands)ASSETSCash and cash equivalents
    
    $
    107,426
    
    
    $
    85,620Accounts receivable, net of allowances of $2,547 and $2,592 as of
February 28, 2007 and August 31, 2006, respectively
    
    
    218,819
    
    
    
    208,652Inventories
    
    
    86,999
    
    
    
    65,902Prepaid expenses and other current assets
    
    
    13,723
    
    
    
    17,531Total current assets
    
    
    426,967
    
    
    
    377,705Property and equipment, net
    
    
    27,396
    
    
    
    25,971Goodwill
    
    
    3,187
    
    
    
    3,187Other non-current assets
    
    
    15,399
    
    
    
    19,593Total assets
    
    $
    472,949
    
    
    $
    426,456LIABILITIES AND SHAREHOLDERS EQUITYAccounts payable
    
    $
    182,828
    
    
    $
    169,349Accrued expenses and other current liabilities
    
    
    27,626
    
    
    
    27,325Total current liabilities
    
    
    210,454
    
    
    
    196,674Long-term debt
    
    
    81,250
    
    
    
    81,250Other long-term liabilities
    
    
    1,637
    
    
    
    1,637Total liabilities
    
    
    293,341
    
    
    
    279,561Shareholders equity:Ordinary shares
    
    
    10
    
    
    
    10Additional paid-in capital
    
    
    88,800
    
    
    
    85,251Deferred stock-based compensation
    
    
    (436
    )
    
    
    (555
    )Accumulated other comprehensive income
    
    
    794
    
    
    
    272Retained earnings
    
    
    90,440
    
    
    
    61,917Total shareholders equity
    
    
    179,608
    
    
    
    146,895Total liabilities and shareholders equity
    
    $
    472,949
    
    
    $
    426,456
  3




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##### Table of Contents



SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months
    
    
    Three Months
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedFebruary 28,
    
    
    February 28,
    
    
    February 28,
    
    
    February 28,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands, except per share data)Net sales
    
    $
    239,137
    
    
    $
    163,732
    
    
    $
    476,307
    
    
    $
    321,994Cost of sales*
    
    
    197,975
    
    
    
    133,987
    
    
    
    397,233
    
    
    
    261,648Gross profit
    
    
    41,162
    
    
    
    29,745
    
    
    
    79,074
    
    
    
    60,346Research and development*
    
    
    4,450
    
    
    
    3,912
    
    
    
    8,490
    
    
    
    7,380Selling, general and administrative*
    
    
    16,756
    
    
    
    12,862
    
    
    
    31,010
    
    
    
    25,764Advisory service agreements fees
    
    
    
    
    
    
    9,553
    
    
    
    
    
    
    
    10,303Total operating expenses
    
    
    21,206
    
    
    
    26,327
    
    
    
    39,500
    
    
    
    43,447Income from operations
    
    
    19,956
    
    
    
    3,418
    
    
    
    39,574
    
    
    
    16,899Interest expense, net
    
    
    (2,336
    )
    
    
    (2,891
    )
    
    
    (4,423
    )
    
    
    (5,873
    )Other (expense) income, net
    
    
    (265
    )
    
    
    246
    
    
    
    (336
    )
    
    
    377Total other expense, net
    
    
    (2,601
    )
    
    
    (2,645
    )
    
    
    (4,759
    )
    
    
    (5,496
    )Income before provision (benefit) for
income taxes
    
    
    17,355
    
    
    
    773
    
    
    
    34,815
    
    
    
    11,403Provision (benefit) for income taxes
    
    
    3,385
    
    
    
    (10
    )
    
    
    6,292
    
    
    
    1,274Net income
    
    $
    13,970
    
    
    $
    783
    
    
    $
    28,523
    
    
    $
    10,129Net income per ordinary share, basic
    
    $
    0.24
    
    
    $
    0.02
    
    
    $
    0.48
    
    
    $
    0.20Shares used in computing basic net
income per ordinary share
    
    
    59,396
    
    
    
    51,273
    
    
    
    59,043
    
    
    
    50,166Net income per ordinary share, diluted
    
    $
    0.22
    
    
    $
    0.01
    
    
    $
    0.45
    
    
    $
    0.18Shares used in computing diluted net
income per ordinary share
    
    
    63,790
    
    
    
    56,304
    
    
    
    63,653
    
    
    
    55,015* Stock-based compensation by category:Cost of sales
    
    $
    133
    
    
    $
    41
    
    
    $
    246
    
    
    $
    71Research and development
    
    
    271
    
    
    
    128
    
    
    
    543
    
    
    
    223Selling, general and administrative
    
    
    813
    
    
    
    279
    
    
    
    1,377
    
    
    
    590
  4




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SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 Three Months
    
    
    Three Months
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedFebruary 28,
    
    
    February 28,
    
    
    February 28,
    
    
    February 28,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)Net income
    
    $
    13,970
    
    
    $
    783
    
    
    $
    28,523
    
    
    $
    10,129Other comprehensive income (loss), net
of tax:Changes in fair value of derivative
instruments accounted for as cash flow
hedges
    
    
    76
    
    
    
    569
    
    
    
    (234
    )
    
    
    1,354Foreign currency translation adjustments
    
    
    266
    
    
    
    189
    
    
    
    755
    
    
    
    463Comprehensive income
    
    $
    14,312
    
    
    $
    1,541
    
    
    $
    29,044
    
    
    $
    11,946
  5




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SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months
    
    
    Six MonthsEnded
    
    
    EndedFebruary 28,
    
    
    February 28,2007
    
    
    2006(In thousands)Cash flows from operating activities:Net cash (used in) provided by operating activities
    
    $
    25,434
    
    
    $
    (5,239
    )Cash flows from investing activities:Capital expenditures
    
    
    (5,177
    )
    
    
    (12,338
    )Sale of short term investments
    
    
    
    
    
    
    5,071Cash paid for acquisition of businesses, net of cash acquired
    
    
    
    
    
    
    (680
    )Proceeds from sale of assets
    
    
    
    
    
    
    130Other
    
    
    3
    
    
    
    Net cash used in investing activities
    
    
    (5,174
    )
    
    
    (7,817
    )Cash flows from financing activities:Repayment of customer advance
    
    
    
    
    
    
    (1,000
    )Proceeds from issuance of ordinary shares from stock option exercises
    
    
    834
    
    
    
    49Excess tax benefits from share-based compensation
    
    
    669
    
    
    
    Proceeds from issuance of ordinary shares in an initial public
offering, net of offering expenses paid
    
    
    
    
    
    
    75,233Net cash provided by financing activities
    
    
    1,503
    
    
    
    74,282Effect of exchange rate changes on cash and cash equivalents
    
    
    43
    
    
    
    (34
    )Net increase in cash and cash equivalents
    
    
    21,806
    
    
    
    61,192Cash and cash equivalents at beginning of period
    
    
    85,620
    
    
    
    75,970Cash and cash equivalents at end of period
    
    $
    107,426
    
    
    $
    137,162Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    
    3,679
    
    
    
    6,171Income taxes
    
    
    4,229
    
    
    
    910
  6




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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
    Product and Service Revenue
 Revenue Recognition
 Reporting Revenue Gross as a Principal versus Net as an Agent
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Recent Accounting Pronouncements
 Accounting Changes and Error Corrections Accounting Changes Reporting Accounting Changes in Interim Financial Statements.
 Accounting for Uncertainty in
Income Taxes  an interpretation of FASB Statement No. 109 Accounting for Income Taxes.
 Fair Value Measurements.
 Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements
 )
 NOTE 2  Public Offering
   8




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NOTE 3  Stock-Based Compensation
 Share-Based
Payment Accounting for Stock Issued to Employees
  Plan Description
  Summary of Assumptions and Activity
 Share-Based Payment.
 Six MonthsEndedFebruary 28, 2007Stock options:Expected term (years)
    
    
    6.25Expected volatility
    
    
    73
    %Risk-free interest rate
    
    
    4.58
    %Expected dividends
    
    
    
  WeightedAverageWeighted
    
    
    RemainingAverage
    
    
    Contractual
    
    
    AggregateExercise
    
    
    Term
    
    
    IntrinsicShares
    
    
    Price
    
    
    (Years)
    
    
    ValueOptions outstanding at September 1, 2006
    
    
    6,791
    
    
    $
    1.68Options granted
    
    
    1,681
    
    
    
    10.17Options exercised
    
    
    (1,282
    )
    
    
    (0.65
    )Options forfeited
    
    
    (174
    )
    
    
    (3.96
    )Options outstanding at February 28, 2007
    
    
    7,016
    
    
    
    3.85
    
    
    
    8.3
    
    
    $
    47,109Options exercisable at February 28, 2007
    
    
    2,462
    
    
    $
    1.50
    
    
    
    7.7
    
    
    $
    22,225Options vested and expected to vest at February 28, 2007
    
    
    6,720
    
    
    $
    3.73
    
    
    
    8.2
    
    
    $
    45,925
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Weighted AverageGrant Date FairShares
    
    Value Per ShareNon-vested stock options at September 1, 2006
    
    
    4,131
    
    
    $
    2.06Non-vested stock options granted
    
    
    1,681
    
    
    
    7.18Vested stock options
    
    
    (1,084
    )
    
    
    (2.29
    )Forfeited stock options
    
    
    (174
    )
    
    
    (2.80
    )Non-vested stock options at February 28, 2007
    
    
    4,554
    
    
    $
    3.85
   NOTE 4  Net Income Per Share
   Three Months
    
    
    Three Months
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedFebruary 28,
    
    
    February 28,
    
    
    February 28,
    
    
    February 28,2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator:Net income
    
    $
    13,970
    
    
    $
    783
    
    
    $
    28,523
    
    
    $
    10,129Denominator:Weighted average ordinary shares
    
    
    59,396
    
    
    
    51,273
    
    
    
    59,043
    
    
    
    50,166Effect of dilutive securities:Stock options
    
    
    4,394
    
    
    
    5,031
    
    
    
    4,610
    
    
    
    4,849Total ordinary shares, diluted
    
    
    63,790
    
    
    
    56,304
    
    
    
    63,653
    
    
    
    55,015Net income per ordinary share, basic
    
    $
    0.24
    
    
    $
    0.02
    
    
    $
    0.48
    
    
    $
    0.20Net income per ordinary share, diluted
    
    $
    0.22
    
    
    $
    0.01
    
    
    $
    0.45
    
    
    $
    0.18
 10




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NOTE 5  Related Party Information
   NOTE 6  Inventories
  February 28, 2007
    
    
    August 31, 2006Raw materials
    
    $
    45,544
    
    
    $
    29,249Work-in process
    
    
    9,062
    
    
    
    5,098Finished goods
    
    
    32,393
    
    
    
    31,555$
    86,999
    
    
    $
    65,902
  NOTE 7  Income Taxes (Benefit)
  Three Months
    
    
    Three Months
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedFebruary 28, 2007
    
    
    February 28, 2006
    
    
    February 28, 2007
    
    
    February 28, 2006Current
    
    $
    2,439
    
    
    $
    145
    
    
    $
    4,947
    
    
    $
    1,516Deferred
    
    
    946
    
    
    
    (155
    )
    
    
    1,345
    
    
    
    (242
    )Total
    
    $
    3,385
    
    
    $
    (10
    )
    
    $
    6,292
    
    
    $
    1,274
 11




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Three Months
    
    
    Three Months
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedFebruary 28, 2007
    
    
    February 28, 2006
    
    
    February 28, 2007
    
    
    February 28, 2006U.S. income (loss)
    
    $
    3,816
    
    
    $
    (1,711
    )
    
    $
    5,239
    
    
    $
    (1,325
    )Non-U.S. income
    
    
    13,539
    
    
    
    2,484
    
    
    
    29,576
    
    
    
    12,728Total
    
    $
    17,355
    
    
    $
    773
    
    
    $
    34,815
    
    
    $
    11,403
 NOTE 8  Long-Term Debt
 Senior Secured Floating Rate Notes
     12




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Revolving Line of Credit
     NOTE 9  Financial Instruments
 Fair Value of Financial Instruments
  Derivative Instruments
 Accounting for Derivative Instruments and Hedging Activities.
  13




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NOTE 10  Commitments and Contingencies
 Product Warranty
   Six MonthsEndedFebruary 28, 2007Balance of accrual at August 31, 2006
    
    $
    505Warranty claims
    
    
    (530
    )Provision for product warranties
    
    
    709Balance of accrual at February 28, 2007
    
    $
    684
   Legal Matters
  NOTE 11  Segment and Geographic Information
  Three Months
    
    
    Three Months
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedFebruary 28, 2007
    
    
    February 28, 2006
    
    
    February 28, 2007
    
    
    February 28, 2006Geographic net sales:U.S.A.
    
    $
    147,810
    
    
    $
    102,727
    
    
    $
    302,579
    
    
    $
    204,484Other North and Latin America
    
    
    43,412
    
    
    
    17,562
    
    
    
    74,556
    
    
    
    33,262Europe
    
    
    16,190
    
    
    
    16,007
    
    
    
    35,416
    
    
    
    30,910Asia
    
    
    31,725
    
    
    
    27,436
    
    
    
    63,756
    
    
    
    53,338$
    239,137
    
    
    $
    163,732
    
    
    $
    476,307
    
    
    $
    321,994
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February 28, 2007
    
    
    August 31, 2006Property and equipment:U.S.A.
    
    $
    5,949
    
    
    $
    5,400Other North and Latin America
    
    
    16,924
    
    
    
    15,861Europe
    
    
    9
    
    
    
    49Asia
    
    
    4,514
    
    
    
    4,661$
    27,396
    
    
    $
    25,971
 NOTE 12  Major Customers
  Three Months
    
    Three Months
    
    Six Months
    
    Six MonthsEnded
    
    Ended
    
    Ended
    
    EndedFebruary 28, 2007
    
    February 28, 2006
    
    February 28, 2007
    
    February 28, 2006Customer A
    
    
    45
    %
    
    
    45
    %
    
    
    49
    %
    
    
    44
    %Customer B
    
    
    16
    %
    
    
    16
    %
    
    
    14
    %
    
    
    15
    %
  NOTE 13  Interest Expense, Net
  Three Months
    
    
    Three Months
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedFebruary 28, 2007
    
    
    February 28, 2006
    
    
    February 28, 2007
    
    
    February 28, 2006Interest income
    
    $
    402
    
    
    $
    439
    
    
    $
    902
    
    
    $
    703Interest expense
    
    
    (2,738
    )
    
    
    (3,330
    )
    
    
    (5,325
    )
    
    
    (6,576
    )Interest expense, net
    
    $
    (2,336
    )
    
    $
    (2,891
    )
    
    $
    (4,423
    )
    
    $
    (5,873
    )
 NOTE 14  Subsidiary Guarantors
  15




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Executive Overview
      16




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Key Business Metrics
  Net Sales
  Cost of Sales
  Research and Development Expenses
  Selling, General and Administrative Expenses
  Critical Accounting Policies
  17




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Revenue Recognition
  Reporting Revenue Gross as a
Principal versus Net as an Agent.
  Three Months Ended
    
    
    Six Months EndedFebruary 28,
    
    
    February 28,2007
    
    
    2006
    
    
    2007
    
    
    2006Product net sales
    
    $
    225,256
    
    
    $
    152,106
    
    
    $
    449,704
    
    
    $
    299,965Service revenue
    
    
    13,881
    
    
    
    11,626
    
    
    
    26,603
    
    
    
    22,029Net sales
    
    
    239,137
    
    
    
    163,732
    
    
    
    476,307
    
    
    
    321,994Plus: Cost of sales(1)
    
    
    315,974
    
    
    
    173,464
    
    
    
    575,710
    
    
    
    349,462Gross billing to customers
    
    $
    555,111
    
    
    $
    337,196
    
    
    $
    1,052,017
    
    
    $
    671,456
 
 (1)
    
    Represents cost of sales associated with service revenue accounted for on an agency basis. Accounts Receivable
  18




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Inventory Valuation
  Income Taxes
  Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed
  Stock-Based Compensation
 Share-Based Payment
 Results of Operations
  Three Months Ended
    
    
    Six Months EndedFebruary 28,
    
    
    February 28,2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    $
    239.1
    
    
    $
    163.7
    
    
    $
    476.3
    
    
    $
    322.0Cost of sales
    
    
    198.0
    
    
    
    134.0
    
    
    
    397.2
    
    
    
    261.6Gross profit(1)
    
    
    41.2
    
    
    
    29.7
    
    
    
    79.1
    
    
    
    60.3
 19




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Three Months Ended
    
    
    Six Months EndedFebruary 28,
    
    
    February 28,2007
    
    
    2006
    
    
    2007
    
    
    2006Research and development
    
    
    4.5
    
    
    
    3.9
    
    
    
    8.5
    
    
    
    7.4Selling, general and administrative
    
    
    16.8
    
    
    
    12.9
    
    
    
    31.0
    
    
    
    25.8Advisory service agreements fees
    
    
    
    
    
    
    9.6
    
    
    
    
    
    
    
    10.3Total operating expenses(1)
    
    
    21.2
    
    
    
    26.3
    
    
    
    39.5
    
    
    
    43.4Income from operations(1)
    
    
    20.0
    
    
    
    3.4
    
    
    
    39.6
    
    
    
    16.9Interest expense, net
    
    
    (2.3
    )
    
    
    (2.9
    )
    
    
    (4.4
    )
    
    
    (5.9
    )Other (expense) income, net
    
    
    (0.3
    )
    
    
    0.2
    
    
    
    (0.3
    )
    
    
    0.4Total other expense, net(1)
    
    
    (2.6
    )
    
    
    (2.6
    )
    
    
    (4.8
    )
    
    
    (5.5
    )Income before provision for income taxes
    
    
    17.4
    
    
    
    0.8
    
    
    
    34.8
    
    
    
    11.4Provision for income taxes
    
    
    3.4
    
    
    
    
    
    
    
    6.3
    
    
    
    1.3Net income(1)
    
    $
    14.0
    
    
    $
    0.8
    
    
    $
    28.5
    
    
    $
    10.1
 
 (1)
    
    Summations may not compute precisely due to rounding. Three and Six Months Ended February 28, 2007 as Compared to the Three and Six Months Ended
February 28, 2006
 Net Sales
   Cost of Sales
   Gross Profit
  20




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##### Table of Contents



Research and Development Expenses
   Selling, General and Administrative Expenses
   Advisory Service Agreements Fees
  Interest Expense, Net
   21




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##### Table of Contents



Other (Expense) Income, Net
   Provision for Income Taxes
  Liquidity and Capital Resources
  Debt Service
  Senior Secured Credit Facility.
 Senior Secured Floating Rate Exchange Notes Due April 2012.
 Capital Expenditures
  22




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##### Table of Contents



Sources of Funds
   Historical Trends
  Cash Flows from Operating Activities.
 Cash Flows from Investing Activities.
 Cash Flows from Financing Activities.
 Contractual Obligations
  Payments Due by Period
 Less Than
    
    
    
    
    
    
    
    
    
    
    After1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 Years
    
    
    Total(In millions)Total debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    81.3
    
    
    $
    81.3Interest expense cash obligations
in connection with long-term debt
and related interest rate swaps
    
    
    8.9
    
    
    
    17.9
    
    
    
    17.9
    
    
    
    5.2
    
    
    
    49.9Operating leases
    
    
    2.0
    
    
    
    3.1
    
    
    
    1.2
    
    
    
    0.5
    
    
    
    6.8Total contractual cash obligations
    
    $
    10.9
    
    
    $
    21.0
    
    
    $
    19.1
    
    
    $
    87.0
    
    
    $
    138.0
 23




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##### Table of Contents



Off-Balance Sheet Arrangements
  Inflation
  Recent Accounting Pronouncements
 Accounting Changes and Error Corrections Accounting Changes Reporting Accounting Changes in Interim
Financial Statements.
 Accounting for Uncertainty in Income Taxes  an
interpretation of FASB Statement No. 109 Accounting
for Income Taxes.
 Fair Value Measurements.
 Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements
 )
 24




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##### Table of Contents



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
 25




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
 Compliance with Section 404 of the Sarbanes-Oxley Act of 2002 and other requirements will increase
our costs and require additional management resources.
  Following our secondary share offering, we are no longer a controlled company within the meaning
of the rules of the NASDAQ Global Select Market. However, our principal investors continue to
exert substantial influence over us.
   
    
    mergers, acquisitions or certain sales of assets;
    
    any liquidation, dissolution or bankruptcy;
    
    issuances of securities;
    
    determination of compensation and benefits for our chief executive officer,
president and chief financial officer;
    
    appointment or dismissal of any of the chairman of our board of directors, chief
executive officer,
 26




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##### Table of Contents



president, chief financial officer, or any other executive officer in any similar
capacity;
    
    amendments to the shareholders agreement or exercise or waiver of rights under
the shareholders agreement;
    
    any increase or decrease in the number of directors that comprise our board of
directors;
    
    the declaration of dividends or other distributions or the recapitalization,
reclassification, redemption, repurchase or other acquisition of any of our or our
subsidiaries securities;
    
    any incurrence or refinancing of indebtedness in excess of $10 million;
    
    approval of our business plan, budget and strategy; and
    
    modification of our long-term business strategy, the scope of our business or any
of our material customer relationships.
   
 Item 4. Submission of Matters to a Vote of Security Holders
   Nominee
    
    Votes For
    
    Votes WithheldIain MacKenzie
    
    
    49,855,454
    
    
    
    8,338,783Ajay Shah
    
    
    46,611,231
    
    
    
    11,583,006Eugene Frantz
    
    
    46,404,101
    
    
    
    11,790,136John W. Marren
    
    
    46,422,439
    
    
    
    11,771,798Dipanjan Deb
    
    
    46,422,639
    
    
    
    11,771,598Ezra Perlman
    
    
    46,404,301
    
    
    
    11,789,936Dr. C.S. Park
    
    
    53,305,063
    
    
    
    4,889,174Mukesh Patel
    
    
    46,409,741
    
    
    
    11,784,496Clifton Thomas Weatherford
    
    
    52,997,653
    
    
    
    5,196,584
  Votes For
    
    Votes Against
    
    Abstain58,188,491
    
    
    4,996
    
    
    
    750
 27




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##### 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
 28




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##### Table of Contents



SMART MODULAR TECHNOLOGIES (WWH), INC.
 
 SIGNATURES
  SMART MODULAR TECHNOLOGIES (WWH), INC.By:
    /s/ IAIN MACKENZIEName:
    Iain MacKenzieTitle:
    President and Chief Executive OfficerBy:
    /s/ JACK A. PACHECOName:
    Jack A. PachecoTitle:
    Senior Vice President and Chief Financial Officer  29




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##### 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
 30