##### 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 1934For the Quarterly Period Ended
    November 24, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For 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
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)4211 Starboard Drive
    Fremont, CA

94538(Address of Principal Executive
    Offices)

(Zip
    Code)   (510) 623-1231
 Registrants Telephone Number, Including Area Code
      þ o
  Rule 12b-2
 o o þ
  Rule 12b-2 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


3Condensed
    Consolidated Balance Sheets


3Condensed
    Consolidated Statements of Operations


4Condensed
    Consolidated Statements of Comprehensive Income


5Condensed
    Consolidated Statements of Cash Flows


6Item 2.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


17Item 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 6.


Exhibits


27SIGNATURES


28EXHIBIT 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
  November 30,


August 31,2006


2006(In thousands)(Unaudited)ASSETSCurrent assets:Cash and cash equivalents

$
94,005


$
85,620Accounts receivable, net of
    allowances of $2,805 and $2,592 as of November 30, 2006 and
    August 31, 2006, respectively


229,168



208,652Inventories


81,498



65,902Prepaid expenses and other current
    assets


15,867



17,531Total current assets


420,538



377,705Property and equipment, net


26,775



25,971Goodwill


3,187



3,187Other non-current assets


16,165



19,593Total assets

$
466,665


$
426,456LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
192,895


$
169,349Accrued expenses and other current
    liabilities


27,845



27,325Total current liabilities


220,740



196,674Long-term debt


81,250



81,250Other long-term liabilities


1,637



1,637Total liabilities


303,627



279,561Shareholders equity:Ordinary shares


10



10Additional paid-in capital


86,599



85,251Deferred stock-based compensation


(492
)


(555
)Accumulated other comprehensive
    income


451



272Retained earnings


76,470



61,917Total shareholders equity


163,038



146,895Total liabilities and
    shareholders equity

$
466,665


$
426,456    3




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##### Table of Contents



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


Three MonthsEnded


EndedNovember 30,


November 30,2006


2005(In thousands, exceptper share data)(Unaudited)Net sales

$
237,170


$
158,262Cost of sales*


199,258



127,661Gross profit


37,912



30,601Operating expenses:Research and development*


4,040



3,468Selling, general and
    administrative*


14,254



12,902Advisory service agreements
    fees






750Total operating expenses


18,294



17,120Income from operations


19,618



13,481Interest expense, net


(2,087
)


(2,982
)Other income (expense), net


(71
)


131Total other expense, net


(2,158
)


(2,851
)Income before provision for income
    taxes


17,460



10,630Provision for income taxes


2,907



1,284Net income

$
14,553


$
9,346Net income per ordinary share,
    basic

$
0.25


$
0.19Shares used in computing basic net
    income per ordinary share


58,663



49,071Net income per ordinary share,
    diluted

$
0.23


$
0.17Shares used in computing diluted
    net income per ordinary share


63,488



53,738* Stock-based compensation by
    category:Cost of sales

$
113


$
30Research and development


272



95Selling, general and administrative


564



311    4




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


Three MonthsEnded


EndedNovember 30,


November 30,2006


2005(In thousands)(Unaudited)Net income

$
14,553


$
9,346Other comprehensive income, net of
    tax:Changes in fair value of
    derivative instruments accounted for as cash flow hedges


(310
)


785Foreign currency translation
    adjustments


489



274Comprehensive income

$
14,732


$
10,405    5




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


Three MonthsEnded


EndedNovember 30,


November 30,2006


2005(In thousands)(Unaudited)Cash flows from operating
    activities:Net cash provided by (used in)
    operating activities

$
10,521


$
(12,919
)Cash flows from investing
    activities:Capital expenditures


(2,635
)


(4,933
)Cash paid for acquisition of
    business, net of cash acquired






(680
)Proceeds from sale of assets






125Other, net


3



Net cash used in investing
    activities


(2,632
)


(5,488
)Cash flows from financing
    activities:Net advance on revolving line of
    credit






1,768Repayment of customer advance






(1,000
)Excess tax benefits from
    share-based compensation


289



Proceeds from issuance of ordinary
    shares from stock option exercises


174



46Net cash provided by financing
    activities


463



814Effect of exchange rate changes on
    cash and cash equivalents


33



(44
)Net increase (decrease) in cash
    and cash equivalents


8,385



(17,637
)Cash and cash equivalents at
    beginning of period


85,620



75,970Cash and cash equivalents at end
    of period

$
94,005


$
58,333Supplemental disclosures of cash
    flow information:Cash paid during the period for:Interest


1,784



3,110Income taxes


1,273



523    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
  Form 10-K
  53-week
    Product
    and Service Revenue
  Revenue
    Recognition.
  No. 99-19, Reporting Revenue Gross as a Principal versus Net as an
    Agent.
 7




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SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  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 
    Initial Public Offering
    NOTE 3 
    Stock-Based Compensation
  Share-Based Payment Accounting for Stock Issued to
    Employees
   8




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SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Plan
    Description
  10-year
  Summary
    of Assumptions and Activity
  Share-Based Payment.
  Three MonthsEndedNovember 30,2006Stock options:Expected term

6.25 yearsExpected volatility

77%Risk-free interest rate

4.66%Expected dividends

     WeightedAverageRemainingContractual


AggregateWeighted Average


Term


IntrinsicShares


Exercise Price


(Years)


ValueOptions outstanding at
    September 1, 2006


6,791


$
1.68Options granted


1,522



10.00Options exercised


(524
)


(0.33
)Options forfeited


(56
)


(2.01
)Options outstanding at
    November 30, 2006


7,733



3.41



8.4


$
64,420Options exercisable at
    November 30, 2006


2,676


$
0.92



7.9


$
28,938Options vested and expected to
    vest at November 30, 2006


7,383


$
3.29



8.4


$
62,415    9




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SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted AverageGrant Date FairShares


Value per ShareNon-vested stock options at
    September 1, 2006


4,131


$
2.06Non-vested stock options granted


1,522



7.12Vested stock options


(540
)


(1.89
)Forfeited stock options


(56
)


(1.40
)Non-vested stock options at
    November 30, 2006


5,057


$
3.59       NOTE 4 
    Net Income Per Share
      Three Months


Three MonthsEnded


EndedNovember 30,


November 30,2006


2005Numerator:Net income

$
14,553


$
9,346Denominator:Weighted average ordinary shares


58,663



49,071Effect of dilutive securities:Stock options


4,825



4,667Total ordinary shares, diluted


63,488



53,738Net income per ordinary share,
    basic

$
0.25


$
0.19Net income per ordinary share,
    diluted

$
0.23


$
0.17  10




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##### Table of Contents



SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NOTE 5 
    Related Party Information
      NOTE 6 
    Inventories
    November 30,


August 31,2006


2006Raw materials

$
41,408


$
29,249Work-in process


9,901



5,098Finished goods


30,189



31,555$
81,498


$
65,902     NOTE 7 
    Income Taxes
    Three Months


Three MonthsEnded


EndedNovember 30,


November 30,2006


2005Current

$
2,508


$
1,371Deferred


399



(87
)Total

$
2,907


$
1,284  11




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##### Table of Contents



SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three Months


Three MonthsEnded


EndedNovember 30,


November 30,2006


2005U.S. income

$
1,423


$
386Non-U.S. income


16,037



10,244Total

$
17,460


$
10,630   NOTE 8 
    Long-Term Debt
  Senior
    Secured Floating Rate Notes
          Revolving
    Line of Credit
   12




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SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          NOTE 9 
    Financial Instruments
  Fair
    Value of Financial Instruments
    Derivative
    Instruments
  3-month Accounting for Derivative Instruments
    and Hedging Activities.
     13




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SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  NOTE 10 
    Commitments and Contingencies
  Product
    Warranties
      Three MonthsEndedNovember 30,2006Balance of accrual at
    August 31, 2006

$
505Warranty claims


(268
)Provision for product warranties


330Balance of accrual at
    November 30, 2006

$
567       Legal
    Matters
   14




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SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  NOTE 11 
    Segment and Geographic Information
    Three Months


Three MonthsEnded


EndedNovember 30,


November 30,2006


2005Geographic net sales:U.S.A.

$
154,769


$
101,757Other North and Latin America


31,144



15,700Europe


19,226



14,903Asia


32,031



25,902$
237,170


$
158,262   November 30,


August 31,2006


2006Property and equipment:U.S.A.

$
6,095


$
5,400Other North and Latin America


16,071



15,861Europe


44



49Asia


4,565



4,661$
26,775


$
25,971   NOTE 12 
    Major Customers
    Three Months


Three MonthsEnded


EndedNovember 30,


November 30,2006


2005Customer A


52
%


46
%Customer B


11
%


18
%    15




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##### Table of Contents



SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  NOTE 13 
    Interest Expense, Net
    Three Months


Three MonthsEnded


EndedNovember 30,


November 30,2006


2005Interest income

$
500


$
264Interest expense


(2,587
)


(3,246
)Interest expense, net

$
(2,087
)

$
(2,982
)   NOTE 14 
    Subsidiary Guarantors
   16




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Form 10-Q,
  Executive
    Overview
    TFT-LCD
    Key
    Business Metrics
    Net
    Sales
   17




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##### Table of Contents



Cost
    of Sales
    Research
    and Development Expenses
    Selling,
    General and Administrative Expenses
    Critical
    Accounting Policies
      Revenue
    Recognition
   18




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##### Table of Contents



No. 99-19, Reporting Revenue Gross as a Principal versus Net as an
    Agent.
    Three Months EndedNovember 30,2006


2005Product net sales

$
224,448


$
147,859Service revenue


12,722



10,403Net sales


237,170



158,262Plus:Cost of sales*


259,736



175,998Gross billing to customers

$
496,906


$
334,260     *
    
    Represents cost of sales netted against sales accounted for on
    an agency basis.  Accounts
    Receivable
    Inventory
    Valuation
  first-in,
 19




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##### Table of Contents



Restructuring
    Charges
    Income
    Taxes
    Impairment
    of Long-Lived Assets and Long-Lived Assets to be
    Disposed
    Stock-Based
    Compensation
  Share-Based Payment
 20




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##### Table of Contents



Results
    of Operations
    Three Months EndedNovember 30,2006


2005Net sales

$
237.2


$
158.3Cost of sales


199.3



127.7Gross profit


37.9



30.6Operating Expenses:Research and development


4.0



3.5Selling, general and administrative


14.3



12.9Advisory service agreements
    fees






0.8Total operating expenses*


18.3



17.1Income from operations


19.6



13.5Interest expense, net


(2.1
)


(3.0
)Other income (expense), net


(0.1
)


0.1Total other expense, net


(2.2
)


(2.9
)Income before provision for income
    taxes*


17.5



10.6Provision for income taxes


2.9



1.3Net income

$
14.6


$
9.3     *
    
    Summations may not compute precisely due to rounding.  Three
    Months Ended November 30, 2006 as Compared to the Three
    Months Ended November 30, 2005
  Net
    Sales
    Cost of
    Sales
   21




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##### Table of Contents



Gross
    Profit
    Research
    and Development Expenses
    Selling,
    General and Administrative Expenses
    Advisory
    Service Agreements Fees
    Interest
    Expense, Net
    Other
    Income (Expense), Net
    Provision
    for Income Taxes
  non-U.S.,
  Liquidity
    and Capital Resources
   22




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##### Table of Contents



Debt
    Service
    Senior Secured Credit Facility.
  Senior Secured Floating Rate Exchange Notes Due April
    2012.
  Capital
    Expenditures
  and/or
  Sources
    of Funds
      Historical
    Trends
   23




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##### Table of Contents



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   Off-Balance
    Sheet Arrangements
    Inflation
   24




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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
  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk    Foreign
    Exchange Risks
    Interest
    Rate Risk
   25




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Item 4.
    Controls
    and Procedures  Evaluation of Disclosure Controls and
    Procedures. Rules 13a-15(e) 15d-15(e)) Rules 13a-15 15d-15.
  Changes in Internal Control Over Financial
    Reporting. Rules 13a-15 15d-15
 PART II.
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings    Item 1A.
    Risk
    Factors  Risks
    Related to Our Business
  Compliance
    with Section 404 of the Sarbanes-Oxley Act of 2002 and
    other requirements will increase our costs and require
    additional management resources.
   26




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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  27




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SMART
    MODULAR TECHNOLOGIES (WWH), INC.
 SIGNATURES    SMART MODULAR TECHNOLOGIES (WWH), INC.
  By:
    /s/  IAIN
    MACKENZIE   Title:
    President and Chief Executive Officer  By:
    /s/  JACK
    A. PACHECO   Title:
    Senior Vice President and Chief Financial Officer   28




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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