##### 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 25, 2005ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          
    to          .   Commission file
    number 333-127442
      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 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


2Item 1.

Financial
    Statements


2Condensed
    Consolidated Balance Sheets


2Condensed
    Consolidated Statements of Operations


3Condensed
    Consolidated Statements of Comprehensive Income


4Condensed
    Consolidated Statements of Cash Flows


5Item 2.

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


17Item 3.

Quantitative and
    Qualitative Disclosures About Market Risk


26Item 4.

Controls and
    Procedures


26PART II. OTHER
    INFORMATION


27Item 1.

Legal
    Proceedings


27Item 1A.

Risk Factors


27Item 2.

Unregistered Sales
    of Equity Securities and Use of Proceeds


38Item 6.

Exhibits


39SIGNATURES


40EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32   1




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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 30,


August 31,2005


2005(In thousands,except share data)ASSETSCurrent assets:Cash and cash equivalents

$
58,333


$
75,970Short term investments


5,071



5,071Accounts receivable, net of
    allowances of $2,646 and $2,629 as of November 30, 2005 and
    August 31, 2005, respectively


159,550



144,760Inventories


61,076



53,122Prepaid expenses and other current
    assets


11,436



9,459Total current assets


295,466



288,382Property and equipment, net


15,132



11,309Goodwill


3,198



2,248Intangible assets, net


8,114



9,142Other non-current assets


12,971



9,980Total assets

$
334,881


$
321,061LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
131,090


$
125,305Accrued expenses and other current
    liabilities


26,514



29,912Line of credit


1,768



Advance from customer






1,000Total current liabilities


159,372



156,217Long-term debt


125,000



125,000Other long-term liabilities


739



961Total liabilities


285,111



282,178Shareholders equity:Ordinary shares


8



8Additional paid-in capital


9,675



9,490Deferred stock-based compensation


(829
)


(1,126
)Accumulated other comprehensive
    income


1,959



900Retained earnings


38,957



29,611Total shareholders equity


49,770



38,883Total liabilities and
    shareholders equity

$
334,881


$
321,061    2




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##### Table of Contents



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


Three MonthsEnded


EndedNovember 30,


November 30,2005


2004(In thousands,except per share data)Net sales

$
158,262


$
154,490Cost of sales


127,661



132,645Gross profit


30,601



21,845Operating expenses:Research and development


3,468



2,619Selling, general and administrative


13,652



11,889Restructuring and impairment costs






880Total operating expenses*


17,120



15,388Income from operations


13,481



6,457Interest expense, net


(2,982
)


(543
)Other income (expense), net


131



(251
)Total other expense, net


(2,851
)


(794
)Income before provision for income
    taxes


10,630



5,663Provision for income taxes


1,284



1,473Net income

$
9,346


$
4,190Net income per ordinary share,
    basic

$
0.19


$
0.09Shares used in computing basic net
    income per ordinary share


49,071



48,872Net income per ordinary share,
    diluted

$
0.17


$
0.08Shares used in computing diluted
    net income per ordinary share


53,738



53,104*Stock-based compensation by
    category:Cost of sales

$
30


$
Research and development


95



Selling, general and administrative


311



$
436


$
    3




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##### Table of Contents



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


Three MonthsEnded


EndedNovember 30,


November 30,2005


2004(In thousands)Net income

$
9,346


$
4,190Other comprehensive income, net of
    tax:Changes in fair value of
    derivative instruments accounted for as cash flow hedges


785



Foreign currency translation
    adjustments


274



140Comprehensive income

$
10,405


$
4,330    4




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


Three MonthsEnded


EndedNovember 30,


November 30,2005


2004(In thousands)Cash flows from operating
    activities:Net cash (used in) provided by
    operating activities

$
(12,919
)

$
17,385Cash flows from investing
    activities:Capital expenditures


(4,933
)


(2,126
)Cash paid for acquisition of
    business, net of cash acquired


(680
)


(2,260
)Proceeds from sale of assets


125



Other, net






90Net cash used in investing
    activities


(5,488
)


(4,296
)Cash flows from financing
    activities:Net advance (repayment) on
    revolving line of credit


1,768



(4,105
)Net repayments on other debt






(249
)Repayment of customer advance


(1,000
)


Proceeds from issuance of ordinary
    shares


46



Net cash provided by (used in)
    financing activities


814



(4,354
)Effect of exchange rate changes on
    cash and cash equivalents


(44
)


13Net increase (decrease) in cash
    and cash equivalents


(17,637
)


8,748Cash and cash equivalents at
    beginning of period


75,970



36,747Cash and cash equivalents at end
    of period

$
58,333


$
45,495Supplemental disclosures of cash
    flow information:Cash paid during the period for:Interest


3,110



564Income taxes


523



448    5




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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.
 6




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SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
   NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
   Recent
    Accounting Pronouncements
  Inventory Costs, an amendment of ARB
    No. 43, Chapter 4.
  Accounting Changes and Error Corrections Accounting Changes Reporting
    Accounting Changes in Interim Financial Statements.
  NOTE 2  Stock-Based
    Compensation
  Change
    in Accounting Principle
  Share-Based Payment Accounting for Stock Issued to
    Employees
  Accounting for
    Stock-Based Compensation
    Plan
    Description
  10-year
 7




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##### Table of Contents



SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
   NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
   Summary
    of Assumptions and Activity
  Share-Based Payment.
  Three MonthsEndedNovember 30, 2005Stock options:Expected term


6.25 yearsExpected volatility


81
%Risk-free interest rate


4.38
%Expected dividends


     WeightedWeighted


AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicShares


Price


Term (Years)


ValueOptions outstanding at
    September 1, 2005


5,478


$
0.29Options granted


1,511


$
3.65Options exercised


(269
)

$
(0.17
)Options forfeited


(180
)

$
(0.57
)Options outstanding at
    November 30, 2005


6,540


$
1.06



8.9


$
2,743Options exercisable at
    November 30, 2005


1,526


$
0.28



8.6


$
205       Weighted AverageGrant DateFair ValueShares


Per ShareNon-vested stock options at
    September 1, 2005


4,202


$
0.36Non-vested stock options granted


1,511


$
3.66Vested stock options


(519
)

$
(0.78
)Forfeited stock options


(180
)

$
(1.37
)Non-vested stock options at
    November 30, 2005


5,014


$
1.28  8




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##### Table of Contents



SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
   NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
       NOTE 3  Net
    Income Per Share
      Three Months


Three MonthsEnded


EndedNovember 30, 2005


November 30, 2004Numerator:Net income

$
9,346


$
4,190Denominator:Weighted average ordinary shares


49,071



48,872Effect of dilutive securities:Stock options


4,667



4,232Total ordinary shares, diluted


53,738



53,104Net income per ordinary share,
    basic

$
0.19


$
0.09Net income per ordinary share,
    diluted

$
0.17


$
0.08     NOTE 4  Acquisitions
   9




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SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
   NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
        NOTE 5  Intangibles
    November 30,


August 31,Life


2005


2005Customer relationships


5


$
11,797


$
11,797Technology


3



1,826



1,826Trademark


7



4,680



4,680Total






18,303



18,303Accumulated amortization






(4,402
)


(3,774
)Other deductions






(5,787
)


(5,387
)Carrying value





$
8,114


$
9,142         NOTE 6  Related
    Party Information
   10




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SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
   NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
       NOTE 7  Inventories
    November 30, 2005


August 31, 2005Raw materials

$
27,017


$
23,765Work-in process


8,150



5,680Finished goods


25,909



23,677$
61,076


$
53,122     NOTE 8  Income
    Taxes
    Three Months


Three MonthsEnded


EndedNovember 30, 2005


November 30, 2004Current

$
1,371


$
1,553Deferred


(87
)


(80
)Total

$
1,284


$
1,473     Three Months


Three MonthsEnded


EndedNovember 30, 2005


November 30, 2004U.S. income

$
386


$
1,618Non-U.S. income


10,244



4,045Total

$
10,630


$
5,663  11




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##### Table of Contents



SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
   NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
   NOTE 9  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)
 (Unaudited)
     NOTE 10  Financial
    Instruments
  Fair
    Value of Financial Instruments
    Derivative
    Instruments
  3-month
      NOTE 11  Commitments
    and Contingencies
  Product
    Warranties
   13




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##### Table of Contents



SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
   NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
     Three MonthsEndedNovember 30, 2005Balance of accrual at
    August 31, 2005

$
1,044Warranty claims


(260
)Warranty accruals


141Balance of accrual at
    November 30, 2005

$
925       Legal
    Matters
    NOTE 12  Restructuring
    and Impairment
    Three MonthsEndedNovember 30, 2004Impairment of equipment

$
65Severance and benefit costs


420Exit costs


340Other


55Total

$
880    14




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##### Table of Contents



SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
   NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
   Restructuring
    Accrual
    SeveranceandBenefits


Other


TotalBalance of accrual at
    August 31, 2005

$
99


$
108


$
207Cash payments


(57
)






(57
)Balance of accrual at
    November 30, 2005

$
42


$
108


$
150     NOTE 13  Segment
    and Geographic Information
    Three Months


Three MonthsEnded


EndedNovember 30, 2005


November 30, 2004Geographic net sales:U.S.A.

$
101,757


$
111,898Other North and Latin America


15,700



12,832Europe


14,903



9,154Asia


25,902



20,606$
158,262


$
154,490   November 30, 2005


August 31, 2005Long-lived assets:U.S.A.

$
4,746


$
4,240Brazil


4,019



1,494Other North and Latin America


632



658Europe


33



36Malaysia


4,878



4,117Other Asia


824



764$
15,132


$
11,309  15




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##### Table of Contents



SMART
    MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
   NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Unaudited)
   NOTE 14  Major
    Customers
    Three Months


Three MonthsEnded


EndedNovember 30, 2005


November 30, 2004Customer A


46%



47%Customer B


18%



16%     NOTE 15  Interest
    Expense, Net
    Three Months


Three MonthsEnded


EndedNovember 30, 2005


November 30, 2004Interest income

$
264


$
71Interest expense


(3,246
)


(614
)Interest expense, net

$
(2,982
)

$
(543
)   NOTE 16  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
       17




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##### Table of Contents



Key
    Business Metrics
    Net
    Sales
    Cost
    of Sales
    Research
    and Development Expenses
    Selling,
    General and Administrative Expenses
    Critical
    Accounting Policies
     18




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##### Table of Contents



Revenue
    Recognition
    No. 99-19, Reporting Revenue Gross as a Principal versus Net as an
    Agent.
    Three Months EndedNovember 30,2005


2004Product net sales

$
147,859


$
146,336Service revenue


10,403



8,154Net sales


158,262



154,490Plus:Cost of sales*


175,998



191,683Gross billing to customers

$
334,260


$
346,173     *
    Represents cost of sales netted against sales accounted for on
    an agency basis.  Accounts
    Receivable
    Inventory
    Valuation
  first-in,
 19




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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 30,2005


2004Net sales

$
158.3


$
154.5Cost of sales


127.7



132.6Gross profit


30.6



21.9Operating Expenses:Research and development


3.5



2.6Selling, general and administrative


13.7



11.9Restructuring and impairment costs






0.9Total operating expenses*


17.1



15.4Income from operations


13.5



6.5Interest expense, net


(3.0
)


(0.5
)Other income (expense), net


0.1



(0.3
)Total other expense, net


(2.9
)


(0.8
)Income before provision for income
    taxes


10.6



5.7Provision for income taxes


1.3



1.5Net income

$
9.3


$
4.2     *
    Summations may not compute precisely due to rounding.  Three
    Months Ended November 30, 2005 as Compared to the Three
    Months Ended November 30, 2004
  Net
    Sales
    Cost of
    Sales
    Gross
    Profit
   21




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##### Table of Contents



Research
    and Development Expenses
    Selling,
    General and Administrative Expenses
    Restructuring
    and Impairment Costs
    Interest
    Expense, Net
    Other
    Income (Expense), Net
    Provision
    for Income Taxes
    Liquidity
    and Capital Resources
   22




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##### Table of Contents



Debt
    Service
    Senior Secured Credit Facility.
  Senior Secured Floating Rate Notes.
  Capital
    Expenditures
    Sources
    of Funds
     23




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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
    Payments
    Due by Period
  Less Than








After1 Year


1-3 Years


4-5 Years


5 Years


Total(In millions)Total debt(1)

$
1.8


$



$



$
125.0


$
126.8Interest expense cash obligations
    in connection with long-term debt(2)


12.0



36.0



24.0



4.0



76.0Operating leases


1.8



4.4



1.1







7.3Total contractual cash obligations

$
15.6


$
40.4


$
25.1


$
129.0


$
210.1     (1)
    
    Our senior secured credit facility had a balance of
    approximately $1.8 million at November 30, 2005.(2)
    
    Interest expense cash obligations are estimated based on the
    current interest rates in effect for our long-term debt as of
    November 30, 2005.  Off-Balance
    Sheet Arrangements
   24




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##### Table of Contents



Inflation
    Recent
    Accounting Pronouncements
  Inventory Costs, an amendment
    of ARB No. 43, Chapter 4.
  APB
    No. 20, Accounting Changes and SFAS No. 3,
    Reporting Accounting Changes in Interim Financial
    Statements.
 25




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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. Rules 13a-15(e) 15d-15(e)) Rules 13a-15 15d-15.
  Changes in Internal Control Over Financial
    Reporting. Rules 13a-15 15d-15
 26




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##### Table of Contents



PART II.
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings    Item 1A.
    Risk
    Factors  Risks
    Related to Our Business
  We are
    subject to the cyclical nature of the markets in which we
    compete and any future downturn could adversely affect our
    business.
    period-to-period
  We
    have experienced quarterly and annual losses in the past and may
    experience losses in the future.
    Declines
    in our average selling prices may result in declines in our net
    sales and gross profit.
     27




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Sales
    to a limited number of customers represent a significant portion
    of our net sales, and the loss of any key customer would
    materially harm our business.
      Our
    customers are primarily in the computing, networking,
    communications, printer, storage and industrial markets, and
    fluctuations in demand in these markets may adversely affect
    sales of our products.
  period-to-period
  Customer
    demand is difficult to accurately forecast and, as a result, we
    may be unable to optimally calibrate production to meet customer
    demand.
   28




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##### Table of Contents



Order
    cancellations or reductions, product returns and product
    obsolescence could result in substantial inventory
    write-downs.
    We may
    be less competitive if we fail to develop new or enhanced
    products and introduce them in a timely manner.
      first-to-market
  Our
    dependence on a small number of sole or limited source suppliers
    subjects us to certain risks and our results of operations would
    be adversely affected if we are unable to obtain adequate
    supplies in a timely manner.
    The
    flash memory market is constantly evolving and competitive, and
    we may not have rights to manufacture and sell certain types of
    products utilizing emerging flash formats, or we may be required
    to pay a royalty to sell products utilizing these
    formats.
   29




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Our
    growth strategy includes expanding our presence in the embedded
    computing and TFT-LCD markets which are competitive
    markets.
    Our
    growth initiatives require significant capital investments and
    we cannot assure you that we will realize a positive return on
    these investments.
    Industry
    consolidation could adversely affect our business by reducing
    the number of our potential significant customers and increasing
    our reliance on our existing key customers.
    We may
    make acquisitions which involve numerous risks. If we are not
    successful in integrating the technologies, operations and
    personnel of acquired businesses or fail to realize the
    anticipated benefits of an acquisition, our operations may be
    adversely affected.
    
    problems integrating the purchased operations, technologies or
    products;
    costs associated with the acquisition;
    negative effects on profitability resulting from the acquisition;
    adverse effects on existing business relationships with
    suppliers and customers; 30




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##### Table of Contents




    risks associated with entering markets in which we have no or
    limited prior experience;
    loss of key employees of the acquired business; and
    litigation arising from the acquired companys operations
    before the acquisition.    We may
    not be able to maintain or improve our competitive position
    because of the intense competition in the markets we
    serve.
          Our
    success is dependent on achieving design wins into commercially
    successful OEM systems and the failure to achieve design wins or
    of OEM customers to incorporate our products in their systems
    could adversely affect our operating results and
    prospects.
   31




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Our
    business is dependent upon our OEM customers continuing to
    outsource the design and manufacturing of value added
    subsystems.
    Our
    future success is dependent on our ability to retain key
    personnel, including our executive officers, and attract
    qualified personnel. If we lose the services of these
    individuals or are unable to attract new talent, our business
    will be adversely affected.
    We
    rely on third-party sales representatives to assist in selling
    our products, and the failure of these representatives to
    perform as expected could reduce our future sales.
    We
    have and will continue to incur increased costs as a result of
    becoming a reporting company.
   32




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##### Table of Contents



If we
    fail to maintain an effective system of internal controls or
    discover material weaknesses in our internal controls over
    financial reporting, we may not be able to report our financial
    results accurately or detect fraud, which could harm our
    business and the trading price of our ordinary
    shares.
    Our
    indemnification obligations to our customers and suppliers for
    product defects could require us to pay substantial
    damages.
    Our
    operations in foreign countries are subject to political and
    economic risks, which could have a material adverse effect on
    us.
     33




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##### Table of Contents



Our
    inability to effectively manage our operations in foreign
    countries could harm our operating results.
  day-to-day
  Worldwide
    economic and political conditions may adversely affect demand
    for our products.
          Unfavorable
    currency exchange rate fluctuations could result in our products
    becoming relatively more expensive to our overseas customers or
    increase our manufacturing costs, each of which could adversely
    affect our profitability.
   34




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##### Table of Contents



Our
    worldwide operations could be subject to natural disasters and
    other business disruptions, which could materially adversely
    affect our business and increase our costs and
    expenses.
  and/or
  Our
    ability to compete successfully and achieve future growth will
    depend, in part, on our ability to protect our intellectual
    property, as well as our ability to operate without infringing
    the intellectual property of others.
    
    prevent our competitors from independently developing similar
    products, duplicating our products or designing around the
    patents owned by us;
    prevent third-party patents from having an adverse effect on our
    ability to do business;
    provide adequate protection for our intellectual property rights;
    prevent disputes with third parties regarding ownership of our
    intellectual property rights;
    prevent disclosure of our trade secrets and know-how to third
    parties or into the public domain;
    prevent the challenge, invalidation or circumvention of our
    existing patents;
    result in patents that lead to commercially viable products or
    provide competitive advantages for our products; and
    result in issued patents and registered trademarks from any of
    our pending applications.     35




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Our
    indemnification obligations for the infringement by our products
    of the intellectual property rights of others could require us
    to pay substantial damages.
    We
    could incur substantial costs as a result of violations of or
    liabilities under environmental laws.
    We are
    subject to a variety of federal, state and foreign laws and
    regulatory regimes. Failure to comply with governmental laws and
    regulations could subject us to, among other things, mandatory
    product recalls, penalties and legal expenses which could have
    an adverse effect on our business.
  wage-hour
   36




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Risks
    Related to our Substantial Debt
  Our
    substantial indebtedness could impair our financial condition
    and harm our ability to operate our business.
      
    it may limit our ability to service all of our debt obligations;
    it may impair our ability to obtain additional financing in the
    future for working capital, capital expenditures, acquisitions,
    general corporate purposes or other purposes;
    a significant portion of our cash flow from operations must be
    dedicated to the payment of interest and principal on our debt,
    which will reduce the funds available to us for our operations;
    some of our debt is and will continue to be at variable rates of
    interest, which may result in higher interest expense in the
    event of increases in interest rates;
    our debt agreements contain, and any agreements to refinance our
    debt likely will contain, financial and restrictive covenants,
    and our failure to comply with them may result in an event of
    default which, if not cured or waived, could have a material
    adverse effect on us;
    our level of indebtedness will increase our vulnerability to
    general economic downturns and adverse industry conditions;
    our debt service obligations could limit our flexibility in
    planning for, or reacting to, changes in our business and our
    industry; and
    our substantial leverage could place us at a competitive
    disadvantage compared to those of our competitors who have less
    leverage.  To
    service our debt, we will require a significant amount of cash
    and we may not be able to generate sufficient cash flow from
    operations to satisfy these obligations or to refinance these
    obligations on acceptable terms, or at all.
     37




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Our
    existing debt is subject to floating interest rates, which may
    cause our interest expense to increase and decrease cash
    available for operations and other purposes.
    Restrictive
    covenants contained in our senior secured credit facility and
    the indenture relating to our senior secured floating rate notes
    may restrict our current and future operations, particularly our
    ability to respond to changes or to take some actions and our
    failure to comply with such covenants, whether due to events
    beyond our control or otherwise, could result in an event of
    default which could materially and adversely affect our
    operating results and our financial condition.
      Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds     38




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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  39




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SMART
    MODULAR TECHNOLOGIES (WWH), INC.
  SIGNATURES
    SMART MODULAR TECHNOLOGIES (WWH), INC.
  By:
    /s/  IAIN
    MACKENZIE      By:
    /s/  JACK
    A. PACHECO       40




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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