##### 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 November 27, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 000-51771
 SMART MODULAR TECHNOLOGIES (WWH), INC.
  Cayman Islands
(State or other jurisdiction of incorporation or organization)
    
    20-2509518
(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




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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
    
    
    18Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4. Controls and Procedures
    
    
    26PART II. OTHER INFORMATION
    
    
    26Item 1. Legal Proceedings
    
    
    26Item 1A. Risk Factors
    
    
    26Item 5. Other Information
    
    
    27Item 6. Exhibits
    
    
    27SIGNATURES
    
    
    28Exhibit 10.33Exhibit 10.34Exhibit 10.35Exhibit 10.36Exhibit 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)
 November 27,
    
    
    August 28,2009
    
    
    2009(In thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    129,102
    
    
    $
    147,658Accounts receivable, net of allowances of
$1,685 and $1,591 as of November 27, 2009
and August 28, 2009, respectively
    
    
    127,388
    
    
    
    130,953Inventories
    
    
    78,686
    
    
    
    63,115Prepaid expenses and other current assets
    
    
    15,917
    
    
    
    12,628Total current assets
    
    
    351,093
    
    
    
    354,354Property and equipment, net
    
    
    35,867
    
    
    
    36,263Goodwill
    
    
    1,061
    
    
    
    1,061Other intangible assets, net
    
    
    7,208
    
    
    
    7,475Other non-current assets
    
    
    5,710
    
    
    
    4,585Total assets
    
    $
    400,939
    
    
    $
    403,738LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    77,102
    
    
    $
    68,928Accrued expenses
    
    
    20,081
    
    
    
    16,615Total current liabilities
    
    
    97,183
    
    
    
    85,543Long-term debt
    
    
    55,072
    
    
    
    81,250Other long-term liabilities
    
    
    1,579
    
    
    
    2,120Total liabilities
    
    $
    153,834
    
    
    $
    168,913Commitments and contingenciesShareholders equity:Ordinary shares, $0.00016667 par value;
600,000,000 shares authorized; 62,032,356 and
61,904,788 shares issued and outstanding as of
November 27, 2009 and August 28, 2009,
respectively
    
    
    10
    
    
    
    10Additional paid-in capital
    
    
    111,116
    
    
    
    109,264Accumulated other comprehensive income
    
    
    10,179
    
    
    
    4,333Retained earnings
    
    
    125,800
    
    
    
    121,218Total shareholders equity
    
    
    247,105
    
    
    
    234,825Total liabilities and shareholders equity
    
    $
    400,939
    
    
    $
    403,738
   3




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##### Table of Contents



SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months EndedNovember 27,
    
    
    November 28,2009
    
    
    2008(In thousands, except per share data)Net sales
    
    $
    123,093
    
    
    $
    140,775Cost of sales (1)
    
    
    94,327
    
    
    
    114,959Gross profit
    
    
    28,766
    
    
    
    25,816Operating expenses:Research and development (1)
    
    
    5,730
    
    
    
    5,436Selling, general and administrative (1)
    
    
    13,366
    
    
    
    14,467Goodwill impairment
    
    
    
    
    
    
    7,210Restructuring charges
    
    
    
    
    
    
    886Total operating expenses
    
    
    19,096
    
    
    
    27,999Income (loss) from operations
    
    
    9,670
    
    
    
    (2,183
    )Interest expense, net
    
    
    (1,663
    )
    
    
    (1,752
    )Other income (expense), net
    
    
    1,292
    
    
    
    (766
    )Total other expense
    
    
    (371
    )
    
    
    (2,518
    )Income (loss) before provision for income taxes
    
    
    9,299
    
    
    
    (4,701
    )Provision for income taxes
    
    
    4,717
    
    
    
    2,177Net income (loss)
    
    
    4,582
    
    
    
    (6,878
    )Net income (loss) per share, basic
    
    $
    0.07
    
    
    $
    (0.11
    )Net income (loss) per share, diluted
    
    $
    0.07
    
    
    $
    (0.11
    )Shares used in computing basic net income
(loss) per share
    
    
    61,974
    
    
    
    61,507Shares used in computing diluted net income (loss) per
share
    
    
    64,016
    
    
    
    61,507(1)      Stock-based compensation by category:Cost of sales
    
    $
    157
    
    
    $
    201Research and development
    
    
    297
    
    
    
    431Selling, general and administrative
    
    
    1,192
    
    
    
    1,155
   4




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SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 Three Months EndedNovember 27,
    
    
    November 28,2009
    
    
    2008Net income (loss)
    
    $
    4,582
    
    
    $
    (6,878
    )Other comprehensive income (loss):Net changes in unrealized gain or loss on
derivative instruments accounted for as
cash flow hedges
    
    
    475
    
    
    
    (345
    )Foreign currency translation
    
    
    5,371
    
    
    
    (17,908
    )Comprehensive income (loss)
    
    $
    10,428
    
    
    $
    (25,131
    )
   5




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##### Table of Contents



SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three Months EndedNovember 27,
    
    
    November 28,2009
    
    
    2008(In thousands)Cash flows from operating activities:Net income (loss)
    
    $
    4,582
    
    
    $
    (6,878
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    3,615
    
    
    
    3,328Stock-based compensation
    
    
    1,646
    
    
    
    1,787Changes in allowances for accounts receivable and
sales returns
    
    
    92
    
    
    
    587Amortization of debt issuance costs
    
    
    550
    
    
    
    346(Gain) loss on sale of assets
    
    
    (35
    )
    
    
    87Gain on early repayment of long-term debt
    
    
    (1,178
    )
    
    
    Goodwill impairment
    
    
    
    
    
    
    7,210Changes in operating assets and liabilities:Accounts receivable
    
    
    4,650
    
    
    
    39,750Inventories
    
    
    (14,580
    )
    
    
    (19,626
    )Prepaid expenses and other assets
    
    
    (2,676
    )
    
    
    1,569Accounts payable
    
    
    8,089
    
    
    
    2,151Accrued expenses and other liabilities
    
    
    2,948
    
    
    
    (1,672
    )Net cash provided by operating activities
    
    
    7,703
    
    
    
    28,639Cash flows from investing activities:Capital expenditures
    
    
    (1,410
    )
    
    
    (3,773
    )Cash deposits on equipment
    
    
    (1,630
    )
    
    
    (795
    )Proceeds from sale of property and equipment
    
    
    145
    
    
    
    60Net cash used in investing activities
    
    
    (2,895
    )
    
    
    (4,508
    )Cash flows from financing activities:Repayment of long-term debt
    
    
    (25,000
    )
    
    
    Proceeds from issuance of ordinary shares from stock
option exercises
    
    
    218
    
    
    
    439Net cash (used in) provided by financing activities
    
    
    (24,782
    )
    
    
    439Effect of exchange rate changes on cash and cash equivalents
    
    
    1,418
    
    
    
    (3,303
    )Net (decrease) increase in cash and cash equivalents
    
    
    (18,556
    )
    
    
    21,267Cash and cash equivalents at beginning of period
    
    
    147,658
    
    
    
    115,994Cash and cash equivalents at end of period
    
    $
    129,102
    
    
    $
    137,261Supplemental disclosures of cash flow information:Cash paid during the year:Interest
    
    $
    1,648
    
    
    $
    1,880Taxes
    
    
    4,081
    
    
    
    2,121Non-cash activities information:Change in fair value of derivative instruments
    
    $
    (350
    )
    
    $
    377
   6




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##### 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
  Recent Accounting Pronouncements
   7




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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,
 NOTE 2  Stock-Based Compensation
 Compensation  Stock
Compensation
  Stock Options
   Option Exchange
     8




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Summary of Assumptions and Activity
 .
 Three Months EndedNovember 27,
    
    
    November 28,2009
    
    
    2008Stock options:Expected term (years)
    
    
    4.7
    
    
    
    5.3Expected volatility
    
    
    70.1
    %
    
    
    57.0
    %Risk-free interest rate
    
    
    2.11
    %
    
    
    2.01
    %Expected dividends
    
    
    
    
    
    
    
  WeightedAverageWeighted
    
    
    RemainingAverage
    
    
    Contractual
    
    
    AggregateExercise
    
    
    Term
    
    
    IntrinsicShares
    
    
    Price
    
    
    (Years)
    
    
    ValueOptions outstanding at August 28, 2009
    
    
    8,796
    
    
    $
    4.99Options granted
    
    
    2,617
    *
    
    
    5.31Options exercised
    
    
    (125
    )
    
    
    1.75Options forfeited and cancelled
    
    
    (2,618
    )*
    
    
    8.41Options outstanding at November 27, 2009
    
    
    8,670
    
    
    $
    4.10
    
    
    
    7.4
    
    
    $
    11,787Options vested and exercisable at November 27, 2009
    
    
    3,826
    
    
    $
    3.21
    
    
    
    6.0
    
    
    $
    8,993Options vested and expected to vest at November
27, 2009
    
    
    8,244
    
    
    $
    4.08
    
    
    
    7.3
    
    
    $
    11,532
 *
    
    Includes options re-granted (1,864) and cancelled (2,450) due to the Option Exchange.   WeightedAverageGrant Date FairShares
    
    
    Value Per ShareNon-vested stock options at August 28, 2009
    
    
    3,738
    
    
    $
    2.87Non-vested stock options granted
    
    
    2,617
    *
    
    
    2.55Vested stock options
    
    
    (303
    )
    
    
    2.79Forfeited
and cancelled non-vested stock options
    
    
    (1,208
    )*
    
    
    4.43Non-vested stock options at November 27, 2009
    
    
    4,844
    
    
    $
    2.41
 *
    
    Includes options re-granted
(1,864) and cancelled (1,040) due to the Option Exchange.  Restricted Stock Units (RSUs)
    9




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##### Table of Contents



WeightedAverageGrant
    
    
    AggregateDate Fair
    
    
    IntrinsicShares
    
    
    Value
    
    
    ValueAwards outstanding at August 28, 2009
    
    
    68
    
    
    $
    2.94Awards granted
    
    
    1,044
    
    
    
    5.77Awards vested
    
    
    (5
    )
    
    
    2.84Awards forfeited
    
    
    (6
    )
    
    
    5.20Awards outstanding at November 27, 2009
    
    
    1,101
    
    
    $
    5.61
    
    
    $
    5,056
  NOTE 3  Goodwill and Other Intangible Assets, net
 Intangibles  Goodwill and Other
    Weighted
    
    
    Value at
    
    
    As of November 27, 2009
    
    
    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
    
    
    $
    648
    
    
    $
    3,052
    
    
    $
    555
    
    
    $
    3,145Technology
    
    
    7
    
    
    
    2,800
    
    
    
    700
    
    
    
    2,100
    
    
    
    600
    
    
    
    2,200Company trade name
    
    
    20
    
    
    
    2,040
    
    
    
    178
    
    
    
    1,862
    
    
    
    153
    
    
    
    1,887Leasehold interest
    
    
    3
    
    
    
    260
    
    
    
    142
    
    
    
    118
    
    
    
    122
    
    
    
    138Non-compete agreement
    
    
    2
    
    
    
    220
    
    
    
    192
    
    
    
    28
    
    
    
    165
    
    
    
    55Product names
    
    
    9
    
    
    
    60
    
    
    
    12
    
    
    
    48
    
    
    
    10
    
    
    
    50Total
    
    
    11
    
    
    $
    9,080
    
    
    $
    1,872
    
    
    $
    7,208
    
    
    $
    1,605
    
    
    $
    7,475
  10




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##### Table of Contents



Fiscal Year:
    
    AmountRemainder of fiscal 2010
    
    $
    7482011
    
    
    9362012
    
    
    8792013
    
    
    8792014
    
    
    879Thereafter
    
    
    2,887Total
    
    $
    7,208
 NOTE 4  Net Income (Loss) Per Share
   Three Months EndedNovember 27,
    
    
    November 28,2009
    
    
    2008Numerator:Net income (loss)
    
    $
    4,582
    
    
    $
    (6,878
    )Denominator:Weighted average ordinary shares, basic
    
    
    61,974
    
    
    
    61,507Effect of dilutive securities:Stock options and RSUs
    
    
    2,042
    
    
    
    Weighted average ordinary shares, diluted
    
    
    64,016
    
    
    
    61,507Net income (loss) per ordinary share, basic
    
    $
    0.07
    
    
    $
    (0.11
    )Net income (loss) per ordinary share, diluted
    
    $
    0.07
    
    
    $
    (0.11
    )
  NOTE 5  Inventories
  November 27,
    
    
    August 28,2009
    
    
    2009Raw materials
    
    $
    26,909
    
    
    $
    20,207Work-in process
    
    
    8,698
    
    
    
    4,716Finished goods
    
    
    43,079
    
    
    
    38,192$
    78,686
    
    
    $
    63,115
  11




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##### Table of Contents



NOTE 6  Income Taxes
  Three Months EndedNovember 27,
    
    
    November 28,2009
    
    
    2008Current
    
    $
    4,728
    
    
    $
    2,192Deferred
    
    
    (11
    )
    
    
    (15
    )Total
    
    $
    4,717
    
    
    $
    2,177
  Three Months EndedNovember 27,
    
    
    November 28,2009
    
    
    2008U.S. loss
    
    $
    (4,263
    )
    
    $
    (12,329
    )Non-U.S. income
    
    
    13,562
    
    
    
    7,628Total
    
    $
    9,299
    
    
    $
    (4,701
    )
    NOTE 7  Indebtedness
    12




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Financial Instruments
 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 include its non-current
variable-to-fixed interest rate swap.
 
    
    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.
  13




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Quoted prices in
    
    
    Observable/Active Markets
    
    
    Unobservablefor Identical
    
    
    InputsAssets or
    
    
    Corroborated byLiabilities
    
    
    Market DataLevel 1
    
    
    Level 2
    
    
    TotalBalances as of November 27, 2009:Assets: (1)Money market funds (2)
    
    $
    24.5
    
    
    $
    
    
    
    $
    24.5Certificates of deposit (2)
    
    
    20.1
    
    
    
    
    
    
    
    20.1Total assets measured at fair value (3)
    
    $
    44.6
    
    
    $
    
    
    
    $
    44.6Liabilities:Non-current variable-to-fixed interest rate swap
    
    $
    
    
    
    $
    (1.0
    )
    
    $
    (1.0
    )Total liabilities measured at fair value
    
    $
    
    
    
    $
    (1.0
    )
    
    $
    (1.0
    )Balances as of August 28, 2009:Assets: (1)Money market funds (2)
    
    $
    79.2
    
    
    $
    
    
    
    $
    79.2Certificates of deposit (2)
    
    
    24.0
    
    
    
    
    
    
    
    24.0Total assets measured at fair value (3)
    
    $
    103.2
    
    
    $
    
    
    
    $
    103.2Liabilities:Non-current variable-to-fixed interest rate swap
    
    $
    
    
    
    $
    (1.3
    )
    
    $
    (1.3
    )Total liabilities measured at fair value
    
    $
    
    
    
    $
    (1.3
    )
    
    $
    (1.3
    )
 
 (1)
    
    There were no assets or liabilities measured under Level 3.(2)
    
    Included in cash and cash equivalents on the Companys consolidated balance sheet.(3)
    
    The total in Level 1 does not included $84.5 million and $44.5 million of cash
balances from checking and savings accounts for November 27, 2009 and August 28, 2009,
respectively. Derivative Instruments
 Derivatives and Hedging
  NOTE 9  Commitments and Contingencies
 Product Warranty
   14




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Three Months EndedNovember 27, 2009Balance of accrual at August 28, 2009
    
    $
    694Warranty claims
    
    
    (226
    )Provision for product warranties
    
    
    128Balance of accrual at November 27, 2009
    
    $
    596
   Legal Matters
  Brazil
  Tessera
  
 
  15




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##### Table of Contents




    Contingencies
 Brazil Legal Matters
  NOTE 10  Segment and Geographic Information
   Three Months EndedNovember 27,
    
    
    November 28,2009
    
    
    2008Geographic net sales:U.S.
    
    $
    43,104
    
    
    $
    57,201Other Americas
    
    
    46,467
    
    
    
    43,088Europe
    
    
    8,630
    
    
    
    16,308Asia
    
    
    24,892
    
    
    
    24,178$
    123,093
    
    
    $
    140,775
  16




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##### Table of Contents



November 27,
    
    
    August 28,2009
    
    
    2009Property and equipment, net:U.S.
    
    $
    6,862
    
    
    $
    7,724Other Americas
    
    
    22,857
    
    
    
    22,654Europe
    
    
    35
    
    
    
    40Asia
    
    
    6,113
    
    
    
    5,845$
    35,867
    
    
    $
    36,263
 NOTE 11  Major Customers
  Three Months EndedNovember 27,
    
    
    November 28,2009
    
    
    2008Customer A
    
    
    23
    %
    
    
    34
    %Customer B
    
    
    18
    %
    
    
    12
    %Customer C
    
    
    12
    %
    
    
    *
 
 *
    
    Less than 10%  NOTE 12  Restructuring
  NOTE 13  Subsidiary Guarantors
  NOTE 14 Other Income (Expense), Net
  Three Months EndedNovember 27,
    
    
    November  28,2009
    
    
    2008Foreign currency losses
    
    
    (50
    )
    
    
    (799
    )Gain on early repayment of long-term debt
    
    
    1,178
    
    
    
    Other
    
    
    164
    
    
    
    33Total
    
    $
    1,292
    
    
    $
    (766
    )
  17




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##### Table of Contents



NOTE 15  Subsequent Events
     
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   Executive Overview
   18




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##### Table of Contents



Key Business Metrics
  Net Sales
  Cost of Sales
  Research and Development Expenses
  Selling, General and Administrative Expenses
   19




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##### Table of Contents



Critical Accounting Policies
   Revenue Recognition
    Three Months EndedNovember 27,
    
    
    November 28,2009
    
    
    2008Product net sales
    
    $
    115,141
    
    
    $
    128,800Service revenue
    
    
    7,952
    
    
    
    11,975Net sales
    
    
    123,093
    
    
    
    140,775Plus: Cost of sales (1)
    
    
    153,604
    
    
    
    186,210Gross billings to customers
    
    $
    276,697
    
    
    $
    326,985
 
 (1)
    
    Represents cost of sales associated with service revenue reported on a net
basis. Accounts Receivable
    20




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##### Table of Contents



Inventory Valuation
  Restructuring Charges
  Income Taxes
    Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed
   21




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##### Table of Contents



Impairment of Goodwill
 Intangibles  Goodwill and Other
  Stock-Based Compensation
 Compensation  Stock Compensation
 Results of Operations
  Three Months EndedNovember 27,
    
    
    % of
    
    
    November 28,
    
    
    % of2009
    
    
    sales
    
    
    2008
    
    
    salesNet sales
    
    $
    123.1
    
    
    
    100
    %
    
    $
    140.8
    
    
    
    100
    %Cost of sales
    
    
    94.3
    
    
    
    77
    %
    
    
    115.0
    
    
    
    82
    %Gross profit
    
    
    28.8
    
    
    
    23
    %
    
    
    25.8
    
    
    
    18
    %Research and development
    
    
    5.7
    
    
    
    5
    %
    
    
    5.4
    
    
    
    4
    %Selling, general, and administrative
    
    
    13.4
    
    
    
    11
    %
    
    
    14.5
    
    
    
    10
    %Goodwill impairment
    
    
    0.0
    
    
    
    0
    %
    
    
    7.2
    
    
    
    5
    %Restructuring charges
    
    
    0.0
    
    
    
    0
    %
    
    
    0.9
    
    
    
    1
    %Total operating expenses
    
    
    19.1
    
    
    
    16
    %
    
    
    28.0
    
    
    
    20
    %Income (loss) from operations (1)
    
    
    9.7
    
    
    
    8
    %
    
    
    (2.2
    )
    
    
    -2
    %Interest expense, net
    
    
    (1.7
    )
    
    
    -1
    %
    
    
    (1.8
    )
    
    
    -1
    %Other income (expense), net
    
    
    1.3
    
    
    
    1
    %
    
    
    (0.8
    )
    
    
    -1
    %Total other expense (1)
    
    
    (0.4
    )
    
    
    0
    %
    
    
    (2.5
    )
    
    
    -2
    %Income (loss) before provision for income taxes(1)
    
    
    9.3
    
    
    
    8
    %
    
    
    (4.7
    )
    
    
    -3
    %Provision for income taxes
    
    
    4.7
    
    
    
    4
    %
    
    
    2.2
    
    
    
    2
    %Net income (loss) (1)
    
    $
    4.6
    
    
    
    4
    %
    
    $
    (6.9
    )
    
    
    -5
    %
 
 (1)
    
    Summations may not compute precisely due to rounding. Three Months Ended November 27, 2009 as Compared to the Three Months Ended November 28,
2008
 Net Sales
  Cost of Sales
   22




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##### Table of Contents



Gross Profit
  Research and Development Expenses
  Selling, General and Administrative Expenses
  Goodwill Impairment and Restructuring Charges
  Interest Expense, Net
  Other Income (expense), net
  Provision for Income Taxes
   23




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##### Table of Contents



Liquidity and Capital Resources
  Debt Service
  Senior Secured Floating Rate Exchange Notes Due April 2012 (the Notes).
 Senior Secured Revolving Line of Credit Facility
 Capital Expenditures
  Sources and Uses of Funds
    24




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##### Table of Contents



Historical Trends
  Cash Flows from Operating Activities.
  Cash Flows from Investing Activities .
 Cash Flows from Financing Activities .
 Contractual Obligations
  Off-Balance Sheet Arrangements
   Inflation
  Recent Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   25




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##### Table of Contents



Foreign Exchange Risks
  Interest Rate Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
 Changes in Internal Control Over Financial Reporting
 
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  Our logistics business requires us to make inventory purchases based on customer forecasts which
can be unpredictable and which can in turn cause us to have significant increases in inventory from
time to time resulting in a negative impact on our cash flow and possibly resulting in inventory
write-downs which would have a negative impact on our results of operations and our financial
condition.
  26




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##### Table of Contents



Item 5. Other Information
  
 Item 6. Exhibits
  Exhibit No.
    
    Exhibit Title10.33
    
    
    Form of Second Amended and Restated Indemnification Agreement10.34
    
    
    Form of Time-based RSU Agreement (for Employees)10.35
    
    
    Form of Time-based RSU Agreement (for Directors)10.36
    
    
    Form of Performance-based RSU Agreement (for Employees)31.1
    
    
    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
  27




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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/ BARRY ZWARENSTEINName:
    Barry ZwarensteinTitle:
    Senior Vice President and Chief Financial Officer   28




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Exhibit Title10.33
    
    
    Form of Second Amended and Restated Indemnification Agreement10.34
    
    
    Form of Time-based RSU Agreement (for Employees)10.35
    
    
    Form of Time-based RSU Agreement (for Directors)10.36
    
    
    Form of Performance-based RSU Agreement (for Employees)31.1
    
    
    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
  29