##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K/ A


(Amendment No. 1)


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended August 27, 2004                                                   
|          
|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 001-11098


SOLECTRON CORPORATION


(Exact name of Registrant as Specified in its Charter)


|                                                                                                                  |  |                                                                       
|----------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------
|Delaware                                                                                                          |  | 94-2447045                                                            
|(State or Other Jurisdiction of
    Incorporation or Organization)                                                |  | (I.R.S. Employer
    Identification Number)                           
|847 Gibraltar Drive
    Milpitas, California 95035(Address of Principal Executive Offices including Zip
    Code) |  | (408) 957-8500(Registrants Telephone Number, Including Area
    Code)

Securities registered pursuant to Section 12(b) of the
Act:


0.5% Convertible Senior Notes due 2034


7.25% Adjustable Conversion  Rate Equity Security
Units


3.25% Liquid Yield Option Notes due 2020


2.75% Liquid Yield Option Notes due 2020


Common Stock


Securities registered pursuant to Section 12(g) of the
Act:


None


þ o


o


þ o






DOCUMENTS INCORPORATED BY REFERENCE












---



##### Table of Contents



SOLECTRON CORPORATION


EXPLANATORY NOTE












2



---










SOLECTRON CORPORATION


2004 FORM 10-K/A


(Amendment No. 1)


ANNUAL REPORT


TABLE OF CONTENTS


|             |  |                                                                                           |    |      |    | 
|------------ |  | ----------------------------------------------------------------------------------------- | -- | ---- | -- | 
|             |  |                                                                                           |    | Page |   
|             |  |                                                                                           |    |      |   
|PART I      
|Item 1.      |  | Business                                                                                  |    |      | 4  | 
|Item 2.      |  | Properties                                                                                |    |      | 9  | 
|Item 3.      |  | Legal Proceedings                                                                         |    |      | 11 | 
|Item 4.      |  | Submission of Matters to a Vote of Security
    Holders                                   |    |      | 12 | 
|            
|PART II     
|Item 5.      |  | Market for the Registrants Common
    Equity and Related Stockholder Matters             |    |      | 14 | 
|Item 6.      |  | Selected Financial Data                                                                   |    |      | 14 | 
|Item 7.      |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations |    |      | 16 | 
|Item 7a      |  | Quantitative and Qualitative Disclosures
    About Market Risk                            |    |      | 39 | 
|Item 8.      |  | Consolidated Financial Statements and
    Supplementary Data                              |    |      | 39 | 
|Item 9.      |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure  |    |      | 96 | 
|Item 9a      |  | Controls and Procedures                                                                   |    |      | 96 | 
|            
|PART III    
|Item 10.     |  | Directors and Executive Officers of the
    Registrant                                    |    |      | 97 | 
|Item 11.     |  | Executive Compensation                                                                    |    |      | 98 | 
|Item 12.     |  | Security Ownership of Certain Beneficial
    Owners and Management                        |    |      | 98 | 
|Item 13.     |  | Certain Relationships and Related
    Transactions                                        |    |      | 98 | 
|Item 14.     |  | Principal Accountant Fees and Services                                                    |    |      | 98 | 
|            
|PART IV     
|Item 15.     |  | Exhibits, Consolidated Financial Statement
    Schedules and Reports on Form 8-K          |    |      | 98 | 
|Signatures   |  |                                                                                           | 99 |     
|EXHIBIT 12.1
|EXHIBIT 23.1
|EXHIBIT 31.1
|EXHIBIT 31.2
|EXHIBIT 32.1
|EXHIBIT 32.2





3



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PART I







|        |         
|------- | --------
|Item 1. | Business



Overview








| |   |                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Computing and storage equipment, including servers, storage
    systems, workstations, notebooks, and peripherals;                                                                                                   
|
| |  | Networking equipment such as routers and switches that move
    traffic across the Internet;                                                                                                                         
|
| |  | Communications equipment, including wireless and wireline
    infrastructure products;                                                                                                                               
|
| |  | Consumer products such as cellular phones, set-top boxes and
    personal/handheld communications devices;                                                                                                           
|
| |  | Automotive electronics systems, including audio and navigation
    systems, system control modules, and body electronics;                                                                                            
|
| |  | Industrial products, including semiconductor manufacturing and
    test equipment, wafer fabrication equipment controls, process
    automation equipment and home appliance electronics controls;                   
|
| |  | Medical products such as X-ray equipment, ultrasound fetal
    monitors, MRI scanners, blood analyzers, ECG patient monitors,
    surgical robotic systems, HPLCs, spectrometers and laser surgery
    equipment; and
|
| |  | Other electronics equipment and products.                                                                                                                                                                            







| |   |                                                                      
| | - | ---------------------------------------------------------------------
| |  | Collaborative design                                                 
|
| |  | Design for Six Sigma and manufacturability                           
|
| |  | Design for cost-reduction                                            
|
| |  | Product launch                                                       
|
| |  | Product life extension                                               
|
| |  | Sustaining engineering                                               
|
| |  | Printed circuit board assembly (PCBA) and subsystem
    manufacturing
|
| |  | Systems assembly and test                                            
|
| |  | Product fulfillment                                                  
|
| |  | Repair                                                               
|
| |  | Product logistics                                                    
|
| |  | End-of-life product support                                          

4



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Faster Time-to-Market:


Lower Costs:


Better Asset Utilization:


Focused Resource Allocation:


Leading Manufacturing and Service Technologies:


Cost-Effective Global Capabilities:




Strategy






| |                                         
| | ----------------------------------------
| | Concentrate on Core and Emerging Markets



5



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| |                       
| | ----------------------
| | Uncompromising Quality





| |                                    
| | -----------------------------------
| | Efficiency and Cost Competitiveness





| |                                                 
| | ------------------------------------------------
| | Align Services to Improve Customer Supply Chains





| |                              
| | -----------------------------
| | Advanced Technology Processes



Global Footprint










6



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| |                
| | ---------------
| | Americas Region







| |            
| | -----------
| | Asia Region







| |              
| | -------------
| | Europe Region



Sales and Marketing






Backlog




7



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Competition




Associates




Patents and Trademarks






Environmental Matters








8



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Additional Information











|        |           
|------- | ----------
|Item 2. | Properties



|                                |  |                |         |  |              |  |        |                |  |  |                            | 
|------------------------------- |  | -------------- | ------- |  | ------------ |  | ------ | -------------- |  |  | -------------------------- | 
|Location                        |  | Square Footage |         |  | Leased/Owned |  |        | Primarily Used | 
|                                |  |                |         |  |              |  |        |                | 
|Continuing Operations           |  |                |         |  |              |  |        |                |  |  |                            | 
|Americas Region                 |  |                |         |  |              |  |        |                |  |  |                            | 
|Jaguariuna, Brazil              |  |                | 233,000 |  |              |  | Owned  |                |  |  | PCBA & Systems Integration | 
|Hortolandia, Brazil             |  |                | 49,000  |  |              |  | Leased |                |  |  | PCBA & Systems Integration | 
|Guadalajara, Mexico             |  |                | 689,000 |  |              |  | Owned  |                |  |  | PCBA & Systems Integration | 
|Chihuahua, Mexico               |  |                | 107,000 |  |              |  | Leased |                |  |  | Systems Repair & Refurbish | 
|Aguadilla, Puerto Rico          |  |                | 164,000 |  |              |  | Leased |                |  |  | PCBA & Systems Integration | 
|Dollard des Ormeaux, Quebec     |  |                | 165,000 |  |              |  | Leased |                |  |  | PCBA & Systems Integration | 
|Sherbrooke, Quebec              |  |                | 36,000  |  |              |  | Leased |                |  |  | PCBA & Systems Integration | 
|Sherbrooke, Quebec              |  |                | 125,000 |  |              |  | Owned  |                |  |  | PCBA & Systems Integration | 
|St. Laurent, Quebec             |  |                | 112,000 |  |              |  | Leased |                |  |  | Warehouse                  | 
|Kanata, Ontario                 |  |                | 114,000 |  |              |  | Owned  |                |  |  | Systems Integration        | 
|Newmarket, Ontario              |  |                | 185,000 |  |              |  | Leased |                |  |  | Repair & Refurbish         | 
|Ottawa, Ontario                 |  |                | 48,000  |  |              |  | Leased |                |  |  | Systems Engineering        | 
|Scarborough, Ontario            |  |                | 69,000  |  |              |  | Leased |                |  |  | Systems Integration        | 
|Winnipeg, Manitoba              |  |                | 94,000  |  |              |  | Owned  |                |  |  | Metal Fab                  | 
|Lincoln, California             |  |                | 356,000 |  |              |  | Leased |                |  |  | Repair & Refurbish         | 
|Milpitas, California            |  |                | 253,000 |  |              |  | Leased |                |  |  | Repair & Refurbish         | 
|Milpitas & Fremont, California  |  |                | 445,000 |  |              |  | Leased |                |  |  | PCBA & Systems Integration | 
|Milpitas & San Jose, California |  |                | 262,000 |  |              |  | Leased |                |  |  | HQ Office                  | 
|Milpitas, California            |  |                | 108,000 |  |              |  | Leased |                |  |  | Warehouse for PCBA & SI    | 
|West Palm Beach, Florida        |  |                | 100,000 |  |              |  | Leased |                |  |  | PCBA & Systems Integration | 
|Louisville, Kentucky            |  |                | 240,000 |  |              |  | Leased |                |  |  | Repair & Refurbish         | 
|Baltimore, Maryland             |  |                | 6,000   |  |              |  | Leased |                |  |  | Wireless Office            | 
|Friberg, Massachusetts          |  |                | 5,000   |  |              |  | Leased |                |  |  | Corp. Office               | 
|Southfield, Michigan            |  |                | 15,000  |  |              |  | Leased |                |  |  | Systems Integration        | 

9



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|                              |  |                |           |  |              |  |        |                |  |  |                                    | 
|----------------------------- |  | -------------- | --------- |  | ------------ |  | ------ | -------------- |  |  | ---------------------------------- | 
|Location                      |  | Square Footage |           |  | Leased/Owned |  |        | Primarily Used | 
|                              |  |                |           |  |              |  |        |                | 
|Somerset, New Jersey          |  |                | 2,000     |  |              |  | Leased |                |  |  | Wireless Office                    | 
|Charlotte, North Carolina     |  |                | 456,000   |  |              |  | Owned  |                |  |  | PCBA & Systems Integration         | 
|Creedmoor, North Carolina     |  |                | 290,000   |  |              |  | Owned  |                |  |  | Systems Integration                | 
|Durham, North Carolina        |  |                | 183,000   |  |              |  | Leased |                |  |  | Warehouse for PCBA & SI            | 
|Morrisville, North Carolina   |  |                | 323,000   |  |              |  | Leased |                |  |  | Repair & Refurbish                 | 
|Hillsboro, Oregon             |  |                | 70,000    |  |              |  | Owned  |                |  |  | Metal Fab                          | 
|West Columbia, South Carolina |  |                | 313,000   |  |              |  | Owned  |                |  |  | PCBA & Systems Integration         | 
|Memphis, Tennessee            |  |                | 275,000   |  |              |  | Leased |                |  |  | Repair & Refurbish                 | 
|Austin, Texas                 |  |                | 279,000   |  |              |  | Leased |                |  |  | Repair & Refurbish                 | 
|Austin, Texas                 |  |                | 468,000   |  |              |  | Leased |                |  |  | PCBA & Systems Integration         | 
|                              |  |                |           |  |              |  |        |                | 
|Americas Region Total         |  |                | 6,639,000 |  |              |  |        |                |  |  |                                    | 
|European Region               |  |                |           |  |              |  |        |                |  |  |                                    | 
|Turnhout, Belgium             |  |                | 103,000   |  |              |  | Leased |                |  |  | Repair & Refurbish                 | 
|Cwmcarn, Wales                |  |                | 100,000   |  |              |  | Owned  |                |  |  | Repair & Refurbish                 | 
|South Ockendon, UK            |  |                | 27,000    |  |              |  | Owned  |                |  |  | Microcircuits                      | 
|South Ockendon, UK            |  |                | 38,000    |  |              |  | Leased |                |  |  | Microcircuits                      | 
|Bordeaux, France              |  |                | 191,000   |  |              |  | Leased |                |  |  | PCBA & Systems Integration         | 
|Bordeaux, France              |  |                | 141,000   |  |              |  | Leased |                |  |  | Repair & Refurbish                 | 
|Herrenberg, Germany           |  |                | 110,000   |  |              |  | Owned  |                |  |  | PCBA & Systems Integration         | 
|Budapest, Hungary             |  |                | 300,000   |  |              |  | Owned  |                |  |  | PCBA & Systems Integration         | 
|Dieman, Amsterdam             |  |                | 16,000    |  |              |  | Leased |                |  |  | Finance Office                     | 
|Rosmalen, Netherlands         |  |                | 164,000   |  |              |  | Leased |                |  |  | Repair & Refurbish                 | 
|Rosmalen, Netherlands         |  |                | 31,000    |  |              |  | Leased |                |  |  | Warehouse for R&R                  | 
|Rotterdam, Netherlands        |  |                | 1,000     |  |              |  | Leased |                |  |  | Office                             | 
|Timisoara, Romania            |  |                | 460,000   |  |              |  | Owned  |                |  |  | PCBA & Systems Integration         | 
|Dunfermline, Scotland         |  |                | 144,000   |  |              |  | Owned  |                |  |  | PCBA & Systems Integration         | 
|Ostersund, Sweden             |  |                | 280,000   |  |              |  | Owned  |                |  |  | PCBA & Systems Integration         | 
|Istanbul, Turkey              |  |                | 47,000    |  |              |  | Leased |                |  |  | PCBA & Systems Integration         | 
|                              |  |                |           |  |              |  |        |                | 
|European Region Total         |  |                | 2,153,000 |  |              |  |        |                |  |  |                                    | 
|Asia Region                   |  |                |           |  |              |  |        |                |  |  |                                    | 
|Sydney, Australia             |  |                | 133,000   |  |              |  | Leased |                |  |  | Repair & Refurbish                 | 
|Beijing, China                |  |                | 14,000    |  |              |  | Leased |                |  |  | Repair & Refurbish                 | 
|Hong Kong, China              |  |                | 5,000     |  |              |  | Leased |                |  |  | Repair & Refurbish                 | 
|Huizhou City, China           |  |                | 62,000    |  |              |  | Leased |                |  |  | PCBA & Systems Integration         | 
|Shanghai, China               |  |                | 33,000    |  |              |  | Leased |                |  |  | Repair & Refurbish                 | 
|Shanghai, China               |  |                | 105,000   |  |              |  | Leased |                |  |  | PCBA & Systems Integration         | 
|Shanghai, China               |  |                | 171,000   |  |              |  | Leased |                |  |  | Metal Fab                          | 
|Shenzhen, China               |  |                | 230,000   |  |              |  | Owned  |                |  |  | PCBA & Systems Integration         | 
|Suzhou, China                 |  |                | 619,000   |  |              |  | Owned  |                |  |  | PCBA & Systems Integration         | 
|Suzhou, China                 |  |                | 17,000    |  |              |  | Leased |                |  |  | Repair & Refurbish                 | 
|Bangalore, India              |  |                | 32,000    |  |              |  | Leased |                |  |  | Memory Manufacturing & Engineering | 
|Batam, Indonesia              |  |                | 137,000   |  |              |  | Leased |                |  |  | PCBA & Systems Integration         | 
|Ibaraki-Ken, Japan            |  |                | 137,000   |  |              |  | Leased |                |  |  | PCBA & Systems Integration         | 
|Koriyama, Japan               |  |                | 67,000    |  |              |  | Owned  |                |  |  | Repair & Refurbish                 | 
|Miyagi-Ken, Japan             |  |                | 379,000   |  |              |  | Leased |                |  |  | Repair & Refurbish                 | 

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|                                                           |                   |                |            |           |              |  |        |                |  |  |                                       |  | 
|---------------------------------------------------------- | ----------------- | -------------- | ---------- | --------- | ------------ |  | ------ | -------------- |  |  | ------------------------------------- |  | 
|Location                                                   |                   | Square Footage |            |           | Leased/Owned |  |        | Primarily Used | 
|                                                           |                   |                |            |           |              |  |        |                | 
|Johor, Malaysia                                            |                   |                | 125,000    |           |              |  | Owned  |                |  |  | PCBA & Systems Integration            | 
|Penang, Malaysia                                           |                   |                | 1,032,000  |           |              |  | Owned  |                |  |  | PCBA & Systems Integration            | 
|Penang, Malaysia                                           |                   |                | 30,000     |           |              |  | Leased |                |  |  | PCBA & Systems Integration            | 
|Singapore                                                  |                   |                | 130,000    |           |              |  | Leased |                |  |  | PCBA & Systems Integration            | 
|Singapore                                                  |                   |                | 48,000     |           |              |  | Leased |                |  |  | Repair & Refurbish                    | 
|Singapore                                                  |                   |                | 239,000    |           |              |  | Owned  |                |  |  | Metal Fab, PCBA & Systems Integration | 
|Taipei, Taiwan                                             |                   |                | 3,000      |           |              |  | Leased |                |  |  | Office                                | 
|                                                           |                   |                |            |           |              |  |        |                | 
|                                                           | Asia Region Total |                |            | 3,748,000 |              |  |        |                |  |  |                                       |  | 
|Total Continuing Operations Facilities in Use              |                   |                | 12,540,000 |           |              |  |        |                |  |  |                                       | 
|                                                           |                   |                |            |           |              |  |        |                | 
|Total Restructured and Discontinued Operations Facilities* |                   |                | 3,474,000  |           |              |  |        |                |  |  |                                       | 
|                                                           |                   |                |            |           |              |  |        |                | 






|  |                                                   
|- | --------------------------------------------------
|* | These facilities are excluded from the list above.






|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings



Ronald Sorisho v. Solectron Corporation
et al


Abrams v. Solectron
Corporation et al.


11



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Lifshitz v.
Cannon et al.,







|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



Executive Officers of Solectron




|                  |  |     |    |  |          |                                                           
|----------------- |  | --- | -- |  | -------- | ----------------------------------------------------------
|Name              |  | Age |    |  | Position
|                  |  |     |    |  |         
|Michael R. Cannon |  |     | 51 |  |          | President and Chief Executive Officer                     
|Perry Hayes       |  |     | 51 |  |          | Treasurer and Vice President of Investor Relations        
|Warren J. Ligan   |  |     | 51 |  |          | Senior Vice President and Chief Accounting Officer        
|Craig London      |  |     | 58 |  |          | Executive Vice President, Strategy, Marketing and Services
|Kevin OConnor    |  |     | 46 |  |          | Executive Vice President, Human Resources                 
|Marc Onetto       |  |     | 54 |  |          | Executive Vice President, Operations                      
|Kiran Patel       |  |     | 56 |  |          | Executive Vice President and Chief Financial Officer      
|David Purvis      |  |     | 52 |  |          | Executive Vice President, Design and Engineering          







12



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13



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PART II





Item 5. Market for the Registrants Common
Equity and Related Stockholder Matters


Common Stock Information




|               |  |      |      |  |     |   |      | 
|-------------- |  | ---- | ---- |  | --- | - | ---- | 
|               |  | High |      |  | Low |  
|               |  |      |      |  |     |  
|Fiscal 2004    |  |      |      |  |     |   |      | 
|Fourth quarter |  | $    | 6.49 |  |     | $ | 4.59 | 
|Third quarter  |  |      | 6.55 |  |     |   | 4.39 | 
|Second quarter |  |      | 8.20 |  |     |   | 5.40 | 
|First quarter  |  |      | 6.89 |  |     |   | 5.11 | 
|Fiscal 2003    |  |      |      |  |     |   |      | 
|Fourth quarter |  | $    | 6.05 |  |     | $ | 3.20 | 
|Third quarter  |  |      | 4.10 |  |     |   | 2.84 | 
|Second quarter |  |      | 5.14 |  |     |   | 2.80 | 
|First quarter  |  |      | 4.86 |  |     |   | 1.39 | 








|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data





14



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Five-Year Selected Financial Highlights


|                                                       |                                                     |                                      |          |       |            |            |          |       |             |            |          |             |            |      |          |       |   |   |          |      | 
|------------------------------------------------------ | --------------------------------------------------- | ------------------------------------ | -------- | ----- | ---------- | ---------- | -------- | ----- | ----------- | ---------- | -------- | ----------- | ---------- | ---- | -------- | ----- | - | - | -------- | ---- | 
|                                                       |                                                     | Years Ended August 31                |         
|                                                       |                                                     |                                      |         
|                                                       |                                                     | 2004                                 |          |       | 2003       |            |          | 2002  |             |            | 2001     |             |            | 2000 |         
|                                                       |                                                     |                                      |          |       |            |            |          |       |             |            |          |             |            |      |         
|                                                       |                                                     | (Restated)                           |          |       | (Restated) |            |          |       |             | (Restated) |          |             | (Restated) |     
|                                                       |                                                     |                                      |          |       |            | (Restated) |          |       | (Unaudited) |            |          | (Unaudited) |           
|                                                       |                                                     | (In millions, except per share data) |         
|Consolidated Statements of Operations Data:            |                                                     |                                      |          |       |            |            |          |       |             |            |          |             |            |      |          |       |   |   |          |     
|Net Sales                                              |                                                     | $                                    | 11,638.3 |       |            | $          | 9,828.3  |       |             | $          | 10,738.7 |             |            | $    | 17,436.9 |       |   | $ | 13,007.5 |     
|Operating (loss) income                                |                                                     |                                      | (54.9    | )     |            |            | (2,351.9 | )     |             |            | (3,445.2 | )           |            |      | (126.6   | )     |   |   | 654.1    |     
|(Loss) income from continuing operations               |                                                     |                                      | (262.4   | )     |            |            | (3,008.9 | )     |             |            | (3,069.3 | )           |            |      | (90.5    | )     |   |   | 455.7    |     
|Cumulative effect of change in accounting principle    |                                                     |                                      |         |       |            |            |         |       |             |            |         |             |            |      |         |       |   |   | (3.5     | )   
|Income (loss) from discontinued operations, net of tax |                                                     |                                      | 85.0     |       |            |            | (443.7   | )     |             |            | (40.4    | )           |            |      | (33.4    | )     |   |   | 44.0     |     
|                                                       |                                                     |                                      |          |       |            |            |          |       |             |            |          |             |            |      |         
|Net (loss) income                                      |                                                     | $                                    | (177.4   | )     |            | $          | (3,452.6 | )     |             | $          | (3,109.7 | )           |            | $    | (123.9   | )     |   | $ | 496.2    |     
|                                                      
|Basic net income (loss) per share:                     |                                                     |                                      |          |       |            |            |          |       |             |            |          |             |            |      |          |       |   |   |          |     
|                                                       | Continuing operations                               |                                      | $        | (0.30 | )          |            | $        | (3.63 | )           |            | $        | (3.93       | )          |      | $        | (0.14 | ) |   | $        | 0.76 | 
|                                                       | Cumulative effect of change in accounting principle |                                      |          |      |            |            |          |      |             |            |          |            |            |      |          |      |   |   |          |     | 
|                                                       | Discontinued operations                             |                                      |          | 0.10  |            |            |          | (0.54 | )           |            |          | (0.05       | )          |      |          | (0.05 | ) |   |          | 0.07 | 
|                                                       |                                                     |                                      |          |       |            |            |          |       |             |            |          |             |            |      |         
|                                                       |                                                     | $                                    | (0.20    | )     |            | $          | (4.17    | )     |             | $          | (3.98    | )           |            | $    | (0.19    | )     |   | $ | 0.83     |     
|                                                       |                                                     |                                      |          |       |            |            |          |       |             |            |          |             |            |      |         
|                                                      
|Diluted net income (loss) per share:                   |                                                     |                                      |          |       |            |            |          |       |             |            |          |             |            |      |          |       |   |   |          |     
|                                                       | Continuing operations                               |                                      | $        | (0.30 | )          |            | $        | (3.63 | )           |            | $        | (3.93       | )          |      | $        | (0.14 | ) |   | $        | 0.73 | 
|                                                       | Cumulative effect of change in accounting principle |                                      |          |      |            |            |          |      |             |            |          |            |            |      |          |      |   |   |          |     | 
|                                                       | Discontinued operations                             |                                      |          | 0.10  |            |            |          | (0.54 | )           |            |          | (0.05       | )          |      |          | (0.05 | ) |   |          | 0.07 | 
|                                                       |                                                     |                                      |          |       |            |            |          |       |             |            |          |             |            |      |         
|                                                       |                                                     | $                                    | (0.20    | )     |            | $          | (4.17    | )     |             | $          | (3.98    | )           |            | $    | (0.19    | )     |   | $ | 0.80     |     
|                                                       |                                                     |                                      |          |       |            |            |          |       |             |            |          |             |            |      |         

|                                 |  |            |         |  |            |   |         |            |  |   |             |  |  |             |          |  |  |   |          | 
|-------------------------------- |  | ---------- | ------- |  | ---------- | - | ------- | ---------- |  | - | ----------- |  |  | ----------- | -------- |  |  | - | -------- | 
|                                 |  | August 31  |        
|                                 |  |            |        
|                                 |  | 2004       |         |  | 2003       |   |         | 2002       |  |   | 2001        |  |  | 2000        |         
|                                 |  |            |         |  |            |   |         |            |  |   |             |  |  |             |         
|                                 |  |            |         |  |            |   |         | (Restated) |  |   | (Restated)  | 
|                                 |  | (Restated) |         |  | (Restated) |   |         | (Restated) |  |   | (Unaudited) |  |  | (Unaudited) |         
|Consolidated Balance Sheet Data* |  |            |         |  |            |   |         |            |  |   |             |  |  |             |          |  |  |   |          | 
|Working capital                  |  | $          | 2,476.8 |  |            | $ | 1,696.6 |            |  | $ | 3,652.8     |  |  | $           | 6,013.0  |  |  | $ | 5,410.0  | 
|Total assets                     |  |            | 5,858.1 |  |            |   | 6,570.3 |            |  |   | 10,990.0    |  |  |             | 13,078.4 |  |  |   | 10,375.6 | 
|Long-term debt                   |  |            | 1,221.4 |  |            |   | 1,816.9 |            |  |   | 3,180.2     |  |  |             | 5,027.5  |  |  |   | 3,319.5  | 
|Stockholders equity             |  |            | 2,418.9 |  |            |   | 1,471.7 |            |  |   | 4,771.4     |  |  |             | 5,148.9  |  |  |   | 3,800.7  | 






|  |                                       
|- | --------------------------------------
|* | Continuing and discontinued operations

15



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



Restatement














Adjustments to Results of Operations Related to the
Restatement


|                          |                                |                       |       |            |      |   |     |      |   |   |       |     |  |   |      |      |  
|------------------------- | ------------------------------ | --------------------- | ----- | ---------- | ---- | - | --- | ---- | - | - | ----- | --- |  | - | ---- | ---- | -
|                          |                                | Increase (decrease)   |      
|                          |                                |                       |      
|                          |                                |                       |       | Three Year |     
|                          |                                | 2004                  |       |            | 2003 |   |     | 2002 |   |   | Total |    
|                          |                                |                       |       |            |      |   |     |      |   |   |       |    
|                          |                                | (Dollars in millions) |      
|Total pre-tax adjustments |                                | $                     | (10.8 | )          |      | $ | 2.6 |      |   | $ | (1.0  | )   |  | $ | (9.2 | )   
|                          | Tax reconciliation adjustments |                       |       | 3.0        |      |   |     | 8.4  |   |   |       |    |  |   |      | 11.4 |  
|                          | Tax effect of restatement      |                       |       | (0.7       | )    |   |     | (1.6 | ) |   |       | 1.5 |  |   |      | (0.8 | )
|                          |                                |                       |       |            |      |   |     |      |   |   |       |    
|                          | Total increase (decrease)      |                       | $     | (8.5       | )    |   | $   | 9.4  |   |   | $     | 0.5 |  |   | $    | 1.4  |  
|                          |                                |                       |       |            |      |   |     |      |   |   |       |    

Cautionary Statement Regarding Forward-Looking Statements


With the exception of historical facts, the statements
contained in this annual report are forward-looking statements
within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended (the Exchange Act),
and are subject to the safe harbor


16



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provisions set forth in the Exchange Act. These
forward-looking statements relate to matters including, but not
limited to:




| |   |                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | future sales and operating results;                                                                                                                   
|
| |  | future prospects and growth;                                                                                                                          
|
| |  | our ability to improve our gross profit margins;                                                                                                      
|
| |  | the capabilities and capacities of our business
    operations;                                                                                       
|
| |  | any financial or other guidance, including interest expense
    savings;                                                                              
|
| |  | our business strategy and our ability to execute on such
    strategy;                                                                                
|
| |  | the anticipated financial impact of recent and future
    acquisitions and divestitures;                                                              
|
| |  | the timing and amount of our planned restructuring activities
    and related estimated cost savings;                                                 
|
| |  | the expansion of our low-cost manufacturing capacity and
    redirection of our manufacturing operations to lower-cost
    facilities;                
|
| |  | our ability to maintain a long-term cost structure to support
    improved operating efficiency and margins;                                          
|
| |  | the anticipated production levels and revenues of
    manufacturing and supply agreements with customers;                                             
|
| |  | the potential impact of, and our strategies for addressing,
    our current litigation and environmental liability exposure;
    and                  
|
| |  | various other forward-looking statements contained in
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations.

We intend that our forward-looking statements be subject to
the safe harbors created by the Exchange Act. The
forward-looking statements are generally accompanied by words
such as intend, anticipate,
believe, estimate, expect
and other similar words and statements. Our forward-looking
statements are based on current expectations, forecasts and
assumptions and are subject to risks, uncertainties and changes
in condition, significance, value and effect, including those
discussed under the heading Risk Factors in this
report and in our reports filed with the Securities and Exchange
Commission on Forms 10-K,10-Q, 8-K and S-3. Such risks,
uncertainties and changes in condition, significance, value and
effect could cause our actual results to differ materially from
our anticipated outcomes. Although we believe that the
assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could prove inaccurate.
Therefore, we can give no assurance that the results implied by
these forward-looking statements will be realized. The inclusion
of forward-looking information should not be regarded as a
representation by our company or any other person that the
future events, plans or expectations contemplated by Solectron
will be achieved. Furthermore, past performance in operations
and share price is not necessarily indicative of future
performance. We disclaim any intention or obligation to update
or revise any forward-looking statements contained in the
documents incorporated by reference herein, whether as a result
of new information, future events or otherwise.


Overview






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| |                              
| | -----------------------------
| | Summary of Results (restated)



|                                            |  |                       |          |  |            |   |         |            |  |   |          |  
|------------------------------------------- |  | --------------------- | -------- |  | ---------- | - | ------- | ---------- |  | - | -------- | -
|                                            |  | Years Ended August 31 |         
|                                            |  |                       |         
|                                            |  | 2004                  |          |  | 2003       |   |         | 2002       | 
|                                            |  |                       |          |  |            |   |         |            | 
|                                            |  | (Restated)            |          |  | (Restated) |   |         | (Restated) | 
|Net sales                                   |  | $                     | 11,638.3 |  |            | $ | 9,828.3 |            |  | $ | 10,738.7 |  
|Gross profit                                |  |                       | 569.7    |  |            |   | 439.9   |            |  |   | 503.9    |  
|Selling, general and administrative expense |  |                       | 446.7    |  |            |   | 566.9   |            |  |   | 661.4    |  
|Income (loss) on discontinued operations    |  |                       | 85.0     |  |            |   | (443.7  | )          |  |   | (40.4    | )









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| |                                      
| | -------------------------------------
| | Key Performance Indicators (restated)



|                                   |  |                    |           |  |            |  |           |              |  |  |              |  |  |            |           |  |  |  |           | 
|---------------------------------- |  | ------------------ | --------- |  | ---------- |  | --------- | ------------ |  |  | ------------ |  |  | ---------- | --------- |  |  |  | --------- | 
|                                   |  | Three Months Ended |          
|                                   |  |                    |          
|                                   |  | August 31,         |           |  | May 31,    |  |           | February 28, |  |  | November 30, |  |  | August 31, |          
|                                   |  | 2004               |           |  | 2004       |  |           | 2004         |  |  | 2003         |  |  | 2003       |          
|                                   |  |                    |           |  |            |  |           |              |  |  |              |  |  |            |          
|                                   |  | (Restated)         |           |  | (Restated) |  |           | (Restated)   |  |  | (Restated)   |  |  | (Restated) |          
|Inventory turns                    |  |                    | 7.6 turns |  |            |  | 7.5 turns |              |  |  | 7.4 turns    |  |  |            | 7.3 turns |  |  |  | 6.8 turns | 
|Days sales outstanding (DSO)       |  |                    | 47 days   |  |            |  | 47 days   |              |  |  | 49 days      |  |  |            | 50 days   |  |  |  | 51 days   | 
|Days payable outstanding (DPO)     |  |                    | 47 days   |  |            |  | 47 days   |              |  |  | 48 days      |  |  |            | 49 days   |  |  |  | 47 days   | 
|Cash-to-cash cycle (C2C)           |  |                    | 48 days   |  |            |  | 48 days   |              |  |  | 49 days      |  |  |            | 50 days   |  |  |  | 57 days   | 
|Capital expenditures (in millions) |  |                    | $48.3     |  |            |  | $32.8     |              |  |  | $31.5        |  |  |            | $37.0     |  |  |  | $40.7     | 



Critical Accounting Policies






| |                    
| | -------------------
| | Inventory Valuation



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| |                                
| | -------------------------------
| | Allowance for Doubtful Accounts





| |         
| | --------
| | Goodwill





| |                  
| | -----------------
| | Intangible Assets





| |                                           
| | ------------------------------------------
| | Restructuring and Related Impairment Costs



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| |             
| | ------------
| | Income Taxes







| |                   
| | ------------------
| | Loss Contingencies



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Results of Operations for Fiscal Years 2004, 2003 and 2002
(Restated)




|                                                              |                                     |                                          |       |     |            |    |       |            |       |    |       |      |       |   
|------------------------------------------------------------- | ----------------------------------- | ---------------------------------------- | ----- | --- | ---------- | -- | ----- | ---------- | ----- | -- | ----- | ---- | ----- | --
|                                                              |                                     | Years Ended August 31                    |      
|                                                              |                                     |                                          |      
|                                                              |                                     | 2004                                     |       |     | 2003       |    |       | 2002       |      
|                                                              |                                     |                                          |       |     |            |    |       |            |      
|                                                              |                                     | (Restated)                               |       |     | (Restated) |    |       | (Restated) |      
|Net sales                                                     |                                     |                                          | 100.0 | %   |            |    | 100.0 | %          |       |    | 100.0 | %   
|Cost of sales                                                 |                                     |                                          | 95.1  |     |            |    | 95.5  |            |       |    | 95.3  |     
|                                                              |                                     |                                          |       |     |            |    |       |            |      
|Gross profit                                                  |                                     |                                          | 4.9   |     |            |    | 4.5   |            |       |    | 4.7   |     
|Operating expenses:                                           |                                     |                                          |       |     |            |    |       |            |       |    |       |     
|                                                              | Selling, general and administrative |                                          |       | 3.8 |            |    |       | 5.8        |       |    |       | 6.2  |      
|                                                              | Restructuring and impairment costs  |                                          |       | 1.5 |            |    |       | 6.2        |       |    |       | 7.4  |      
|                                                              | Goodwill impairment                 |                                          |       |    |            |    |       | 16.5       |       |    |       | 23.3 |      
|                                                              |                                     |                                          |       |     |            |    |       |            |      
|                                                              |                                     | Operating loss                           |       |     | (0.5       | )  |       |            | (23.9 | )  |       |      | (32.1 | ) 
|Interest income                                               |                                     |                                          | 0.1   |     |            |    | 0.3   |            |       |    | 0.5   |     
|Interest expense                                              |                                     |                                          | (1.2  | )   |            |    | (2.1  | )          |       |    | (2.2  | )   
|Other (expense) income-net                                    |                                     |                                          | (0.7  | )   |            |    | 0.5   |            |       |    | 1.0   |     
|                                                              |                                     |                                          |       |     |            |    |       |            |      
|Operating loss from continuing operations before income taxes |                                     |                                          | (2.3  | )   |            |    | (25.3 | )          |       |    | (32.8 | )   
|Income tax expense (benefit)                                  |                                     |                                          | 0.0   |     |            |    | 5.4   |            |       |    | (4.2  | )   
|                                                              |                                     |                                          |       |     |            |    |       |            |      
|                                                              |                                     | Loss from continuing operations          |       |     | (2.3       | )% |       |            | (30.6 | )% |       |      | (28.6 | )%
|Discontinued operations:                                      |                                     |                                          |       |     |            |    |       |            |       |    |       |     
|Income (loss) from discontinued operations                    |                                     |                                          | 0.7   |     |            |    | (3.4  | )          |       |    | (0.5  | )   
|Income tax expense (benefit)                                  |                                     |                                          |      |     |            |    | 1.1   |            |       |    | (0.1  | )   
|                                                              |                                     |                                          |       |     |            |    |       |            |      
|                                                              |                                     | Income (loss) on discontinued operations |       |     | 0.7        |    |       |            | (4.5  | )  |       |      | (0.4  | ) 
|                                                              |                                     |                                          |       |     |            |    |       |            |      
|                                                              |                                     | Net loss                                 |       |     | (1.6       | )% |       |            | (35.1 | )% |       |      | (29.0 | )%
|                                                              |                                     |                                          |       |     |            |    |       |            |      

Net Sales  Continuing Operations (restated)






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|                    |  |                       |        |  |      |  |        |      |  |  |        | 
|------------------- |  | --------------------- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                    |  | Years Ended August 31 |       
|                    |  |                       |       
|                    |  | 2004                  |        |  | 2003 |  |        | 2002 | 
|                    |  |                       |        |  |      |  |        |      | 
|Computing & Storage |  |                       | 30.5%  |  |      |  | 32.7%  |      |  |  | 27.8%  | 
|Networking          |  |                       | 21.6%  |  |      |  | 22.8%  |      |  |  | 26.4%  | 
|Consumer            |  |                       | 19.3%  |  |      |  | 13.2%  |      |  |  | 9.5%   | 
|Communications      |  |                       | 18.8%  |  |      |  | 21.7%  |      |  |  | 23.7%  | 
|Industrial          |  |                       | 5.4%   |  |      |  | 3.8%   |      |  |  | 2.8%   | 
|Automotive          |  |                       | 2.6%   |  |      |  | 2.6%   |      |  |  | 1.9%   | 
|Other               |  |                       | 1.8%   |  |      |  | 3.2%   |      |  |  | 7.9%   | 
|                    |  |                       |        |  |      |  |        |      | 
|Total               |  |                       | 100.0% |  |      |  | 100.0% |      |  |  | 100.0% | 
|                    |  |                       |        |  |      |  |        |      | 

International Sales




Major Customers




|                |  |                       |      |   |      |  |      |      |  |  |      |  
|--------------- |  | --------------------- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                |  | Years Ended August 31 |     
|                |  |                       |     
|                |  | 2004                  |      |   | 2003 |  |      | 2002 | 
|                |  |                       |      |   |      |  |      |      | 
|Cisco Systems   |  |                       | 13.2 | % |      |  | 11.9 | %    |  |  | 11.6 | %
|Nortel Networks |  |                       | *    |   |      |  | 12.9 | %    |  |  | 15.6 | %






|  |              
|- | -------------
|* | less than 10%





Gross Profit  Continuing Operations (restated)






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Selling, General and Administrative (SG&A)
Expenses  Continuing Operations (restated)




Restructuring and Impairment Costs  Continuing
Operations (restated)










24



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Goodwill Impairment  Continuing Operations
(restated)




Interest Income  Continuing Operations




Interest Expense  Continuing Operations


tm


Other (Expense) Income  Net  Continuing
Operations (restated)







tm


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|                                              |  |                       |         |   |      |   |      |  |  |   |   | 
|--------------------------------------------- |  | --------------------- | ------- | - | ---- | - | ---- |  |  | - | - | 
|                                              |  | Years Ended August 31
|                                              |  |                      
|7.25% ACES Early Settlement                   |  | 2004                  |         |   | 2003 |   | 2002
|                                              |  |                       |         |   |      |   |     
|Principal amount at maturity                  |  | $                     | 1,012.5 |   |      | $ |     |  |  | $ |  | 
|                                              |  |                       |         |   |      |   |      |  | 
|Carrying value                                |  | $                     | 1,007.5 |   |      | $ |     |  |  | $ |  | 
|Common stock issued                           |  |                       | 1,006.6 |   |      |   |     |  |  |   |  | 
|Cash paid                                     |  |                       | 63.3    |   |      |   |     |  |  |   |  | 
|Write off of debt issuance costs              |  |                       | 15.3    |   |      |   |     |  |  |   |  | 
|                                              |  |                       |         |   |      |   |      |  | 
|Loss included in other (expense) income  net |  | $                     | (77.7   | ) |      | $ |     |  |  | $ |  | 
|                                              |  |                       |         |   |      |   |      |  | 

|                                              |  |                       |         |  |      |   |         |      |  |   |         | 
|--------------------------------------------- |  | --------------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                                              |  | Years Ended August 31 |        
|                                              |  |                       |        
|LYONs Retirement                              |  | 2004                  |         |  | 2003 |   |         | 2002 | 
|                                              |  |                       |         |  |      |   |         |      | 
|Principal amount at maturity                  |  | $                     | 1,617.5 |  |      | $ | 1,771.1 |      |  | $ | 5,170.2 | 
|                                              |  |                       |         |  |      |   |         |      | 
|Carrying value                                |  | $                     | 950.2   |  |      | $ | 1,047.8 |      |  | $ | 2,911.0 | 
|Cash paid and payable                         |  |                       | 950.2   |  |      |   | 1,008.4 |      |  |   | 2,835.3 | 
|                                              |  |                       |         |  |      |   |         |      | 
|Gain included in other (expense) income  net |  | $                     |        |  |      | $ | 39.4    |      |  | $ | 75.7    | 
|                                              |  |                       |         |  |      |   |         |      | 



Income Taxes  Continuing Operations (Restated)








26



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Liquidity and Capital Resources  Continuing
Operations (Restated)




|                                                                                 |  |                       |        |   |            |  |          |            |  |  |          |  
|-------------------------------------------------------------------------------- |  | --------------------- | ------ | - | ---------- |  | -------- | ---------- |  |  | -------- | -
|                                                                                 |  | Years Ended August 31 |       
|                                                                                 |  |                       |       
|                                                                                 |  | 2004                  |        |   | 2003       |  |          | 2002       | 
|                                                                                 |  |                       |        |   |            |  |          |            | 
|                                                                                 |  | (Restated)            |        |   | (Restated) |  |          | (Restated) | 
|Net cash (used in) provided by operating activities of
    continuing operations |  |                       | (8.6   | ) |            |  | 281.0    |            |  |  | 2,053.4  |  
|Net cash provided by (used in) investing activities of
    continuing operations |  |                       | 497.1  |   |            |  | 384.8    |            |  |  | (972.1   | )
|Net cash used in financing activities of continuing operations                   |  |                       | (510.4 | ) |            |  | (1,016.3 | )          |  |  | (1,776.6 | )







1 2






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|                                                           |  |                        |         |  |      |   |       |      |  |   |       |  |  |      |       |  |      |   |      |            |  |   |       |  |  |   |       | 
|---------------------------------------------------------- |  | ---------------------- | ------- |  | ---- | - | ----- | ---- |  | - | ----- |  |  | ---- | ----- |  | ---- | - | ---- | ---------- |  | - | ----- |  |  | - | ----- | 
|                                                           |  | Payments Due by Period |        
|                                                           |  |                        |        
|                                                           |  | Total                  |         |  | FY05 |   |       | FY06 |  |   | FY07  |  |  | FY08 |       |  | FY09 |   |      | Thereafter | 
|                                                           |  |                        |         |  |      |   |       |      |  |   |       |  |  |      |       |  |      |   |      |            | 
|                                                           |  | (In millions)          |        
|Long term debt                                             |  | $                      | 1,210.6 |  |      | $ |      |      |  | $ | 172.8 |  |  | $    | 72.4  |  |      | $ | 0.1  |            |  | $ | 500.1 |  |  | $ | 465.2 | 
|Operating lease                                            |  |                        | 197.6   |  |      |   | 57.5  |      |  |   | 35.1  |  |  |      | 28.3  |  |      |   | 17.7 |            |  |   | 14.0  |  |  |   | 45.0  | 
|Operating leases for restructured facilities and equipment |  |                        | 71.8    |  |      |   | 30.5  |      |  |   | 14.3  |  |  |      | 12.1  |  |      |   | 6.8  |            |  |   | 3.8   |  |  |   | 4.3   | 
|Other(1)                                                   |  |                        | 256.1   |  |      |   | 256.1 |      |  |   |      |  |  |      |      |  |      |   |     |            |  |   |      |  |  |   |      | 
|                                                           |  |                        |         |  |      |   |       |      |  |   |       |  |  |      |       |  |      |   |      |            | 
|                                                           |  | $                      | 1,736.1 |  |      | $ | 344.1 |      |  | $ | 222.2 |  |  | $    | 112.8 |  |      | $ | 24.6 |            |  | $ | 517.9 |  |  | $ | 514.5 | 
|                                                           |  |                        |         |  |      |   |       |      |  |   |       |  |  |      |       |  |      |   |      |            | 






|    |                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------
|(1) | We have guaranteed various purchase commitments for materials,
    supplies and services incurred during the normal course of
    business.



Off-Balance Sheet Arrangements and Contractual Obligations






Discontinued Operations (Restated)






|                                  |                                                      |                         |         |       |            |   |         |            |        |   |         |       |       |  
|--------------------------------- | ---------------------------------------------------- | ----------------------- | ------- | ----- | ---------- | - | ------- | ---------- | ------ | - | ------- | ----- | ----- | -
|                                  |                                                      | Years Ended August 31   |        
|                                  |                                                      |                         |        
|                                  |                                                      | 2004                    |         |       | 2003       |   |         | 2002       |       
|                                  |                                                      |                         |         |       |            |   |         |            |       
|                                  |                                                      | (Restated)              |         |       | (Restated) |   |         | (Restated) |       
|Net sales                         |                                                      | $                       | 1,264.9 |       |            | $ | 1,872.1 |            |        | $ | 1,537.5 |      
|Cost of sales                     |                                                      |                         | 1,061.8 |       |            |   | 1,598.1 |            |        |   | 1,336.0 |      
|                                  |                                                      |                         |         |       |            |   |         |            |       
|Gross profit                      |                                                      |                         | 203.1   |       |            |   | 274.0   |            |        |   | 201.5   |      
|                                  | Operating expenses  net                             |                         |         | 109.4 |            |   |         | 606.5      |        |   |         | 265.1 |      
|                                  |                                                      |                         |         |       |            |   |         |            |       
|                                  |                                                      | Operating income (loss) |         |       | 93.7       |   |         |            | (332.5 | ) |         |       | (63.6 | )
|Interest income  net             |                                                      |                         | 1.4     |       |            |   | 1.5     |            |        |   | 3.7     |      
|Other (expense) income  net      |                                                      |                         | (1.4    | )     |            |   | (0.7    | )          |        |   | 0.8     |      
|                                  |                                                      |                         |         |       |            |   |         |            |       
|Income (loss) before income taxes |                                                      |                         | 93.7    |       |            |   | (331.7  | )          |        |   | (59.1   | )    
|Income tax expense (benefit)      |                                                      |                         | 8.7     |       |            |   | 112.0   |            |        |   | (18.7   | )    
|                                  |                                                      |                         |         |       |            |   |         |            |       
|                                  | Income (loss) on discontinued operations, net of tax |                         | $       | 85.0  |            |   | $       | (443.7     | )      |   | $       | (40.4 | )    
|                                  |                                                      |                         |         |       |            |   |         |            |       

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| |            
| | -----------
| | Fiscal 2004







| |            
| | -----------
| | Fiscal 2003



Recent Developments








30



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RISK FACTORS




| |                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------
| | Most of our net sales come from a small number of
    customers; if we lose any of these customers, our net sales
    could decline significantly.







| |                                                                                                           
| | ----------------------------------------------------------------------------------------------------------
| | Our customers may cancel their orders, change production
    quantities or locations, or delay production.





| |                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may not be able to sell excess or obsolete inventory to
    customers or third parties, which could have a material adverse
    impact on our consolidated financial condition.



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| |                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | Our non-U.S. locations represent a significant
    portion of our net sales; we are exposed to risks associated
    with operating internationally.





| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | adverse movement of foreign currencies against the
    U.S. dollar in which our results are reported;           
|
| |  | import and export duties, and value added taxes;                                                                
|
| |  | import and export regulation changes that could erode our profit
    margins or restrict exports and/or imports;
|
| |  | potential restrictions on the transfer of funds;                                                                
|
| |  | government and license requirements governing the transfer of
    technology and products abroad;               
|
| |  | disruption of local labor supply and/or transportation services;                                                

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| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | inflexible employee contracts in the event of business downturns;                                      
|
| |  | the burden and cost of compliance with import and export
    regulations and foreign laws;             
|
| |  | economic and political risks in emerging or developing
    economies; and                              
|
| |  | risks of conflict and terrorism that could disrupt our or our
    customers and suppliers businesses.





| |                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are exposed to general economic conditions, which could
    have a material adverse impact on our business, operating
    results and consolidated financial condition.





| |                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | Possible fluctuation of operating results from quarter to
    quarter and factors out of our control could affect the market
    price of our securities.





| |   |                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | differences in the profitability of the types of manufacturing
    services we provide. For example, high velocity and low
    complexity printed circuit boards and systems assembly services
    have lower gross profit than low volume/complex printed circuit
    boards and systems assembly services;
|
| |  | our ability to maximize the hours of use of our equipment and
    facilities is dependent on the duration of the production run
    time for each job and customer;                                                                                                                                         
|
| |  | the amount of automation that we can use in the manufacturing
    process for cost reduction varies, depending upon the complexity
    of the product being made;                                                                                                                                           
|
| |  | our customers demand for our products and their ability to
    take delivery of our products and to make timely payments for
    delivered products;                                                                                                                                                       
|
| |  | our ability to optimize the ordering of inventory as to timing
    and amount to avoid holding inventory in excess of immediate
    production needs;                                                                                                                                                       
|
| |  | our ability to offer technologically advanced, cost-effective,
    quick response, manufacturing services;                                                                                                                                                                                                  
|
| |  | fluctuations in the availability and pricing of components;                                                                                                                                                                                                                                                 
|
| |  | timing of expenditures in anticipation of increased sales;                                                                                                                                                                                                                                                  
|
| |  | cyclicality in our target markets;                                                                                                                                                                                                                                                                          
|
| |  | fluctuations in our market share;                                                                                                                                                                                                                                                                           
|
| |  | expenses and disruptions associated with acquisitions and
    divestitures;                                                                                                                                                                                                                                 
|
| |  | announcements of operating results and business conditions by
    our customers;                                                                                                                                                                                                                            

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| |   |                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------
| |  | announcements by our competitors relating to new customers or
    technological innovation or new services;
|
| |  | economic developments in the electronics industry as a whole;                                              
|
| |  | credit rating and stock analyst downgrades;                                                                
|
| |  | political and economic developments in countries in which we
    have operations; and                      
|
| |  | general market conditions.                                                                                 





| |                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we incur more restructuring-related charges than
    currently anticipated, our consolidated financial condition and
    results of operations may suffer.





| |                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We depend on limited or sole source suppliers for critical
    components. The inability to obtain sufficient components as
    required, and under favorable purchase terms, would cause harm
    to our business.





| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | We potentially bear the risk of price increases associated
    with shortages in electronics components.





| |                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------
| | Our net sales could decline if our competitors provide
    comparable manufacturing services and improved products at a
    lower cost.



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| |                                                            
| | -----------------------------------------------------------
| | We depend on the continuing trend of OEMS to
    outsource.





| |                                                                   
| | ------------------------------------------------------------------
| | Our strategic relationships with major customers create
    risks.





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we may pay a purchase price to the divesting OEMs that exceeds
    the value we are ultimately able to realize from the future
    business of the OEM;                                                                                                                                                                                                                                                                                                 
|
| |  | the integration into our business of the acquired assets and
    facilities may be time-consuming and costly;                                                                                                                                                                                                                                                                                                                                           
|
| |  | we, rather than the divesting OEM, would bear the risk of excess
    capacity;                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | we may not achieve anticipated cost reductions and efficiencies;                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | we may be unable to meet the expectations of the OEM as to
    volume, product quality, timeliness and cost reductions; and                                                                                                                                                                                                                                                                                                                             
|
| |  | if demand for the OEMs products declines, the OEM may
    reduce its volume of purchases, and we may not be able to
    sufficiently reduce the expenses of operating the facility or
    use the facility to provide services to other OEMs, and we might
    find it appropriate to close, rather than continue to operate,
    the facility, and any such actions would require us to incur
    significant restructuring and/or impairment charges.



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| |                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------
| | If we are unable to manage future acquisitions, and
    cost-effectively run our operations, our profitability could be
    adversely affected.





| |                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Notwithstanding our divestiture of certain businesses, we
    will remain subject to certain indemnification obligations for a
    period of time after completion of the divestitures.





| |                                                                       
| | ----------------------------------------------------------------------
| | We are exposed to fluctuations in foreign currency
    exchange rates.









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| |                                              
| | ---------------------------------------------
| | We are exposed to interest rate fluctuations.









| |                                                                                                  
| | -------------------------------------------------------------------------------------------------
| | Failure to attract and retain key personnel and skilled
    associates could hurt our operations.





| |                                                                              
| | -----------------------------------------------------------------------------
| | Failure to comply with environmental regulations could
    harm our business.





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| |                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may not be able to adequately protect or enforce our
    intellectual property rights and could become involved in
    intellectual property disputes.







| |                                                                         
| | ------------------------------------------------------------------------
| | Our rating downgrades make it more expensive for us to
    borrow money.





| |                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | With regards to our internal controls over financial
    reporting, we may not be able to adequately satisfy the
    requirements of Section 404 of the Sarbanes-Oxley Act of
    2002 (S404) in a timely manner or we may encounter
    difficulties in implementing any new or improved internal
    controls.



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Item 7A.     Quantitative
and Qualitative Disclosures About Market Risk









|        |                                                             
|------- | ------------------------------------------------------------
|Item 8. | Consolidated Financial Statements and Supplementary
    Data





|                                                                        |  |      |     | 
|----------------------------------------------------------------------- |  | ---- | --- | 
|                                                                        |  | Page |    
|                                                                        |  |      |    
|Consolidated Balance Sheets                                             |  |      | 40  | 
|Consolidated Statements of Operations                                   |  |      | 41  | 
|Consolidated Statements of Stockholders Equity                         |  |      | 42  | 
|Consolidated Statements of Comprehensive Loss                           |  |      | 43  | 
|Consolidated Statements of Cash Flows                                   |  |      | 44  | 
|Notes to the Consolidated Financial Statements                          |  |      | 45  | 
|Report of Independent Registered Public Accounting Firm                 |  |      | 95  | 
|Financial Statement Schedule II  Valuation and
    Qualifying Accounts |  |      | 100 | 

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SOLECTRON CORPORATION AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


|                                                 |                                                                                                                                |                            |         |          |            |   |         |          |         | 
|------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------ | -------------------------- | ------- | -------- | ---------- | - | ------- | -------- | ------- | 
|                                                 |                                                                                                                                | August 31                  |        
|                                                 |                                                                                                                                |                            |        
|                                                 |                                                                                                                                | 2004                       |         |          | 2003       |  
|                                                 |                                                                                                                                |                            |         |          |            |  
|                                                 |                                                                                                                                | (In millions,              |        
|                                                 |                                                                                                                                | except per share data)     |        
|                                                 |                                                                                                                                | (Restated)                 |         |          | (Restated) |  
|ASSETS                                          
|Current assets:                                  |                                                                                                                                |                            |         |          |            |   |         |         
|                                                 | Cash and cash equivalents                                                                                                      |                            | $       | 1,412.7  |            |   | $       | 1,425.3  |        
|                                                 | Restricted cash and cash equivalents                                                                                           |                            |         | 17.5     |            |   |         | 42.1     |        
|                                                 | Short-term investments                                                                                                         |                            |         |         |            |   |         | 27.5     |        
|                                                 | Restricted short-term investments                                                                                              |                            |         |         |            |   |         | 19.9     |        
|                                                 | Accounts receivable, less allowance for doubtful accounts of
    $35.7 and $39.1, respectively                                 |                            |         | 1,550.2  |            |   |         | 1,388.9  |        
|                                                 | Inventories                                                                                                                    |                            |         | 1,455.4  |            |   |         | 1,325.5  |        
|                                                 | Prepaid expenses and other current assets                                                                                      |                            |         | 189.5    |            |   |         | 263.2    |        
|                                                 | Current assets of discontinued operations                                                                                      |                            |         | 36.4     |            |   |         | 452.1    |        
|                                                 |                                                                                                                                |                            |         |          |            |  
|                                                 |                                                                                                                                | Total current assets       |         |          | 4,661.7    |   |         |          | 4,944.5 | 
|Property and equipment, net                      |                                                                                                                                |                            | 754.4   |          |            |   | 808.9   |         
|Goodwill                                         |                                                                                                                                |                            | 135.8   |          |            |   | 135.2   |         
|Other assets                                     |                                                                                                                                |                            | 294.3   |          |            |   | 418.5   |         
|Long-term assets of discontinued operations      |                                                                                                                                |                            | 11.9    |          |            |   | 263.2   |         
|                                                 |                                                                                                                                |                            |         |          |            |  
|Total assets                                     |                                                                                                                                | $                          | 5,858.1 |          |            | $ | 6,570.3 |         
|                                                 |                                                                                                                                |                            |         |          |            |  
|                                                
|LIABILITIES AND STOCKHOLDERS EQUITY            
|Current liabilities:                             |                                                                                                                                |                            |         |          |            |   |         |         
|                                                 | Short-term debt                                                                                                                |                            | $       | 25.1     |            |   | $       | 973.8    |        
|                                                 | Accounts payable                                                                                                               |                            |         | 1,439.0  |            |   |         | 1,277.3  |        
|                                                 | Accrued employee compensation                                                                                                  |                            |         | 173.7    |            |   |         | 157.4    |        
|                                                 | Accrued expenses and other current liabilities                                                                                 |                            |         | 500.7    |            |   |         | 505.4    |        
|                                                 | Current liabilities of discontinued operations                                                                                 |                            |         | 46.4     |            |   |         | 334.0    |        
|                                                 |                                                                                                                                |                            |         |          |            |  
|                                                 |                                                                                                                                | Total current liabilities  |         |          | 2,184.9    |   |         |          | 3,247.9 | 
|Long-term debt                                   |                                                                                                                                |                            | 1,221.4 |          |            |   | 1,816.9 |         
|Other long-term liabilities                      |                                                                                                                                |                            | 31.1    |          |            |   | 11.2    |         
|Long-term liabilities of discontinued operations |                                                                                                                                |                            | 1.8     |          |            |   | 22.6    |         
|                                                 |                                                                                                                                |                            |         |          |            |  
|                                                 |                                                                                                                                | Total liabilities          |         | $        | 3,439.2    |   |         | $        | 5,098.6 | 
|                                                 |                                                                                                                                |                            |         |          |            |  
|Commitments and contingencies                    |                                                                                                                                |                            |         |          |            |   |         |         
|Stockholders equity:                            |                                                                                                                                |                            |         |          |            |   |         |         
|                                                 | Preferred stock, $0.001 par value; 1.2 shares
    authorized; one share issued                                                 |                            | $       |         |            |   | $       |         |        
|                                                 | Common stock. $0.001 par value; 1,600.0 shares
    authorized; 963.6 and 832.6 shares issued and outstanding,
    respectively |                            |         | 1.0      |            |   |         | 0.8      |        
|                                                 | Additional paid-in capital                                                                                                     |                            |         | 7,775.9  |            |   |         | 6,658.2  |        
|                                                 | Accumulated deficit                                                                                                            |                            |         | (5,209.9 | )          |   |         | (5,032.5 | )      
|                                                 | Accumulated other comprehensive losses                                                                                         |                            |         | (148.1   | )          |   |         | (154.8   | )      
|                                                 |                                                                                                                                |                            |         |          |            |  
|                                                 |                                                                                                                                | Total stockholders equity |         |          | 2,418.9    |   |         |          | 1,471.7 | 
|                                                 |                                                                                                                                |                            |         |          |            |  
|Total liabilities and stockholders equity       |                                                                                                                                | $                          | 5,858.1 |          |            | $ | 6,570.3 |         
|                                                 |                                                                                                                                |                            |         |          |            |  



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SOLECTRON CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                                         |                                          |                                      |          |       |            |   |          |            |          |   |          |         |          |  
|------------------------------------------------------------------------ | ---------------------------------------- | ------------------------------------ | -------- | ----- | ---------- | - | -------- | ---------- | -------- | - | -------- | ------- | -------- | -
|                                                                         |                                          | Years Ended August 31                |         
|                                                                         |                                          |                                      |         
|                                                                         |                                          | 2004                                 |          |       | 2003       |   |          | 2002       |         
|                                                                         |                                          |                                      |          |       |            |   |          |            |         
|                                                                         |                                          | (In millions, except per-share data) |         
|                                                                         |                                          | (Restated)                           |          |       | (Restated) |   |          | (Restated) |         
|Net sales                                                                |                                          | $                                    | 11,638.3 |       |            | $ | 9,828.3  |            |          | $ | 10,738.7 |        
|Cost of sales                                                            |                                          |                                      | 11,068.6 |       |            |   | 9,388.4  |            |          |   | 10,234.8 |        
|                                                                         |                                          |                                      |          |       |            |   |          |            |         
|Gross profit                                                             |                                          |                                      | 569.7    |       |            |   | 439.9    |            |          |   | 503.9    |        
|Operating expenses:                                                      |                                          |                                      |          |       |            |   |          |            |          |   |          |        
|                                                                         | Selling, general and administrative      |                                      |          | 446.7 |            |   |          | 566.9      |          |   |          | 661.4   |         
|                                                                         | Restructuring and impairment costs       |                                      |          | 177.9 |            |   |          | 604.8      |          |   |          | 787.7   |         
|                                                                         | Goodwill impairment                      |                                      |          |      |            |   |          | 1,620.1    |          |   |          | 2,500.0 |         
|                                                                         |                                          |                                      |          |       |            |   |          |            |         
|                                                                         |                                          | Operating loss                       |          |       | (54.9      | ) |          |            | (2,351.9 | ) |          |         | (3,445.2 | )
|Interest income                                                          |                                          |                                      | 15.1     |       |            |   | 27.2     |            |          |   | 61.4     |        
|Interest expense                                                         |                                          |                                      | (145.3   | )     |            |   | (207.1   | )          |          |   | (237.6   | )      
|Other (expense) income  net                                             |                                          |                                      | (80.6    | )     |            |   | 48.4     |            |          |   | 102.1    |        
|                                                                         |                                          |                                      |          |       |            |   |          |            |         
|Operating loss from continuing operations before income taxes            |                                          |                                      | (265.7   | )     |            |   | (2,483.4 | )          |          |   | (3,519.3 | )      
|Income tax (benefit) expense                                             |                                          |                                      | (3.3     | )     |            |   | 525.5    |            |          |   | (450.0   | )      
|                                                                         |                                          |                                      |          |       |            |   |          |            |         
|Loss from continuing operations                                          |                                          | $                                    | (262.4   | )     |            | $ | (3,008.9 | )          |          | $ | (3,069.3 | )      
|Discontinued operations:                                                 |                                          |                                      |          |       |            |   |          |            |          |   |          |        
|Income (loss) from discontinued operations                               |                                          |                                      | 93.7     |       |            |   | (331.7   | )          |          |   | (59.1    | )      
|Income tax expense (benefit)                                             |                                          |                                      | 8.7      |       |            |   | 112.0    |            |          |   | (18.7    | )      
|                                                                         |                                          |                                      |          |       |            |   |          |            |         
|                                                                         | Income (loss) on discontinued operations |                                      |          | 85.0  |            |   |          | (443.7     | )        |   |          | (40.4   | )       
|                                                                         |                                          |                                      |          |       |            |   |          |            |         
|Net loss                                                                 |                                          | $                                    | (177.4   | )     |            | $ | (3,452.6 | )          |          | $ | (3,109.7 | )      
|                                                                         |                                          |                                      |          |       |            |   |          |            |         
|Basic and diluted net income (loss) per share                            |                                          |                                      |          |       |            |   |          |            |          |   |          |        
|                                                                         | Continuing operations                    |                                      | $        | (0.30 | )          |   | $        | (3.63      | )        |   | $        | (3.93   | )       
|                                                                         | Discontinued operations                  |                                      |          | 0.10  |            |   |          | (0.54      | )        |   |          | (0.05   | )       
|                                                                         |                                          |                                      |          |       |            |   |          |            |         
|                                                                         | Basic and diluted net loss per share     |                                      | $        | (0.20 | )          |   | $        | (4.17      | )        |   | $        | (3.98   | )       
|                                                                         |                                          |                                      |          |       |            |   |          |            |         
|Shares used to compute basic and diluted net income (loss) per
    share |                                          |                                      | 873.9    |       |            |   | 827.7    |            |          |   | 780.9    |        



41



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SOLECTRON CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


|                                                            |                      |               |       |            |            |          |            |              |             |            |               |   |  |               |          |   |        |   |        |   |  |   |          |   | 
|----------------------------------------------------------- | -------------------- | ------------- | ----- | ---------- | ---------- | -------- | ---------- | ------------ | ----------- | ---------- | ------------- | - |  | ------------- | -------- | - | ------ | - | ------ | - |  | - | -------- | - | 
|                                                            |                      |               |       |            |            | Retained |            |              | Accumulated |            |               |  
|                                                            |                      | Common Stock  |       |            | Additional |          |            | Earnings     |             |            | Other         |   |  | Total         |         
|                                                            |                      |               |       |            | Paid-In    |          |            | (Accumulated |             |            | Comprehensive |   |  | Stockholders |         
|                                                            |                      | Shares        |       |            | Amount     |          |            | Capital      |             |            | Deficit)      |   |  | Losses        |          |   | Equity |  
|                                                            |                      |               |       |            |            |          |            |              |             |            |               |   |  |               |          |   |        |  
|                                                            |                      | (In millions) |      
|                                                            |                      |               |       | (Restated) |            |          | (Restated) |              |             | (Restated) |              
|Balances as of August 31, 2001 (as reported)                |                      |               | 658.2 |            |            | $        | 0.7        |              |             | $          | 3,877.6       |   |  | $             | 1,531.6  |   |        | $ | (259.2 | ) |  | $ | 5,150.7  |  
|Effect of restatement                                       |                      |               |      |            |            | $        |           |              |             | $          |              |   |  | $             | (1.8     | ) |        | $ |       |   |  | $ | (1.8     | )
|Balances as of August 31, 2001 (as restated)                |                      |               | 658.2 |            |            | $        | 0.7        |              |             | $          | 3,887.6       |   |  | $             | 1,529.8  |   |        | $ | (259.2 | ) |  | $ | 5,148.9  |  
|                                                            |                      |               |       |            |            |          |            |              |             |            |               |   |  |               |          |   |        |  
|Net loss                                                    |                      |               |      |            |            | $        |           |              |             | $          |              |   |  | $             | (3,109.7 | ) |        | $ |       |   |  | $ | (3,109.7 | )
|Foreign currency translation                                |                      |               |      |            |            |          |           |              |             |            |              |   |  |               |         |   |        |   | (36.3  | ) |  |   | (36.3    | )
|Unrealized gain on investments                              |                      |               |      |            |            |          |           |              |             |            |              |   |  |               |         |   |        |   | 10.1   |   |  |   | 10.1     |  
|Stock issued under stock option and employee purchase plans |                      |               | 6.7   |            |            |          |           |              |             |            | 38.8          |   |  |               |         |   |        |   |       |   |  |   | 38.8     |  
|Stock and stock options issued in business combinations     |                      |               | 160.4 |            |            |          | 0.1        |              |             |            | 2,676.1       |   |  |               |         |   |        |   |       |   |  |   | 2,676.2  |  
|Repurchase of common stock                                  |                      |               | (0.5  | )          |            |          |           |              |             |            | (4.5          | ) |  |               |         |   |        |   |       |   |  |   | (4.5     | )
|ACES stock purchase contracts                               |                      |               |      |            |            |          |           |              |             |            | 46.9          |   |  |               |         |   |        |   |       |   |  |   | 46.9     |  
|Deferred stock-based compensation from                      |                      |               |      |            |            |          |           |              |             |            | (7.2          | ) |  |               |         |   |        |   |       |   |  |   | (7.2     | )
|                                                            | business combination |               |       |            |            |          |            |              |             |            |               |   |  |               |          |   |        |   |        |   |  |   |          |   | 
|Other                                                       |                      |               |      |            |            |          |           |              |             |            | 8.2           |   |  |               |         |   |        |   |       |   |  |   | 8.2      |  
|                                                            |                      |               |       |            |            |          |            |              |             |            |               |   |  |               |          |   |        |  
|Balances as of August 31, 2002 (as restated)                |                      |               | 824.8 |            |            | $        | 0.8        |              |             | $          | 6,635.9       |   |  | $             | (1,579.9 | ) |        | $ | (285.4 | ) |  | $ | 4,771.4  |  
|                                                            |                      |               |       |            |            |          |            |              |             |            |               |   |  |               |          |   |        |  
|Net loss                                                    |                      |               |      |            |            | $        |           |              |             | $          |              |   |  | $             | (3,452.6 | ) |        | $ |       |   |  | $ | (3,452.6 | )
|Foreign currency translation                                |                      |               |      |            |            |          |           |              |             |            |              |   |  |               |         |   |        |   | 150.6  |   |  |   | 150.6    |  
|Unrealized loss on investments                              |                      |               |      |            |            |          |           |              |             |            |              |   |  |               |         |   |        |   | (20.0  | ) |  |   | (20.0    | )
|Stock issued under stock option and employee purchase plans |                      |               | 5.1   |            |            |          |           |              |             |            | 15.5          |   |  |               |         |   |        |   |       |   |  |   | 15.5     |  
|Other                                                       |                      |               | 2.7   |            |            |          |           |              |             |            | 6.8           |   |  |               |         |   |        |   |       |   |  |   | 6.8      |  
|                                                            |                      |               |       |            |            |          |            |              |             |            |               |   |  |               |          |   |        |  
|Balances as of August 31, 2003 (as restated)                |                      |               | 832.6 |            |            | $        | 0.8        |              |             | $          | 6,658.2       |   |  | $             | (5,032.5 | ) |        | $ | (154.8 | ) |  | $ | 1,471.7  |  
|                                                            |                      |               |       |            |            |          |            |              |             |            |               |   |  |               |          |   |        |  
|Net loss                                                    |                      |               |      |            |            | $        |           |              |             | $          |              |   |  | $             | (177.4   | ) |        | $ |       |   |  | $ | (177.4   | )
|Foreign currency translation                                |                      |               |      |            |            |          |           |              |             |            |              |   |  |               |         |   |        |   | (3.0   | ) |  |   | (3.0     | )
|Unrealized gain on investments                              |                      |               |      |            |            |          |           |              |             |            |              |   |  |               |         |   |        |   | 9.7    |   |  |   | 9.7      |  
|Stock issued under stock option and employee purchase plans |                      |               | 8.3   |            |            |          |           |              |             |            | 29.6          |   |  |               |         |   |        |   |       |   |  |   | 29.6     |  
|Stock issued                                                |                      |               | 17.1  |            |            |          |           |              |             |            | 81.7          |   |  |               |         |   |        |   |       |   |  |   | 81.7     |  
|Settlement of equity security units                         |                      |               | 105.6 |            |            |          | 0.2        |              |             |            | 1,006.4       |   |  |               |         |   |        |   |       |   |  |   | 1,006.6  |  
|                                                            |                      |               |       |            |            |          |            |              |             |            |               |   |  |               |          |   |        |  
|Balances as of August 31, 2004 (as restated)                |                      |               | 963.6 |            |            | $        | 1.0        |              |             | $          | 7,775.9       |   |  | $             | (5,209.9 | ) |        | $ | (148.1 | ) |  | $ | 2,418.9  |  
|                                                            |                      |               |       |            |            |          |            |              |             |            |               |   |  |               |          |   |        |  



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SOLECTRON CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


|                                                                                                                                                 |  |                       |        |   |            |   |          |            |  |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------- | ------ | - | ---------- | - | -------- | ---------- |  | - | -------- | -
|                                                                                                                                                 |  | Years Ended August 31 |       
|                                                                                                                                                 |  |                       |       
|                                                                                                                                                 |  | 2004                  |        |   | 2003       |   |          | 2002       | 
|                                                                                                                                                 |  |                       |        |   |            |   |          |            | 
|                                                                                                                                                 |  | (In millions)         |       
|                                                                                                                                                 |  | (Restated)            |        |   | (Restated) |   |          | (Restated) | 
|Net loss                                                                                                                                         |  | $                     | (177.4 | ) |            | $ | (3,452.6 | )          |  | $ | (3,109.7 | )
|Other comprehensive income (loss):                                                                                                               |  |                       |        |   |            |   |          |            |  |   |          |  
|Foreign currency translation adjustments net of income tax
    expense of $0.0 in 2004, $1.7 in 2003, and income tax benefit of
    $6.3 in 2002 |  |                       | (3.0   | ) |            |   | 150.6    |            |  |   | (36.3    | )
|Unrealized (loss) gain on investments net of income tax benefit
    of $0.0 in 2004, $0.3 in 2003, and income tax expense of $0.1 in
    2002    |  |                       | 9.7    |   |            |   | (20.0    | )          |  |   | 10.1     |  
|                                                                                                                                                 |  |                       |        |   |            |   |          |            | 
|Comprehensive loss                                                                                                                               |  | $                     | (170.7 | ) |            | $ | (3,322.0 | )          |  | $ | (3,135.9 | )
|                                                                                                                                                 |  |                       |        |   |            |   |          |            | 





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SOLECTRON CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                               |                                                                                               |                                                                                    |                                                |         |            |        |   |            |          |        |   |          |          |         |  
|-------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | ---------------------------------------------- | ------- | ---------- | ------ | - | ---------- | -------- | ------ | - | -------- | -------- | ------- | -
|                                                               |                                                                                               | Years Ended August 31                                                              |                                               
|                                                               |                                                                                               |                                                                                    |                                               
|                                                               |                                                                                               | 2004                                                                               |                                                |         | 2003       |        |   | 2002       |         
|                                                               |                                                                                               |                                                                                    |                                                |         |            |        |   |            |         
|                                                               |                                                                                               | (In millions)                                                                      |                                               
|                                                               |                                                                                               | (Restated)                                                                         |                                                |         | (Restated) |        |   | (Restated) |         
|Cash flows from operating activities of continuing operations: |                                                                                               |                                                                                    |                                                |         |            |        |   |            |          |        |   |         
|                                                               | Net loss from continuing operations                                                           |                                                                                    | $                                              | (262.4  | )          |        | $ | (3,008.9   | )        |        | $ | (3,069.3 | )       
|                                                               | Adjustments to reconcile net loss to net cash (used in) provided
    by operating activities: |                                                                                    |                                                |         |            |        |   |            |          |        |   |          |         
|                                                               |                                                                                               | Depreciation and amortization                                                      |                                                |         | 226.9      |        |   |            | 245.7    |        |   |          | 327.3    |        
|                                                               |                                                                                               | Amortization of debt issuance costs and accretion of discount on
    notes payable |                                                |         | 49.4       |        |   |            | 84.6     |        |   |          | 137.5    |        
|                                                               |                                                                                               | Tax benefit associated with exercise of stock options                              |                                                |         |           |        |   |            |         |        |   |          | 3.6      |        
|                                                               |                                                                                               | Loss (gain) on retirement of debt                                                  |                                                |         | 77.7       |        |   |            | (39.4    | )      |   |          | (75.7    | )      
|                                                               |                                                                                               | Gain on termination of interest rate swap                                          |                                                |         | (5.6       | )      |   |            |         |        |   |          |         |        
|                                                               |                                                                                               | Deferred tax charge                                                                |                                                |         | (12.0      | )      |   |            | 528.9    |        |   |          |         |        
|                                                               |                                                                                               | Impairment of goodwill and intangible assets                                       |                                                |         | 47.5       |        |   |            | 1,792.0  |        |   |          | 2,731.7  |        
|                                                               |                                                                                               | (Gain) loss on disposal and impairment of property and
    equipment, net          |                                                |         | 60.2       |        |   |            | 157.5    |        |   |          | 318.4    |        
|                                                               |                                                                                               | Other                                                                              |                                                |         |           |        |   |            | (5.2     | )      |   |          | 23.3     |        
|                                                               |                                                                                               | Changes in operating assets and liabilities:                                       |                                                |         |            |        |   |            |          |        |   |          |          |        
|                                                               |                                                                                               |                                                                                    | Accounts receivable, net of allowance          |         |            | (144.3 | ) |            |          | 123.4  |   |          |          | 1,037.3 |  
|                                                               |                                                                                               |                                                                                    | Inventories                                    |         |            | (134.1 | ) |            |          | 420.4  |   |          |          | 1,635.6 |  
|                                                               |                                                                                               |                                                                                    | Prepaid expenses and other current assets      |         |            | 6.8    |   |            |          | 106.9  |   |          |          | (505.3  | )
|                                                               |                                                                                               |                                                                                    | Accounts payable                               |         |            | 150.3  |   |            |          | (132.0 | ) |          |          | (473.5  | )
|                                                               |                                                                                               |                                                                                    | Accrued expenses and other current liabilities |         |            | (69.0  | ) |            |          | 7.1    |   |          |          | (37.5   | )
|                                                               |                                                                                               |                                                                                    |                                                |         |            |        |   |            |         
|                                                               |                                                                                               | Net cash (used in) provided by operating activities of
    continuing operations   |                                                |         | (8.6       | )      |   |            | 281.0    |        |   |          | 2,053.4  |        
|                                                               |                                                                                               |                                                                                    |                                                |         |            |        |   |            |         
|Cash flows from investing activities of continuing operations: |                                                                                               |                                                                                    |                                                |         |            |        |   |            |          |        |   |         
|                                                               | Change in restricted cash, cash equivalents and short-term
    investments                    |                                                                                    |                                                | 44.5    |            |        |   | 169.8      |          |        |   | (231.9   | )       
|                                                               | Sales and maturities of short-term investments                                                |                                                                                    |                                                | 27.5    |            |        |   | 252.5      |          |        |   | 665.4    |         
|                                                               | Purchases of short-term investments                                                           |                                                                                    |                                                |        |            |        |   | (56.1      | )        |        |   | (589.9   | )       
|                                                               | Acquisition of businesses, net of cash acquired                                               |                                                                                    |                                                |        |            |        |   | (3.8       | )        |        |   | (316.3   | )       
|                                                               | Acquisition of manufacturing assets and locations                                             |                                                                                    |                                                |        |            |        |   | (45.5      | )        |        |   | (102.2   | )       
|                                                               | Net proceeds from disposition of businesses                                                   |                                                                                    |                                                | 508.0   |            |        |   |           |          |        |   |         |         
|                                                               | Capital expenditures                                                                          |                                                                                    |                                                | (149.6  | )          |        |   | (124.6     | )        |        |   | (203.2   | )       
|                                                               | Purchase of facilities previously under synthetic leases                                      |                                                                                    |                                                |        |            |        |   |           |          |        |   | (179.3   | )       
|                                                               | Proceeds from sale of property and equipment                                                  |                                                                                    |                                                | 58.5    |            |        |   | 60.1       |          |        |   | 129.8    |         
|                                                               | Proceeds from sale of investments                                                             |                                                                                    |                                                | 10.4    |            |        |   |           |          |        |   |         |         
|                                                               | Advances from (to) discontinued operations                                                    |                                                                                    |                                                | (2.4    | )          |        |   | 84.1       |          |        |   | (98.1    | )       
|                                                               | Supply agreement and other                                                                    |                                                                                    |                                                | 0.2     |            |        |   | 48.3       |          |        |   | (46.4    | )       
|                                                               |                                                                                               |                                                                                    |                                                |         |            |        |   |            |         
|                                                               |                                                                                               | Net cash provided by (used in) investing activities of
    continuing operations   |                                                |         | 497.1      |        |   |            | 384.8    |        |   |          | (972.1   | )      
|                                                               |                                                                                               |                                                                                    |                                                |         |            |        |   |            |         
|Cash flows from financing activities of continuing operations: |                                                                                               |                                                                                    |                                                |         |            |        |   |            |          |        |   |         
|                                                               | Proceeds used for ACES early settlement                                                       |                                                                                    |                                                | (63.3   | )          |        |   |           |          |        |   |         |         
|                                                               | Net repayment of banklines of credit                                                          |                                                                                    |                                                | (50.5   | )          |        |   | (85.0      | )        |        |   | (193.3   | )       
|                                                               | Proceeds from issuance of ACES and Senior Notes                                               |                                                                                    |                                                | 436.5   |            |        |   |           |          |        |   | 1,553.8  |         
|                                                               | Net proceeds from termination of interest rate swap                                           |                                                                                    |                                                | 6.0     |            |        |   |           |          |        |   |         |         
|                                                               | Repurchase of LYONS                                                                           |                                                                                    |                                                | (950.2  | )          |        |   | (967.5     | )        |        |   | (2,835.9 | )       
|                                                               | Net payments on long-term debt                                                                |                                                                                    |                                                |        |            |        |   |           |          |        |   | (318.2   | )       
|                                                               | Common stock repurchase                                                                       |                                                                                    |                                                |        |            |        |   |           |          |        |   | (4.5     | )       
|                                                               | Net proceeds from issuance of common stock                                                    |                                                                                    |                                                | 111.1   |            |        |   | 7.8        |          |        |   | 38.8     |         
|                                                               | Other                                                                                         |                                                                                    |                                                |        |            |        |   | 28.4       |          |        |   | (17.3    | )       
|                                                               |                                                                                               |                                                                                    |                                                |         |            |        |   |            |         
|                                                               |                                                                                               | Net cash used in financing activities of continuing operations                     |                                                |         | (510.4     | )      |   |            | (1,016.3 | )      |   |          | (1,776.6 | )      
|                                                               |                                                                                               |                                                                                    |                                                |         |            |        |   |            |         
|                                                               | Effect of exchange rate changes on cash and cash equivalents                                  |                                                                                    |                                                | 9.3     |            |        |   | 32.9       |          |        |   | (25.4    | )       
|                                                               |                                                                                               |                                                                                    |                                                |         |            |        |   |            |         
|                                                               | Net decrease in cash and cash equivalents                                                     |                                                                                    |                                                | (12.6   | )          |        |   | (317.6     | )        |        |   | (720.7   | )       
|                                                               | Cash and cash equivalents at beginning of period 
    continuing operations                  |                                                                                    |                                                | 1,425.3 |            |        |   | 1,742.9    |          |        |   | 2,463.6  |         
|                                                               |                                                                                               |                                                                                    |                                                |         |            |        |   |            |         
|                                                               | Cash and cash equivalents at end of period 
    continuing operations                        |                                                                                    | $                                              | 1,412.7 |            |        | $ | 1,425.3    |          |        | $ | 1,742.9  |         
|                                                               |                                                                                               |                                                                                    |                                                |         |            |        |   |            |         
|                                                               | SUPPLEMENTAL DISCLOSURES                                                                      |                                                                                    |                                                |         |            |        |   |            |          |        |   |          |         
|                                                               | Cash paid (received) during the period:                                                       |                                                                                    |                                                |         |            |        |   |            |          |        |   |          |         
|                                                               |                                                                                               | Income taxes                                                                       |                                                | $       | 6.6        |        |   | $          | (199.6   | )      |   | $        | (70.5    | )      
|                                                               |                                                                                               | Interest                                                                           |                                                | $       | 100.8      |        |   | $          | 133.4    |        |   | $        | 70.9     |        
|                                                               | Non-cash investing and financing activities:                                                  |                                                                                    |                                                |         |            |        |   |            |          |        |   |          |         
|                                                               |                                                                                               | Issuance of common stock for business combination, net of cash
    acquired        |                                                | $       |           |        |   | $          |         |        |   | $        | 2,528.8  |        
|                                                               |                                                                                               | Early settlement of ACES for stock                                                 |                                                | $       | 1,006.6    |        |   | $          |         |        |   | $        |         |        
|                                                               | Cash and cash equivalents at beginning of period 
    discontinued operations                |                                                                                    | $                                              | 32.8    |            |        | $ | 39.0       |          |        | $ | 18.7     |         
|                                                               | Cash acquired by acquiring discontinued operations                                            |                                                                                    |                                                |        |            |        |   |           |          |        |   | 20.0     |         
|                                                               | Cash (used in) provided by discontinued operations                                            |                                                                                    |                                                | (32.8   | )          |        |   | (6.2       | )        |        |   | 0.3      |         
|                                                               |                                                                                               |                                                                                    |                                                |         |            |        |   |            |         
|                                                               | Cash and cash equivalents at end of periods 
    discontinued operations                     |                                                                                    | $                                              |        |            |        | $ | 32.8       |          |        | $ | 39.0     |         
|                                                               |                                                                                               |                                                                                    |                                                |         |            |        |   |            |         



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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements




|        |                                           
|------- | ------------------------------------------
|NOTE 1. | Summary of Significant Accounting Policies

Basis of Presentation:


Year End:


Use of Estimates:


Cash Equivalents and Short-Term Investments:


Restricted Cash, Cash Equivalents and Short-Term
Investments:


Allowance for Doubtful Accounts:


Inventories:




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Notes to Consolidated Financial Statements 
(Continued)


Property and Equipment:


|                                            |  |  |                              | 
|------------------------------------------- |  |  | ---------------------------- | 
|Machinery, equipment, and computer software |  |  | 2-7 years                    | 
|Furniture and fixtures                      |  |  | 3-5 years                    | 
|Leasehold improvements                      |  |  | estimated life or lease term | 
|Buildings                                   |  |  | 15-50 years                  | 



Goodwill and Intangible Assets:






Income Taxes:


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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)




Net Loss Per Share:


Revenue Recognition:


Employee Stock Plans:


|                                                                                                             |                                 |                                      |        |       |            |   |          |            |   |   |          |       |  
|------------------------------------------------------------------------------------------------------------ | ------------------------------- | ------------------------------------ | ------ | ----- | ---------- | - | -------- | ---------- | - | - | -------- | ----- | -
|                                                                                                             |                                 | 2004                                 |        |       | 2003       |   |          | 2002       |  
|                                                                                                             |                                 |                                      |        |       |            |   |          |            |  
|                                                                                                             |                                 | (Restated)                           |        |       | (Restated) |   |          | (Restated) |  
|                                                                                                             |                                 | (In millions, except per-share data) |       
|Net loss as reported                                                                                         |                                 | $                                    | (177.4 | )     |            | $ | (3,452.6 | )          |   | $ | (3,109.7 | )    
|Stock-based employee compensation expense determined under fair
    value method, net of related tax effects |                                 |                                      | (60.5  | )     |            |   | (107.0   | )          |   |   | (94.7    | )    
|                                                                                                             |                                 |                                      |        |       |            |   |          |            |  
|Pro forma net loss                                                                                           |                                 | $                                    | (237.9 | )     |            | $ | (3,559.6 | )          |   | $ | (3,204.4 | )    
|                                                                                                             |                                 |                                      |        |       |            |   |          |            |  
|Net loss per share                                                                                           |                                 |                                      |        |       |            |   |          |            |   |   |          |      
|                                                                                                             | Basic and diluted  as reported |                                      | $      | (0.20 | )          |   | $        | (4.17      | ) |   | $        | (3.98 | )
|                                                                                                             | Basic and diluted  pro forma   |                                      | $      | (0.27 | )          |   | $        | (4.30      | ) |   | $        | (4.11 | )



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Notes to Consolidated Financial Statements 
(Continued)




|                         |  |      |                |  |      |  |                |      |  |  |                | 
|------------------------ |  | ---- | -------------- |  | ---- |  | -------------- | ---- |  |  | -------------- | 
|Stock Options            |  | 2004 |                |  | 2003 |  |                | 2002 | 
|                         |  |      |                |  |      |  |                |      | 
|Expected life of options |  |      | 3.9 years      |  |      |  | 3.9 years      |      |  |  | 3.8 years      | 
|Volatility               |  |      | 75%            |  |      |  | 79%            |      |  |  | 70%            | 
|Risk-free interest rate  |  |      | 2.30% to 3.06% |  |      |  | 1.93% to 2.30% |      |  |  | 3.01% to 3.98% | 
|Dividend yield           |  |      | zero           |  |      |  | zero           |      |  |  | zero           | 

|                                |  |      |                |  |      |  |                |      |  |  |                | 
|------------------------------- |  | ---- | -------------- |  | ---- |  | -------------- | ---- |  |  | -------------- | 
|Employee Stock Purchase Plan    |  | 2004 |                |  | 2003 |  |                | 2002 | 
|                                |  |      |                |  |      |  |                |      | 
|Expected life of purchase right |  |      | 6 months       |  |      |  | 6 months       |      |  |  | 6 months       | 
|Volatility                      |  |      | 77%            |  |      |  | 79%            |      |  |  | 70%            | 
|Risk-free interest rate         |  |      | 1.00% to 1.70% |  |      |  | 0.99% to 1.51% |      |  |  | 1.74% to 2.27% | 
|Dividend yield                  |  |      | zero           |  |      |  | zero           |      |  |  | zero           | 

Foreign Currency:


Derivative Instruments:




| |                                  
| | ---------------------------------
| | Recent Accounting Pronouncements:



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Notes to Consolidated Financial Statements 
(Continued)












|        |                                    
|------- | -----------------------------------
|NOTE 2. | Restatement of Financial Statements









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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)






Consolidated Statements of Operations




|                                                              |                                          |                |          |        |             |   |       |             |       |   |          |        |       |  
|------------------------------------------------------------- | ---------------------------------------- | -------------- | -------- | ------ | ----------- | - | ----- | ----------- | ----- | - | -------- | ------ | ----- | -
|                                                              |                                          | As Previously  |          |        |             |   |      
|                                                              |                                          | Reported       |          |        | Adjustments |   |       | As Restated |      
|                                                              |                                          |                |          |        |             |   |       |             |      
|Annual 2004                                                   |                                          |                |          |        |             |   |       |             |       |   |          |       
|Net sales                                                     |                                          | $              | 11,638.3 |        |             | $ |      |             |       | $ | 11,638.3 |       
|Cost of sales                                                 |                                          |                | 11,058.0 |        |             |   | 10.6  |             |       |   | 11,068.6 |       
|                                                              |                                          |                |          |        |             |   |       |             |      
|Gross profit                                                  |                                          |                | 580.3    |        |             |   | (10.6 | )           |       |   | 569.7    |       
|Operating expenses:                                           |                                          |                |          |        |             |   |       |             |       |   |          |       
|                                                              | Selling, general and administrative      |                |          | 440.9  |             |   |       | 5.8         |       |   |          | 446.7  |      
|                                                              | Restructuring and impairment costs       |                |          | 176.8  |             |   |       | 1.1         |       |   |          | 177.9  |      
|                                                              | Goodwill impairment                      |                |          |       |             |   |       |            |       |   |          |       |      
|                                                              |                                          |                |          |        |             |   |       |             |      
|                                                              |                                          | Operating loss |          |        | (37.4       | ) |       |             | (17.5 | ) |          |        | (54.9 | )
|Interest income                                               |                                          |                | 14.8     |        |             |   | 0.3   |             |       |   | 15.1     |       
|Interest expense                                              |                                          |                | (144.2   | )      |             |   | (1.1  | )           |       |   | (145.3   | )     
|Other (expense) income  net                                  |                                          |                | (85.3    | )      |             |   | 4.7   |             |       |   | (80.6    | )     
|                                                              |                                          |                |          |        |             |   |       |             |      
|Operating loss from continuing operations before income taxes |                                          |                | (252.1   | )      |             |   | (13.6 | )           |       |   | (265.7   | )     
|Income tax (benefit) expense                                  |                                          |                | (0.3     | )      |             |   | (3.0  | )           |       |   | (3.3     | )     
|                                                              |                                          |                |          |        |             |   |       |             |      
|                                                              | Loss from continuing operations          |                | $        | (251.8 | )           |   | $     | (10.6       | )     |   | $        | (262.4 | )    
|Discontinued operations:                                      |                                          |                |          |        |             |   |       |             |       |   |          |       
|Income (loss) from discontinued operations                    |                                          |                | 90.9     |        |             |   | 2.8   |             |       |   | 93.7     |       
|Income tax expense (benefit)                                  |                                          |                | 8.0      |        |             |   | 0.7   |             |       |   | 8.7      |       
|                                                              |                                          |                |          |        |             |   |       |             |      
|                                                              | Income (loss) on discontinued operations |                |          | 82.9   |             |   |       | 2.1         |       |   |          | 85.0   |      
|                                                              |                                          |                |          |        |             |   |       |             |      
|                                                              | Net loss                                 |                | $        | (168.9 | )           |   | $     | (8.5        | )     |   | $        | (177.4 | )    
|                                                              |                                          |                |          |        |             |   |       |             |      
|Basic and diluted net income (loss) per share                 |                                          |                |          |        |             |   |       |             |       |   |          |       
|                                                              | Continuing operations                    |                | $        | (0.29  | )           |   | $     | (0.1        | )     |   | $        | (0.30  | )    
|                                                              | Discontinued operations                  |                |          | 0.10   |             |   |       |            |       |   |          | 0.10   |      
|                                                              |                                          |                |          |        |             |   |       |             |      
|                                                              | Basic and diluted net loss per share     |                | $        | (0.19  | )           |   | $     | (0.1        | )     |   | $        | (0.20  | )    
|                                                              |                                          |                |          |        |             |   |       |             |      
|Shares used to compute basic and diluted net income           |                                          |                | 873.9    |        |             |   | 873.9 |             |       |   | 873.9    |       

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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)


|                                                              |                                          |                |          |          |             |   |       |             |     |   |          |          |          |  
|------------------------------------------------------------- | ---------------------------------------- | -------------- | -------- | -------- | ----------- | - | ----- | ----------- | --- | - | -------- | -------- | -------- | -
|                                                              |                                          | As Previously  |          |          |             |   |      
|                                                              |                                          | Reported       |          |          | Adjustments |   |       | As Restated |    
|                                                              |                                          |                |          |          |             |   |       |             |    
|Annual 2003                                                   |                                          |                |          |          |             |   |       |             |     |   |          |         
|Net sales                                                     |                                          | $              | 9,828.3  |          |             | $ |      |             |     | $ | 9,828.3  |         
|Cost of sales                                                 |                                          |                | 9,386.3  |          |             |   | 2.1   |             |     |   | 9,388.4  |         
|                                                              |                                          |                |          |          |             |   |       |             |    
|Gross profit                                                  |                                          |                | 442.0    |          |             |   | (2.1  | )           |     |   | 439.9    |         
|Operating expenses:                                           |                                          |                |          |          |             |   |       |             |     |   |          |         
|                                                              | Selling, general and administrative      |                |          | 566.1    |             |   |       | 0.8         |     |   |          | 566.9    |         
|                                                              | Restructuring and impairment costs       |                |          | 603.2    |             |   |       | 1.6         |     |   |          | 604.8    |         
|                                                              | Goodwill impairment                      |                |          | 1,632.5  |             |   |       | (12.4       | )   |   |          | 1,620.1  |         
|                                                              |                                          |                |          |          |             |   |       |             |    
|                                                              |                                          | Operating loss |          |          | (2,359.8    | ) |       |             | 7.9 |   |          |          | (2,351.9 | )
|Interest income                                               |                                          |                | 26.8     |          |             |   | 0.4   |             |     |   | 27.2     |         
|Interest expense                                              |                                          |                | (207.1   | )        |             |   |      |             |     |   | (207.1   | )       
|Other (expense) income  net                                  |                                          |                | 52.4     |          |             |   | (4.0  | )           |     |   | 48.4     |         
|                                                              |                                          |                |          |          |             |   |       |             |    
|Operating loss from continuing operations before income taxes |                                          |                | (2,487.7 | )        |             |   | 4.3   |             |     |   | (2,483.4 | )       
|Income tax (benefit) expense                                  |                                          |                | 532.1    |          |             |   | (6.6  | )           |     |   | 525.5    |         
|                                                              |                                          |                |          |          |             |   |       |             |    
|Loss from continuing operations                               |                                          | $              | (3,019.8 | )        |             | $ | 10.9  |             |     | $ | (3,008.9 | )       
|Discontinued operations:                                      |                                          |                |          |          |             |   |       |             |     |   |          |         
|Income (loss) from discontinued operations                    |                                          |                | (330.0   | )        |             |   | (1.7  | )           |     |   | (331.7   | )       
|Income tax expense (benefit)                                  |                                          |                | 112.2    |          |             |   | (0.2  | )           |     |   | 112.0    |         
|                                                              |                                          |                |          |          |             |   |       |             |    
|                                                              | Income (loss) on discontinued operations |                |          | (442.2   | )           |   |       | (1.5        | )   |   |          | (443.7   | )       
|                                                              |                                          |                |          |          |             |   |       |             |    
|                                                              | Net loss                                 |                | $        | (3,462.0 | )           |   | $     | 9.4         |     |   | $        | (3,452.6 | )       
|                                                              |                                          |                |          |          |             |   |       |             |    
|Basic and diluted net income (loss) per share                 |                                          |                |          |          |             |   |       |             |     |   |          |         
|                                                              | Continuing operations                    |                | $        | (3.65    | )           |   | $     | 0.02        |     |   | $        | (3.63    | )       
|                                                              | Discontinued operations                  |                |          | (0.53    | )           |   |       | (0.01       | )   |   |          | (0.54    | )       
|                                                              |                                          |                |          |          |             |   |       |             |    
|                                                              | Basic and diluted net loss per share     |                | $        | (4.18    | )           |   | $     | 0.01        |     |   | $        | (4.17    | )       
|                                                              |                                          |                |          |          |             |   |       |             |    
|Shares used to compute basic and diluted net income           |                                          |                | 827.7    |          |             |   | 827.7 |             |     |   | 827.7    |         

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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)


|                                                              |                                          |                |          |          |             |   |       |             |     |   |          |          |          |  
|------------------------------------------------------------- | ---------------------------------------- | -------------- | -------- | -------- | ----------- | - | ----- | ----------- | --- | - | -------- | -------- | -------- | -
|                                                              |                                          | As Previously  |          |          |             |   |      
|                                                              |                                          | Reported       |          |          | Adjustments |   |       | As Restated |    
|                                                              |                                          |                |          |          |             |   |       |             |    
|Annual 2002                                                   |                                          |                |          |          |             |   |       |             |     |   |          |         
|Net sales                                                     |                                          | $              | 10,738.7 |          |             | $ |      |             |     | $ | 10,738.7 |         
|Cost of sales                                                 |                                          |                | 10,233.8 |          |             |   | 1.0   |             |     |   | 10,234.8 |         
|                                                              |                                          |                |          |          |             |   |       |             |    
|Gross profit                                                  |                                          |                | 504.9    |          |             |   | (1.0  | )           |     |   | 503.9    |         
|Operating expenses:                                           |                                          |                |          |          |             |   |       |             |     |   |          |         
|                                                              | Selling, general and administrative      |                |          | 658.2    |             |   |       | 3.2         |     |   |          | 661.4    |         
|                                                              | Restructuring and impairment costs       |                |          | 793.6    |             |   |       | (5.9        | )   |   |          | 787.7    |         
|                                                              | Goodwill impairment                      |                |          | 2,500.0  |             |   |       |            |     |   |          | 2,500.0  |         
|                                                              |                                          |                |          |          |             |   |       |             |    
|                                                              |                                          | Operating loss |          |          | (3,446.9    | ) |       |             | 1.7 |   |          |          | (3,445.2 | )
|Interest income                                               |                                          |                | 61.1     |          |             |   | 0.3   |             |     |   | 61.4     |         
|Interest expense                                              |                                          |                | (238.8   | )        |             |   | 1.2   |             |     |   | (237.6   | )       
|Other (expense) income  net                                  |                                          |                | 104.8    |          |             |   | (2.7  | )           |     |   | 102.1    |         
|                                                              |                                          |                |          |          |             |   |       |             |    
|Operating loss from continuing operations before income taxes |                                          |                | (3,519.8 | )        |             |   | 0.5   |             |     |   | (3,519.3 | )       
|Income tax (benefit) expense                                  |                                          |                | (449.0   | )        |             |   | (1.0  | )           |     |   | (450.0   | )       
|                                                              |                                          |                |          |          |             |   |       |             |    
|                                                              | Loss from continuing operations          |                | $        | (3,070.8 | )           |   | $     | 1.5         |     |   | $        | (3,069.3 | )       
|Discontinued operations:                                      |                                          |                |          |          |             |   |       |             |     |   |          |         
|Income (loss) from discontinued operations                    |                                          |                | (57.6    | )        |             |   | (1.5  | )           |     |   | (59.1    | )       
|Income tax expense (benefit)                                  |                                          |                | (18.2    | )        |             |   | (0.5  | )           |     |   | (18.7    | )       
|                                                              |                                          |                |          |          |             |   |       |             |    
|                                                              | Income (loss) on discontinued operations |                |          | (39.4    | )           |   |       | (1.0        | )   |   |          | (40.4    | )       
|                                                              |                                          |                |          |          |             |   |       |             |    
|                                                              | Net loss                                 |                | $        | (3,110.2 | )           |   | $     | 0.5         |     |   | $        | (3,109.7 | )       
|                                                              |                                          |                |          |          |             |   |       |             |    
|Basic and diluted net income (loss) per share                 |                                          |                |          |          |             |   |       |             |     |   |          |         
|                                                              | Continuing operations                    |                | $        | (3.93    | )           |   | $     |            |     |   | $        | (3.93    | )       
|                                                              | Discontinued operations                  |                |          | (0.05    | )           |   |       |            |     |   |          | (0.05    | )       
|                                                              |                                          |                |          |          |             |   |       |             |    
|                                                              | Basic and diluted net loss per share     |                | $        | (3.98    | )           |   | $     |            |     |   | $        | (3.98    | )       
|                                                              |                                          |                |          |          |             |   |       |             |    
|Shares used to compute basic and diluted net income           |                                          |                | 780.9    |          |             |   | 780.9 |             |     |   | 780.9    |         



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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)


Consolidated Balance Sheets




|                                                 |                                                |                            |         |          |             |   |         |         |      |    |          |      |       |   |         |          |         | 
|------------------------------------------------ | ---------------------------------------------- | -------------------------- | ------- | -------- | ----------- | - | ------- | ------- | ---- | -- | -------- | ---- | ----- | - | ------- | -------- | ------- | 
|                                                 |                                                | August 31, 2004            |        
|                                                 |                                                |                            |        
|                                                 |                                                | As                         |         |          |             |   | Balance |         |      |   
|                                                 |                                                | Previously                 |         |          |             |   | Sheet   |         |      | As |         
|                                                 |                                                | Reported                   |         |          | Adjustments |   |         | Reclass |      |    | Restated |     
|                                                 |                                                |                            |         |          |             |   |         |         |      |    |          |     
|ASSETS                                          
|Current assets:                                  |                                                |                            |         |          |             |   |         |         |      |    |          |      |       |   |         |         
|                                                 | Cash and cash equivalents                      |                            | $       | 1,412.5  |             |   | $       | 0.2     |      |    |          |     |       |   | $       | 1,412.7  |        
|                                                 | Restricted cash and cash equivalents           |                            |         | 17.5     |             |   |         |        |      |    |          |     |       |   |         | 17.5     |        
|                                                 | Short-term investments                         |                            |         |         |             |   |         |        |      |    |          |     |       |   |         |         |        
|                                                 | Restricted short-term investments              |                            |         |         |             |   |         |        |      |    |          |     |       |   |         |         |        
|                                                 | Accounts receivable, net                       |                            |         | 1,549.9  |             |   |         | 0.1     |      |    |          | 0.2  |       |   |         | 1,550.2  |        
|                                                 | Inventories                                    |                            |         | 1,457.2  |             |   |         | (1.8    | )    |    |          |     |       |   |         | 1,455.4  |        
|                                                 | Prepaid expenses and other current assets      |                            |         | 192.9    |             |   |         | 1.4     |      |    |          | (4.8 | )     |   |         | 189.5    |        
|                                                 | Current assets of discontinued operations      |                            |         | 36.4     |             |   |         |        |      |    |          |     |       |   |         | 36.4     |        
|                                                 |                                                |                            |         |          |             |   |         |         |      |    |          |     
|                                                 |                                                | Total current assets       |         |          | 4,666.4     |   |         |         | (0.1 | )  |          |      | (4.6  | ) |         |          | 4,661.7 | 
|Property and equipment, net                      |                                                |                            | 726.6   |          |             |   | (2.8    | )       |      |    | 30.6     |      |       |   | 754.4   |         
|Goodwill                                         |                                                |                            | 134.6   |          |             |   | 2.4     |         |      |    | (1.2     | )    |       |   | 135.8   |         
|Other assets                                     |                                                |                            | 277.5   |          |             |   | 23.2    |         |      |    | (6.4     | )    |       |   | 294.3   |         
|Long-term assets of discontinued operations      |                                                |                            | 11.9    |          |             |   |        |         |      |    |         |      |       |   | 11.9    |         
|                                                 |                                                |                            |         |          |             |   |         |         |      |    |          |     
|Total assets                                     |                                                | $                          | 5,817.0 |          |             | $ | 22.7    |         |      |    | 18.4     |      |       | $ | 5,858.1 |         
|                                                 |                                                |                            |         |          |             |   |         |         |      |    |          |     
|                                                
|LIABILITIES AND STOCKHOLDERS EQUITY            
|Current liabilities:                             |                                                |                            |         |          |             |   |         |         |      |    |          |      |       |   |         |         
|                                                 | Short-term debt                                |                            | $       | 25.1     |             |   | $       |        |      |    |          |     |       |   | $       | 25.1     |        
|                                                 | Accounts payable                               |                            |         | 1,417.3  |             |   |         | 23.4    |      |    |          | (1.7 | )     |   |         | 1,439.0  |        
|                                                 | Accrued employee compensation                  |                            |         | 175.2    |             |   |         | (1.5    | )    |    |          |     |       |   |         | 173.7    |        
|                                                 | Accrued expenses and other current liabilities |                            |         | 495.1    |             |   |         | 4.5     |      |    |          | 1.1  |       |   |         | 500.7    |        
|                                                 | Current liabilities of discontinued operations |                            |         | 46.4     |             |   |         |        |      |    |          |     |       |   |         | 46.4     |        
|                                                 |                                                |                            |         |          |             |   |         |         |      |    |          |     
|                                                 |                                                | Total current liabilities  |         |          | 2,159.1     |   |         |         | 26.4 |    |          |      | (0.6  | ) |         |          | 2,184.9 | 
|Long-term debt                                   |                                                |                            | 1,221.4 |          |             |   |        |         |      |    |         |      |       |   | 1,221.4 |         
|Other long-term liabilities                      |                                                |                            | 55.9    |          |             |   | (4.2    | )       |      |    | (20.6    | )    |       |   | 31.1    |         
|Long-term liabilities of discontinued operations |                                                |                            | 1.8     |          |             |   |        |         |      |    |         |      |       |   | 1.8     |         
|                                                 |                                                |                            |         |          |             |   |         |         |      |    |          |     
|                                                 |                                                | Total liabilities          |         | $        | 3,438.2     |   |         | $       | 22.2 |    |          |      | (21.2 | ) |         | $        | 3,439.2 | 
|                                                 |                                                |                            |         |          |             |   |         |         |      |    |          |     
|Commitments and contingencies                    |                                                |                            |         |          |             |   |         |         |      |    |          |      |       |   |         |         
|Stockholders equity:                            |                                                |                            |         |          |             |   |         |         |      |    |          |      |       |   |         |         
|                                                 | Common stock                                   |                            |         | 1.0      |             |   |         |        |      |    |          |     |       |   |         | 1.0      |        
|                                                 | Additional paid-in capital                     |                            |         | 7,775.9  |             |   |         |        |      |    |          |     |       |   |         | 7,775.9  |        
|                                                 | Accumulated deficit                            |                            |         | (5,209.5 | )           |   |         | (0.4    | )    |    |          |     |       |   |         | (5,209.9 | )      
|                                                 | Accumulated other comprehensive losses         |                            |         | (188.6   | )           |   |         | 0.9     |      |    |          | 39.6 |       |   |         | (148.1   | )      
|                                                 |                                                |                            |         |          |             |   |         |         |      |    |          |     
|                                                 |                                                | Total stockholders equity |         |          | 2,378.8     |   |         |         | 0.5  |    |          |      | 39.6  |   |         |          | 2,418.9 | 
|                                                 |                                                |                            |         |          |             |   |         |         |      |    |          |     
|Total liabilities and stockholders equity       |                                                | $                          | 5,817.0 |          |             | $ | 22.7    |         |      |    | 18.4     |      |       | $ | 5,858.1 |         
|                                                 |                                                |                            |         |          |             |   |         |         |      |    |          |     

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Notes to Consolidated Financial Statements 
(Continued)


|                                                 |                                                |                            |         |          |             |   |       |         |      |    |          |      |       |   |         |          |         | 
|------------------------------------------------ | ---------------------------------------------- | -------------------------- | ------- | -------- | ----------- | - | ----- | ------- | ---- | -- | -------- | ---- | ----- | - | ------- | -------- | ------- | 
|                                                 |                                                | August 31, 2003            |        
|                                                 |                                                |                            |        
|                                                 |                                                |                            |         | Balance  |             |   |      
|                                                 |                                                | As Previously              |         |          |             |   | Sheet |         |      | As |         
|                                                 |                                                | Reported                   |         |          | Adjustments |   |       | Reclass |      |    | Restated |     
|                                                 |                                                |                            |         |          |             |   |       |         |      |    |          |     
|ASSETS                                          
|Current assets:                                  |                                                |                            |         |          |             |   |       |         |      |    |          |      |       |   |         |         
|                                                 | Cash and cash equivalents                      |                            | $       | 1,425.5  |             |   | $     | (0.2    | )    |    | $        |     |       |   | $       | 1,425.3  |        
|                                                 | Restricted cash and cash equivalents           |                            |         | 42.1     |             |   |       |        |      |    |          |     |       |   |         | 42.1     |        
|                                                 | Short-term investments                         |                            |         | 27.5     |             |   |       |        |      |    |          |     |       |   |         | 27.5     |        
|                                                 | Restricted short-term investments              |                            |         | 19.9     |             |   |       |        |      |    |          |     |       |   |         | 19.9     |        
|                                                 | Accounts receivable, net                       |                            |         | 1,389.1  |             |   |       | (0.4    | )    |    |          | 0.2  |       |   |         | 1,388.9  |        
|                                                 | Inventories                                    |                            |         | 1,327.3  |             |   |       | (1.8    | )    |    |          |     |       |   |         | 1,325.5  |        
|                                                 | Prepaid expenses and other current assets      |                            |         | 270.3    |             |   |       | (2.3    | )    |    |          | (4.8 | )     |   |         | 263.2    |        
|                                                 | Current assets of discontinued operations      |                            |         | 452.1    |             |   |       |        |      |    |          |     |       |   |         | 452.1    |        
|                                                 |                                                |                            |         |          |             |   |       |         |      |    |          |     
|                                                 |                                                | Total current assets       |         |          | 4,953.8     |   |       |         | (4.7 | )  |          |      | (4.6  | ) |         |          | 4,944.5 | 
|Property and equipment, net                      |                                                |                            | 781.9   |          |             |   | (3.6  | )       |      |    | 30.6     |      |       |   | 808.9   |         
|Goodwill                                         |                                                |                            | 134.6   |          |             |   | 1.8   |         |      |    | (1.2     | )    |       |   | 135.2   |         
|Other assets                                     |                                                |                            | 396.3   |          |             |   | 28.7  |         |      |    | (6.5     | )    |       |   | 418.5   |         
|Long-term assets of discontinued operations      |                                                |                            | 262.9   |          |             |   | 0.3   |         |      |    |         |      |       |   | 263.2   |         
|                                                 |                                                |                            |         |          |             |   |       |         |      |    |          |     
|                                                 |                                                | Total assets               |         | $        | 6,529.5     |   |       | $       | 22.5 |    |          |      | 18.3  |   |         | $        | 6,570.3 | 
|                                                 |                                                |                            |         |          |             |   |       |         |      |    |          |     
|                                                
|LIABILITIES AND STOCKHOLDERS EQUITY            
|Current liabilities:                             |                                                |                            |         |          |             |   |       |         |      |    |          |      |       |   |         |         
|                                                 | Short-term debt                                |                            | $       | 973.8    |             |   | $     |        |      |    | $        |     |       |   | $       | 973.8    |        
|                                                 | Accounts payable                               |                            |         | 1,266.6  |             |   |       | 12.4    |      |    |          | (1.7 | )     |   |         | 1,277.3  |        
|                                                 | Accrued employee compensation                  |                            |         | 161.0    |             |   |       | (3.6    | )    |    |          |     |       |   |         | 157.4    |        
|                                                 | Accrued expenses and other current liabilities |                            |         | 499.6    |             |   |       | 4.6     |      |    |          | 1.2  |       |   |         | 505.4    |        
|                                                 | Current liabilities of discontinued operations |                            |         | 333.9    |             |   |       | 0.1     |      |    |          |     |       |   |         | 334.0    |        
|                                                 |                                                |                            |         |          |             |   |       |         |      |    |          |     
|                                                 |                                                | Total current liabilities  |         |          | 3,234.9     |   |       |         | 13.5 |    |          |      | (0.5  | ) |         |          | 3,247.9 | 
|Long-term debt                                   |                                                |                            | 1,817.6 |          |             |   | (0.7  | )       |      |    |         |      |       |   | 1,816.9 |         
|Other long-term liabilities                      |                                                |                            | 32.4    |          |             |   | (0.6  | )       |      |    | (20.6    | )    |       |   | 11.2    |         
|Long-term liabilities of discontinued operations |                                                |                            | 22.6    |          |             |   |      |         |      |    |         |      |       |   | 22.6    |         
|                                                 |                                                |                            |         |          |             |   |       |         |      |    |          |     
|                                                 |                                                | Total liabilities          |         | $        | 5,107.5     |   |       | $       | 12.2 |    |          |      | (21.1 | ) |         | $        | 5,098.6 | 
|                                                 |                                                |                            |         |          |             |   |       |         |      |    |          |     
|Commitments and contingencies                    |                                                |                            |         |          |             |   |       |         |      |    |          |      |       |   |         |         
|Stockholders equity:                            |                                                |                            |         |          |             |   |       |         |      |    |          |      |       |   |         |         
|Common stock                                     |                                                |                            | 0.8     |          |             |   |      |         |      |    |         |      |       |   | 0.8     |         
|                                                 | Additional paid-in capital                     |                            |         | 6,658.2  |             |   |       |        |      |    |          |     |       |   |         | 6,658.2  |        
|                                                 | Accumulated deficit                            |                            |         | (5,040.6 | )           |   |       | 8.1     |      |    |          |      |       |   |         | (5,032.5 | )      
|                                                 | Accumulated other comprehensive losses         |                            |         | (196.4   | )           |   |       | 2.2     |      |    |          | 39.4 |       |   |         | (154.8   | )      
|                                                 |                                                |                            |         |          |             |   |       |         |      |    |          |     
|                                                 |                                                | Total stockholders equity |         |          | 1,422.0     |   |       |         | 10.3 |    |          |      | 39.4  |   |         |          | 1,471.7 | 
|                                                 |                                                |                            |         |          |             |   |       |         |      |    |          |     
|Total liabilities and stockholders equity       |                                                | $                          | 6,529.5 |          |             | $ | 22.5  |         |      | $  | 18.3     |      |       | $ | 6,570.3 |         
|                                                 |                                                |                            |         |          |             |   |       |         |      |    |          |     

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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)


Consolidated Statement of Cash Flows




|                                                               |                                                                                               |                                                                                    |                                                |        |          |        |    |            |       |        |          |          |         |            |   |          |          |        |   |          |         |         |   |          |         |         |  
|-------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | ---------------------------------------------- | ------ | -------- | ------ | -- | ---------- | ----- | ------ | -------- | -------- | ------- | ---------- | - | -------- | -------- | ------ | - | -------- | ------- | ------- | - | -------- | ------- | ------- | -
|                                                               |                                                                                               | Years Ended August 31                                                              |                                               
|                                                               |                                                                                               |                                                                                    |                                               
|                                                               |                                                                                               | 2004                                                                               |                                                |        | 2003     |        |    | 2002       |      
|                                                               |                                                                                               |                                                                                    |                                                |        |          |        |    |            |      
|                                                               |                                                                                               | As                                                                                 |                                                |        |          |        | As |            |       |        |          | As       |         |            |  
|                                                               |                                                                                               | Previously                                                                         |                                                |        | As       |        |    | Previously |       |        | As       |          |         | Previously |   |          | As       |       
|                                                               |                                                                                               | Reported                                                                           |                                                |        | Restated |        |    | Reported   |       |        | Restated |          |         | Reported   |   |          | Restated |       
|                                                               |                                                                                               |                                                                                    |                                                |        |          |        |    |            |       |        |          |          |         |            |   |          |          |       
|Cash flows from operating activities of continuing operations: |                                                                                               |                                                                                    |                                                |        |          |        |    |            |       |        |          |          |         |            |   |          |          |        |   |          |         |         |   |         
|                                                               | Net loss from continuing operations                                                           |                                                                                    | $                                              | (251.8 | )        |        | $  | (262.4     | )     |        | $        | (3,019.8 | )       |            | $ | (3,008.9 | )        |        | $ | (3,070.8 | )       |         | $ | (3,069.3 | )      
|                                                               | Adjustments to reconcile net loss to net cash (used in) provided
    by operating activities: |                                                                                    |                                                |        |          |        |    |            |       |        |          |          |         |            |   |          |          |        |   |          |         |         |   |          |        
|                                                               |                                                                                               | Depreciation and amortization                                                      |                                                |        | 226.9    |        |    |            | 226.9 |        |          |          | 245.7   |            |   |          | 245.7    |        |   |          | 327.3   |         |   |          | 327.3   |        
|                                                               |                                                                                               | Amortization of debt issuance costs and accretion of discount on
    notes payable |                                                |        | 49.4     |        |    |            | 49.4  |        |          |          | 84.6    |            |   |          | 84.6     |        |   |          | 137.5   |         |   |          | 137.5   |        
|                                                               |                                                                                               | Tax benefit associated with exercise of stock options                              |                                                |        |         |        |    |            |      |        |          |          |        |            |   |          |         |        |   |          | 3.6     |         |   |          | 3.6     |        
|                                                               |                                                                                               | Loss (gain) on retirement of debt                                                  |                                                |        | 77.7     |        |    |            | 77.7  |        |          |          | (39.4   | )          |   |          | (39.4    | )      |   |          | (75.7   | )       |   |          | (75.7   | )      
|                                                               |                                                                                               | Gain on termination of interest rate swap                                          |                                                |        | (5.6     | )      |    |            | (5.6  | )      |          |          |        |            |   |          |         |        |   |          |        |         |   |          |        |        
|                                                               |                                                                                               | Deferred tax charge                                                                |                                                |        | (10.2    | )      |    |            | (12.0 | )      |          |          | 541.0   |            |   |          | 528.9    |        |   |          |        |         |   |          |        |        
|                                                               |                                                                                               | Impairment of goodwill and intangible assets                                       |                                                |        | 47.5     |        |    |            | 47.5  |        |          |          | 1,804.2 |            |   |          | 1792.0   |        |   |          | 2,731.7 |         |   |          | 2,731.7 |        
|                                                               |                                                                                               | (Gain) loss on disposal and impairment of property and
    equipment, net          |                                                |        | 60.2     |        |    |            | 60.2  |        |          |          | 157.5   |            |   |          | 157.5    |        |   |          | 321.1   |         |   |          | 318.4   |        
|                                                               |                                                                                               | Other                                                                              |                                                |        |         |        |    |            |      |        |          |          | (5.2    | )          |   |          | (5.2     | )      |   |          | 23.3    |         |   |          | 23.3    |        
|                                                               |                                                                                               | Changes in operating assets and liabilities:                                       |                                                |        |          |        |    |            |       |        |          |          |         |            |   |          |          |        |   |          |         |         |   |          |         |        
|                                                               |                                                                                               |                                                                                    | Accounts receivable, net of allowance          |        |          | (144.3 | )  |            |       | (144.3 | )        |          |         | 123.4      |   |          |          | 123.4  |   |          |         | 1,037.3 |   |          |         | 1,037.3 |  
|                                                               |                                                                                               |                                                                                    | Inventories                                    |        |          | (134.1 | )  |            |       | (134.1 | )        |          |         | 418.6      |   |          |          | 420.4  |   |          |         | 1,635.6 |   |          |         | 1,635.6 |  
|                                                               |                                                                                               |                                                                                    | Prepaid expenses and other current assets      |        |          | 2.8    |    |            |       | 6.8    |          |          |         | 112.7      |   |          |          | 106.9  |   |          |         | (510.0  | ) |          |         | (505.3  | )
|                                                               |                                                                                               |                                                                                    | Accounts payable                               |        |          | 139.7  |    |            |       | 150.3  |          |          |         | (144.4     | ) |          |          | (132.0 | ) |          |         | (472.5  | ) |          |         | (473.5  | )
|                                                               |                                                                                               |                                                                                    | Accrued expenses and other current liabilities |        |          | (67.1  | )  |            |       | (69.0  | )        |          |         | 2.3        |   |          |          | 7.1    |   |          |         | (35.0   | ) |          |         | (37.5   | )
|                                                               |                                                                                               |                                                                                    |                                                |        |          |        |    |            |       |        |          |          |         |            |   |          |          |       
|                                                               |                                                                                               | Net cash (used in) provided by operating activities of
    continuing operations   |                                                |        | (8.9     | )      |    |            | (8.6  | )      |          |          | 281.2   |            |   |          | 281.0    |        |   |          | 2,053.4 |         |   |          | 2,053.4 |        
|                                                               |                                                                                               |                                                                                    |                                                |        |          |        |    |            |       |        |          |          |         |            |   |          |          |       
|Cash flows from investing activities of continuing operations: |                                                                                               |                                                                                    |                                                |        |          |        |    |            |       |        |          |          |         |            |   |          |          |        |   |          |         |         |   |         
|                                                               | Change in restricted cash, cash equivalents and short-term
    investments                    |                                                                                    |                                                | 44.5   |          |        |    | 44.5       |       |        |          | 169.8    |         |            |   | 169.8    |          |        |   | (231.9   | )       |         |   | (231.9   | )      
|                                                               | Sales and maturities of short-term investments                                                |                                                                                    |                                                | 27.5   |          |        |    | 27.5       |       |        |          | 252.5    |         |            |   | 252.5    |          |        |   | 665.4    |         |         |   | 665.4    |        
|                                                               | Purchases of short-term investments                                                           |                                                                                    |                                                |       |          |        |    |           |       |        |          | (56.1    | )       |            |   | (56.1    | )        |        |   | (589.9   | )       |         |   | (589.9   | )      
|                                                               | Acquisition of businesses, net of cash acquired                                               |                                                                                    |                                                |       |          |        |    |           |       |        |          | (3.8     | )       |            |   | (3.8     | )        |        |   | (316.3   | )       |         |   | (316.3   | )      
|                                                               | Acquisition of manufacturing assets and locations                                             |                                                                                    |                                                |       |          |        |    |           |       |        |          | (45.5    | )       |            |   | (45.5    | )        |        |   | (102.2   | )       |         |   | (102.2   | )      

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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)


|                                                               |                                                                              |                                                                                  |   |         |          |   |    |            |        |   |          |         |          |            |   |         |          |   |   |          |          |   |   |          |          |  
|-------------------------------------------------------------- | ---------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | - | ------- | -------- | - | -- | ---------- | ------ | - | -------- | ------- | -------- | ---------- | - | ------- | -------- | - | - | -------- | -------- | - | - | -------- | -------- | -
|                                                               |                                                                              | Years Ended August 31                                                            |  
|                                                               |                                                                              |                                                                                  |  
|                                                               |                                                                              | 2004                                                                             |   |         | 2003     |   |    | 2002       |       
|                                                               |                                                                              |                                                                                  |   |         |          |   |    |            |       
|                                                               |                                                                              | As                                                                               |   |         |          |   | As |            |        |   |          | As      |          |            |  
|                                                               |                                                                              | Previously                                                                       |   |         | As       |   |    | Previously |        |   | As       |         |          | Previously |   |         | As       |  
|                                                               |                                                                              | Reported                                                                         |   |         | Restated |   |    | Reported   |        |   | Restated |         |          | Reported   |   |         | Restated |  
|                                                               |                                                                              |                                                                                  |   |         |          |   |    |            |        |   |          |         |          |            |   |         |          |  
|                                                               | Net proceeds from disposition of businesses                                  |                                                                                  |   | 508.0   |          |   |    | 508.0      |        |   |          |        |          |            |   |        |          |   |   |         |          |   |   |         |         
|                                                               | Capital expenditures                                                         |                                                                                  |   | (149.6  | )        |   |    | (149.6     | )      |   |          | (124.6  | )        |            |   | (124.6  | )        |   |   | (203.2   | )        |   |   | (203.2   | )       
|                                                               | Purchase of facilities previously under synthetic leases                     |                                                                                  |   |        |          |   |    |           |        |   |          |        |          |            |   |        |          |   |   | (179.3   | )        |   |   | (179.3   | )       
|                                                               | Proceeds from sale of property and equipment                                 |                                                                                  |   | 58.5    |          |   |    | 58.5       |        |   |          | 60.1    |          |            |   | 60.1    |          |   |   | 129.8    |          |   |   | 129.8    |         
|                                                               | Proceeds from sale of investments                                            |                                                                                  |   | 10.4    |          |   |    | 10.4       |        |   |          |        |          |            |   |        |          |   |   |         |          |   |   |         |         
|                                                               | Advances from (to) discontinued operations                                   |                                                                                  |   | (2.4    | )        |   |    | (2.4       | )      |   |          | 84.1    |          |            |   | 84.1    |          |   |   | (98.1    | )        |   |   | (98.1    | )       
|                                                               | Supply agreement and other                                                   |                                                                                  |   | 0.2     |          |   |    | 0.2        |        |   |          | 48.3    |          |            |   | 48.3    |          |   |   | (46.4    | )        |   |   | (46.4    | )       
|                                                               |                                                                              |                                                                                  |   |         |          |   |    |            |        |   |          |         |          |            |   |         |          |  
|                                                               |                                                                              | Net cash provided by (used in) investing activities of
    continuing operations |   |         | 497.1    |   |    |            | 497.1  |   |          |         | 384.8    |            |   |         | 384.8    |   |   |          | (972.1   | ) |   |          | (972.1   | )
|                                                               |                                                                              |                                                                                  |   |         |          |   |    |            |        |   |          |         |          |            |   |         |          |  
|Cash flows from financing activities of continuing operations: |                                                                              |                                                                                  |   |         |          |   |    |            |        |   |          |         |          |            |   |         |          |   |   |          |          |   |   |         
|                                                               | Proceeds used for ACES early settlement                                      |                                                                                  |   | (63.3   | )        |   |    | (63.3      | )      |   |          |        |          |            |   |        |          |   |   |         |          |   |   |         |         
|                                                               | Net repayment of bank lines of credit                                        |                                                                                  |   | (50.5   | )        |   |    | (50.5      | )      |   |          | (85.0   | )        |            |   | (85.0   | )        |   |   | (193.3   | )        |   |   | (193.3   | )       
|                                                               | Proceeds from issuance of ACES and Senior Notes                              |                                                                                  |   | 436.5   |          |   |    | 436.5      |        |   |          |        |          |            |   |        |          |   |   | 1,553.8  |          |   |   | 1,553.8  |         
|                                                               | Net proceeds from termination of interest rate swap                          |                                                                                  |   | 6.0     |          |   |    | 6.0        |        |   |          |        |          |            |   |        |          |   |   |         |          |   |   |         |         
|                                                               | Repurchase of LYONS                                                          |                                                                                  |   | (950.2  | )        |   |    | (950.2     | )      |   |          | (967.5  | )        |            |   | (967.5  | )        |   |   | (2,835.9 | )        |   |   | (2,835.9 | )       
|                                                               | Net payments on long-term debt                                               |                                                                                  |   |        |          |   |    |           |        |   |          |        |          |            |   |        |          |   |   | (318.2   | )        |   |   | (318.2   | )       
|                                                               | Common stock repurchase                                                      |                                                                                  |   |        |          |   |    |           |        |   |          |        |          |            |   |        |          |   |   | (4.5     | )        |   |   | (4.5     | )       
|                                                               | Net proceeds from issuance of common stock                                   |                                                                                  |   | 111.1   |          |   |    | 111.1      |        |   |          | 7.8     |          |            |   | 7.8     |          |   |   | 38.8     |          |   |   | 38.8     |         
|                                                               | Other                                                                        |                                                                                  |   |        |          |   |    |           |        |   |          | 28.4    |          |            |   | 28.4    |          |   |   | (17.3    | )        |   |   | (17.3    | )       
|                                                               |                                                                              |                                                                                  |   |         |          |   |    |            |        |   |          |         |          |            |   |         |          |  
|                                                               |                                                                              | Net cash used in financing activities of continuing operations                   |   |         | (510.4   | ) |    |            | (510.4 | ) |          |         | (1,016.3 | )          |   |         | (1,016.3 | ) |   |          | (1,776.6 | ) |   |          | (1,776.6 | )
|                                                               |                                                                              |                                                                                  |   |         |          |   |    |            |        |   |          |         |          |            |   |         |          |  
|                                                               | Effect of exchange rate changes on cash and cash equivalents                 |                                                                                  |   | 9.3     |          |   |    | 9.3        |        |   |          | 32.9    |          |            |   | 32.9    |          |   |   | (25.4    | )        |   |   | (25.4    | )       
|                                                               |                                                                              |                                                                                  |   |         |          |   |    |            |        |   |          |         |          |            |   |         |          |  
|                                                               | Net decrease in cash and cash equivalents                                    |                                                                                  |   | (12.9   | )        |   |    | (12.6      | )      |   |          | (317.4  | )        |            |   | (317.6  | )        |   |   | (720.7   | )        |   |   | (720.7   | )       
|                                                               | Cash and cash equivalents at beginning of period 
    continuing operations |                                                                                  |   | 1,425.5 |          |   |    | 1,425.3    |        |   |          | 1,742.9 |          |            |   | 1,742.9 |          |   |   | 2,463.6  |          |   |   | 2,463.6  |         
|                                                               |                                                                              |                                                                                  |   |         |          |   |    |            |        |   |          |         |          |            |   |         |          |  
|                                                               | Cash and cash equivalents at end of period 
    continuing operations       |                                                                                  | $ | 1,412.6 |          |   | $  | 1,412.7    |        |   | $        | 1,425.5 |          |            | $ | 1,425.3 |          |   | $ | 1,742.9  |          |   | $ | 1,742.9  |         
|                                                               |                                                                              |                                                                                  |   |         |          |   |    |            |        |   |          |         |          |            |   |         |          |  

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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)




|        |                                                  
|------- | -------------------------------------------------
|NOTE 3. | Cash, Cash Equivalents and Short-term Investments



|                          |       |               |       |         |             |   |      |      | 
|------------------------- | ----- | ------------- | ----- | ------- | ----------- | - | ---- | ---- | 
|                          |       | Cash and Cash |       |         | Short-Term  |  
|                          |       | Equivalents   |       |         | Investments |  
|                          |       |               |       |         |             |  
|                          |       | (Restated)    |       |         | (Restated)  |  
|August 31, 2004           |       |               |       |         |             |   |      |     
|Cash                      |       | $             | 521.7 |         |             | $ |     |     
|Money market funds        |       |               | 908.5 |         |             |   |     |     
|                          |       |               |       |         |             |  
|                          | Total |               | $     | 1,430.2 |             |   | $    |     | 
|                          |       |               |       |         |             |  
|August 31, 2003           |       |               |       |         |             |   |      |     
|Cash                      |       | $             | 713.0 |         |             | $ | 19.9 |     
|Money market funds        |       |               | 543.5 |         |             |   |     |     
|Market auction securities |       |               |      |         |             |   | 21.9 |     
|Corporate obligations     |       |               | 210.9 |         |             |   | 5.6  |     
|                          |       |               |       |         |             |  
|                          | Total |               | $     | 1,467.4 |             |   | $    | 47.4 | 
|                          |       |               |       |         |             |  





|        |            
|------- | -----------
|NOTE 4. | Inventories



|                |  |            |         |  |            |   |         | 
|--------------- |  | ---------- | ------- |  | ---------- | - | ------- | 
|                |  | August 31  |         |  | August 31  |  
|                |  | 2004       |         |  | 2003       |  
|                |  |            |         |  |            |  
|                |  | (Restated) |         |  | (Restated) |  
|Raw materials   |  | $          | 992.6   |  |            | $ | 904.6   | 
|Work-in-process |  |            | 224.0   |  |            |   | 220.4   | 
|Finished goods  |  |            | 238.8   |  |            |   | 200.5   | 
|                |  |            |         |  |            |  
|Total           |  | $          | 1,455.4 |  |            | $ | 1,325.5 | 
|                |  |            |         |  |            |  

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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)




|        |                       
|------- | ----------------------
|NOTE 5. | Property and Equipment



|                                               |  |            |         |  |            |   |         | 
|---------------------------------------------- |  | ---------- | ------- |  | ---------- | - | ------- | 
|                                               |  | August 31  |         |  | August 31  |  
|                                               |  | 2004       |         |  | 2003       |  
|                                               |  |            |         |  |            |  
|                                               |  | (Restated) |         |  | (Restated) |  
|Land                                           |  | $          | 85.2    |  |            | $ | 82.1    | 
|Building and improvements                      |  |            | 410.5   |  |            |   | 389.2   | 
|Leasehold improvements                         |  |            | 97.8    |  |            |   | 100.0   | 
|Furniture, fixtures, equipment and other       |  |            | 772.7   |  |            |   | 861.7   | 
|Computer equipment and software                |  |            | 326.3   |  |            |   | 317.9   | 
|                                               |  |            |         |  |            |  
|                                               |  |            | 1,692.5 |  |            |   | 1,750.9 | 
|Less accumulated depreciation and amortization |  |            | 938.1   |  |            |   | 942.0   | 
|                                               |  |            |         |  |            |  
|Property and equipment, net                    |  | $          | 754.4   |  |            | $ | 808.9   | 
|                                               |  |            |         |  |            |  



|        |                
|------- | ---------------
|NOTE 6. | Lines of Credit





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Notes to Consolidated Financial Statements 
(Continued)




|        |               
|------- | --------------
|NOTE 7. | Long-term Debt



|                                                                                                                                                                                                                       |  |      |         |            |      |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---------- | ---- | - | ------- | -
|                                                                                                                                                                                                                       |  | 2004 |         |            | 2003 |  
|                                                                                                                                                                                                                       |  |      |         |            |      |  
|                                                                                                                                                                                                                       |  |      |         | (Restated) |     
|9.625% senior notes, face value of $500.0, fair values of
    $551.3 in 2004 and $532.5 in 2003, due 2009                                                                                                              |  | $    | 519.4   |            |      | $ | 516.4   |  
|0.5% convertible senior notes, face value of $450.0, fair
    value of $389.8 due 2034                                                                                                                                 |  |      | 450.0   |            |      |   |        |  
|7.375% senior notes, face value of $150.0, fair values of
    $156.4 in 2004 and $152.3 in 2003, due 2006                                                                                                              |  |      | 150.0   |            |      |   | 149.9   |  
|7.25% adjustable conversion-rate equity securities, face value
    of $64.3 and $1,100.0, 2,570,798 units outstanding in 2004
    and 44,000,000 in 2003 fair values of $65.0 in 2004 and $723.6
    in 2003, due 2006 |  |      | 63.0    |            |      |   | 1,081.6 |  
|2.75% zero-coupon convertible senior notes, face values of $15.2
    and $15.9 fair values of $9.9 in 2004 and $9.0 in 2003, due 2020                                                                                  |  |      | 9.9     |            |      |   | 10.1    |  
|3.25% zero-coupon convertible senior notes, face values of $5.0
    and $1,622.6, fair values of $3.0 in 2004 and $912.7 in 2003,
    due 2020                                                                         |  |      | 3.0     |            |      |   |        | *
|Other, fair values                                                                                                                                                                                                     |  |      | 26.1    |            |      |   | 58.9    |  
|                                                                                                                                                                                                                       |  |      |         |            |      |  
|Total long-term debt                                                                                                                                                                                                   |  | $    | 1,221.4 |            |      | $ | 1,816.9 |  
|                                                                                                                                                                                                                       |  |      |         |            |      |  






|  |                                                                                                                                                                                                                   
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | As of August 31, 2003, remaining carrying amount of
    $931 million was classified in short-term debt as the
    holders of these notes had the right to require Solectron to
    repurchase them on May 20, 2004



| |                    
| | -------------------
| | 9.625% Senior Notes





| |                                       
| | --------------------------------------
| | 0.5% Convertible Senior Notes due 2034





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Notes to Consolidated Financial Statements 
(Continued)








| |                    
| | -------------------
| | 7.375% Senior Notes





| |                                                    
| | ---------------------------------------------------
| | Adjustable Conversion-Rate Equity Securities (ACES)









| |                                  
| | ---------------------------------
| | Liquid Yield Option Notes (LYONs)



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Notes to Consolidated Financial Statements 
(Continued)








|                        |  |   |         | 
|----------------------- |  | - | ------- | 
|Years Ending August 31: |  |  
|                        |  |  
|2006                    |  | $ | 170.9   | 
|2007                    |  |   | 71.0    | 
|2008                    |  |   |        | 
|2009                    |  |   | 519.4   | 
|2010                    |  |   | 10.0    | 
|Thereafter              |  |   | 450.1   | 
|                        |  |   |        
|Total                   |  | $ | 1,221.4 | 
|                        |  |   |        



|        |                      
|------- | ---------------------
|NOTE 8. | Financial Instruments



| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments



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Notes to Consolidated Financial Statements 
(Continued)




| |            
| | -----------
| | Derivatives



















|        |                              
|------- | -----------------------------
|NOTE 9. | Commitments and Contingencies



| |                 
| | ----------------
| | Synthetic Leases



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Notes to Consolidated Financial Statements 
(Continued)












| |                                 
| | --------------------------------
| | Future Minimum Lease Obligations



|                |  |       |       |  |      |  |      |      |  |  |      |  |  |      |      |  |      |  |      |            |  |  |      |  |  |  |      | 
|--------------- |  | ----- | ----- |  | ---- |  | ---- | ---- |  |  | ---- |  |  | ---- | ---- |  | ---- |  | ---- | ---------- |  |  | ---- |  |  |  | ---- | 
|                |  | Total |       |  | FY05 |  |      | FY06 |  |  | FY07 |  |  | FY08 |      |  | FY09 |  |      | Thereafter | 
|                |  |       |       |  |      |  |      |      |  |  |      |  |  |      |      |  |      |  |      |            | 
|Operating lease |  |       | 197.6 |  |      |  | 57.5 |      |  |  | 35.1 |  |  |      | 28.3 |  |      |  | 17.7 |            |  |  | 14.0 |  |  |  | 45.0 | 





| |                         
| | ------------------------
| | Related Party Guarantees





| |                  
| | -----------------
| | Legal Proceedings



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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)




Ronald Sorisho v. Solectron Corporation
et al


Abrams v. Solectron
Corporation et al.


Lifshitz v.
Cannon et al.,




|         |                 
|-------- | ----------------
|NOTE 10. | Retirement Plans





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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)




|         |             
|-------- | ------------
|NOTE 11. | Income Taxes



|          |       |            |       |      |            |   |       |            |  |   |        |        |  
|--------- | ----- | ---------- | ----- | ---- | ---------- | - | ----- | ---------- |  | - | ------ | ------ | -
|          |       | 2004       |       |      | 2003       |   |       | 2002       | 
|          |       |            |       |      |            |   |       |            | 
|          |       | (Restated) |       |      | (Restated) |   |       | (Restated) | 
|Current:  |       |            |       |      |            |   |       |            |  |   |        |       
|Federal   |       | $          | 2.8   |      |            | $ | 26.8  |            |  | $ | (171.9 | )     
|State     |       |            | 2.7   |      |            |   | 3.2   |            |  |   | 3.3    |       
|Foreign   |       |            | 3.2   |      |            |   | 14.2  |            |  |   | 15.7   |       
|          |       |            |       |      |            |   |       |            | 
|          |       |            | 8.7   |      |            |   | 44.2  |            |  |   | (152.9 | )     
|          |       |            |       |      |            |   |       |            | 
|Deferred: |       |            |       |      |            |   |       |            |  |   |        |       
|Federal   |       |            |      |      |            |   | 426.0 |            |  |   | (212.0 | )     
|State     |       |            |      |      |            |   | 63.5  |            |  |   | (53.5  | )     
|Foreign   |       |            | (12.0 | )    |            |   | (8.2  | )          |  |   | (31.6  | )     
|          |       |            |       |      |            |   |       |            | 
|          |       |            | (12.0 | )    |            |   | 481.3 |            |  |   | (297.1 | )     
|          |       |            |       |      |            |   |       |            | 
|          | Total |            | $     | (3.3 | )          |   | $     | 525.5      |  |   | $      | (450.0 | )
|          |       |            |       |      |            |   |       |            | 



|                                                              |  |            |       |   |            |  |       |            |  |  |       |  
|------------------------------------------------------------- |  | ---------- | ----- | - | ---------- |  | ----- | ---------- |  |  | ----- | -
|                                                              |  | 2004       |       |   | 2003       |  |       | 2002       | 
|                                                              |  |            |       |   |            |  |       |            | 
|                                                              |  | (Restated) |       |   | (Restated) |  |       | (Restated) | 
|Federal tax rate                                              |  |            | 35.0  | % |            |  | 35.0  | %          |  |  | 35.0  | %
|State income tax, net of federal tax benefit                  |  |            | (1.1  | ) |            |  | (1.7  | )          |  |  | 0.9   |  
|Income of international subsidiaries taxed at different rates |  |            | 16.9  |   |            |  | (11.6 | )          |  |  | (0.7  | )
|Tax holiday                                                   |  |            | 28.6  |   |            |  | 0.4   |            |  |  | 1.6   |  
|Nondeductible goodwill and other permanent items              |  |            | (6.6  | ) |            |  | (3.5  | )          |  |  | (18.5 | )
|Loss for which no benefit is currently realized               |  |            | (77.4 | ) |            |  | (20.8 | )          |  |  | (5.5  | )
|Change in beginning valuation allowance                       |  |            | 7.0   |   |            |  | (19.0 | )          |  |  |      |  
|Other                                                         |  |            | (1.2  | ) |            |  |      |            |  |  |      |  
|                                                              |  |            |       |   |            |  |       |            | 
|Effective income tax rate                                     |  |            | 1.2   | % |            |  | (21.2 | )%         |  |  | 12.8  | %
|                                                              |  |            |       |   |            |  |       |            | 

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Notes to Consolidated Financial Statements 
(Continued)




|                               |                                             |            |          |       |            |   |          |       |  
|------------------------------ | ------------------------------------------- | ---------- | -------- | ----- | ---------- | - | -------- | ----- | -
|                               |                                             | 2004       |          |       | 2003       |  
|                               |                                             |            |          |       |            |  
|                               |                                             | (Restated) |          |       | (Restated) |  
|Deferred tax assets:           |                                             |            |          |       |            |   |          |      
|                               | Accruals and allowances                     |            | $        | 66.6  |            |   | $        | 79.5  |  
|                               | State income tax                            |            |          | 62.2  |            |   |          | 52.0  |  
|                               | Acquired intangible assets                  |            |          | 455.8 |            |   |          | 498.2 |  
|                               | Depreciation                                |            |          | 2.3   |            |   |          |      |  
|                               | Net operating loss carryforward and credits |            |          | 918.1 |            |   |          | 736.6 |  
|                               | Restructuring accruals                      |            |          | 28.3  |            |   |          | 34.3  |  
|                               | Capital loss carryover                      |            |          | 180.5 |            |   |          |      |  
|                               | Other                                       |            |          | 16.7  |            |   |          | 32.6  |  
|                               |                                             |            |          |       |            |  
|Deferred tax assets            |                                             |            | 1,730.5  |       |            |   | 1,433.2  |      
|Valuation allowance            |                                             |            | (1,629.6 | )     |            |   | (1,366.7 | )    
|                               |                                             |            |          |       |            |  
|Total deferred tax assets      |                                             | $          | 100.9    |       |            | $ | 66.5     |      
|                               |                                             |            |          |       |            |  
|Deferred tax liabilities:      |                                             |            |          |       |            |   |          |      
|                               | Depreciation                                |            | $        | (26.4 | )          |   | $        | (9.4  | )
|                               | Other                                       |            |          | (3.8  | )          |   |          |      |  
|                               |                                             |            |          |       |            |  
|Total deferred tax liabilities |                                             |            | (30.2    | )     |            |   | (9.4     | )    
|                               |                                             |            |          |       |            |  
|Net deferred tax assets        |                                             | $          | 70.7     |       |            | $ | 57.1     |      
|                               |                                             |            |          |       |            |  











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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)




|               |  |        |       |  |            |  |             | 
|-------------- |  | ------ | ----- |  | ---------- |  | ----------- | 
|Jurisdiction   |  | Amount |       |  | Expiration | 
|               |  |        |       |  |            | 
|Australia      |  | $      | 52.4  |  |            |  | Indefinite  | 
|Brazil         |  |        | 125.6 |  |            |  | Indefinite  | 
|Canada         |  |        | 53.2  |  |            |  | 2005  2010 | 
|France         |  |        | 317.9 |  |            |  | 2005  2009 | 
|Germany        |  |        | 43.9  |  |            |  | Indefinite  | 
|Hungary        |  |        | 66.3  |  |            |  | Indefinite  | 
|Japan          |  |        | 95.0  |  |            |  | 2006  2009 | 
|Mexico         |  |        | 72.2  |  |            |  | 2008  2014 | 
|Netherlands    |  |        | 172.6 |  |            |  | Indefinite  | 
|Romania        |  |        | 84.3  |  |            |  | 2005  2009 | 
|United Kingdom |  |        | 139.2 |  |            |  | Indefinite  | 
|Other          |  |        | 50.4  |  |            |  | Various     | 





|         |       |            |        |        |            |   |          |            |   |   |          |          |  
|-------- | ----- | ---------- | ------ | ------ | ---------- | - | -------- | ---------- | - | - | -------- | -------- | -
|         |       | 2004       |        |        | 2003       |   |          | 2002       |  
|         |       |            |        |        |            |   |          |            |  
|         |       | (Restated) |        |        | (Restated) |   |          | (Restated) |  
|U.S.     |       | $          | (373.9 | )      |            | $ | (289.4   | )          |   | $ | (3,823.5 | )       
|Non-U.S. |       |            | 108.2  |        |            |   | (2,194.0 | )          |   |   | 304.2    |         
|         |       |            |        |        |            |   |          |            |  
|         | Total |            | $      | (265.7 | )          |   | $        | (2,483.4   | ) |   | $        | (3,519.3 | )
|         |       |            |        |        |            |   |          |            |  







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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)




|         |                     
|-------- | --------------------
|NOTE 12. | Stockholders Equity



| |                   
| | ------------------
| | Stock Option Plans





|                                                                                      |  |        |       |          |          |   |       |        |          |  |          |   |  |          |       |  |          |  |      |   |  |   |       | 
|------------------------------------------------------------------------------------- |  | ------ | ----- | -------- | -------- | - | ----- | ------ | -------- |  | -------- | - |  | -------- | ----- |  | -------- |  | ---- | - |  | - | ----- | 
|                                                                                      |  | 2004   |       |          | 2003     |   |       | 2002   |         
|                                                                                      |  |        |       |          |          |   |       |        |         
|                                                                                      |  |        |       | Weighted |          |   |       |        | Weighted |  |          |   |  | Weighted |      
|                                                                                      |  | Number |       |          | Average  |   |       | Number |          |  | Average  |   |  | Number   |       |  | Average  | 
|                                                                                      |  | of     |       |          | Exercise |   |       | of     |          |  | Exercise |   |  | of       |       |  | Exercise | 
|                                                                                      |  | Shares |       |          | Price    |   |       | Shares |          |  | Price    |   |  | Shares   |       |  | Price    | 
|                                                                                      |  |        |       |          |          |   |       |        |          |  |          |   |  |          |       |  |          | 
|Outstanding, beginning of year                                                        |  |        | 64.0  |          |          | $ | 14.30 |        |          |  | 63.2     |   |  | $        | 18.50 |  |          |  | 47.9 |   |  | $ | 22.61 | 
|Granted                                                                               |  |        | 18.0  |          |          | $ | 5.06  |        |          |  | 21.3     |   |  | $        | 3.73  |  |          |  | 26.1 |   |  | $ | 10.40 | 
|Exercised                                                                             |  |        | (5.7  | )        |          | $ | 3.11  |        |          |  | (0.3     | ) |  | $        | 3.54  |  |          |  | (3.1 | ) |  | $ | 6.02  | 
|Cancelled                                                                             |  |        | (22.5 | )        |          | $ | 15.52 |        |          |  | (20.2    | ) |  | $        | 16.43 |  |          |  | (7.7 | ) |  | $ | 21.92 | 
|                                                                                      |  |        |       |          |          |   |       |        |          |  |          |   |  |          |       |  |          | 
|Outstanding, end of year                                                              |  |        | 53.8  |          |          | $ | 12.05 |        |          |  | 64.0     |   |  | $        | 14.30 |  |          |  | 63.2 |   |  | $ | 18.50 | 
|                                                                                      |  |        |       |          |          |   |       |        |          |  |          |   |  |          |       |  |          | 
|Exercisable, end of year                                                              |  |        | 29.7  |          |          | $ | 17.88 |        |          |  | 37.5     |   |  | $        | 18.20 |  |          |  | 36.4 |   |  | $ | 17.64 | 
|                                                                                      |  |        |       |          |          |   |       |        |          |  |          |   |  |          |       |  |          | 
|Weighted-average fair value of options granted at market value
    during the year    |  |        |       |          |          | $ | 3.04  |        |          |  |          |   |  | $        | 2.25  |  |          |  |      |   |  | $ | 6.97  | 
|Weighted-average fair value of options granted below market
    value during the year |  |        |       |          |          | $ | 5.62  |        |          |  |          |   |  | $        | 3.89  |  |          |  |      |   |  |   |      | 

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Notes to Consolidated Financial Statements 
(Continued)




|                        |  |             |      |           |             |  |            |          |  |   |           |          |  |          |      |  |  |   |       | 
|----------------------- |  | ----------- | ---- | --------- | ----------- |  | ---------- | -------- |  | - | --------- | -------- |  | -------- | ---- |  |  | - | ----- | 
|                        |  | Outstanding |      |           |            
|                        |  |             |      |           | Exercisable | 
|                        |  |             |      | Weighted  |             |  |            |          |  |  
|                        |  |             |      | Average   |             |  | Weighted   |          |  |   |           | Weighted | 
|                        |  |             |      | Remaining |             |  | Average    |          |  |   |           | Average  | 
|                        |  | Number of   |      |           | Contractual |  |            | Exercise |  |   | Number of |          |  | Exercise |     
|Range of Exercise Price |  | Shares      |      |           | Life        |  |            | Price    |  |   | Shares    |          |  | Price    |     
|                        |  |             |      |           |             |  |            |          |  |   |           |          |  |          |     
|$1.09  $3.77           |  |             | 6.9  |           |             |  | 8.12 years |          |  | $ | 3.59      |          |  |          | 3.0  |  |  | $ | 3.53  | 
|$3.99  $4.24           |  |             | 6.2  |           |             |  | 8.42 years |          |  | $ | 4.06      |          |  |          | 2.3  |  |  | $ | 4.05  | 
|$4.30  $4.95           |  |             | 0.6  |           |             |  | 7.97 years |          |  | $ | 4.70      |          |  |          | 0.3  |  |  | $ | 4.60  | 
|$5.01  $5.09           |  |             | 7.5  |           |             |  | 9.80 years |          |  | $ | 5.09      |          |  |          | 0.3  |  |  | $ | 5.09  | 
|$5.13  $5.81           |  |             | 5.7  |           |             |  | 9.15 years |          |  | $ | 5.58      |          |  |          | 1.3  |  |  | $ | 5.55  | 
|$5.96  $9.98           |  |             | 3.0  |           |             |  | 7.62 years |          |  | $ | 6.79      |          |  |          | 1.2  |  |  | $ | 7.48  | 
|$10.29  $10.29         |  |             | 7.2  |           |             |  | 7.07 years |          |  | $ | 10.29     |          |  |          | 5.4  |  |  | $ | 10.29 | 
|$10.34  $13.81         |  |             | 5.4  |           |             |  | 1.68 years |          |  | $ | 12.20     |          |  |          | 5.2  |  |  | $ | 12.23 | 
|$14.25  $35.03         |  |             | 7.1  |           |             |  | 3.05 years |          |  | $ | 25.96     |          |  |          | 6.6  |  |  | $ | 26.36 | 
|$35.31  $51.67         |  |             | 4.2  |           |             |  | 2.92 years |          |  | $ | 43.00     |          |  |          | 4.1  |  |  | $ | 43.02 | 
|                        |  |             |      |           |             |  |            |          |  |   |           |          |  |          |     
|$1.09  $51.67          |  |             | 53.8 |           |             |  | 6.60 years |          |  | $ | 12.05     |          |  |          | 29.7 |  |  | $ | 17.88 | 
|                        |  |             |      |           |             |  |            |          |  |   |           |          |  |          |     







| |                             
| | ----------------------------
| | Employee Stock Purchase Plan







| |                      
| | ---------------------
| | Common Stock Issuance



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Notes to Consolidated Financial Statements 
(Continued)




| |                                                     
| | ----------------------------------------------------
| | Restricted Stock Awards and Discounted Stock Options







| |                 
| | ----------------
| | Stock Repurchase





|         |                                   
|-------- | ----------------------------------
|NOTE 13. | Segment and Geographic Information









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Notes to Consolidated Financial Statements 
(Continued)




|                      |                               |                       |          |         |      |   |         |         |  |   |          |         | 
|--------------------- | ----------------------------- | --------------------- | -------- | ------- | ---- | - | ------- | ------- |  | - | -------- | ------- | 
|                      |                               | Years Ended August 31 |         
|                      |                               |                       |         
|                      |                               | 2004                  |          |         | 2003 |   |         | 2002    | 
|                      |                               |                       |          |         |      |   |         |         | 
|Geographic net sales: |                               |                       |          |         |      |   |         |         |  |   |          |        
|                      | United States                 |                       | $        | 3,219.4 |      |   | $       | 3,217.7 |  |   | $        | 3,415.8 | 
|                      | Other North and Latin America |                       |          | 1,836.2 |      |   |         | 1,358.7 |  |   |          | 1,735.7 | 
|                      | Europe                        |                       |          | 1,667.4 |      |   |         | 1,590.4 |  |   |          | 1,840.7 | 
|                      | Malaysia                      |                       |          | 1,853.4 |      |   |         | 1,455.0 |  |   |          | 1,410.1 | 
|                      | China                         |                       |          | 1,914.6 |      |   |         | 1,091.3 |  |   |          | 853.9   | 
|                      | Other Asia Pacific            |                       |          | 1,147.3 |      |   |         | 1,115.2 |  |   |          | 1,482.5 | 
|                      |                               |                       |          |         |      |   |         |         | 
|                      |                               | $                     | 11,638.3 |         |      | $ | 9,828.3 |         |  | $ | 10,738.7 |        
|                      |                               |                       |          |         |      |   |         |         | 



|                   |                               |            |       |       |            |   |         |       | 
|------------------ | ----------------------------- | ---------- | ----- | ----- | ---------- | - | ------- | ----- | 
|                   |                               | August 31  |       |       | August 31  |  
|                   |                               | 2004       |       |       | 2003       |  
|                   |                               |            |       |       |            |  
|                   |                               | (Restated) |       |       | (Restated) |  
|Long-lived assets: |                               |            |       |       |            |   |         |      
|                   | United States                 |            | $     | 332.4 |            |   | $       | 387.6 | 
|                   | Other North and Latin America |            |       | 182.6 |            |   |         | 224.7 | 
|                   | Europe                        |            |       | 144.7 |            |   |         | 203.4 | 
|                   | Asia Pacific                  |            |       | 330.1 |            |   |         | 346.9 | 
|                   |                               |            |       |       |            |  
|                   |                               | $          | 989.8 |       |            | $ | 1,162.6 |      
|                   |                               |            |       |       |            |  



|         |                
|-------- | ---------------
|NOTE 14. | Major Customers



|                |  |                       |       |  |      |  |       |      |  |  |       | 
|--------------- |  | --------------------- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|                |  | Years Ended August 31 |      
|                |  |                       |      
|                |  | 2004                  |       |  | 2003 |  |       | 2002 | 
|                |  |                       |       |  |      |  |       |      | 
|Cisco Systems   |  |                       | 13.2% |  |      |  | 11.9% |      |  |  | 11.6% | 
|Nortel Networks |  |                       | *     |  |      |  | 12.9% |      |  |  | 15.6% | 






|  |              
|- | -------------
|* | less than 10%





|         |              
|-------- | -------------
|NOTE 15. | Restructuring



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(Continued)








| |            
| | -----------
| | Fiscal 2004











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Notes to Consolidated Financial Statements 
(Continued)




|                                                               |  |            |       |   |        |  |          | 
|-------------------------------------------------------------- |  | ---------- | ----- | - | ------ |  | -------- | 
|                                                               |  | 2004       |       |   | Nature | 
|                                                               |  |            |       |   |        | 
|                                                               |  | (Restated) |       |   |       
|Loss on disposal of and impairment of equipment and facilities |  | $          | 38.5  |   |        |  | non-cash | 
|Severance and benefit costs                                    |  |            | 25.9  |   |        |  | cash     | 
|Net adjustment to equipment lease loss accrual                 |  |            | (2.2  | ) |        |  | cash     | 
|Net adjustment to facility lease loss accrual                  |  |            | 42.5  |   |        |  | cash     | 
|Other exit costs                                               |  |            | 25.7  |   |        |  | cash     | 
|                                                               |  |            |       |   |        | 
|Total                                                          |  | $          | 130.4 |   |        |  |          | 
|                                                               |  |            |       |   |        | 



| |            
| | -----------
| | Fiscal 2003





|                                               |  |            |       |  |        |  |          | 
|---------------------------------------------- |  | ---------- | ----- |  | ------ |  | -------- | 
|                                               |  | 2003       |       |  | Nature | 
|                                               |  |            |       |  |        | 
|                                               |  | (Restated) |       |  |       
|Impairment of equipment                        |  | $          | 48.9  |  |        |  | non-cash | 
|Impairment of facilities                       |  |            | 77.8  |  |        |  | non-cash | 
|Impairment of other assets                     |  |            | 26.9  |  |        |  | non-cash | 
|                                               |  |            |       |  |        | 
|Impairment of equipment, facilities and others |  | $          | 153.6 |  |        |  |          | 
|Severance and benefit costs                    |  |            | 221.8 |  |        |  | cash     | 
|Loss on leased equipment                       |  |            | 2.2   |  |        |  | cash     | 
|Loss on leased facilities                      |  |            | 22.9  |  |        |  | cash     | 
|Other exit costs                               |  |            | 32.6  |  |        |  | cash     | 
|                                               |  |            |       |  |        | 
|Total                                          |  | $          | 433.1 |  |        |  |          | 
|                                               |  |            |       |  |        | 



| |            
| | -----------
| | Fiscal 2002



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(Continued)






|                                               |  |            |       |  |        |  |          | 
|---------------------------------------------- |  | ---------- | ----- |  | ------ |  | -------- | 
|                                               |  | 2002       |       |  | Nature | 
|                                               |  |            |       |  |        | 
|                                               |  | (Restated) |       |  |       
|Impairment of equipment                        |  | $          | 114.8 |  |        |  | non-cash | 
|Impairment of facilities                       |  |            | 81.0  |  |        |  | non-cash | 
|Impairment of IT software and other assets     |  |            | 162.5 |  |        |  | non-cash | 
|                                               |  |            |       |  |        | 
|Impairment of equipment, facilities and others |  | $          | 358.3 |  |        |  |          | 
|Severance and benefit costs                    |  |            | 114.5 |  |        |  | cash     | 
|Loss on leased equipment                       |  |            | 23.0  |  |        |  | cash     | 
|Loss on leased facilities                      |  |            | 80.0  |  |        |  | cash     | 
|Other exit costs                               |  |            | 20.7  |  |        |  | cash     | 
|                                               |  |            |       |  |        | 
|Total                                          |  | $          | 596.5 |  |        |  |          | 
|                                               |  |            |       |  |        | 





|                                      |  |              |        |   |                |   |       |                |  |   |       |   |            |       |       |   |  |   |        |  
|------------------------------------- |  | ------------ | ------ | - | -------------- | - | ----- | -------------- |  | - | ----- | - | ---------- | ----- | ----- | - |  | - | ------ | -
|                                      |  | Severance    |        |   | Lease Payments |   |       | Lease Payments |  |   |       |   |           
|                                      |  | and Benefits |        |   | on Facilities  |   |       | on Equipment   |  |   | Other |   |            | Total |      
|                                      |  |              |        |   |                |   |       |                |  |   |       |   |            |       |      
|                                      |  | (Restated)   |        |   | (Restated)     |   |       | (Restated)     |  |   |       |   | (Restated) |      
|Balance of accrual at August 31, 2001 |  |              |       |   |                |   | 50.9  |                |  |   | 112.5 |   |            |       | 3.9   |   |  |   | 167.3  |  
|FY2002 Provision                      |  |              | 114.5  |   |                |   | 83.9  |                |  |   | 29.5  |   |            |       | 20.7  |   |  |   | 248.6  |  
|FY2002 Provision adjustments          |  |              |        |   |                |   | (3.9  | )              |  |   | (6.5  | ) |            |       |      |   |  |   | (10.4  | )
|FY2002 Cash payments                  |  |              | (108.9 | ) |                |   | (71.2 | )              |  |   | (52.1 | ) |            |       | (24.3 | ) |  |   | (256.5 | )
|                                      |  |              |        |   |                |   |       |                |  |   |       |   |            |       |      
|Balance of accrual at August 31, 2002 |  | $            | 5.6    |   |                | $ | 59.7  |                |  | $ | 83.4  |   |            | $     | 0.3   |   |  | $ | 149.0  |  
|                                      |  |              |        |   |                |   |       |                |  |   |       |   |            |       |      
|FY2003 Provision                      |  |              | 221.8  |   |                |   | 22.6  |                |  |   | 2.2   |   |            |       | 32.6  |   |  |   | 279.2  |  
|FY2003 Provision adjustments          |  |              |       |   |                |   | 0.3   |                |  |   |      |   |            |       |      |   |  |   | 0.3    |  
|FY2003 Cash payments                  |  |              | (153.2 | ) |                |   | (50.1 | )              |  |   | (57.1 | ) |            |       | (22.4 | ) |  |   | (282.8 | )
|                                      |  |              |        |   |                |   |       |                |  |   |       |   |            |       |      
|Balance of accrual at August 31, 2003 |  | $            | 74.2   |   |                | $ | 32.5  |                |  | $ | 28.5  |   |            | $     | 10.5  |   |  | $ | 145.7  |  
|                                      |  |              |        |   |                |   |       |                |  |   |       |   |            |       |      
|FY2004 Provision                      |  |              | 25.9   |   |                |   | 53.7  |                |  |   | 2.3   |   |            |       | 25.7  |   |  |   | 107.6  |  
|FY2004 Provision adjustments          |  |              |       |   |                |   | (11.2 | )              |  |   | (4.5  | ) |            |       |      |   |  |   | (15.7  | )
|FY2004 Cash payments                  |  |              | (71.2  | ) |                |   | (17.5 | )              |  |   | (21.4 | ) |            |       | (34.9 | ) |  |   | (145.0 | )
|                                      |  |              |        |   |                |   |       |                |  |   |       |   |            |       |      
|Balance of accrual at August 31, 2004 |  | $            | 28.9   |   |                | $ | 57.5  |                |  | $ | 4.9   |   |            | $     | 1.3   |   |  | $ | 92.6   |  
|                                      |  |              |        |   |                |   |       |                |  |   |       |   |            |       |      

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Notes to Consolidated Financial Statements 
(Continued)






|         |                               
|-------- | ------------------------------
|NOTE 16. | Goodwill and Intangible Assets



|                           |  |            |          |  
|-------------------------- |  | ---------- | -------- | -
|                           |  | Goodwill   |         
|                           |  |            |         
|                           |  | (Restated) |         
|Balance at August 31, 2002 |  | $          | 1,784.8  |  
|Goodwill adjustments*      |  |            | (29.5    | )
|Goodwill impairment        |  |            | (1,620.1 | )
|                           |  |            |         
|Balance at August 31, 2003 |  | $          | 135.2    |  
|                           |  |            |         
|Goodwill adjustments       |  |            | 0.6      |  
|Goodwill impairment        |  |            |         |  
|                           |  |            |         
|Balance at August 31, 2004 |  | $          | 135.8    |  
|                           |  |            |         






|  |                                                                                                                                                                                                                                                
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Goodwill adjustments were primarily made based on the final
    appraisal received during the first quarter of fiscal 2003
    related to the acquisition of C-MAC. No significant additions
    resulted from acquisitions during fiscal 2003.





| |            
| | -----------
| | Fiscal 2004





| |            
| | -----------
| | Fiscal 2003





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Notes to Consolidated Financial Statements 
(Continued)




| |            
| | -----------
| | Fiscal 2002









| |                  
| | -----------------
| | Intangible Assets





|                         |  |            |       |              |            |            |       |       |            |   |       |   |  |   |        |  
|------------------------ |  | ---------- | ----- | ------------ | ---------- | ---------- | ----- | ----- | ---------- | - | ----- | - |  | - | ------ | -
|                         |  |            |       | Intellectual |            |            |       |       |           
|                         |  | Supply     |       |              | Property   |            |       |       |            |  
|Fiscal 2004              |  | Agreements |       |              | Agreements |            |       | Other |            |   | Total |  
|                         |  |            |       |              |            |            |       |       |            |   |       |  
|                         |  |            |       |              |            | (Restated) |       |       | (Restated) |  
|Gross amount             |  | $          | 87.7  |              |            | $          | 108.5 |       |            | $ | 92.3  |   |  | $ | 288.5  |  
|Accumulated amortization |  |            | (86.1 | )            |            |            | (54.5 | )     |            |   | (77.5 | ) |  |   | (218.1 | )
|Impairment               |  |            |      |              |            |            | (47.5 | )     |            |   |      |   |  |   | (47.5  | )
|                         |  |            |       |              |            |            |       |       |            |   |       |  
|Carrying value           |  | $          | 1.6   |              |            | $          | 6.5   |       |            | $ | 14.8  |   |  | $ | 22.9   |  
|                         |  |            |       |              |            |            |       |       |            |   |       |  

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Notes to Consolidated Financial Statements 
(Continued)


|                         |  |            |        |              |            |   |       |       |  |   |       |   |  |   |        |  
|------------------------ |  | ---------- | ------ | ------------ | ---------- | - | ----- | ----- |  | - | ----- | - |  | - | ------ | -
|                         |  |            |        | Intellectual |            |   |       |       | 
|                         |  | Supply     |        |              | Property   |   |       |       |  |  
|Fiscal 2003              |  | Agreements |        |              | Agreements |   |       | Other |  |   | Total |  
|                         |  |            |        |              |            |   |       |       |  |   |       |  
|Gross amount             |  | $          | 228.1  |              |            | $ | 108.5 |       |  | $ | 123.6 |   |  | $ | 460.2  |  
|Accumulated amortization |  |            | (85.7  | )            |            |   | (45.6 | )     |  |   | (71.5 | ) |  |   | (202.8 | )
|Impairment               |  |            | (140.4 | )            |            |   |      |       |  |   | (31.3 | ) |  |   | (171.7 | )
|                         |  |            |        |              |            |   |       |       |  |   |       |  
|Carrying value           |  | $          | 2.0    |              |            | $ | 62.9  |       |  | $ | 20.8  |   |  | $ | 85.7   |  
|                         |  |            |        |              |            |   |       |       |  |   |       |  









|         |                        
|-------- | -----------------------
|NOTE 17. | Discontinued Operations





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Notes to Consolidated Financial Statements 
(Continued)




|                                                       |                          |                         |         |       |            |   |         |            |        |   |         |       |       |  
|------------------------------------------------------ | ------------------------ | ----------------------- | ------- | ----- | ---------- | - | ------- | ---------- | ------ | - | ------- | ----- | ----- | -
|                                                       |                          | Years Ended August 31   |        
|                                                       |                          |                         |        
|                                                       |                          | 2004                    |         |       | 2003       |   |         | 2002       |       
|                                                       |                          |                         |         |       |            |   |         |            |       
|                                                       |                          | (Restated)              |         |       | (Restated) |   |         | (Restated) |       
|Net sales                                              |                          | $                       | 1,264.9 |       |            | $ | 1,872.1 |            |        | $ | 1,537.5 |      
|Cost of sales                                          |                          |                         | 1,061.8 |       |            |   | 1,598.1 |            |        |   | 1,336.0 |      
|                                                       |                          |                         |         |       |            |   |         |            |       
|Gross profit                                           |                          |                         | 203.1   |       |            |   | 274.0   |            |        |   | 201.5   |      
|                                                       | Operating expenses  net |                         |         | 109.4 |            |   |         | 606.5      |        |   |         | 265.1 |      
|                                                       |                          |                         |         |       |            |   |         |            |       
|                                                       |                          | Operating income (loss) |         |       | 93.7       |   |         |            | (332.5 | ) |         |       | (63.6 | )
|Interest income  net                                  |                          |                         | 1.4     |       |            |   | 1.5     |            |        |   | 3.7     |      
|Other (expense) income  net                           |                          |                         | (1.4    | )     |            |   | (0.7    | )          |        |   | 0.8     |      
|                                                       |                          |                         |         |       |            |   |         |            |       
|Income (loss) before income taxes                      |                          |                         | 93.7    |       |            |   | (331.7  | )          |        |   | (59.1   | )    
|Income tax expense (benefit)                           |                          |                         | 8.7     |       |            |   | 112.0   |            |        |   | (18.7   | )    
|                                                       |                          |                         |         |       |            |   |         |            |       
|Income (loss) from discontinued operations, net of tax |                          | $                       | 85.0    |       |            | $ | (443.7  | )          |        | $ | (40.4   | )    
|                                                       |                          |                         |         |       |            |   |         |            |       











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Notes to Consolidated Financial Statements 
(Continued)








|                                                  |                                                          |            |      |      |            |   |       |       | 
|------------------------------------------------- | -------------------------------------------------------- | ---------- | ---- | ---- | ---------- | - | ----- | ----- | 
|                                                  |                                                          | August 31  |      |      | August 31  |  
|                                                  |                                                          | 2004       |      |      | 2003       |  
|                                                  |                                                          |            |      |      |            |  
|                                                  |                                                          | (Restated) |      |      | (Restated) |  
|Cash, cash equivalents and short-term investments |                                                          | $          |     |      |            | $ | 36.4  |      
|Accounts receivable, net                          |                                                          |            | 18.3 |      |            |   | 276.2 |      
|Inventories                                       |                                                          |            | 18.1 |      |            |   | 121.4 |      
|Prepaid expenses and other current assets         |                                                          |            |     |      |            |   | 18.1  |      
|                                                  |                                                          |            |      |      |            |  
|                                                  | Total current assets of discontinued operations          |            | $    | 36.4 |            |   | $     | 452.1 | 
|                                                  |                                                          |            |      |      |            |  
|Net property and equipment                        |                                                          | $          | 10.1 |      |            | $ | 126.5 |      
|Goodwill                                          |                                                          |            |     |      |            |   | 111.6 |      
|Other assets                                      |                                                          |            | 1.8  |      |            |   | 25.1  |      
|                                                  |                                                          |            |      |      |            |  
|                                                  | Total non-current assets of discontinued operations      |            | $    | 11.9 |            |   | $     | 263.2 | 
|                                                  |                                                          |            |      |      |            |  
|Short-term debt                                   |                                                          | $          | 8.9  |      |            | $ | 6.1   |      
|Accounts payable                                  |                                                          |            | 26.0 |      |            |   | 168.1 |      
|Accrued employee compensation                     |                                                          |            | 7.2  |      |            |   | 41.4  |      
|Accrued expenses                                  |                                                          |            | 4.3  |      |            |   | 55.2  |      
|Other current liabilities                         |                                                          |            |     |      |            |   | 63.2  |      
|                                                  |                                                          |            |      |      |            |  
|                                                  | Total current liabilities of discontinued operations     |            | $    | 46.4 |            |   | $     | 334.0 | 
|                                                  |                                                          |            |      |      |            |  
|                                                  | Total non-current liabilities of discontinued operations |            | $    | 1.8  |            |   | $     | 22.6  | 
|                                                  |                                                          |            |      |      |            |  



|         |                   
|-------- | ------------------
|NOTE 18. | Net Loss Per Share





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Notes to Consolidated Financial Statements 
(Continued)




|                                             |                                                                                                    |                                        |  |      |       |  |  |       |       |  |  |      |       | 
|-------------------------------------------- | -------------------------------------------------------------------------------------------------- | -------------------------------------- |  | ---- | ----- |  |  | ----- | ----- |  |  | ---- | ----- | 
|                                             |                                                                                                    | 2004                                   |  |      | 2003  |  |  | 2002  |      
|                                             |                                                                                                    |                                        |  |      |       |  |  |       |      
|Dilutive potential common shares:            |                                                                                                    |                                        |  |      |       |  |  |       |       |  |  |     
|                                             | Employee stock options                                                                             |                                        |  | 7.0  |       |  |  | 1.2   |       |  |  | 3.5  |      
|                                             | Shares issuable upon conversion of LYONs                                                           |                                        |  | 14.5 |       |  |  | 31.7  |       |  |  | 57.6 |      
|                                             | Shares issuable upon conversion of ACES                                                            |                                        |  | 78.9 |       |  |  | 112.1 |       |  |  | 78.0 |      
|                                             |                                                                                                    |                                        |  |      |       |  |  |       |      
|                                             |                                                                                                    | Total dilutive potential common shares |  |      | 100.4 |  |  |       | 145.0 |  |  |      | 139.1 | 
|                                             |                                                                                                    |                                        |  |      |       |  |  |       |      
|Contingent dilutive potential common shares: |                                                                                                    |                                        |  |      |       |  |  |       |       |  |  |     
|                                             | Shares issuable upon conversion of 0.5% senior notes, only
    if certain conversion events occur* |                                        |  | 24.6 |       |  |  |      |       |  |  |     |      
|                                             |                                                                                                    |                                        |  |      |       |  |  |       |      






|  |                                                                                                                                                                                                                                     
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | This represents the weighted average number of shares
    outstanding based on the issuance date of February 17,
    2004. The total number of contingent common shares related to
    the 0.5% senior notes is 46.6 million shares.



|         |                   
|-------- | ------------------
|NOTE 19. | Purchase of Assets



| |            
| | -----------
| | Fiscal 2003







| |            
| | -----------
| | Fiscal 2002



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Notes to Consolidated Financial Statements 
(Continued)


NOTE 20.     Business
Combinations




| |            
| | -----------
| | Fiscal 2002



| |                               
| | ------------------------------
| | C-MAC Industries, Inc. (C-MAC)







|                       |  |                      |          |  
|---------------------- |  | -------------------- | -------- | -
|                       |  | 2002                 |         
|                       |  |                      |         
|                       |  | (In millions, except |         
|                       |  | per-share data)      |         
|Net sales              |  | $                    | 10,897.7 |  
|Net loss               |  | $                    | (3,133.7 | )
|Basic loss per share   |  | $                    | (3.82    | )
|Diluted loss per share |  | $                    | (3.82    | )

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Notes to Consolidated Financial Statements 
(Continued)




|                            |                           |   |         |         |  
|--------------------------- | ------------------------- | - | ------- | ------- | -
|Accounts receivable         |                           | $ | 277.4   |        
|Inventory                   |                           |   | 362.1   |        
|Other current assets        |                           |   | 214.5   |        
|Property and equipment      |                           |   | 186.2   |        
|Goodwill                    |                           |   | 2,143.5 |        
|Other intangible assets     |                           |   | 25.6    |        
|Other long-term assets      |                           |   | 44.2    |        
|                            |                           |   |        
|                            | Total assets acquired     |   | $       | 3,253.5 |  
|                            |                           |   |        
|Current liabilities         |                           | $ | (316.5  | )      
|Long-term debt              |                           |   | (337.8  | )      
|Other long-term liabilities |                           |   | (32.3   | )      
|                            |                           |   |        
|                            | Total liabilities assumed |   | $       | (686.6  | )
|                            |                           |   |        





| |                   
| | ------------------
| | Other Acquisitions









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Notes to Consolidated Financial Statements 
(Continued)








|         |                  
|-------- | -----------------
|NOTE 21. | Subsequent Events







|         |                                                  
|-------- | -------------------------------------------------
|NOTE 22. | Quarterly Consolidated Financial Data (Unaudited)



|                                                             |                                     |                                            |         |       |                            |   |         |               |       |   |               |       |       |               |         |       |               |   |         |               |       |   |               |       |        |   |          |         |          |   |         |       |        |  
|------------------------------------------------------------ | ----------------------------------- | ------------------------------------------ | ------- | ----- | -------------------------- | - | ------- | ------------- | ----- | - | ------------- | ----- | ----- | ------------- | ------- | ----- | ------------- | - | ------- | ------------- | ----- | - | ------------- | ----- | ------ | - | -------- | ------- | -------- | - | ------- | ----- | ------ | -
|                                                             |                                     | Year Ended August 31, 2004                 |         |       | Year Ended August 31, 2003 |  
|                                                             |                                     |                                            |         |       |                            |  
|                                                             |                                     | 1st Quarter                                |         |       | 2nd Quarter                |   |         | 3rd Quarter   |       |   | 4th Quarter   |       |       | 1st Quarter   |         |       | 2nd Quarter   |   |         | 3rd Quarter   |       |   | 4th Quarter   |      
|                                                             |                                     |                                            |         |       |                            |   |         |               |       |   |               |       |       |               |         |       |               |   |         |               |       |   |               |      
|                                                             |                                     | (As Restated)                              |         |       | (As Restated)              |   |         | (As Restated) |       |   | (As Restated) |       |       | (As Restated) |         |       | (As Restated) |   |         | (As Restated) |       |   | (As Restated) |      
|Net sales                                                    |                                     | $                                          | 2,685.7 |       |                            | $ | 2,877.8 |               |       | $ | 3,034.2       |       |       | $             | 3,040.6 |       |               | $ | 2,668.1 |               |       | $ | 2,359.6       |       |        | $ | 2,357.3  |         |          | $ | 2,443.3 |      
|Cost of sales                                                |                                     |                                            | 2,559.0 |       |                            |   | 2,749.8 |               |       |   | 2,879.0       |       |       |               | 2,880.8 |       |               |   | 2,503.8 |               |       |   | 2,298.3       |       |        |   | 2,256.8  |         |          |   | 2,329.5 |      
|                                                             |                                     |                                            |         |       |                            |   |         |               |       |   |               |       |       |               |         |       |               |   |         |               |       |   |               |      
|Gross profit                                                 |                                     |                                            | 126.7   |       |                            |   | 128.0   |               |       |   | 155.2         |       |       |               | 159.8   |       |               |   | 164.3   |               |       |   | 61.3          |       |        |   | 100.5    |         |          |   | 113.8   |      
|Operating expenses:                                          |                                     |                                            |         |       |                            |   |         |               |       |   |               |       |       |               |         |       |               |   |         |               |       |   |               |       |        |   |          |         |          |   |         |      
|                                                             | Selling, general and administrative |                                            |         | 114.4 |                            |   |         | 113.8         |       |   |               | 103.7 |       |               |         | 114.8 |               |   |         | 157.9         |       |   |               | 139.1 |        |   |          | 140.5   |          |   |         | 129.4 |       
|                                                             | Restructuring and impairment costs  |                                            |         | 31.4  |                            |   |         | 74.0          |       |   |               | 4.4   |       |               |         | 68.1  |               |   |         | 95.7          |       |   |               | 47.2  |        |   |          | 356.6   |          |   |         | 105.3 |       
|                                                             | Goodwill impairment                 |                                            |         |      |                            |   |         |              |       |   |               |      |       |               |         |      |               |   |         |              |       |   |               |      |        |   |          | 1,612.0 |          |   |         | 8.1   |       
|                                                             |                                     |                                            |         |       |                            |   |         |               |       |   |               |       |       |               |         |       |               |   |         |               |       |   |               |      
|                                                             |                                     | Operating income (loss)                    |         |       | (19.1                      | ) |         |               | (59.8 | ) |               |       | 47.1  |               |         |       | (23.1         | ) |         |               | (89.3 | ) |               |       | (125.0 | ) |          |         | (2,008.6 | ) |         |       | (129.0 | )
|Interest income                                              |                                     |                                            | 2.5     |       |                            |   | 3.7     |               |       |   | 4.9           |       |       |               | 4.0     |       |               |   | 5.3     |               |       |   | 9.7           |       |        |   | 6.9      |         |          |   | 5.3     |      
|Interest expense                                             |                                     |                                            | (43.9   | )     |                            |   | (44.4   | )             |       |   | (42.9         | )     |       |               | (14.1   | )     |               |   | (55.3   | )             |       |   | (53.7         | )     |        |   | (51.4    | )       |          |   | (46.7   | )    
|Other income (expense)  net                                 |                                     |                                            | 4.2     |       |                            |   | 2.0     |               |       |   | (74.2         | )     |       |               | (12.6   | )     |               |   | 32.3    |               |       |   | 13.6          |       |        |   | (6.8     | )       |          |   | 9.3     |      
|                                                             |                                     |                                            |         |       |                            |   |         |               |       |   |               |       |       |               |         |       |               |   |         |               |       |   |               |      
|Income (loss) from continuing operations before income taxes |                                     |                                            | (56.3   | )     |                            |   | (98.5   | )             |       |   | (65.1         | )     |       |               | (45.8   | )     |               |   | (107.0  | )             |       |   | (155.4        | )     |        |   | (2,059.9 | )       |          |   | (161.1  | )    
|Income tax expense (benefit)                                 |                                     |                                            | 1.6     |       |                            |   | 0.5     |               |       |   | 0.3           |       |       |               | (5.7    | )     |               |   | (38.9   | )             |       |   | (50.3         | )     |        |   | 609.4    |         |          |   | 5.3     |      
|                                                             |                                     |                                            |         |       |                            |   |         |               |       |   |               |       |       |               |         |       |               |   |         |               |       |   |               |      
|                                                             |                                     | Income (loss) from continuing operations   |         | $     | (57.9                      | ) |         | $             | (99.0 | ) |               | $     | (65.4 | )             |         | $     | (40.1         | ) |         | $             | (68.1 | ) |               | $     | (105.1 | ) |          | $       | (2,669.3 | ) |         | $     | (166.4 | )
|Discontinued operations:                                     |                                     |                                            |         |       |                            |   |         |               |       |   |               |       |       |               |         |       |               |   |         |               |       |   |               |       |        |   |          |         |          |   |         |      
|Income (loss) from discontinued operations                   |                                     |                                            | (67.3   | )     |                            |   | 27.4    |               |       |   | 92.9          |       |       |               | 40.7    |       |               |   | 2.4     |               |       |   | (5.2          | )     |        |   | (310.8   | )       |          |   | (18.0   | )    
|Income tax expense (benefit)                                 |                                     |                                            | 0.3     |       |                            |   | 4.4     |               |       |   | 6.1           |       |       |               | (2.1    | )     |               |   | 6.1     |               |       |   | 2.1           |       |        |   | 105.2    |         |          |   | (1.3    | )    
|                                                             |                                     |                                            |         |       |                            |   |         |               |       |   |               |       |       |               |         |       |               |   |         |               |       |   |               |      
|                                                             |                                     | Income (loss) from discontinued operations |         | $     | (67.6                      | ) |         | $             | 23.0  |   |               | $     | 86.8  |               |         | $     | 42.8          |   |         | $             | (3.7  | ) |               | $     | (7.3   | ) |          | $       | (416.0   | ) |         | $     | (16.7  | )
|                                                             |                                     |                                            |         |       |                            |   |         |               |       |   |               |       |       |               |         |       |               |   |         |               |       |   |               |      
|                                                             |                                     | Net income (loss)                          |         | $     | (125.5                     | ) |         | $             | (76.0 | ) |               | $     | 21.4  |               |         | $     | 2.7           |   |         | $             | (71.8 | ) |               | $     | (112.4 | ) |          | $       | (3,085.3 | ) |         | $     | (183.1 | )
|                                                             |                                     |                                            |         |       |                            |   |         |               |       |   |               |       |       |               |         |       |               |   |         |               |       |   |               |      
|Basic net income (loss) per share:                           |                                     |                                            |         |       |                            |   |         |               |       |   |               |       |       |               |         |       |               |   |         |               |       |   |               |       |        |   |          |         |          |   |         |      
|Continuing operations                                        |                                     |                                            | (0.07   | )     |                            |   | (0.12   | )             |       |   | (0.08         | )     |       |               | (0.04   | )     |               |   | (0.08   | )             |       |   | (0.13         | )     |        |   | (3.22    | )       |          |   | (0.20   | )    
|Discontinued operations                                      |                                     |                                            | (0.08   | )     |                            |   | 0.03    |               |       |   | 0.10          |       |       |               | 0.04    |       |               |   | (0.01   | )             |       |   | (0.01         | )     |        |   | (0.50    | )       |          |   | (0.02   | )    
|                                                             |                                     |                                            |         |       |                            |   |         |               |       |   |               |       |       |               |         |       |               |   |         |               |       |   |               |      
|Basic net income (loss) per share                            |                                     |                                            | (0.15   | )     |                            |   | (0.09   | )             |       |   | 0.02          |       |       |               |        |       |               |   | (0.09   | )             |       |   | (0.14         | )     |        |   | (3.72    | )       |          |   | (0.22   | )    
|Diluted net income (loss) per share:                         |                                     |                                            |         |       |                            |   |         |               |       |   |               |       |       |               |         |       |               |   |         |               |       |   |               |       |        |   |          |         |          |   |         |      
|Continuing operations                                        |                                     |                                            | (0.07   | )     |                            |   | (0.12   | )             |       |   | (0.08         | )     |       |               | (0.04   | )     |               |   | (0.08   | )             |       |   | (0.13         | )     |        |   | (3.22    | )       |          |   | (0.20   | )    
|Discontinued operations                                      |                                     |                                            | (0.08   | )     |                            |   | 0.03    |               |       |   | 0.10          |       |       |               | 0.04    |       |               |   | (0.01   | )             |       |   | (0.01         | )     |        |   | (0.50    | )       |          |   | (0.02   | )    
|                                                             |                                     |                                            |         |       |                            |   |         |               |       |   |               |       |       |               |         |       |               |   |         |               |       |   |               |      
|Diluted net income (loss) per share                          |                                     |                                            | (0.15   | )     |                            |   | (0.09   | )             |       |   | 0.02          |       |       |               |        |       |               |   | (0.09   | )             |       |   | (0.14         | )     |        |   | (3.72    | )       |          |   | (0.22   | )    
|Shares used to compute basic
    net income (loss) per share |                                     |                                            | 833.6   |       |                            |   | 835.6   |               |       |   | 868.3         |       |       |               | 960.7   |       |               |   | 825.5   |               |       |   | 827.6         |       |        |   | 828.8    |         |          |   | 829.6   |      
|Shares used to compute diluted net income (loss) per share   |                                     |                                            | 833.6   |       |                            |   | 835.6   |               |       |   | 868.3         |       |       |               | 960.7   |       |               |   | 825.5   |               |       |   | 827.6         |       |        |   | 828.8    |         |          |   | 829.6   |      

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Notes to Consolidated Financial Statements 
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Notes to Consolidated Financial Statements 
(Continued)


Quarterly Consolidated Statements of Operations for 2004




|                                                             |                                            |                            |         |        |             |   |       |             |      |   |         |        |       |  
|------------------------------------------------------------ | ------------------------------------------ | -------------------------- | ------- | ------ | ----------- | - | ----- | ----------- | ---- | - | ------- | ------ | ----- | -
|                                                             |                                            | Year Ended August 31, 2004 |        
|                                                             |                                            |                            |        
|                                                             |                                            | 1st Quarter                |        
|                                                             |                                            |                            |        
|                                                             |                                            | As Reported                |         |        | Adjustments |   |       | As Restated |     
|                                                             |                                            |                            |         |        |             |   |       |             |     
|Net sales                                                    |                                            | $                          | 2,696.8 |        |             | $ | (11.1 | )           |      | $ | 2,685.7 |       
|Cost of sales                                                |                                            |                            | 2,569.3 |        |             |   | (10.3 | )           |      |   | 2,559.0 |       
|                                                             |                                            |                            |         |        |             |   |       |             |     
|Gross profit                                                 |                                            |                            | 127.5   |        |             |   | (0.8  | )           |      |   | 126.7   |       
|Operating expenses:                                          |                                            |                            |         |        |             |   |       |             |      |   |         |       
|                                                             | Selling, general and administrative        |                            |         | 114.7  |             |   |       | (0.3        | )    |   |         | 114.4  |      
|                                                             | Restructuring and impairment costs         |                            |         | 27.0   |             |   |       | 4.4         |      |   |         | 31.4   |      
|                                                             |                                            |                            |         |        |             |   |       |             |     
|                                                             |                                            | Operating income (loss)    |         |        | (14.2       | ) |       |             | (4.9 | ) |         |        | (19.1 | )
|Interest income                                              |                                            |                            | 2.4     |        |             |   | 0.1   |             |      |   | 2.5     |       
|Interest expense                                             |                                            |                            | (43.9   | )      |             |   |      |             |      |   | (43.9   | )     
|Other income-net                                             |                                            |                            | 6.0     |        |             |   | (1.8  | )           |      |   | 4.2     |       
|                                                             |                                            |                            |         |        |             |   |       |             |     
|Income (loss) from continuing operations before income taxes |                                            |                            | (49.7   | )      |             |   | (6.6  | )           |      |   | (56.3   | )     
|Income tax expense (benefit)                                 |                                            |                            | 2.5     |        |             |   | (0.9  | )           |      |   | 1.6     |       
|                                                             |                                            |                            |         |        |             |   |       |             |     
|                                                             | Income (loss) from continuing operations   |                            | $       | (52.2  | )           |   | $     | (5.7        | )    |   | $       | (57.9  | )    
|Discontinued operations:                                     |                                            |                            |         |        |             |   |       |             |      |   |         |       
|Income (loss) from discontinued operations                   |                                            |                            | (67.3   | )      |             |   |      |             |      |   | (67.3   | )     
|Income tax expense (benefit)                                 |                                            |                            | 0.3     |        |             |   |      |             |      |   | 0.3     |       
|                                                             |                                            |                            |         |        |             |   |       |             |     
|                                                             | Income (loss) from discontinued operations |                            | $       | (67.6  | )           |   | $     |            |      |   | $       | (67.6  | )    
|                                                             |                                            |                            |         |        |             |   |       |             |     
|                                                             | Net income (loss)                          |                            | $       | (119.8 | )           |   | $     | (5.7        | )    |   | $       | (125.5 | )    
|                                                             |                                            |                            |         |        |             |   |       |             |     
|Basic net income (loss) per share:                           |                                            |                            |         |        |             |   |       |             |      |   |         |       
|Continuing operations                                        |                                            | $                          | (0.06   | )      |             | $ | (0.01 | )           |      | $ | (0.07   | )     
|Discontinued operations                                      |                                            |                            | (0.08   | )      |             |   |      |             |      |   | (0.08   | )     
|                                                             |                                            |                            |         |        |             |   |       |             |     
|Basic net income (loss) per share                            |                                            | $                          | (0.14   | )      |             | $ | (0.01 | )           |      | $ | (0.15   | )     
|                                                             |                                            |                            |         |        |             |   |       |             |     
|Diluted net income (loss) per share:                         |                                            |                            |         |        |             |   |       |             |      |   |         |       
|Continuing operations                                        |                                            | $                          | (0.06   | )      |             | $ | (0.01 | )           |      | $ | (0.07   | )     
|Discontinued operations                                      |                                            |                            | (0.08   | )      |             |   |      |             |      |   | (0.08   | )     
|                                                             |                                            |                            |         |        |             |   |       |             |     
|Diluted net income (loss) per share                          |                                            | $                          | (0.14   | )      |             | $ | (0.01 | )           |      | $ | (0.15   | )     
|                                                             |                                            |                            |         |        |             |   |       |             |     
|Shares used to compute basic net income (loss) per share     |                                            |                            | 833.6   |        |             |   | 833.6 |             |      |   | 833.6   |       
|Shares used to compute diluted net income (loss) per share   |                                            |                            | 833.6   |        |             |   | 833.6 |             |      |   | 833.6   |       

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Notes to Consolidated Financial Statements 
(Continued)


|                                                           |                                     |                                     |         |       |             |   |       |             |      |   |         |       |       |  
|---------------------------------------------------------- | ----------------------------------- | ----------------------------------- | ------- | ----- | ----------- | - | ----- | ----------- | ---- | - | ------- | ----- | ----- | -
|                                                           |                                     | Year Ended August 31, 2004          |        
|                                                           |                                     |                                     |        
|                                                           |                                     | 2nd Quarter                         |        
|                                                           |                                     |                                     |        
|                                                           |                                     | As Reported                         |         |       | Adjustments |   |       | As Restated |     
|                                                           |                                     |                                     |         |       |             |   |       |             |     
|Net sales                                                  |                                     | $                                   | 2,887.4 |       |             | $ | (9.6  | )           |      | $ | 2,877.8 |      
|Cost of sales                                              |                                     |                                     | 2,756.3 |       |             |   | (6.5  | )           |      |   | 2,749.8 |      
|                                                           |                                     |                                     |         |       |             |   |       |             |     
|Gross profit                                               |                                     |                                     | 131.1   |       |             |   | (3.1  | )           |      |   | 128.0   |      
|Operating expenses:                                        |                                     |                                     |         |       |             |   |       |             |      |   |         |      
|                                                           | Selling, general and administrative |                                     |         | 109.2 |             |   |       | 4.6         |      |   |         | 113.8 |      
|                                                           | Restructuring and impairment costs  |                                     |         | 73.6  |             |   |       | 0.4         |      |   |         | 74.0  |      
|                                                           |                                     |                                     |         |       |             |   |       |             |     
|                                                           |                                     | Operating loss                      |         |       | (51.7       | ) |       |             | (8.1 | ) |         |       | (59.8 | )
|Interest income                                            |                                     |                                     | 3.6     |       |             |   | 0.1   |             |      |   | 3.7     |      
|Interest expense                                           |                                     |                                     | (44.4   | )     |             |   |      |             |      |   | (44.4   | )    
|Other income-net                                           |                                     |                                     | 3.3     |       |             |   | (1.3  | )           |      |   | 2.0     |      
|                                                           |                                     |                                     |         |       |             |   |       |             |     
|Loss from continuing operations before income taxes        |                                     |                                     | (89.2   | )     |             |   | (9.3  | )           |      |   | (98.5   | )    
|Income tax expense                                         |                                     |                                     | 0.5     |       |             |   |      |             |      |   | 0.5     |      
|                                                           |                                     |                                     |         |       |             |   |       |             |     
|                                                           |                                     | Loss from continuing operations     |         | $     | (89.7       | ) |       |             | (9.3 | ) |         | $     | (99.0 | )
|Discontinued operations:                                   |                                     |                                     |         |       |             |   |       |             |      |   |         |      
|Income from discontinued operations                        |                                     |                                     | 25.3    |       |             |   | 2.1   |             |      |   | 27.4    |      
|Income tax expense                                         |                                     |                                     | 3.6     |       |             |   | 0.8   |             |      |   | 4.4     |      
|                                                           |                                     |                                     |         |       |             |   |       |             |     
|                                                           |                                     | Income from discontinued operations |         | $     | 21.7        |   |       | $           | 1.3  |   |         | $     | 23.0  |  
|                                                           |                                     |                                     |         |       |             |   |       |             |     
|                                                           |                                     | Net income (loss)                   |         | $     | (68.0       | ) |       | $           | (8.0 | ) |         | $     | (76.0 | )
|                                                           |                                     |                                     |         |       |             |   |       |             |     
|Basic net income (loss) per share:                         |                                     |                                     |         |       |             |   |       |             |      |   |         |      
|Continuing operations                                      |                                     | $                                   | (0.11   | )     |             | $ | (0.01 | )           |      | $ | (0.12   | )    
|Discontinued operations                                    |                                     |                                     | 0.03    |       |             |   |      |             |      |   | 0.03    |      
|                                                           |                                     |                                     |         |       |             |   |       |             |     
|Basic net income (loss) per share                          |                                     | $                                   | (0.08   | )     |             | $ | (0.01 | )           |      | $ | (0.09   | )    
|                                                           |                                     |                                     |         |       |             |   |       |             |     
|Diluted net income (loss) per share:                       |                                     |                                     |         |       |             |   |       |             |      |   |         |      
|Continuing operations                                      |                                     | $                                   | (0.11   | )     |             | $ | (0.01 | )           |      | $ | (0.12   | )    
|Discontinued operations                                    |                                     |                                     | 0.03    |       |             |   |      |             |      |   | 0.03    |      
|                                                           |                                     |                                     |         |       |             |   |       |             |     
|Diluted net income (loss) per share                        |                                     | $                                   | (0.08   | )     |             | $ | (0.01 | )           |      | $ | (0.09   | )    
|                                                           |                                     |                                     |         |       |             |   |       |             |     
|Shares used to compute basic net income (loss) per share   |                                     |                                     | 835.6   |       |             |   | 835.6 |             |      |   | 835.6   |      
|Shares used to compute diluted net income (loss) per share |                                     |                                     | 835.6   |       |             |   | 835.6 |             |      |   | 835.6   |      

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Notes to Consolidated Financial Statements 
(Continued)


|                                                           |                                     |                                            |         |       |             |   |       |             |      |   |         |       |       |  
|---------------------------------------------------------- | ----------------------------------- | ------------------------------------------ | ------- | ----- | ----------- | - | ----- | ----------- | ---- | - | ------- | ----- | ----- | -
|                                                           |                                     | Year Ended August 31, 2004                 |        
|                                                           |                                     |                                            |        
|                                                           |                                     | 3rd Quarter                                |        
|                                                           |                                     |                                            |        
|                                                           |                                     | As Reported                                |         |       | Adjustments |   |       | As Restated |     
|                                                           |                                     |                                            |         |       |             |   |       |             |     
|Net sales                                                  |                                     | $                                          | 3,039.9 |       |             | $ | (5.7  | )           |      | $ | 3,034.2 |      
|Cost of sales                                              |                                     |                                            | 2,880.7 |       |             |   | (1.7  | )           |      |   | 2,879.0 |      
|                                                           |                                     |                                            |         |       |             |   |       |             |     
|Gross profit                                               |                                     |                                            | 159.2   |       |             |   | (4.0  | )           |      |   | 155.2   |      
|Operating expenses:                                        |                                     |                                            |         |       |             |   |       |             |      |   |         |      
|                                                           | Selling, general and administrative |                                            |         | 103.9 |             |   |       | (0.2        | )    |   |         | 103.7 |      
|                                                           | Restructuring and impairment costs  |                                            |         | 5.5   |             |   |       | (1.1        | )    |   |         | 4.4   |      
|                                                           |                                     |                                            |         |       |             |   |       |             |     
|                                                           |                                     | Operating income (loss)                    |         |       | 49.8        |   |       |             | (2.7 | ) |         |       | 47.1  |  
|Interest income                                            |                                     |                                            | 4.8     |       |             |   | .1    |             |      |   | 4.9     |      
|Interest expense                                           |                                     |                                            | (41.8   | )     |             |   | (1.1  | )           |      |   | (42.9   | )    
|Other income-net                                           |                                     |                                            | (77.9   | )     |             |   | 3.7   |             |      |   | (74.2   | )    
|                                                           |                                     |                                            |         |       |             |   |       |             |     
|Income (loss) from continuing operations                   |                                     |                                            | (65.1   | )     |             |   |      |             |      |   | (65.1   | )    
|before income taxes                                        |                                     |                                            |         |       |             |   |       |             |      |   |         |      
|Income tax expense                                         |                                     |                                            | 0.3     |       |             |   |      |             |      |   | 0.3     |      
|                                                           |                                     |                                            |         |       |             |   |       |             |     
|                                                           |                                     | Income (loss) from continuing operations   |         | $     | (65.4       | ) |       | $           |     |   |         | $     | (65.4 | )
|Discontinued operations:                                   |                                     |                                            |         |       |             |   |       |             |      |   |         |      
|Income (loss) from discontinued operations                 |                                     |                                            | 92.8    |       |             |   | 0.1   |             |      |   | 92.9    |      
|Income tax expense (benefit)                               |                                     |                                            | 6.1     |       |             |   |      |             |      |   | 6.1     |      
|                                                           |                                     |                                            |         |       |             |   |       |             |     
|                                                           |                                     | Income (loss) from discontinued operations |         | $     | 86.7        |   |       | $           | 0.1  |   |         | $     | 86.8  |  
|                                                           |                                     |                                            |         |       |             |   |       |             |     
|                                                           |                                     | Net income (loss)                          |         | $     | 21.3        |   |       | $           | 0.1  |   |         | $     | 21.4  |  
|                                                           |                                     |                                            |         |       |             |   |       |             |     
|Basic net income (loss) per share:                         |                                     |                                            |         |       |             |   |       |             |      |   |         |      
|Continuing operations                                      |                                     | $                                          | (0.08   | )     |             | $ |      |             |      | $ | (0.08   | )    
|Discontinued operations                                    |                                     |                                            | 0.10    |       |             |   |      |             |      |   | 0.10    |      
|                                                           |                                     |                                            |         |       |             |   |       |             |     
|Basic net income (loss) per share                          |                                     | $                                          | 0.02    |       |             | $ |      |             |      | $ | 0.02    |      
|                                                           |                                     |                                            |         |       |             |   |       |             |     
|Diluted net income (loss) per share:                       |                                     |                                            |         |       |             |   |       |             |      |   |         |      
|Continuing operations                                      |                                     | $                                          | (0.08   | )     |             | $ |      |             |      | $ | (0.08   | )    
|Discontinued operations                                    |                                     |                                            | 0.10    |       |             |   |      |             |      |   | 0.10    |      
|                                                           |                                     |                                            |         |       |             |   |       |             |     
|Diluted net income (loss) per share                        |                                     | $                                          | 0.02    |       |             | $ |      |             |      | $ | 0.02    |      
|                                                           |                                     |                                            |         |       |             |   |       |             |     
|Shares used to compute basic net income (loss) per share   |                                     |                                            | 868.3   |       |             |   | 868.3 |             |      |   | 868.3   |      
|Shares used to compute diluted net income (loss) per share |                                     |                                            | 868.3   |       |             |   | 868.3 |             |      |   | 868.3   |      

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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)


|                                                             |                                     |                                            |                         |       |             |       |       |             |     |      |         |       |       |       |  
|------------------------------------------------------------ | ----------------------------------- | ------------------------------------------ | ----------------------- | ----- | ----------- | ----- | ----- | ----------- | --- | ---- | ------- | ----- | ----- | ----- | -
|                                                             |                                     | Year Ended August 31, 2004                 |                        
|                                                             |                                     |                                            |                        
|                                                             |                                     | 4th Quarter                                |                        
|                                                             |                                     |                                            |                        
|                                                             |                                     | As Reported                                |                         |       | Adjustments |       |       | As Restated |    
|                                                             |                                     |                                            |                         |       |             |       |       |             |    
|Net sales                                                    |                                     | $                                          | 3,014.2                 |       |             | $     | 26.4  |             |     | $    | 3,040.6 |      
|Cost of sales                                                |                                     |                                            | 2,851.7                 |       |             |       | 29.1  |             |     |      | 2,880.8 |      
|                                                             |                                     |                                            |                         |       |             |       |       |             |    
|Gross profit                                                 |                                     |                                            | 162.5                   |       |             |       | (2.7  | )           |     |      | 159.8   |      
|Operating expenses:                                          |                                     |                                            |                         |       |             |       |       |             |     |      |         |      
|                                                             | Selling, general and administrative |                                            |                         | 113.1 |             |       |       | 1.7         |     |      |         | 114.8 |      
|                                                             | Restructuring and impairment costs  |                                            |                         | 70.7  |             |       |       | (2.6        | )   |      |         | 68.1  |      
|                                                             |                                     |                                            |                         |       |             |       |       |             |    
|                                                             |                                     |                                            | Operating income (loss) |       |             | (21.3 | )     |             |     | (1.8 | )       |       |       | (23.1 | )
|Interest income                                              |                                     |                                            | 4.0                     |       |             |       |      |             |     |      | 4.0     |      
|Interest expense                                             |                                     |                                            | (14.1                   | )     |             |       |      |             |     |      | (14.1   | )    
|Other income  net                                           |                                     |                                            | (16.7                   | )     |             |       | 4.1   |             |     |      | (12.6   | )    
|                                                             |                                     |                                            |                         |       |             |       |       |             |    
|Income (loss) from continuing operations before income taxes |                                     |                                            | (48.1                   | )     |             |       | 2.3   |             |     |      | (45.8   | )    
|Income tax expense (benefit)                                 |                                     |                                            | (3.6                    | )     |             |       | (2.1  | )           |     |      | (5.7    | )    
|                                                             |                                     |                                            |                         |       |             |       |       |             |    
|                                                             |                                     | Income (loss) from continuing operations   |                         | $     | (44.5       | )     |       | $           | 4.4 |      |         | $     | (40.1 | )    
|Discontinued operations:                                     |                                     |                                            |                         |       |             |       |       |             |     |      |         |      
|Income (loss) from discontinued operations                   |                                     |                                            | 40.1                    |       |             |       | 0.6   |             |     |      | 40.7    |      
|Income tax expense (benefit)                                 |                                     |                                            | (2.0                    | )     |             |       | (0.1  | )           |     |      | (2.1    | )    
|                                                             |                                     |                                            |                         |       |             |       |       |             |    
|                                                             |                                     | Income (loss) from discontinued operations |                         | $     | 42.1        |       |       | $           | 0.7 |      |         | $     | 42.8  |      
|                                                             |                                     |                                            |                         |       |             |       |       |             |    
|                                                             |                                     | Net income (loss)                          |                         | $     | (2.4        | )     |       | $           | 5.1 |      |         | $     | 2.7   |      
|                                                             |                                     |                                            |                         |       |             |       |       |             |    
|Basic net income (loss) per share:                           |                                     |                                            |                         |       |             |       |       |             |     |      |         |      
|Continuing operations                                        |                                     | $                                          | (0.05                   | )     |             | $     | 0.01  |             |     | $    | (0.04   | )    
|Discontinued operations                                      |                                     |                                            | 0.05                    |       |             |       | (0.01 | )           |     |      | 0.04    |      
|                                                             |                                     |                                            |                         |       |             |       |       |             |    
|Basic net income (loss) per share                            |                                     | $                                          |                        |       |             | $     |      |             |     | $    |        |      
|                                                             |                                     |                                            |                         |       |             |       |       |             |    
|Diluted net income (loss) per share:                         |                                     |                                            |                         |       |             |       |       |             |     |      |         |      
|Continuing operations                                        |                                     | $                                          | (0.05                   | )     |             | $     | 0.01  |             |     | $    | (0.04   | )    
|Discontinued operations                                      |                                     |                                            | 0.05                    |       |             |       | (0.01 | )           |     |      | 0.04    |      
|                                                             |                                     |                                            |                         |       |             |       |       |             |    
|Diluted net income (loss) per share                          |                                     | $                                          |                        |       |             | $     |      |             |     | $    |        |      
|                                                             |                                     |                                            |                         |       |             |       |       |             |    
|Shares used to compute basic net income (loss) per share     |                                     |                                            | 960.7                   |       |             |       | 960.7 |             |     |      | 960.7   |      
|Shares used to compute diluted net income (loss) per share   |                                     |                                            | 960.7                   |       |             |       | 960.7 |             |     |      | 960.7   |      

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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)


Quarterly Consolidated Statements of Operations for 2003




|                                                             |                                     |                                            |                         |       |             |       |       |             |      |      |         |       |       |       |  
|------------------------------------------------------------ | ----------------------------------- | ------------------------------------------ | ----------------------- | ----- | ----------- | ----- | ----- | ----------- | ---- | ---- | ------- | ----- | ----- | ----- | -
|                                                             |                                     | Year Ended August 31, 2003                 |                        
|                                                             |                                     |                                            |                        
|                                                             |                                     | 1st Quarter                                |                        
|                                                             |                                     |                                            |                        
|                                                             |                                     | As Reported                                |                         |       | Adjustments |       |       | As Restated |     
|                                                             |                                     |                                            |                         |       |             |       |       |             |     
|Net sales                                                    |                                     | $                                          | 2,668.1                 |       |             | $     |      |             |      | $    | 2,668.1 |      
|Cost of sales                                                |                                     |                                            | 2,503.1                 |       |             |       | 0.7   |             |      |      | 2,503.8 |      
|                                                             |                                     |                                            |                         |       |             |       |       |             |     
|Gross profit                                                 |                                     |                                            | 165.0                   |       |             |       | (0.7  | )           |      |      | 164.3   |      
|Operating expenses:                                          |                                     |                                            |                         |       |             |       |       |             |      |      |         |      
|                                                             | Selling, general and administrative |                                            |                         | 158.9 |             |       |       | (1.0        | )    |      |         | 157.9 |      
|                                                             | Restructuring and impairment costs  |                                            |                         | 94.5  |             |       |       | 1.2         |      |      |         | 95.7  |      
|                                                             | Goodwill impairment                 |                                            |                         |      |             |       |       |            |      |      |         |      |      
|                                                             |                                     |                                            |                         |       |             |       |       |             |     
|                                                             |                                     |                                            | Operating income (loss) |       |             | (88.4 | )     |             |      | (0.9 | )       |       |       | (89.3 | )
|Interest income                                              |                                     |                                            | 5.2                     |       |             |       | 0.1   |             |      |      | 5.3     |      
|Interest expense                                             |                                     |                                            | (55.3                   | )     |             |       |      |             |      |      | (55.3   | )    
|Other income  net                                           |                                     |                                            | 36.2                    |       |             |       | (3.9  | )           |      |      | 32.3    |      
|                                                             |                                     |                                            |                         |       |             |       |       |             |     
|Income (loss) from continuing operations before income taxes |                                     |                                            | (102.3                  | )     |             |       | (4.7  | )           |      |      | (107.0  | )    
|Income tax expense (benefit)                                 |                                     |                                            | (35.0                   | )     |             |       | (3.9  | )           |      |      | (38.9   | )    
|                                                             |                                     |                                            |                         |       |             |       |       |             |     
|                                                             |                                     | Income (loss) from continuing operations   |                         | $     | (67.3       | )     |       | $           | (0.8 | )    |         | $     | (68.1 | )    
|Discontinued operations:                                     |                                     |                                            |                         |       |             |       |       |             |      |      |         |      
|Income (loss) from discontinued operations                   |                                     |                                            | 2.5                     |       |             |       | (0.1  | )           |      |      | 2.4     |      
|Income tax expense (benefit)                                 |                                     |                                            | 6.1                     |       |             |       |      |             |      |      | 6.1     |      
|                                                             |                                     |                                            |                         |       |             |       |       |             |     
|                                                             |                                     | Income (loss) from discontinued operations |                         | $     | (3.6        | )     |       | $           | (0.1 | )    |         | $     | (3.7  | )    
|                                                             |                                     |                                            |                         |       |             |       |       |             |     
|                                                             |                                     | Net income (loss)                          |                         | $     | (70.9       | )     |       | $           | (0.9 | )    |         | $     | (71.8 | )    
|                                                             |                                     |                                            |                         |       |             |       |       |             |     
|Basic net income (loss) per share:                           |                                     |                                            |                         |       |             |       |       |             |      |      |         |      
|Continuing operations                                        |                                     | $                                          | (0.08                   | )     |             | $     |      |             |      | $    | (0.08   | )    
|Discontinued operations                                      |                                     |                                            | (0.01                   | )     |             |       |      |             |      |      | (0.01   | )    
|                                                             |                                     |                                            |                         |       |             |       |       |             |     
|Basic net income (loss) per share                            |                                     | $                                          | (0.09                   | )     |             | $     |      |             |      | $    | (0.09   | )    
|                                                             |                                     |                                            |                         |       |             |       |       |             |     
|Diluted net income (loss) per share:                         |                                     |                                            |                         |       |             |       |       |             |      |      |         |      
|Continuing operations                                        |                                     | $                                          | (0.08                   | )     |             | $     |      |             |      | $    | (0.08   | )    
|Discontinued operations                                      |                                     |                                            | (0.01                   | )     |             |       |      |             |      |      | (0.01   | )    
|                                                             |                                     |                                            |                         |       |             |       |       |             |     
|Diluted net income (loss) per share                          |                                     | $                                          | (0.09                   | )     |             | $     |      |             |      | $    | (0.09   | )    
|                                                             |                                     |                                            |                         |       |             |       |       |             |     
|Shares used to compute basic net income (loss) per share     |                                     |                                            | 825.5                   |       |             |       | 825.5 |             |      |      | 825.5   |      
|Shares used to compute diluted net income (loss) per share   |                                     |                                            | 825.5                   |       |             |       | 825.5 |             |      |      | 825.5   |      

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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)


|                                                             |                                     |                                            |                         |       |             |        |       |             |      |      |         |       |        |        |  
|------------------------------------------------------------ | ----------------------------------- | ------------------------------------------ | ----------------------- | ----- | ----------- | ------ | ----- | ----------- | ---- | ---- | ------- | ----- | ------ | ------ | -
|                                                             |                                     | Year Ended August 31, 2003                 |                        
|                                                             |                                     |                                            |                        
|                                                             |                                     | 2nd Quarter                                |                        
|                                                             |                                     |                                            |                        
|                                                             |                                     | As Reported                                |                         |       | Adjustments |        |       | As Restated |     
|                                                             |                                     |                                            |                         |       |             |        |       |             |     
|Net sales                                                    |                                     | $                                          | 2,359.6                 |       |             | $      |      |             |      | $    | 2,359.6 |      
|Cost of sales                                                |                                     |                                            | 2,299.2                 |       |             |        | (0.9  | )           |      |      | 2,298.3 |      
|                                                             |                                     |                                            |                         |       |             |        |       |             |     
|Gross profit                                                 |                                     |                                            | 60.4                    |       |             |        | 0.9   |             |      |      | 61.3    |      
|Operating expenses:                                          |                                     |                                            |                         |       |             |        |       |             |      |      |         |      
|                                                             | Selling, general and administrative |                                            |                         | 139.4 |             |        |       | (0.3        | )    |      |         | 139.1 |       
|                                                             | Restructuring and impairment costs  |                                            |                         | 45.9  |             |        |       | 1.3         |      |      |         | 47.2  |       
|                                                             | Goodwill impairment                 |                                            |                         |      |             |        |       |            |      |      |         |      |       
|                                                             |                                     |                                            |                         |       |             |        |       |             |     
|                                                             |                                     |                                            | Operating income (loss) |       |             | (124.9 | )     |             |      | (0.1 | )       |       |        | (125.0 | )
|Interest income                                              |                                     |                                            | 9.6                     |       |             |        | 0.1   |             |      |      | 9.7     |      
|Interest expense                                             |                                     |                                            | (53.7                   | )     |             |        |      |             |      |      | (53.7   | )    
|Other income  net                                           |                                     |                                            | 15.3                    |       |             |        | (1.7  | )           |      |      | 13.6    |      
|                                                             |                                     |                                            |                         |       |             |        |       |             |     
|Income (loss) from continuing operations before income taxes |                                     |                                            | (153.7                  | )     |             |        | (1.7  | )           |      |      | (155.4  | )    
|Income tax expense (benefit)                                 |                                     |                                            | (49.8                   | )     |             |        | (0.5  | )           |      |      | (50.3   | )    
|                                                             |                                     |                                            |                         |       |             |        |       |             |     
|                                                             |                                     | Income (loss) from continuing operations   |                         | $     | (103.9      | )      |       | $           | (1.2 | )    |         | $     | (105.1 | )     
|Discontinued operations:                                     |                                     |                                            |                         |       |             |        |       |             |      |      |         |      
|Income (loss) from discontinued operations                   |                                     |                                            | (4.7                    | )     |             |        | (0.5  | )           |      |      | (5.2    | )    
|Income tax expense (benefit)                                 |                                     |                                            | 2.2                     |       |             |        | (0.1  | )           |      |      | 2.1     |      
|                                                             |                                     |                                            |                         |       |             |        |       |             |     
|                                                             |                                     | Income (loss) from discontinued operations |                         | $     | (6.9        | )      |       | $           | (0.4 | )    |         | $     | (7.3   | )     
|                                                             |                                     |                                            |                         |       |             |        |       |             |     
|                                                             |                                     | Net income (loss)                          |                         | $     | (110.8      | )      |       | $           | (1.6 | )    |         | $     | (112.4 | )     
|                                                             |                                     |                                            |                         |       |             |        |       |             |     
|Basic net income (loss) per share:                           |                                     |                                            |                         |       |             |        |       |             |      |      |         |      
|Continuing operations                                        |                                     | $                                          | (0.13                   | )     |             | $      |      |             |      | $    | (0.13   | )    
|Discontinued operations                                      |                                     |                                            |                        |       |             |        | (0.01 | )           |      |      | (0.01   | )    
|                                                             |                                     |                                            |                         |       |             |        |       |             |     
|Basic net income (loss) per share                            |                                     | $                                          | (0.13                   | )     |             | $      | (0.01 | )           |      | $    | (0.14   | )    
|                                                             |                                     |                                            |                         |       |             |        |       |             |     
|Diluted net income (loss) per share:                         |                                     |                                            |                         |       |             |        |       |             |      |      |         |      
|Continuing operations                                        |                                     | $                                          | (0.13                   | )     |             | $      |      |             |      | $    | (0.13   | )    
|Discontinued operations                                      |                                     |                                            |                        |       |             |        | (0.01 | )           |      |      | (0.01   | )    
|                                                             |                                     |                                            |                         |       |             |        |       |             |     
|Diluted net income (loss) per share                          |                                     | $                                          | (0.13                   | )     |             | $      | (0.01 | )           |      | $    | (0.14   | )    
|                                                             |                                     |                                            |                         |       |             |        |       |             |     
|Shares used to compute basic net income (loss) per share     |                                     |                                            | 827.6                   |       |             |        | 827.6 |             |      |      | 827.6   |      
|Shares used to compute diluted net income (loss) per share   |                                     |                                            | 827.6                   |       |             |        | 827.6 |             |      |      | 827.6   |      

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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)


|                                                             |                                     |                                            |          |         |             |   |       |             |      |   |          |         |          |  
|------------------------------------------------------------ | ----------------------------------- | ------------------------------------------ | -------- | ------- | ----------- | - | ----- | ----------- | ---- | - | -------- | ------- | -------- | -
|                                                             |                                     | Year Ended August 31, 2003                 |         
|                                                             |                                     |                                            |         
|                                                             |                                     | 3rd Quarter                                |         
|                                                             |                                     |                                            |         
|                                                             |                                     | As Reported                                |          |         | Adjustments |   |       | As Restated |     
|                                                             |                                     |                                            |          |         |             |   |       |             |     
|Net sales                                                    |                                     | $                                          | 2,357.3  |         |             | $ |      |             |      | $ | 2,357.3  |        
|Cost of sales                                                |                                     |                                            | 2,258.1  |         |             |   | (1.3  | )           |      |   | 2,256.8  |        
|                                                             |                                     |                                            |          |         |             |   |       |             |     
|Gross profit                                                 |                                     |                                            | 99.2     |         |             |   | 1.3   |             |      |   | 100.5    |        
|Operating expenses:                                          |                                     |                                            |          |         |             |   |       |             |      |   |          |        
|                                                             | Selling, general and administrative |                                            |          | 138.1   |             |   |       | 2.4         |      |   |          | 140.5   |         
|                                                             | Restructuring and impairment costs  |                                            |          | 356.8   |             |   |       | (0.2        | )    |   |          | 356.6   |         
|                                                             | Goodwill impairment                 |                                            |          | 1,624.4 |             |   |       | (12.4       | )    |   |          | 1,612.0 |         
|                                                             |                                     |                                            |          |         |             |   |       |             |     
|                                                             |                                     | Operating income (loss)                    |          |         | (2,020.1    | ) |       |             | 11.5 |   |          |         | (2,008.6 | )
|Interest income                                              |                                     |                                            | 6.8      |         |             |   | 0.1   |             |      |   | 6.9      |        
|Interest expense                                             |                                     |                                            | (51.4    | )       |             |   |      |             |      |   | (51.4    | )      
|Other expense  net                                          |                                     |                                            | (5.4     | )       |             |   | (1.4  | )           |      |   | (6.8     | )      
|                                                             |                                     |                                            |          |         |             |   |       |             |     
|Income (loss) from continuing operations before income taxes |                                     |                                            | (2,070.1 | )       |             |   | 10.2  |             |      |   | (2,059.9 | )      
|Income tax expense (benefit)                                 |                                     |                                            | 615.8    |         |             |   | (6.4  | )           |      |   | 609.4    |        
|                                                             |                                     |                                            |          |         |             |   |       |             |     
|                                                             |                                     | Income (loss) from continuing operations   |          | $       | (2,685.9    | ) |       | $           | 16.6 |   |          | $       | (2,669.3 | )
|Discontinued operations:                                     |                                     |                                            |          |         |             |   |       |             |      |   |          |        
|Income (loss) from discontinued operations                   |                                     |                                            | (310.3   | )       |             |   | (0.5  | )           |      |   | (310.8   | )      
|Income tax expense (benefit)                                 |                                     |                                            | 105.0    |         |             |   | 0.2   |             |      |   | 105.2    |        
|                                                             |                                     |                                            |          |         |             |   |       |             |     
|                                                             |                                     | Income (loss) from discontinued operations |          | $       | (415.3      | ) |       | $           | (0.7 | ) |          | $       | (416.0   | )
|                                                             |                                     |                                            |          |         |             |   |       |             |     
|                                                             |                                     | Net income (loss)                          |          | $       | (3,101.2    | ) |       | $           | 15.9 |   |          | $       | (3,085.3 | )
|                                                             |                                     |                                            |          |         |             |   |       |             |     
|Basic net income (loss) per share:                           |                                     |                                            |          |         |             |   |       |             |      |   |          |        
|Continuing operations                                        |                                     | $                                          | (3.24    | )       |             | $ | 0.02  |             |      | $ | (3.22    | )      
|Discontinued operations                                      |                                     |                                            | (0.50    | )       |             |   |      |             |      |   | (0.50    | )      
|                                                             |                                     |                                            |          |         |             |   |       |             |     
|Basic net income (loss) per share                            |                                     |                                            | (3.74    | )       |             |   | 0.02  |             |      |   | (3.72    | )      
|                                                             |                                     |                                            |          |         |             |   |       |             |     
|Diluted net income (loss) per share:                         |                                     |                                            |          |         |             |   |       |             |      |   |          |        
|Continuing operations                                        |                                     | $                                          | (3.24    | )       |             | $ | 0.02  |             |      | $ | (3.22    | )      
|Discontinued operations                                      |                                     |                                            | (0.50    | )       |             |   |      |             |      |   | (0.50    | )      
|                                                             |                                     |                                            |          |         |             |   |       |             |     
|Diluted net income (loss) per share                          |                                     | $                                          | (3.74    | )       |             | $ | 0.02  |             |      | $ | (3.72    | )      
|                                                             |                                     |                                            |          |         |             |   |       |             |     
|Shares used to compute basic net income (loss) per share     |                                     |                                            | 828.8    |         |             |   | 828.8 |             |      |   | 828.8    |        
|Shares used to compute diluted net income (loss) per share   |                                     |                                            | 828.8    |         |             |   | 828.8 |             |      |   | 828.8    |        

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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)


|                                                             |                                     |                                            |         |       |             |   |       |             |      |   |         |       |        |  
|------------------------------------------------------------ | ----------------------------------- | ------------------------------------------ | ------- | ----- | ----------- | - | ----- | ----------- | ---- | - | ------- | ----- | ------ | -
|                                                             |                                     | Year Ended August 31, 2003                 |        
|                                                             |                                     |                                            |        
|                                                             |                                     | 4th Quarter                                |        
|                                                             |                                     |                                            |        
|                                                             |                                     | As Reported                                |         |       | Adjustments |   |       | As Restated |     
|                                                             |                                     |                                            |         |       |             |   |       |             |     
|Net sales                                                    |                                     | $                                          | 2,443.3 |       |             | $ |      |             |      | $ | 2,443.3 |      
|Cost of sales                                                |                                     |                                            | 2,325.9 |       |             |   | 3.6   |             |      |   | 2,329.5 |      
|                                                             |                                     |                                            |         |       |             |   |       |             |     
|Gross profit                                                 |                                     |                                            | 117.4   |       |             |   | (3.6  | )           |      |   | 113.8   |      
|Operating expenses:                                          |                                     |                                            |         |       |             |   |       |             |      |   |         |      
|                                                             | Selling, general and administrative |                                            |         | 129.7 |             |   |       | (0.3        | )    |   |         | 129.4 |       
|                                                             | Restructuring and impairment costs  |                                            |         | 106.0 |             |   |       | (0.7        | )    |   |         | 105.3 |       
|                                                             | Goodwill impairment                 |                                            |         | 8.1   |             |   |       |            |      |   |         | 8.1   |       
|                                                             |                                     |                                            |         |       |             |   |       |             |     
|                                                             |                                     | Operating income (loss)                    |         |       | (126.4      | ) |       |             | (2.6 | ) |         |       | (129.0 | )
|Interest income                                              |                                     |                                            | 5.2     |       |             |   | 0.1   |             |      |   | 5.3     |      
|Interest expense                                             |                                     |                                            | (46.7   | )     |             |   |      |             |      |   | (46.7   | )    
|Other income  net                                           |                                     |                                            | 6.3     |       |             |   | 3.0   |             |      |   | 9.3     |      
|                                                             |                                     |                                            |         |       |             |   |       |             |     
|Income (loss) from continuing operations before income taxes |                                     |                                            | (161.6  | )     |             |   | 0.5   |             |      |   | (161.1  | )    
|Income tax expense (benefit)                                 |                                     |                                            | 1.1     |       |             |   | 4.2   |             |      |   | 5.3     |      
|                                                             |                                     |                                            |         |       |             |   |       |             |     
|                                                             |                                     | Income (loss) from continuing operations   |         | $     | (162.7      | ) |       | $           | (3.7 | ) |         | $     | (166.4 | )
|Discontinued operations:                                     |                                     |                                            |         |       |             |   |       |             |      |   |         |      
|Income (loss) from discontinued operations                   |                                     |                                            | (17.5   | )     |             |   | (0.5  | )           |      |   | (18.0   | )    
|Income tax expense (benefit)                                 |                                     |                                            | (1.1    | )     |             |   | (0.2  | )           |      |   | (1.3    | )    
|                                                             |                                     |                                            |         |       |             |   |       |             |     
|                                                             |                                     | Income (loss) from discontinued operations |         | $     | (16.4       | ) |       | $           | (0.3 | ) |         | $     | (16.7  | )
|                                                             |                                     |                                            |         |       |             |   |       |             |     
|                                                             |                                     | Net income (loss)                          |         | $     | (179.1      | ) |       | $           | (4.0 | ) |         | $     | (183.1 | )
|                                                             |                                     |                                            |         |       |             |   |       |             |     
|Basic net income (loss) per share:                           |                                     |                                            |         |       |             |   |       |             |      |   |         |      
|Continuing operations                                        |                                     | $                                          | (0.20   | )     |             | $ |      |             |      | $ | (0.20   | )    
|Discontinued operations                                      |                                     |                                            | (0.02   | )     |             |   |      |             |      |   | (0.02   | )    
|                                                             |                                     |                                            |         |       |             |   |       |             |     
|Basic net income (loss) per share                            |                                     | $                                          | (0.22   | )     |             | $ |      |             |      | $ | (0.22   | )    
|                                                             |                                     |                                            |         |       |             |   |       |             |     
|Diluted net income (loss) per share:                         |                                     |                                            |         |       |             |   |       |             |      |   |         |      
|Continuing operations                                        |                                     | $                                          | (0.20   | )     |             | $ |      |             |      | $ | (0.20   | )    
|Discontinued operations                                      |                                     |                                            | (0.02   | )     |             |   |      |             |      |   | (0.02   | )    
|                                                             |                                     |                                            |         |       |             |   |       |             |     
|Diluted net income (loss) per share                          |                                     | $                                          | (0.22   | )     |             | $ |      |             |      | $ | (0.22   | )    
|                                                             |                                     |                                            |         |       |             |   |       |             |     
|Shares used to compute basic net income (loss) per share     |                                     |                                            | 829.6   |       |             |   | 829.6 |             |      |   | 829.6   |      
|Shares used to compute diluted net income (loss) per share   |                                     |                                            | 829.6   |       |             |   | 829.6 |             |      |   | 829.6   |      

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##### Table of Contents



SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)


Quarterly Condensed Consolidated Balance Sheets for 2004




|                                                 |                                                                        |                            |         |          |                   |   |         |               |         |   |                 |          |         |               |         |          |               |   |         |               |         |   |               |          |         |   |         |          |         |   |         |          |         | 
|------------------------------------------------ | ---------------------------------------------------------------------- | -------------------------- | ------- | -------- | ----------------- | - | ------- | ------------- | ------- | - | --------------- | -------- | ------- | ------------- | ------- | -------- | ------------- | - | ------- | ------------- | ------- | - | ------------- | -------- | ------- | - | ------- | -------- | ------- | - | ------- | -------- | ------- | 
|                                                 |                                                                        | November 30, 2003          |         |          | February 28, 2004 |   |         | May 31, 2004  |         |   | August 31, 2004 |         
|                                                 |                                                                        |                            |         |          |                   |   |         |               |         |   |                 |         
|                                                 |                                                                        | (As Reported)              |         |          | (As Restated)     |   |         | (As Reported) |         |   | (As Restated)   |          |         | (As Reported) |         |          | (As Restated) |   |         | (As Reported) |         |   | (As Restated) |         
|                                                 |                                                                        |                            |         |          |                   |   |         |               |         |   |                 |          |         |               |         |          |               |   |         |               |         |   |               |         
|ASSETS                                          
|Current assets:                                  |                                                                        |                            |         |          |                   |   |         |               |         |   |                 |          |         |               |         |          |               |   |         |               |         |   |               |          |         |   |         |          |         |   |         |         
|                                                 | Cash, cash equivalents, short-term investments and restricted
    cash |                            | $       | 1,371.8  |                   |   | $       | 1,371.0       |         |   | $               | 1,839.9  |         |               | $       | 1,839.9  |               |   | $       | 1,212.1       |         |   | $             | 1,212.1  |         |   | $       | 1,430.0  |         |   | $       | 1,430.2  |        
|                                                 | Accounts receivable, net                                               |                            |         | 1,591.3  |                   |   |         | 1,591.0       |         |   |                 | 1,529.5  |         |               |         | 1,529.2  |               |   |         | 1,616.4       |         |   |               | 1,616.9  |         |   |         | 1,549.9  |         |   |         | 1,550.2  |        
|                                                 | Inventories                                                            |                            |         | 1,472.4  |                   |   |         | 1,470.6       |         |   |                 | 1,510.1  |         |               |         | 1,508.3  |               |   |         | 1,577.2       |         |   |               | 1,575.5  |         |   |         | 1,457.2  |         |   |         | 1,455.4  |        
|                                                 | Prepaid expenses and other current assets                              |                            |         | 247.8    |                   |   |         | 241.6         |         |   |                 | 216.8    |         |               |         | 210.9    |               |   |         | 143.2         |         |   |               | 137.0    |         |   |         | 192.9    |         |   |         | 189.5    |        
|                                                 | Current assets of discontinued operations                              |                            |         | 496.0    |                   |   |         | 496.0         |         |   |                 | 485.2    |         |               |         | 485.2    |               |   |         | 138.6         |         |   |               | 138.6    |         |   |         | 36.4     |         |   |         | 36.4     |        
|                                                 |                                                                        |                            |         |          |                   |   |         |               |         |   |                 |          |         |               |         |          |               |   |         |               |         |   |               |         
|                                                 |                                                                        | Total current assets       |         |          | 5,179.3           |   |         |               | 5,170.2 |   |                 |          | 5,581.5 |               |         |          | 5,573.5       |   |         |               | 4,687.5 |   |               |          | 4,680.1 |   |         |          | 4,666.4 |   |         |          | 4661.7  | 
|Property and equipment, net                      |                                                                        |                            | 773.9   |          |                   |   | 796.8   |               |         |   | 740.4           |          |         |               | 762.4   |          |               |   | 734.6   |               |         |   | 756.8         |          |         |   | 726.6   |          |         |   | 754.4   |         
|Goodwill                                         |                                                                        |                            | 134.6   |          |                   |   | 135.2   |               |         |   | 134.6           |          |         |               | 135.2   |          |               |   | 134.6   |               |         |   | 135.8         |          |         |   | 134.6   |          |         |   | 135.8   |         
|Other assets                                     |                                                                        |                            | 416.7   |          |                   |   | 438.8   |               |         |   | 410.1           |          |         |               | 425.1   |          |               |   | 357.3   |               |         |   | 372.4         |          |         |   | 277.5   |          |         |   | 294.3   |         
|Long-term assets of discontinued operations      |                                                                        |                            | 193.2   |          |                   |   | 193.5   |               |         |   | 112.9           |          |         |               | 112.4   |          |               |   | 50.9    |               |         |   | 51.0          |          |         |   | 11.9    |          |         |   | 11.9    |         
|                                                 |                                                                        |                            |         |          |                   |   |         |               |         |   |                 |          |         |               |         |          |               |   |         |               |         |   |               |         
|Total assets                                     |                                                                        | $                          | 6,697.7 |          |                   | $ | 6,734.5 |               |         | $ | 6,979.5         |          |         | $             | 7,008.6 |          |               | $ | 5,964.9 |               |         | $ | 5,996.1       |          |         | $ | 5,817.0 |          |         | $ | 5,858.1 |         
|                                                 |                                                                        |                            |         |          |                   |   |         |               |         |   |                 |          |         |               |         |          |               |   |         |               |         |   |               |         
|                                                
|LIABILITIES AND STOCKHOLDERS EQUITY            
|                                                
|Current liabilities:                             |                                                                        |                            |         |          |                   |   |         |               |         |   |                 |          |         |               |         |          |               |   |         |               |         |   |               |          |         |   |         |          |         |   |         |         
|                                                 | Short-term debt                                                        |                            | $       | 959.5    |                   |   | $       | 959.5         |         |   | $               | 971.4    |         |               | $       | 971.4    |               |   | $       | 25.5          |         |   | $             | 25.5     |         |   | $       | 25.1     |         |   | $       | 25.1     |        
|                                                 | Accounts payable                                                       |                            |         | 1,500.7  |                   |   |         | 1,513.5       |         |   |                 | 1,406.7  |         |               |         | 1,424.5  |               |   |         | 1,532.3       |         |   |               | 1,550.3  |         |   |         | 1,417.3  |         |   |         | 1,439.0  |        
|                                                 | Accrued employee compensation                                          |                            |         | 169.1    |                   |   |         | 166.1         |         |   |                 | 154.3    |         |               |         | 151.3    |               |   |         | 156.7         |         |   |               | 154.3    |         |   |         | 175.2    |         |   |         | 173.7    |        
|                                                 | Accrued expenses and other current liabilities                         |                            |         | 477.2    |                   |   |         | 483.5         |         |   |                 | 497.6    |         |               |         | 502.5    |               |   |         | 500.8         |         |   |               | 508.0    |         |   |         | 495.1    |         |   |         | 500.7    |        
|                                                 | Current liabilities of discontinued operations                         |                            |         | 332.4    |                   |   |         | 332.5         |         |   |                 | 316.3    |         |               |         | 316.4    |               |   |         | 107.6         |         |   |               | 107.6    |         |   |         | 46.4     |         |   |         | 46.4     |        
|                                                 |                                                                        |                            |         |          |                   |   |         |               |         |   |                 |          |         |               |         |          |               |   |         |               |         |   |               |         
|                                                 |                                                                        | Total current liabilities  |         |          | 3,438.9           |   |         |               | 3,455.1 |   |                 |          | 3,346.3 |               |         |          | 3,366.1       |   |         |               | 2,322.9 |   |               |          | 2,345.7 |   |         |          | 2,159.1 |   |         |          | 2,184.9 | 
|Long-term debt                                   |                                                                        |                            | 1,832.1 |          |                   |   | 1,831.4 |               |         |   | 2,281.0         |          |         |               | 2,280.3 |          |               |   | 1,227.5 |               |         |   | 1,227.5       |          |         |   | 1,221.4 |          |         |   | 1,221.4 |         
|Other long-term liabilities                      |                                                                        |                            | 33.2    |          |                   |   | 12.0    |               |         |   | 29.7            |          |         |               | 8.5     |          |               |   | 25.7    |               |         |   | 4.5           |          |         |   | 55.9    |          |         |   | 31.1    |         
|Long-term liabilities of discontinued operations |                                                                        |                            | 21.0    |          |                   |   | 21.0    |               |         |   | 15.5            |          |         |               | 15.5    |          |               |   | 6.1     |               |         |   | 6.1           |          |         |   | 1.8     |          |         |   | 1.8     |         
|                                                 |                                                                        |                            |         |          |                   |   |         |               |         |   |                 |          |         |               |         |          |               |   |         |               |         |   |               |         
|Total liabilities                                |                                                                        | $                          | 5,325.2 |          |                   | $ | 5,319.5 |               |         | $ | 5,672.5         |          |         | $             | 5,670.4 |          |               | $ | 3,582.2 |               |         | $ | 3,583.8       |          |         | $ | 3,438.2 |          |         | $ | 3,439.2 |         
|Stockholders equity:                            |                                                                        |                            |         |          |                   |   |         |               |         |   |                 |          |         |               |         |          |               |   |         |               |         |   |               |          |         |   |         |          |         |   |         |         
|                                                 | Common stock                                                           |                            |         | 0.8      |                   |   |         | 0.8           |         |   |                 | 0.8      |         |               |         | 0.8      |               |   |         | 0.9           |         |   |               | 0.9      |         |   |         | 1.0      |         |   |         | 1.0      |        
|                                                 | Additional paid-in capital                                             |                            |         | 6,671.1  |                   |   |         | 6,671.1       |         |   |                 | 6,674.1  |         |               |         | 6,674.1  |               |   |         | 7,763.3       |         |   |               | 7,763.3  |         |   |         | 7,775.9  |         |   |         | 7,775.9  |        
|                                                 | Accumulated deficit                                                    |                            |         | (5,160.4 | )                 |   |         | (5,158.0      | )       |   |                 | (5,228.4 | )       |               |         | (5,233.9 | )             |   |         | (5,207.1      | )       |   |               | (5,212.5 | )       |   |         | (5,209.5 | )       |   |         | (5,209.9 | )      
|                                                 | Accumulated other comprehensive losses                                 |                            |         | (139.0   | )                 |   |         | (98.9         | )       |   |                 | (139.5   | )       |               |         | (102.8   | )             |   |         | (174.4        | )       |   |               | (139.4   | )       |   |         | (188.6   | )       |   |         | (148.1   | )      
|                                                 |                                                                        |                            |         |          |                   |   |         |               |         |   |                 |          |         |               |         |          |               |   |         |               |         |   |               |         
|                                                 |                                                                        | Total stockholders equity |         |          | 1,372.5           |   |         |               | 1,415.0 |   |                 |          | 1,307.0 |               |         |          | 1,338.2       |   |         |               | 2,382.7 |   |               |          | 2,412.3 |   |         |          | 2,378.8 |   |         |          | 2,418.9 | 
|                                                 |                                                                        |                            |         |          |                   |   |         |               |         |   |                 |          |         |               |         |          |               |   |         |               |         |   |               |         
|Total liabilities and stockholders equity       |                                                                        | $                          | 6,697.7 |          |                   | $ | 6,734.5 |               |         | $ | 6,979.5         |          |         | $             | 7,008.6 |          |               | $ | 5,964.9 |               |         | $ | 5,996.1       |          |         | $ | 5,817.0 |          |         | $ | 5,858.1 |         
|                                                 |                                                                        |                            |         |          |                   |   |         |               |         |   |                 |          |         |               |         |          |               |   |         |               |         |   |               |         

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##### Table of Contents



SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)


Quarterly Condensed Consolidated Balance Sheets for 2003




|                                                 |                                                                        |                            |          |          |                   |   |          |               |         |   |                 |          |         |               |          |          |               |   |         |               |         |   |               |          |         |   |         |          |         |   |         |          |         | 
|------------------------------------------------ | ---------------------------------------------------------------------- | -------------------------- | -------- | -------- | ----------------- | - | -------- | ------------- | ------- | - | --------------- | -------- | ------- | ------------- | -------- | -------- | ------------- | - | ------- | ------------- | ------- | - | ------------- | -------- | ------- | - | ------- | -------- | ------- | - | ------- | -------- | ------- | 
|                                                 |                                                                        | November 30, 2002          |          |          | February 28, 2003 |   |          | May 31, 2003  |         |   | August 31, 2003 |         
|                                                 |                                                                        |                            |          |          |                   |   |          |               |         |   |                 |         
|                                                 |                                                                        | (As Reported)              |          |          | (As Restated)     |   |          | (As Reported) |         |   | (As Restated)   |          |         | (As Reported) |          |          | (As Restated) |   |         | (As Reported) |         |   | (As Restated) |         
|                                                 |                                                                        |                            |          |          |                   |   |          |               |         |   |                 |          |         |               |          |          |               |   |         |               |         |   |               |         
|ASSETS                                          
|Current assets:                                  |                                                                        |                            |          |          |                   |   |          |               |         |   |                 |          |         |               |          |          |               |   |         |               |         |   |               |          |         |   |         |          |         |   |         |         
|                                                 | Cash, cash equivalents, short-term investments and restricted
    cash |                            | $        | 1,944.1  |                   |   | $        | 1,943.7       |         |   | $               | 2,080.0  |         |               | $        | 2,080.0  |               |   | $       | 1,656.0       |         |   | $             | 1,656.0  |         |   | $       | 1,515.0  |         |   | $       | 1,514.8  |        
|                                                 | Accounts receivable, net                                               |                            |          | 1,594.2  |                   |   |          | 1,594.3       |         |   |                 | 1,408.3  |         |               |          | 1,408.2  |               |   |         | 1,376.3       |         |   |               | 1,376.2  |         |   |         | 1,389.1  |         |   |         | 1,388.9  |        
|                                                 | Inventories                                                            |                            |          | 1,677.1  |                   |   |          | 1,674.6       |         |   |                 | 1,506.6  |         |               |          | 1,504.1  |               |   |         | 1,416.9       |         |   |               | 1,414.4  |         |   |         | 1,327.3  |         |   |         | 1,325.5  |        
|                                                 | Prepaid expenses and other current assets                              |                            |          | 629.2    |                   |   |          | 624.7         |         |   |                 | 598.0    |         |               |          | 592.3    |               |   |         | 398.1         |         |   |               | 390.5    |         |   |         | 270.3    |         |   |         | 263.2    |        
|                                                 | Current assets of discontinued operations                              |                            |          | 469.5    |                   |   |          | 469.5         |         |   |                 | 463.2    |         |               |          | 463.2    |               |   |         | 451.5         |         |   |               | 451.5    |         |   |         | 452.1    |         |   |         | 452.1    |        
|                                                 |                                                                        |                            |          |          |                   |   |          |               |         |   |                 |          |         |               |          |          |               |   |         |               |         |   |               |         
|                                                 |                                                                        | Total current assets       |          |          | 6,314.1           |   |          |               | 6,306.8 |   |                 |          | 6,056.1 |               |          |          | 6,047.8       |   |         |               | 5,298.8 |   |               |          | 5,288.6 |   |         |          | 4,953.8 |   |         |          | 4,944.5 | 
|Property and equipment, net                      |                                                                        |                            | 927.9    |          |                   |   | 925.4    |               |         |   | 915.3           |          |         |               | 941.3    |          |               |   | 784.4   |               |         |   | 811.6         |          |         |   | 781.9   |          |         |   | 808.9   |         
|Goodwill                                         |                                                                        |                            | 1,826.2  |          |                   |   | 1,823.3  |               |         |   | 1,828.7         |          |         |               | 1,826.1  |          |               |   | 194.9   |               |         |   | 195.3         |          |         |   | 134.6   |          |         |   | 135.2   |         
|Other assets                                     |                                                                        |                            | 878.0    |          |                   |   | 868.0    |               |         |   | 947.0           |          |         |               | 947.1    |          |               |   | 425.1   |               |         |   | 446.3         |          |         |   | 396.3   |          |         |   | 418.5   |         
|Long-term assets of discontinued operations      |                                                                        |                            | 661.7    |          |                   |   | 661.8    |               |         |   | 649.1           |          |         |               | 649.4    |          |               |   | 259.8   |               |         |   | 259.9         |          |         |   | 262.9   |          |         |   | 263.2   |         
|                                                 |                                                                        |                            |          |          |                   |   |          |               |         |   |                 |          |         |               |          |          |               |   |         |               |         |   |               |         
|Total assets                                     |                                                                        | $                          | 10,607.9 |          |                   | $ | 10,585.3 |               |         | $ | 10,396.2        |          |         | $             | 10,411.7 |          |               | $ | 6,963.0 |               |         | $ | 7001.7        |          |         | $ | 6,529.5 |          |         | $ | 6,570.3 |         
|                                                 |                                                                        |                            |          |          |                   |   |          |               |         |   |                 |          |         |               |          |          |               |   |         |               |         |   |               |         
|                                                
|LIABILITIES AND STOCKHOLDERS EQUITY            
|                                                
|Current liabilities:                             |                                                                        |                            |          |          |                   |   |          |               |         |   |                 |          |         |               |          |          |               |   |         |               |         |   |               |          |         |   |         |          |         |   |         |         
|                                                 | Short-term debt                                                        |                            | $        | 537.6    |                   |   | $        | 537.6         |         |   | $               | 540.1    |         |               | $        | 540.1    |               |   | $       | 1,134.6       |         |   | $             | 1,134.6  |         |   | $       | 973.8    |         |   | $       | 973.8    |        
|                                                 | Accounts payable                                                       |                            |          | 1,317.6  |                   |   |          | 1,319.9       |         |   |                 | 1,303.1  |         |               |          | 1,306.7  |               |   |         | 1,138.7       |         |   |               | 1,147.1  |         |   |         | 1,266.6  |         |   |         | 1,277.3  |        
|                                                 | Accrued employee compensation                                          |                            |          | 191.8    |                   |   |          | 191.8         |         |   |                 | 148.5    |         |               |          | 146.8    |               |   |         | 163.2         |         |   |               | 159.6    |         |   |         | 161.0    |         |   |         | 157.4    |        
|                                                 | Accrued expenses and other current liabilities                         |                            |          | 468.0    |                   |   |          | 464.4         |         |   |                 | 453.9    |         |               |          | 480.8    |               |   |         | 561.7         |         |   |               | 594.6    |         |   |         | 499.6    |         |   |         | 505.4    |        
|                                                 | Current liabilities of discontinued operations                         |                            |          | 307.1    |                   |   |          | 307.2         |         |   |                 | 317.6    |         |               |          | 317.7    |               |   |         | 348.6         |         |   |               | 348.7    |         |   |         | 333.9    |         |   |         | 334.0    |        
|                                                 |                                                                        |                            |          |          |                   |   |          |               |         |   |                 |          |         |               |          |          |               |   |         |               |         |   |               |         
|                                                 |                                                                        | Total current liabilities  |          |          | 2,822.1           |   |          |               | 2,820.9 |   |                 |          | 2,763.2 |               |          |          | 2,792.1       |   |         |               | 3,346.8 |   |               |          | 3,384.6 |   |         |          | 3,234.9 |   |         |          | 3,247.9 | 
|Long-term debt                                   |                                                                        |                            | 3,007.8  |          |                   |   | 3,007.1  |               |         |   | 2,940.3         |          |         |               | 2,939.6  |          |               |   | 1,877.7 |               |         |   | 1,877.5       |          |         |   | 1,817.6 |          |         |   | 1,816.9 |         
|Other long-term liabilities                      |                                                                        |                            | 39.4     |          |                   |   | 20.6     |               |         |   | 23.4            |          |         |               | 4.6      |          |               |   | 52.6    |               |         |   | 31.4          |          |         |   | 32.4    |          |         |   | 11.2    |         
|Long-term liabilities of discontinued operations |                                                                        |                            | 17.2     |          |                   |   | 17.2     |               |         |   | 21.1            |          |         |               | 21.1     |          |               |   | 30.3    |               |         |   | 30.3          |          |         |   | 22.6    |          |         |   | 22.6    |         
|                                                 |                                                                        |                            |          |          |                   |   |          |               |         |   |                 |          |         |               |          |          |               |   |         |               |         |   |               |         
|                                                 |                                                                        | Total liabilities          |          | $        | 5,886.5           |   |          | $             | 5,865.8 |   |                 | $        | 5,748.0 |               |          | $        | 5,757.4       |   |         | $             | 5,307.4 |   |               | $        | 5,323.8 |   |         | $        | 5,107.5 |   |         | $        | 5,098.6 | 
|Stockholders equity:                            |                                                                        |                            |          |          |                   |   |          |               |         |   |                 |          |         |               |          |          |               |   |         |               |         |   |               |          |         |   |         |          |         |   |         |         
|                                                 | Common stock                                                           |                            |          | 0.8      |                   |   |          | 0.8           |         |   |                 | 0.8      |         |               |          | 0.8      |               |   |         | 0.8           |         |   |               | 0.8      |         |   |         | 0.8      |         |   |         | 0.8      |        
|                                                 | Additional paid-in capital                                             |                            |          | 6,641.6  |                   |   |          | 6,641.6       |         |   |                 | 6,650.9  |         |               |          | 6,650.9  |               |   |         | 6,652.4       |         |   |               | 6,652.4  |         |   |         | 6,658.2  |         |   |         | 6,658.2  |        
|                                                 | Accumulated deficit                                                    |                            |          | (1,649.5 | )                 |   |          | (1,651.6      | )       |   |                 | (1,760.3 | )       |               |          | (1,764.0 | )             |   |         | (4,861.5      | )       |   |               | (4,849.3 | )       |   |         | (5,040.6 | )       |   |         | (5,032.5 | )      
|                                                 | Accumulated other comprehensive losses                                 |                            |          | (271.5   | )                 |   |          | (271.3        | )       |   |                 | (243.2   | )       |               |          | (233.4   | )             |   |         | (136.1        | )       |   |               | (126.0   | )       |   |         | (196.4   | )       |   |         | (154.8   | )      
|                                                 |                                                                        |                            |          |          |                   |   |          |               |         |   |                 |          |         |               |          |          |               |   |         |               |         |   |               |         
|                                                 |                                                                        | Total stockholders equity |          |          | 4,721.4           |   |          |               | 4,719.5 |   |                 |          | 4,648.2 |               |          |          | 4,654.3       |   |         |               | 1,655.6 |   |               |          | 1,677.9 |   |         |          | 1,422.0 |   |         |          | 1,471.7 | 
|                                                 |                                                                        |                            |          |          |                   |   |          |               |         |   |                 |          |         |               |          |          |               |   |         |               |         |   |               |         
|Total liabilities and stockholders equity       |                                                                        | $                          | 10,607.9 |          |                   | $ | 10,585.3 |               |         | $ | 10,396.2        |          |         | $             | 10,411.7 |          |               | $ | 6,963.0 |               |         | $ | 7,001.7       |          |         | $ | 6,529.5 |          |         | $ | 6,570.3 |         
|                                                 |                                                                        |                            |          |          |                   |   |          |               |         |   |                 |          |         |               |          |          |               |   |         |               |         |   |               |         

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SOLECTRON CORPORATION AND SUBSIDIARIES


Notes to Consolidated Financial Statements 
(Continued)


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM














Goodwill and
Other Intangible Assets


KPMG LLP








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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures



| |                                                  
| | -------------------------------------------------
| | Evaluation of disclosure controls and procedures.













| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Account Analysis & Reconciliation:
    Solectrons financial close checklist (FCC) has
    been expanded to address the various account analysis and
    reconciliation issues addressed in the Restatement. In
    particular, the areas of general ledger analyses and
    intercompany accounts have been added to the FCC beginning with
    the quarter ended February 28, 2005. In addition, regional
    and corporate financial management will provide additional
    levels of review concerning these issues.                                       
|
| |  | Foreign Exchange Translation: All locations with
    significant foreign currency exchange transactions have been
    identified and are now subject to compliance with the FCC noted
    above, effective February 28, 2005. Solectron currently
    anticipates that it will be eliminating a number of its legal
    entities, thereby reducing related financial and accounting
    complexity and simplifying the accounting treatment of these
    types of items.                                                                                         
|
| |  | Income Taxes: Previous issues relating to income
    tax account roll-forwards have been identified and corrected. In
    addition Solectrons management has migrated the tax
    account roll-forwards to an automated system (CorpTax), which
    will facilitate accurate and timely treatment of these items,
    effective February 28, 2005. In addition, Solectrons
    management has engaged a third party specialist to assist
    Solectron personnel conducting comprehensive and detailed
    reviews of Solectrons tax reporting and accounting.

96



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##### Table of Contents











| |                                                           
| | ----------------------------------------------------------
| | Changes in internal controls over financial
    reporting.






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant



Code of Ethics












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##### Table of Contents



Corporate Governance Guidelines and Board Committee
Charters






| |                         
| | ------------------------
| | Solectron Corporation   
| | 847 Gibraltar Drive     
| | Milpitas, CA 95035      
| | Attn: Investor Relations
| | Phone: (408) 957-8500   






|         |                       
|-------- | ----------------------
|Item 11: | Executive Compensation








|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12: | Security Ownership of Certain Beneficial Owners and
    Management








|         |                                               
|-------- | ----------------------------------------------
|Item 13: | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14: | Principal Accountant Fees and Services






PART IV







|         |                                                                                 
|-------- | --------------------------------------------------------------------------------
|Item 15. | Exhibits, Consolidated Financial Statement Schedules and
    Reports on Form 8-K

|       |  |                                                                                                                                                                                                                           
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)(1) |  | Consolidated Financial Statements. The financial statements
    listed in Item 8: Financial Statements and
    Supplementary Data, above are filed as part of this Annual
    Report on Form 10-K, beginning on page 35.
|(a)(2) |  | Consolidated Financial Statement Schedule. See Schedule II
    on page 78.                                                                                                                                                
|(a)(3) |  | Exhibits. The exhibits listed in the accompanying Index to
    Exhibits are filed as part of this Annual Report on
    Form 10-K.                                                                                       
|(b)    |  | Reports on Form 8-K.                                                                                                                                                                                                      
|       |  | Report filed on Form 8-K on August 6, 2004 attaching
    press release announcing remarketing of debentures underlying
    Registrants equity security units.                                                            
|       |  | Report filed on Form 8-K on August 17, 2004 attaching
    press release announcing the successful completion of there
    marketing of debentures underlying Registrants equity
    security units.                      
|       |  | Report filed on Form 8-K on September 15, 2004
    regarding certain costs associated with exit activities and
    certain impairment charges.                                                                            

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SIGNATURES






| |                      
| | ---------------------
| | SOLECTRON CORPORATION



| |     |                   
| | --- | ------------------
| | By: | /s/ Michael Cannon

| |                                      
| | -------------------------------------
| |                                      
| | Michael Cannon                       
| | President and Chief Executive Officer



|                                             |  |                                                                                        |  |                |  | 
|-------------------------------------------- |  | -------------------------------------------------------------------------------------- |  | -------------- |  | 
|Signature                                    |  | Title                                                                                  |  | Date          
|                                             |  |                                                                                        |  |               
|                                            
|/s/ Michael CannonMichael
    Cannon         |  | President and Chief Executive Officer (Principal Executive
    Officer)                |  | April 14, 2005
|                                            
|/s/ Kiran PatelKiran
    Patel               |  | Executive Vice President and Chief Financial Officer (Principal
    Financial Officer) |  | April 14, 2005
|                                            
|/s/ Warren J. LiganWarren
    J. Ligan       |  | Senior Vice President and Chief Accounting Officer (Principal
    Accounting Officer)  |  | April 14, 2005
|                                            
|/s/ Richard A. DAmoreRichard
    A. DAmore |  | Director                                                                               |  | April 14, 2005
|                                            
|/s/ William R. GraberWilliam
    R. Graber   |  | Director                                                                               |  | April 14, 2005
|                                            
|/s/ Heinz FridrichHeinz
    Fridrich         |  | Director                                                                               |  | April 14, 2005
|                                            
|/s/ William A. HaslerWilliam
    A. Hasler   |  | Director                                                                               |  | April 14, 2005
|                                            
|/s/ Paul R. LowPaul
    R. Low               |  | Director                                                                               |  | April 14, 2005
|                                            
|/s/ C. Wesley M. ScottC.
    Wesley M. Scott |  | Director                                                                               |  | April 14, 2005
|                                            
|/s/ Paulett EberhartPaulett
    Eberhart     |  | Director                                                                               |  | April 14, 2005
|                                            
|/s/ Cyril YansouniCyril
    Yansouni         |  | Director                                                                               |  | April 14, 2005

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CONSOLIDATED FINANCIAL STATEMENT SCHEDULE




SOLECTRON CORPORATION AND SUBSIDIARIES


SCHEDULE II  VALUATION AND QUALIFYING
ACCOUNTS


|                                           |  |                      |      |           |            |   |      |              |  |            |              |        |  |        |       |   |  |   |      | 
|------------------------------------------ |  | -------------------- | ---- | --------- | ---------- | - | ---- | ------------ |  | ---------- | ------------ | ------ |  | ------ | ----- | - |  | - | ---- | 
|                                           |  |                      |      | Additions |            |   |      |              | 
|                                           |  | Balance at           |      |           |            |   |      |              |  | Balance at |             
|                                           |  | Beginning            |      |           | Charged to |   |      |              |  |            |              | End of | 
|Description                                |  | of Period            |      |           | Operations |   |      | Acquisitions |  |            | (Deductions) |        |  | Period |      
|                                           |  |                      |      |           |            |   |      |              |  |            |              |        |  |        |      
|                                           |  | (Amount in millions) |     
|Year ended August 31, 2004:                |  |                      |      |           |            |   |      |              |  |            |              |        |  |        |       |   |  |   |      | 
|Allowance for doubtful accounts receivable |  | $                    | 39.1 |           |            | $ | 25.7 |              |  | $          |             |        |  | $      | (29.1 | ) |  | $ | 35.7 | 
|Year ended August 31, 2003:                |  |                      |      |           |            |   |      |              |  |            |              |        |  |        |       |   |  |   |      | 
|Allowance for doubtful accounts receivable |  | $                    | 71.2 |           |            | $ | 14.3 |              |  | $          |             |        |  | $      | (46.4 | ) |  | $ | 39.1 | 
|Year ended August 31, 2002:                |  |                      |      |           |            |   |      |              |  |            |              |        |  |        |       |   |  |   |      | 
|Allowance for doubtful accounts receivable |  | $                    | 38.9 |           |            | $ | 8.9  |              |  | $          | 34.3         |        |  | $      | (10.9 | ) |  | $ | 71.2 | 

100



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INDEX TO EXHIBITS


| |    |        |  |                                                                                                                                                                                                                                                                                  
| | -- | ------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3  | .1[A]  |  | Certificate of Incorporation of the Registrant, as amended.                                                                                                                                                                                                                      
| | 3  | .2[B]  |  | Bylaws of the Registrant, as amended.                                                                                                                                                                                                                                            
| | 3  | .3[C]  |  | Certificate of Designation Rights, Preferences and Privileges of
    Series A Participating Preferred Stock of the Registrant.                                                                                                                                                   
| | 4  | .1[D]  |  | Supplemental Indenture, dated as of May 8, 2000, by and
    between the Registrant and State Street Bank and Trust Company
    of California N.A., as Trustee.                                                                                                                   
| | 4  | .2[E]  |  | Supplemental Indenture, dated as of November 20, 2000, by
    and between the Registrant and State Street Bank and Trust
    Company of California N.A., as Trustee.                                                                                                             
| | 4  | .3[F]  |  | Preferred Stock Rights Agreement, dated as of June 29,
    2001, as amended December 3, 2001, by and between the
    Registrant and EquiServe Trust Company, N.A., as Rights Agent.                                                                                              
| | 4  | .4[G]  |  | Senior Debt Securities Indenture, dated as of February 6,
    2002, by and between the Registrant and State Street and Trust
    Company of California, N.A., as Trustee.                                                                                                        
| | 4  | .5[H]  |  | Subordinated Debt Securities Indenture, dated as of
    December 27, 2001, by and between the Registrant and State
    Street Bank and Trust Company of California, N.A., as Trustee.                                                                                            
| | 4  | .6[G]  |  | First Supplemental Indenture, dated as of February 6, 2002,
    by and between the Registrant and State Street Bank and Trust
    Company of California, N.A., as Trustee.                                                                                                       
| | 4  | .7[H]  |  | First Supplemental Indenture, dated as of December 27,
    2001, by and between the Registrant and State Street Bank and
    Trust Company of California, N.A., as Trustee.                                                                                                      
| | 4  | .8[G]  |  | Purchase Contract Agreement, dated as of December 27, 2001,
    by and between the Registrant and State Street Bank and Trust
    Company of California, N.A., as purchase contract agent.                                                                                       
| | 4  | .9[G]  |  | Pledge Agreement, dated as of December 27, 2001, among the
    Registrant, U.S. Bank Trust, N.A., as collateral agent,
    custodial agent, and securities intermediary, and State Street
    Bank and Trust Company of California, N.A., as purchase contract
    agent.        
| | 4  | .10[G] |  | Pledge Agreement, dated as of December 27, 2001, between
    the Registrant and State Street Bank and Trust Company of
    California, N.A., as the Trustee for the holders of the
    Debentures.                                                                               
| | 4  | .11[I] |  | Amendment No. 1 made and entered into as of January 8,
    2002 to Pledge Agreement dated as of December 27, 2001
    between the Registrant and State Street Bank and Trust Company
    of California, N.A., as the Trustee for the holders of the
    Debentures.              
| | 4  | .12[G] |  | Control Agreement, dated as of December 27, 2001, by and
    between the Registrant and State Street Bank and Trust Company
    of California, N.A., as Trustee and as securities intermediary
    and depository bank.                                                          
| | 4  | .13[I] |  | Amendment No. 1 made and entered into as of January 8,
    2002 to Control Agreement dated as of December 27, 2001
    between the Registrant and State Street Bank and Trust Company
    of California, N.A., as Trustee and as securities intermediary
    and depository bank.
| | 10 | .1[N]  |  | Form of Indemnification Agreement by and between the Registrant
    and its officers, directors and certain other employees.                                                                                                                                                     
| | 10 | .2[J]  |  | 2003 Employee Stock Purchase Plan.                                                                                                                                                                                                                                               
| | 10 | .3[K]  |  | Amended and Restated 1992 Stock Option Plan.                                                                                                                                                                                                                                     
| | 10 | .4[K]  |  | 2002 Stock Plan.                                                                                                                                                                                                                                                                 
| | 10 | .5[O]  |  | Form of Stock Option Agreement under the 2002 Stock Plan by and
    between the Registrant and its officers, directors and employees.                                                                                                                                            
| | 10 | .6[O]  |  | Form of Restricted Stock Agreement under the 2002 Stock Plan by
    and between the Registrant and its officers and certain
    employees.                                                                                                                                       
| | 10 | .7[O]  |  | Credit Agreement dated as of August 20, 2004, among the
    Registrant, certain subsidiaries of the Registrant, Bank of
    America, N.A., as Administrative Agent and Collateral Agent, and
    certain other lenders.                                                          
| | 10 | .8[L]  |  | Solectron Corporation Michael Cannon Employment Agreement,
    entered into as of January 6, 2003.                                                                                                                                                                               

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| |    |        |  |                                                                                                                                                           
| | -- | ------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10 | .9[L]  |  | Solectron Corporation Stand-Alone Stock Option Agreement
    (Michael Cannon), entered into as of January 6, 2003.                                        
| | 10 | .10[L] |  | Solectron Corporation Restricted Stock Purchase Agreement
    (Michael Cannon), entered into as of January 6, 2003.                                       
| | 10 | .11[J] |  | Solectron Corporation Marc Onetto Employment Agreement, entered
    into as of June 18, 2003.                                                             
| | 10 | .12[M] |  | Solectron Corporation Stand-Alone Stock Option Agreement (Marc
    Onetto), entered into as of June 18, 2003.                                             
| | 10 | .13[M] |  | Solectron Corporation Restricted Stock Purchase Agreement (Marc
    Onetto), entered into as of July 17, 2003.                                            
| | 12 | .1     |  | Computation of ratios of earnings to fixed charges.                                                                                                       
| | 21 | .1[O]  |  | Subsidiaries of the Registrant.                                                                                                                           
| | 23 | .1     |  | Consent of Independent Registered Public Accounting Firm.                                                                                                 
| | 31 | .1     |  | Certification of Chief Executive Officer pursuant to
    Section 302(a) of the Sarbanes-Oxley Act of 2002.                                                
| | 31 | .2     |  | Certification of Chief Financial Officer pursuant to
    Section 302(a) of the Sarbanes-Oxley Act of 2002.                                                
| | 32 | .1     |  | Certification of Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.
| | 32 | .2     |  | Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.








|    |  |                                                                                                                                                                                                                                                                                                                                            
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[A] |  | Incorporated by reference from Exhibit 3.1 filed with the
    Registrants Form 10-Q for the quarter ended
    February 28, 2001, Exhibit 3.1 filed with the
    Registrants Form 10-Q for the quarter ended
    February 25, 2000, and Exhibit 3.1 filed with the
    Registrants Form 10-Q for the quarter ended
    February 26, 1999.
|   
|[B] |  | Incorporated by reference from Exhibit 3.2 filed with the
    Registrants Form 10-Q for the quarter ended
    November 28, 2003.                                                                                                                                                                                                          
|   
|[C] |  | Incorporated by reference from Exhibit 3.3 filed with the
    Registrants Annual Report on Form 10-K for the fiscal
    year ended August 31, 2001.                                                                                                                                                                                       
|   
|[D] |  | Incorporated by reference from Exhibit 1.1 of
    Registrants Form 8-K, filed with the Commission on
    May 16, 2000 (File No. 001-11098)                                                                                                                                                                                                
|   
|[E] |  | Incorporated by reference from Exhibits of Registrants
    Form 8-K, filed with the Commission on November 21,
    2000 (File No. 001-11098)                                                                                                                                                                                              
|   
|[F] |  | Incorporated by reference from Exhibit 4.1 of
    Registrants Registration Statement on Form 8-A filed
    with the Commission on July 13, 2001 (File
    No. 001-11098), and Exhibit 4.2 to Amendment
    No. 1 of Form 8-A filed with the Commission on
    December 4, 2001 (File No. 001-11098)                                       
|   
|[G] |  | Incorporated by reference from Exhibits of Registrants
    Form 8-K, filed with the Commission on February 8,
    2002 (File No. 001-11098)                                                                                                                                                                                               
|   
|[H] |  | Incorporated by reference from Exhibits of Registrants
    Form 8-K, filed with the Commission on January 7, 2002
    (File No. 001-11098)                                                                                                                                                                                                
|   
|[I] |  | Incorporated by reference from Exhibits of Registrants
    Amendment No. 1 to Form 8-K, filed with the Commission
    on January 10, 2002 (File No. 001-11098)                                                                                                                                                                            
|   
|[J] |  | Incorporated by reference from Exhibits filed with the
    Registrants Annual Report on Form 10-K for the fiscal
    year ended August 31, 2003.                                                                                                                                                                                          
|   
|[K] |  | Incorporated by reference from the Exhibit 4.2 of the
    Registrants Registration Statement on Form S-8, filed
    with the Commission March 8, 2002 (File No. 333-84076)                                                                                                                                                                
|   
|[L] |  | Incorporated by reference from Exhibits of Registrants
    Form 10-Q for the quarter ended February 28, 2003.                                                                                                                                                                                                                             

102



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##### Table of Contents





|    |  |                                                                                                                                                                                       
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[M] |  | Incorporated by reference from Exhibits of Registrants
    Form S-8 filed with the Commission on July 17, 2003.                                                                      
|   
|[N] |  | Incorporated by reference from Exhibits of Registrants
    Form 10-K for the year ended August 31, 1997.                                                                             
|   
|[O] |  | Incorporated by reference from Exhibits of Registrants
    Form 10-K for the year ended August 31, 2004, filed
    with the Commission on November 5, 2005 (the Original
    Filing).

103