UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
    Form
10-K
  (Mark
      One)x
              ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934For
      the fiscal year ended October 3, 2009Oro
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934For
      the transition period
      from                      to
  Commission
file number: 0-21272
  Sanmina-SCI
Corporation
 (Exact
name of registrant as specified in its charter)
  Delaware
                (State
      or other jurisdiction of
                incorporation
      or organization)
              77-0228183
                (I.R.S.
      Employer
                Identification
      Number)2700
      North First Street, San Jose, CA
                (Address
      of principal executive offices)
              95134
                (Zip
      Code)
  Registrant’s
telephone number, including area code:
 (408) 964-3500
  Securities
registered pursuant to Section 12(b) of the Act:
 Common
Stock, $0.01 Par Value
 Securities
registered pursuant to Section 12(g) of the Act:
 None
 (Title
of Class)
  Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o  No x
  Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Securities Act. Yes o  No x
  Indicate
by check mark whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the preceding
12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes x  No o
  Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).  Yes o  No o
  Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K. x
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
  Large
      accelerated filer o
              Accelerated
      filer xNon-accelerated
      filer o
                (Do
      not check if a smaller reporting company)
              Smaller
      reporting company o
  Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes o No x
  The
aggregate value of Common Stock held by non-affiliates of the Registrant was
approximately $152,027,915 as of March 27, 2009 based upon the average of
Registrant’s Common Stock reported for such date on the NASDAQ National Market.
Shares of Common Stock held by each executive officer and director and by each
entity who owns 5% or more of the outstanding Common Stock have been excluded in
that such persons may be deemed to be affiliates. The determination of affiliate
status is not necessarily a conclusive determination for other purposes. As of
November 19, 2009, the Registrant had outstanding 78,586,977 shares of
Common Stock.
    DOCUMENTS
INCORPORATED BY REFERENCE
  Certain
information is incorporated into Part III of this report by reference to
the Proxy Statement for the Registrant’s annual meeting of stockholders to be
held on February 8, 2010 to be filed with the Securities and Exchange Commission
pursuant to Regulation 14A not later than 120 days after the end of
the fiscal year covered by this Form 10-K.
















SANMINA-SCI
CORPORATION




INDEX




PART
      IItem 1.
            Business
            2Item 1A.
            Risk
      Factors Affecting Operating Results
            25Item 1B.
            Unresolved
      Staff Comments
            39Item 2.
            Properties
            40Item 3.
            Legal
      Proceedings
            42Item 4.
            Submission
      of Matters to a Vote of Security Holders
            42PART
      IIItem 5.
            Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases ofEquity
      Securities
            43Item 6.
            Selected
      Financial Data
            46Item 7.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            47Item 7A.
            Quantitative
      and Qualitative Disclosures About Market Risk
            70Item 8.
            Financial
      Statements and Supplementary Data
            71Item 9.
            Changes
      In and Disagreements With Accountants on Accounting and Financial
      Disclosure
            71Item 9A.
            Controls
      and Procedures
            71Item
      9B.
            Other
      Information
            72PART
      IIIItem 10.
            Directors
      and Executive Officers of the Registrant
            72Item 11.
            Executive
      Compensation
            72Item 12.
            Security
      Ownership of Certain Beneficial Owners and Management and RelatedStockholder
      Matters
            72Item 13.
            Certain
      Relationships and Related Transactions
            72Item 14.
            Principal
      Accountant Fees and Services
            72PART
      IVItem 15.
            Exhibits
      and Financial Statement Schedules
            73Signatures
            135





1




PART
I




Item 1.  Business




Overview




We
are an independent global provider of customized, integrated electronics
manufacturing services, or EMS. We provide these comprehensive services
primarily to original equipment manufacturers, or OEMs, in the communications,
enterprise computing and storage, multimedia, industrial and semiconductor
capital equipment, defense and aerospace, medical, renewable energy and
automotive industries. The combination of our advanced technologies, extensive
manufacturing expertise and economies of scale enables us to meet the
specialized needs of our customers in these markets in a cost-effective manner.
We were originally incorporated in Delaware in May 1989 and operate as a single
segment.




Our
end-to-end services in combination with our global expertise in supply chain
management enables us to manage our customers’ products throughout their life
cycles. These services include:




•
            product
      design and engineering, including initial development, detailed design,
      prototyping, validation, preproduction services and manufacturing design
      release;




•
            manufacturing
      of components, subassemblies and complete
  systems;




•
            final
      system assembly and test;




•
            direct
      order fulfillment and logistics services;
and




•
            after-market
      product service and support.




Our
manufacturing services are vertically integrated, allowing us to manufacture key
system components and subassemblies for our customers. By manufacturing key
system components and subassemblies ourselves, we enhance continuity of supply
and reduce costs for our customers. In addition, we are able to have greater
control over the production of our customers’ products. System components and
subassemblies that we manufacture include high-end printed circuit boards,
printed circuit board assemblies, backplanes and backplane assemblies,
enclosures, cable assemblies, precision machining, optical components and
modules, and memory modules.




We
manufacture products in 18 countries on five continents. We seek to locate our
facilities near our customers and our customers’ end markets in major centers
for the electronics industry or in lower cost locations. Many of our plants
located near customers and their end markets are focused primarily on final
system assembly and test, while our plants located in lower cost areas engage
primarily in high volume, less complex component and subsystem manufacturing and
assembly.







2




We
have become one of the largest global EMS providers by capitalizing on our
competitive strengths including our:




•
            end-to-end
      services;




•
            product
      design and engineering resources;




•
            vertically
      integrated manufacturing services;




•
            advanced
      technologies;




•
            global
      capabilities;




•
            customer-focused
      organization;




•
            expertise
      in serving diverse end markets; and




•
            experienced
      management team.




Industry
Overview




EMS
companies are the principal beneficiaries of the increased use of outsourced
manufacturing services by the electronics and other industries. Outsourced
manufacturing refers to an OEM’s use of EMS companies, rather than internal
manufacturing capabilities, to manufacture their products. Historically, EMS
companies generally manufactured only components or partial assemblies. As the
EMS industry has evolved, OEMs have increased their reliance on EMS
companies for additional, more complex manufacturing services including design
services. Some EMS companies now often manufacture and test complete systems and
manage the entire supply chains of their customers. Industry leading EMS
companies offer end-to-end services including product design and engineering,
manufacturing, final system assembly and test, direct order fulfillment,
after-market product service and support, and global supply chain
management.




We
believe increased outsourced manufacturing by OEMs will continue because it
allows OEMs to:




Reduce Operating
Costs and Capital Investment.  In the current economic
environment, OEMs are under significant pressure to reduce manufacturing
costs and capital expenditures. EMS companies can provide OEMs with
flexible, cost-efficient manufacturing services through their manufacturing
expertise and more significant economies of scale. In addition, as OEM products
have become more technologically advanced, the manufacturing and system test
processes have become increasingly automated and complex, requiring significant
capital investments. EMS companies enable OEMs to access technologically
advanced manufacturing and test equipment and facilities without additional
capital expenditures.




Focus on Core
Competencies.  The electronics industry is highly competitive
and subject to rapid technological change. As a result, OEMs increasingly
are focusing their resources on activities and technologies in which they expect
to add the greatest value. By offering comprehensive manufacturing services and
supply chain management, EMS companies enable OEMs to focus on their core
competencies including next generation product design and development as well as
marketing and sales.




Access Leading
Design and Engineering Capabilities.  The design and
engineering of electronic products has become more complex and sophisticated and
in an effort to become more competitive, OEMs are increasingly relying on
EMS companies to provide product design and engineering support services. EMS
companies’ design and engineering services can provide OEMs with
improvements in the performance, cost and time required to bring products to
market. EMS companies are providing more sophisticated design and engineering
services to OEMs, including the design and engineering of complete products
following an OEM’s development of a product concept.







3




Improve Supply
Chain Management and Purchasing Power.  OEMs face
challenges in planning, procuring and managing their inventories efficiently due
to fluctuations in customer demand, product design changes, short product life
cycles and component price fluctuations. EMS companies employ sophisticated
production management systems to manage their procurement and manufacturing
processes in an efficient and cost-effective manner so that, where possible,
components arrive on a just-in-time, as-and-when needed basis. EMS companies are
significant purchasers of electronic components and other raw materials and can
capitalize on the economies of scale associated with their relationships with
suppliers to negotiate price discounts, obtain components and other raw
materials that are in short supply and return excess components. EMS companies’
expertise in supply chain management and their relationships with suppliers
across the supply chain enable them to help OEMs reduce their cost of goods
sold and inventory exposure.




Access Global
Manufacturing Services.  OEMs seek to reduce their
manufacturing costs by having EMS companies manufacture their products in the
lowest cost locations that are appropriate for their products and end customers.
OEMs also are increasingly requiring particular products to be manufactured
simultaneously in multiple locations, often near end users, to bring products to
market more quickly, reduce shipping and logistics costs and to meet local
product content requirements. Global EMS companies are able to satisfy these
requirements by capitalizing on their geographically dispersed manufacturing
facilities, including those in lower cost regions.




Accelerate Time
to Market.  OEMs face increasingly short product life
cycles due to increased competition and rapid technological changes. As a
result, OEMs need to reduce the time required to bring their products to
market. OEMs often can bring a product to market faster by using an EMS
company’s expertise in new product introduction including manufacturing design,
engineering support and prototype production. OEMs often can more quickly
achieve volume production of their products by capitalizing on an EMS company’s
manufacturing expertise, global presence and infrastructure.




Competitive
Overview




We
offer our OEM customers end-to-end services that span the entire product life
cycle:





4











Competitive
Strengths




We
believe our competitive strengths differentiate us from our competitors and
enable us to better serve the needs of OEMs. Our competitive strengths
include:







5




End-to-End
Services.  We provide services throughout the world to support
our customers’ products during their entire life cycle, from product design and
engineering, through manufacturing, to direct order fulfillment and after-market
product service and support. We believe that our end-to-end services are more
comprehensive than the services offered by our competitors because of our focus
on adding value before and after the actual manufacturing of our customers’
products. Our end-to-end services enable us to provide our customers with a
single source of supply for their EMS needs, reduce the time required to bring
products to market, lower product costs and allow our customers to focus on
those activities in which they expect to add the highest value. We believe that
our end-to-end services allow us to develop closer relationships with our
customers and more effectively compete for their future business.




Product Design
and Engineering Resources.  We provide product design and
engineering services for new product designs, cost reductions and design for
manufacturability (DFx). Our engineers work with our customers during the
complete product life cycle. Our design centers provide hardware, software,
ECAD, verification, regulatory, and testing services. We design high speed
digital, analog, radio frequency, wired, wireless, optical and
electro-mechanical products.




Our
engineering engagement models include Joint Design Manufacturing (JDM), Contract
Design Manufacturing and consulting engineering for DFx, Value Engineering (cost
reduction re-design), and design for environmental compliance with the European
Union’s Restrictions of Hazardous Substances, or RoHS, and Waste Electrical and
Electronic Equipment or WEEE. We focus on industry segments to align with our
technology focused markets. Industry segments include Communications, Enterprise
Computing and Storage, Medical, Multimedia, Defense & Aerospace,
Industrial & Semiconductor Capital Equipment, Renewable Energy and
Automotive. System solutions for these industry segments are supported through
our vertically integrated component technologies, namely, printed circuit
boards, backplanes, enclosures, cable assemblies, precision machining, memory
modules and optical modules.




In
the JDM model, our customers bring market knowledge and product requirements. We
offer complete design engineering and new product introductions or NPI services.
For JDM products, typically the intellectual property is jointly owned by us and
the customer and we realize manufacturing revenue associated with building and
shipping the product.




Vertically
Integrated Manufacturing Services.  We provide a range of
vertically integrated manufacturing services. Key system components that we
manufacture include complete printed circuit boards and printed circuit board
assemblies, backplanes and backplane assemblies, enclosures, cable assemblies,
precision machine components, optical modules and memory modules. By
manufacturing these system components and subassemblies ourselves, we enhance
continuity of supply and reduce costs for our customers. In addition, we are
able to have greater control over the production of our customers’ products and
retain incremental profit opportunities for us. Examples of products that we
manufacture using our full range of services include wireless base stations,
network switches, routers and gateways, optical switches, enterprise-class
servers and storage appliances, set-top boxes, MRI and computer tomography
(CT) scanners, and equipment used in the semiconductor chip manufacturing
process, including equipment for photolithography, chemical mechanical
polishing, physical vapor deposition, automated handling tools and robotics for
wafer transfer.







6




Advanced
Technologies.  We provide services utilizing advanced
technologies which we believe allows us to differentiate ourselves from our
competitors. These advanced technologies include the fabrication of complex
printed circuit boards and backplanes having over 60 layers and process
capabilities for a range of low signal loss, high performance materials, buried
capacitors and resistors and high density interconnects using micro via holes
that are formed using laser drills. We have added capabilities to manufacture
high density flex and rigid-flex PCBs with up to 30 layers and 8 transition
layers in support of Defense and Aerospace markets along with high end medical
electronics.




Our
printed circuit board assembly technologies include micro ball grid arrays, fine
pitch discretes and small form factor radio frequency and optical components, as
well as advanced packaging technologies used in high pin count application
specific integrated circuits and network processors. We use innovative design
solutions and advanced metal forming techniques to develop and fabricate
high-performance indoor and outdoor chassis, enclosures and frames. Our assembly
services use advanced technologies including precision optical alignment,
multi-axis precision stages and machine vision technologies. We use
sophisticated procurement and production management tools to effectively manage
inventories for our customers and ourselves. We have also developed
build-to-order, or BTO and configure-to-order, or CTO systems that enable us to
manufacture and ship finished systems within 48 to 72 hours after receipt
of an order. To coordinate the development and introduction of new technologies
to meet our customers’ needs in various locations and to increase collaboration
among our facilities, we have established a centralized EMS technology
council.




Global
Capabilities.  Most of our customers compete and sell their
products on a global basis. As such, they require global solutions that include
regional manufacturing for selected end markets, especially when time to market,
local manufacturing or content and low cost solutions are critical objectives.
Our global network of facilities in 18 countries provides our customers a
combination of sites to maximize both the benefits of regional and low cost
manufacturing. To manage and coordinate our global operations, we employ an
enterprise-wide software system that operates on a single IT platform and
provides us with company-wide information regarding component inventories and
orders with respect to substantially all of our manufacturing locations. This
system enables us to standardize planning and purchasing at the plant level and
to optimize inventory management and utilization. Our systems also enable our
customers to receive key information regarding the status of individual
programs.




Customer-Focused
Organization.  We believe customer relationships are critical
to our success and our organization is focused on providing our customers with
responsive services. Our key customer accounts are managed by dedicated account
teams including a global business manager directly responsible for account
management. Global business managers coordinate activities across divisions to
effectively satisfy our customers’ requirements and have direct access to our
senior management to quickly address customer concerns. Local customer account
teams further support the global teams and are linked by a comprehensive
communications and information management infrastructure.




Expertise in
Serving Diverse End Markets.  We have experience in serving our
customers in the communications, enterprise computing and storage, multimedia,
industrial and semiconductor capital equipment, defense and aerospace, medical,
renewable energy and automotive markets. Our diversification across end markets
reduces our dependence upon any one customer or segment. In order to cater to
the specialized needs of customers in particular market segments, we have
dedicated personnel, and in some cases facilities, with industry-specific
capabilities and expertise. We also maintain compliance with industry standards
and regulatory requirements applicable to certain markets including, among
others, the medical and defense and aerospace sectors.




Experienced
Management Team.  We believe that one of our principal assets
is our experienced management team. Our chief executive officer, Jure Sola,
co-founded Sanmina in 1980. Hari Pillai, President and Chief Operating Officer,
joined our Company in 1994 and has served in various senior manufacturing
management positions since that time. We believe that the significant experience
of our management team enables us to capitalize on opportunities in the current
business environment.







7




Our
Business Strategy




Our
objective is to maintain and enhance our leadership position in the EMS
industry. Key elements of our strategy include:




Capitalizing on
Our Comprehensive Services.  We intend to capitalize on our
end-to-end services which we believe will allow us to both sell additional
services to our existing customers and attract new customers. Our end-to-end
services include product design and engineering, manufacturing, final system
assembly and test, direct order fulfillment, after-market product service and
support and supply chain management. Our vertically integrated manufacturing
services enable us to manufacture additional system components and subassemblies
for our customers. When we provide a customer with a number of services, such as
component manufacturing or higher value-added services, we are often able to
improve our margins and profitability. Consequently, our goal is to increase the
number of manufacturing programs for which we provide multiple services. To
achieve this goal, our sales and marketing organization seeks to cross-sell our
services to customers.




Extending Our
Technology Capabilities.  We rely on advanced processes and
technologies to provide our vertically integrated manufacturing services. We
continually strive to improve our manufacturing processes and have adopted a
number of quality improvement and measurement techniques to monitor our
performance. We work with our customers to anticipate their future manufacturing
requirements and align our technology investment activities to meet their needs.
We use our design expertise to develop product technology platforms that we can
customize by incorporating other components and subassemblies to meet the needs
of particular OEMs. These technologies enhance our ability to manufacture
complex, high-value added products, allowing us to continue to win business from
existing and new customers.




Joint Design
Manufacturing Solutions.  As a result of customer feedback, and
our customers’ desire to manage research and development expenses, we have
expanded our product design services to develop systems and components jointly
with our customers. In a JDM model, our customers bring market knowledge and
product requirements. We offer complete design engineering and NPI services. Our
offerings in design engineering include product architecture, development,
integration, regulatory and qualification services; while NPI services include
quick-turn prototyping, supply chain readiness, functional test development and
release to volume production. For JDM products, typically the intellectual
property is jointly owned by us and the customer and we realize manufacturing
revenue associated with building and shipping the product.







8




Continuing to
Penetrate Diverse End Markets.  We focus our marketing efforts
on major end markets within the electronics industry. We have targeted markets
that we believe offer significant growth opportunities and for which
OEMs sell complex products that are subject to rapid technological change
because the manufacturing of these products requires higher value-added
services. Our approach to our target markets is two-fold: we intend to
strengthen our significant presence in the communications and enterprise
computing markets, and also focus on under-penetrated target markets, including
the medical, industrial and semiconductor capital equipment, renewable energy,
automotive, and defense and aerospace industries, many of which have not
extensively relied upon EMS companies in the past. We intend to continue our
diversification across market segments and customers to reduce our dependence on
any particular market.




Pursuing
Strategic Transactions.  We seek to undertake strategic
transactions that give us the opportunity to access new customers, manufacturing
and service capabilities, technologies and geographic markets, to lower our
manufacturing costs and improve margins, and to further develop existing
customer relationships. In addition, we plan to continue to pursue OEM
divestiture transactions that will augment existing strategic customer
relationships with favorable supply agreement terms or build new relationships
with customers in attractive end markets. Potential future transactions may
include a variety of different business arrangements, including acquisitions,
spin-offs, strategic partnerships, joint ventures, restructurings, divestitures,
business combinations and equity or debt investments. We intend to continue to
evaluate and pursue strategic opportunities on a highly selective
basis.




Continuing to
Seek Cost Savings and Efficiency Improvements.  We seek to
optimize our facilities to provide cost-efficient services for our customers. We
maintain extensive operations in lower cost locations, including Latin America,
Eastern Europe, China, Southeast Asia and India, and we plan to expand our
presence in these lower cost locations as appropriate, to meet the needs of our
customers. We believe that we are well positioned to take advantage of future
opportunities on a global basis as a result of our vertically integrated
manufacturing strategy.




Our
Products and Services




We
offer our OEM customers end-to-end services that span the entire product life
cycle. Examples of products that we manufacture for OEMs include wireless
and wireline communications equipment, high-end computer servers and storage
devices, avionics, medical imaging and diagnostic systems and digital satellite
set-top boxes. These products may require us to use some or all of our
end-to-end services.




Product Design
and Engineering.  Our design and engineering groups provide
customers with design and engineering services from initial product design and
detailed product development to production. This group also complements our
vertically integrated manufacturing capabilities by providing manufacturing
design services for printed circuit boards, backplanes and enclosures. Our
offerings in design engineering include product architecture, development,
integration, regulatory and qualification services; while NPI services include
quick-turn prototype, functional test development and release to volume
production.







9




We
provide initial product development and detailed product design and engineering
services for products such as communications base stations, optical switches and
modules, set top boxes, network switches and routers, computer server and
storage products and medical devices. We follow a well defined product life
cycle process during our design and development as follows:




Initial Product
Development.  We provide a range of design and engineering
services to customers to complement their initial product development efforts.
During this phase, our design engineers work with our customers’ product
development teams to assist with product concepts, selecting key components,
cost trade-offs and design reviews.




Detailed Product
Design.  During the detailed product development phase, we work
with our customers’ product development engineers to optimize product designs to
improve the efficiency of the manufacturing (Design for Manufacturability) of
these products and reduce manufacturing costs. We further analyze product design
to improve the ability of tests (Design for Test) used in the manufacturing
process to identify product defects and failures. We provide software
development support for product development, including installing operating
systems on hardware platforms, developing software drivers for electronic
devices and developing diagnostic, production test and support software. We
design components that are incorporated into our customers’ products including
printed circuit boards, backplanes, enclosures and cables
assemblies.




Pre-production.  After
a detailed product design has been completed and the product is released for
prototype production, we can build a prototype on a quick turnaround basis. We
then analyze the feasibility of manufacturing the product and make any necessary
design modifications to the prototype and re-test the prototype to validate its
design. We also provide early-stage test development during the prototype phase.
We evaluate prototypes to determine if they will meet safety and other standards
such as standards published by Underwriters Laboratories, an independent product
safety testing and certification organization and other similar domestic and
international organizations. We also typically provide low-volume manufacturing
to satisfy our customers’ initial needs. We review the material and component
content of our customers’ designs with a view to designing in alternative
components that may provide cost savings. Our preproduction services help our
customers reduce the time required to bring new products to market.




Component
Technology Design Services.  We provide design and technology
support for our vertically integrated system components and subassemblies,
including:







10










Printed Circuit Board and Backplane
Design.  We support our customers with printed circuit board
and backplane design and development assistance for optimizing performance,
manufacturability and cost factors critical to overall system performance. These
printed circuit boards and backplanes incorporate high layer counts and large
form factors and are used in complex products such as optical networking
products and communications switches. These designs also incorporate component
miniaturization technologies and other advanced technologies that increase the
number and density of components that can be placed on a printed circuit board.
These technologies enable OEMs to provide greater functionality in smaller
products. We also provide signal integrity engineering services which enable the
transmission of high speed electrical signals through a system while maintaining
signal quality and data integrity.




Electro-Mechanical
Design.  We have mechanical design groups in Canada, USA, Asia, and
Israel that design and engineer a variety of electro-mechanical systems for the
communications, enterprise computing and storage, multimedia, industrial and
semiconductor, defense and aerospace, medical and renewable energy
markets.  Our teams of highly skilled designers address structural,
thermal, environmental, seismic, power distribution, and interconnect or
cabling, and, regulatory compliance or certification requirements for the
product and its application environment. In addition to providing
conceptual and detailed mechanical design, our offerings include engineering
analysis, DFMA (design for manufacturability and assembly), value engineering,
project management, engineering documentation and qualification services – thus
providing a virtual one-stop service to launch the product. Analysis
capabilities cover thermal analysis and testing, stress and vibration analysis,
dimensional and tolerance analysis, EMC/EMI analysis, etc. Product designs can
involve a wide variety of materials, such as steel, aluminum alloys, injection
molded plastics and die-castings. Our design experience covers a range of
products, including indoor and outdoor wireless base station cabinets, datacom
and computing racks, chassis, frames, enclosures for high-end servers, data
storage systems, industrial and medical imaging systems, gaming consoles, gas
analysis instrumentation, etc.




Manufacturing.  Manufacturing
includes our vertically integrated manufacturing services described in greater
detail below.







11




Printed Circuit
Boards.  We have the ability to produce multilayer printed
circuit boards on a global basis with high layer counts and fine line circuitry.
Our ability to support NPI and quick turn fabrication followed by manufacturing
in both North America and Asia allows our customers to accelerate their time to
market as well as their time to volume. Standardized processes and procedures
make transitioning of products easier for our customers. Our technology roadmaps
provide leading edge capabilities and higher yielding processes. Engineering
teams are available on a world-wide basis to support designers in DFM analysis
and assemblers with field application support.




Printed
circuit boards are made of fiberglass/resin laminated material layers and
contain copper circuits which interconnect and transmit electrical signals among
the components that make up electronic devices. Increasing the density of the
circuitry in each layer is accomplished by reducing the width of the circuit
tracks and placing them closer together in the printed circuit board along with
adding layers and via hole structures. We are currently capable of efficiently
producing printed circuit boards with up to 60 layers and circuit track widths
as narrow as two mils (50 micron) in production volumes. Specialized production
equipment along with an in-depth understanding of high performance laminate
materials allow for fabrication of some of the largest form factor and highest
speed (in excess of 10 gigabits per second, or Gbps) backplanes available in the
industry. We have also developed several proprietary technologies and processes
which improve electrical performance, connection densities and reliability of
printed circuit boards. Some of these technologies, such as Buried CapacitanceTM,
have become industry standards and are licensed to other board
fabricators.




Printed Circuit Board Assembly and
Test.  Printed circuit board assembly involves attaching
electronic components, such as integrated circuits, capacitors, microprocessors,
resistors and memory modules to printed circuit boards. The most common
technologies used to attach components to printed circuit boards employ surface
mount technology, or SMT, and pin-through-hole assembly, or PTH. SMT involves
the use of an automated assembly system to place and solder components to the
printed circuit board. In PTH, components are placed on the printed circuit
board by insertion into holes punched in the circuit board. Components also may
be attached using press-fit technology in which components are pressed into
connectors affixed to the printed circuit board. We use SMT, PTH, press-fit as
well as new attachment technologies that are focused on miniaturization and
increasing the density of component placement on printed circuit boards. These
technologies, which support the needs of our OEM customers to provide greater
functionality in smaller products, include chip-scale packaging, ball grid
array, direct chip attach and high density interconnect. We perform in-circuit
and functional testing of printed circuit board assemblies. In-circuit testing
verifies that all components have been properly inserted and attached and that
the electrical circuits are complete. We perform functional tests to confirm
that the board or assembly operates in accordance with its final design and
manufacturing specifications. We either design and procure test fixtures and
develop our own test software, or we use our customers’ test fixtures and test
software. In addition, we provide environmental stress tests of the board or
assembly that are designed to confirm that the board or assembly will meet the
environmental stresses, such as heat, to which it will be subject.







12




Backplanes and Backplane
Assemblies.  Backplanes are very large printed circuit boards
that serve as the backbones of sophisticated electronics products and provide
interconnections for printed circuit boards, integrated circuits and other
electronic components. We fabricate backplanes in our printed circuit board
plants. Backplane fabrication is significantly more complex than printed circuit
board fabrication due to the large size and thickness of the backplanes. We
manufacture backplane assemblies by press fitting high density connectors into
plated through holes in the bare backplane. In addition, many of the newer
higher technology backplanes require SMT attachment of passive discrete
components as well as high pin count ball grid array packages. These advanced
assembly processes require specialized equipment and a strong focus on quality
and process control. We also perform in-circuit and functional tests on
backplane assemblies. We have developed proprietary technology and “know-how”
which enables backplanes to run at data rates in excess of 10 Gbps. We currently
have capabilities to manufacture backplanes with up to 60 layers in sizes up to
27.5x42 inches and 0.500 inches in thickness, utilizing a wide variety of high
performance laminate materials. These are among the largest and most complex
commercially manufactured backplanes and we are one of a limited number of
manufacturers with these capabilities.




Enclosure Systems. 
Enclosure systems are used across all major markets to house and protect complex
and fragile electronic components, modules and sub-systems, so that the system’s
functional performance is not compromised due to mechanical, environmental or
any hostile conditions.  Our enclosure manufacturing services include
fabrication of cabinets, chassis, frames and racks integrated with various
electronic components and sub-systems for power and thermal management, control,
sensing and alarm functions.  We manufacture a broad range of enclosures
from basic enclosures for low end servers, to large and highly complex
enclosures, such as those used in indoor and outdoor wireless base station
products.  We serve a variety of end markets, partnering with customers
from initial concept development through integration and final system assembly
and test. Our enclosure expertise is readily accessible at any of our
state-of-the-art facilities that provide metal fabrication, high-volume metal
stamping, plastic injection molding, aluminum die-casting and high-capacity
welding capabilities - located around the globe in seven dedicated Enclosure
facilities.




Cable
Assemblies.  Cable assemblies are used to connect modules,
assemblies and subassemblies in electronic devices. We provide a broad range of
cable assembly products and services. We design and manufacture a broad range of
high-speed data, radio frequency and fiber optic cabling products. Cable
assemblies that we manufacture are often used in large rack systems to
interconnect subsystems and modules.




Precision Machining.  As
part of our mission to provide complete manufacturing solutions to customers,
Sanmina-SCI has developed a suite of world-class precision machining services in
USA and China. We utilize advanced numerically controlled machined tools
enabling the manufacture of components to very tight tolerance standards in
clean environments, for equipment that goes into semi-conductor fabs, for
example.  Capabilities include medium- and large-format mill and lathe
machining, in-house welding (TIG, MIG), aluminum, stainless steel, plastics,
ferrous and nonferrous alloys, exotic alloys, in-house helium and hydrostatic
leak-test capabilities, expertise in complex milled and lathe components,
expertise in developing vacuum chambers, and, expertise in lapping, plating,
anodizing, EDM, heat-treating, cleaning, laser inspection, painting and
packaging through an established supply chain. We have dedicated facilities
supporting machining and complex integration in California, Texas and China with
access to a suite of state-of-the-art, computer-controlled machining equipment
that can satisfy the most rigorous demands for production and quality.
 This equipment includes fully automated “lights-out” machinery that
continues production in the absence of human operators.  With some of the
largest horizontal milling machines in the United States, we are a supplier of
vacuum chamber systems for the semiconductor and flat panel display equipment
markets. We also support a number of other markets such as medical, oil and gas
exploration, and transportation.





13




Optical Components and
Modules.  Optical components are the building blocks of optical
systems and include both passive and active components.  Optical
modules are integrated subsystems that use a combination of industry standard
and/or custom optical components. We are a provider of complete optical systems
for customers in telecommunications, networking, and military markets from
optical components through the complete optical system. Our experience in
optical communications and networking products spans long haul/ultra long haul
and metro regions for transport/transmission, as well as access and switching
applications, including last mile solutions. Our service offerings for optical
communications customers are designed to deliver end-to-end solutions with
special focus on system design and industrialization, optical component and
module assembly, as well as optical test and integration. In March 2009, in
order to increase our optical manufacturing capabilities, we acquired certain
optical manufacturing assets, inventories, and employees related to JDS Uniphase
Corp’s operations in Shenzhen, China.




Memory
Modules.  Memory modules are integrated subsystems that use
industry standard integrated circuits including Dynamic Random Access Memory
(DRAM), non-volatile flash memory, microprocessors and digital signal
processors. These solid-state products are sold for a wide range of applications
to a broad base of leading OEM’s in multiple market segments such as network
infrastructure, embedded computing technologies, defense & aerospace, and
enterprise server & storage. We design, develop and manufacture a variety of
modular solutions, including standard and custom processor modules, flash memory
modules and DRAM modules. In addition, we supply solutions to increase memory
component density using our advanced semiconductor packaging solutions. We offer
advanced NexMod memory modules that contain multiple Rambus RDRAM® memory layers
vertically stacked and mounted to a printed circuit board. NexMod solutions are
tailored to high-performance networking customers requiring high bandwidth and
low latency in volumetric restrictive system environments. We also provide
innovative DDRI, DDRII, and DDRIII DRAM modules utilizing stacked
Chip-Scale-Packaging (CSP) technology, Ram-StackTM, offering high densities in
ultra small form factors. We integrate both standard and custom modules in the
products we manufacture.





Final System
Assembly and Test.  We provide final system assembly and test
in which assemblies and modules are combined to form complete, finished
products. We often integrate printed circuit board assemblies manufactured by us
with enclosures, cables and memory modules that we also produce. Our final
assembly activities also may involve integrating components and modules that
others manufacture. The complex, finished products that we produce typically
require extensive test protocols. Our test services include both functional and
environmental tests. We also test products for conformity to applicable
industry, product integrity and regulatory standards. Our test engineering
expertise enables us to design functional test processes that assess critical
performance elements including hardware, software and reliability. By
incorporating rigorous test processes into the manufacturing process, we can
help to assure our customers that their products will function as designed.
Products for which we currently provide final system assembly and test include
wireless base stations, wireline communications switches, optical networking
products, high-end servers, etc.







14




Direct Order
Fulfillment.  We provide direct order fulfillment for our OEM
customers. Direct order fulfillment involves receiving customer orders,
configuring products to quickly fill the orders and delivering the products
either to the OEM, a distribution channel, such as a retail outlet, or directly
to the end customer. We manage our direct order fulfillment processes using a
core set of common systems and processes that receive order information from the
customer and provide comprehensive supply chain management including procurement
and production planning. These systems and processes enable us to process orders
for multiple system configurations and varying production quantities including
single units. Our direct order fulfillment services include BTO and CTO
capabilities. BTO involves building a system having the particular configuration
ordered by the OEM customer. CTO involves configuring systems to an end
customer’s order. The end customer typically places this order by choosing from
a variety of possible system configurations and options. We are capable of
meeting a 48 to 72 hour turn-around-time for BTO and CTO by using advanced
manufacturing processes and a real-time warehouse management and data control
system on the manufacturing floor. We support our direct order fulfillment
services with logistics that include delivery of parts and assemblies to the
final assembly site, distribution and shipment of finished systems and
processing of customer returns. Our systems are sufficiently flexible to support
direct order fulfillment for a variety of different products, such as servers,
workstations, set-top boxes, medical devices, scanners, printers and
monitors.




Global
Supply Chain Management




Supply
chain management involves the planning, purchasing and warehousing of product
components. The objective of our supply chain management services is to reduce
excess component inventory in the supply chain by scheduling deliveries of
components at a competitive price and on a just-in-time, as-and-when-needed
basis. We use sophisticated production management systems to manage our
procurement and manufacturing processes in an efficient and cost effective
manner. We collaborate with our customers to enable us to respond to their
changing component requirements for their products and to reflect any changes in
these requirements in our production management systems. These systems often
enable us to forecast future supply and demand imbalances and develop strategies
to help our customers manage their component requirements. Our enterprise-wide
software systems provide us with company-wide information regarding component
inventories and orders to standardize planning and purchasing at the plant
level. These systems enable us to transfer product components between plants to
respond to changes in customer requirements or to address component or other raw
material shortages.




We
purchase large quantities of electronic components and other raw materials from
a range of suppliers. As a result, we often receive volume discounts or other
favorable terms from suppliers which can enable us to provide our customers with
greater cost reductions than they can obtain themselves. Our supplier
relationships often enable us to obtain electronic components and other raw
materials that are in short supply or return excess inventories to suppliers
even when they are not contractually obligated to accept them.







15





Our
End Markets




We
have targeted markets that we believe offer significant growth opportunities and
for which OEMs sell complex products that are subject to rapid
technological change. We believe that markets involving complex, rapidly
changing products offer us opportunities to produce products with higher margins
because these products require higher value-added manufacturing services and may
also include our advanced vertically integrated components. Our approach to our
target markets is two-fold—we intend to strengthen our significant presence in
the communications and enterprise computing and storage markets market, while
also focusing on other under-penetrated target markets, including the medical,
automotive, industrial and semiconductor capital equipment, and defense and
aerospace, and renewable energy industries, many of which have not extensively
relied upon EMS companies in the past. Our diversification across market
segments and customers helps mitigate our dependence on any particular
market.




Communications
Infrastructure: Wireless and Wireline Access, Optical and Wireline Transmission
and Switching and Enterprise Networking.  In the communications
sector, we focus on infrastructure equipment. This includes wireless and
wireline access and transmission systems, optical networking and transmission
and enterprise networking systems. Our product design and engineering staff has
extensive experience designing and industrializing advanced communications
products and components for these markets. Products we manufacture include
point-to-point microwave systems, wireless base stations, satellite receivers
and various radio frequency appliances, optical switches and transmission
hardware and wireline access equipment including switches and routers among
others. We also manufacture optical and microelectronic components which are a
key component in many of these products.




Enterprise
Computing and Storage.  We provide CTO and BTO services to the
enterprise computing and storage market. We tightly couple our vertically
integrated supply chain with manufacturing and logistics allowing for assembly
and distribution of products to be completed more quickly with high quality
standards and at low cost. Our vertical integration capabilities include racks,
enclosures, cables, complex multi-layer printed circuit boards, printed circuit
assemblies and backplanes. In addition, we have designed and developed some of
the most compact and powerful storage devices available on the market today
which we have coupled with our global, vertically integrated supply chain and
manufacturing capabilities to deliver true end-to-end, no touch, cost-effective
data storage solutions.




Multimedia.  We
manufacture digital set-top boxes, point of sale equipment, digital cameras,
digital home gateways, professional audio-video equipment and internet protocol
entertainment devices. For our multimedia OEM customers, we manage the
production process for multimedia products including product design and
engineering, test development, supply chain management, manufacturing of printed
circuit boards and assemblies, final system assembly and test and direct order
fulfillment including our BTO and CTO capabilities and repair
services.







16




Industrial and
Semiconductor Systems.  Our expertise in manufacturing highly
complex systems includes production of industrial and semiconductor capital
equipment, front-end environmental chambers, computer controllers and test and
inspection equipment. We also have significant experience in manufacturing
highly complex systems such as, process chambers, photolithography tools, etch
tools, wafer handling interfaces, flat panel display test and repair equipment,
chem-mech planarization tools, optical inspection and x-ray equipment, explosive
detection equipment, and large format printing plate machines.





Defense and
Aerospace.  We offer our end-to-end services to the defense and
aerospace industry. We believe that this industry currently represents a
significant growth opportunity for us due in part to the growing desire of
defense and aerospace OEMs to outsource non-core manufacturing activities
in order to reduce costs. We believe our experience in serving the aerospace
industry, as well as our product design and engineering capabilities, represent
key competitive strengths for us in the defense and aerospace market. Defense
and aerospace products that we design and manufacture include avionics systems,
weapons guidance systems, cockpit communications systems, tactical and secure
network communications systems and detection systems for homeland defense and
space systems.





Medical.  We
provide comprehensive manufacturing and related services to the medical industry
including design, logistics and regulatory approval support. The manufacturing
of products for the medical industry often requires compliance with domestic and
foreign regulations including the Food and Drug Administration’s or FDA’s
quality system regulations and the European Union’s medical device directive. In
addition to complying with these standards, our medical manufacturing facilities
comply with ISO 13485 (formerly EN 46002) and ISO 9001:2000. Sanmina
manufactures a broad range of medical systems including blood glucose meters,
computed tomography scanners, respiration systems, blood analyzers, cosmetic
surgery systems, thermo-regulation devices and ultrasound imaging
systems.




Renewable Energy.We are committed to serving companies leading the energy revolution in
the solar, wind, fuel cell, battery systems and clean tech (LED lighting and
smart meters) industries.  We leverage traditional electronics
manufacturing services (EMS) for renewable energy customers in areas related to
power electronics, control and distribution, smart meters and full-system
integration. Beyond traditional EMS, our extensive range of electro-mechanical
design and complex system manufacturing capabilities are an excellent fit across
all the renewable energy segment products. Manufacturing operations are
strategically located in close proximity to renewable energy “hot spots” such as
Western and Southwestern United States, Brazil, Germany, Israel, China and
India.




Automotive.  In
the automotive industry, we manufacture different types of sensors, body
controllers, engine control units, radios, HVAC control heads and blower modules
as well as cables for entertainment solutions. We also provide design support,
product and process qualification, manufacturing, supply chain management,
supplier quality assurance and end-of-life services. All our automotive
dedicated factories are TS 16949 certified and provide printed circuit boards,
printed circuit board assemblies and cables as well as final
systems.







17





Customers




A
relatively small number of customers have historically been responsible for a
significant portion of our net sales. Sales to our ten largest customers
represented approximately 48%,of our net sales in each of 2009, 2008 and 2007,
respectively. For 2009 and 2008, no customer represented 10% or more of our net
sales. For 2007, one customer represented 10.4% of our net sales.




We
seek to establish and maintain long-term relationships with our customers and
have served many of our principal customers for several years. Historically, we
have had substantial recurring sales from existing customers. We have also
expanded our customer base through acquisitions and our marketing and sales
efforts. We have been successful in broadening relationships with customers by
providing vertically integrated products and services as well as multiple
products and services in multiple locations.




We
typically enter into supply agreements with our major OEM customers with terms
ranging from three to five years. Some of these supply agreements were entered
into in connection with divestiture transactions which are transactions in which
we also acquire plants, equipment and inventory from the OEM. In these
divestiture-related supply agreements, the customer typically agrees to purchase
from us its requirements for particular products in particular geographic areas
and for a specific period of time. Our OEM customer supply agreements that were
not entered into in connection with divestitures typically do not require the
customer to purchase their product requirements from us and in these cases,
customers may have alternate sources of supply available to them. Our supply
agreements with our OEM customers generally do not obligate the customer to
purchase minimum quantities of products. However, the customer typically remains
liable for the cost of the materials and components that we have ordered to meet
the customer’s production forecast but which are not used, provided that the
material was ordered in accordance with an agreed-upon procurement plan. In some
cases, the procurement plan contains provisions regarding the types of materials
for which our customers will assume responsibility. Our supply agreements
typically contain provisions permitting cancellation and rescheduling of orders
upon notice and subject, in some cases, to cancellation and rescheduling
charges. Order cancellation charges typically vary by product type and depend
upon how far in advance of shipment a customer notifies us of the cancellation
of an order. In some circumstances, our supply agreements with customers provide
for cost reduction objectives during the term of the agreement.




We
generally do not obtain firm, long-term commitments from our customers under
supply agreements. As a result, customers can cancel their orders, change
production quantities or delay orders. Uncertain economic conditions and our
general lack of long-term purchase contracts with our customers make it
difficult for us to accurately predict revenue over the long-term. Even in those
cases in which customers are contractually obligated to purchase products from
us or repurchase unused inventory from us that we have ordered for them, we may
elect not to immediately enforce our contractual rights because of the long-term
nature of our customer relationships and for other business reasons and may
instead, negotiate accommodations with customers regarding particular
situations.







18





Backlog




We
generally do not obtain firm, long-term commitments from our customers. Instead,
our procurement of inventory and our manufacturing activities are based
primarily on forecasts provided from our customers. This enables us to minimize
the time lapse between receipt of a customer’s order and delivery of product to
the customer. OEM customers typically do not make firm orders for the delivery
of products more than thirty to ninety days in advance. Additionally, customers
may cancel or postpone scheduled deliveries, generally without significant
penalty. Therefore, we do not believe that the backlog of expected product sales
covered by firm orders is a meaningful measure of future sales.




Marketing
and Sales




Our
sales efforts are organized and managed on a regional basis with regional sales
managers in geographic regions in the United States and
internationally.




We
develop relationships with our customers and market our vertically integrated
manufacturing services through our direct sales force, customer support
specialists and representative firms. Our sales resources are directed at
multiple management and staff levels within target accounts. Our direct sales
personnel and representative firms work closely with the customers’ engineering
and technical personnel to better understand their requirements. Our marketing
and sales staff supports our business strategy of providing end-to-end services
by encouraging cross-selling of vertically integrated manufacturing services and
component manufacturing across a broad range of major OEM products. To achieve
this objective, our marketing and sales staff works closely with our various
manufacturing and design and engineering groups and engages in marketing and
sales activities targeted towards key customer opportunities.




Each
of our key customer accounts is managed by a dedicated account team including a
global business manager directly responsible for account management. Global
business managers coordinate activities across divisions to effectively satisfy
customer requirements and have direct access to our senior management to quickly
address customer concerns. Local customer account teams further support the
global teams and are linked by a comprehensive communications and information
management infrastructure.




Information
concerning the geographic distribution of our sales can be found in note 16
of the notes to our consolidated financial statements.







19





Competition




We
face competition from other major global EMS companies such as
Celestica, Inc., Flextronics International Ltd., Hon Hai (Foxconn),
and Jabil Circuit, Inc., as well as other EMS companies that often have a
regional product, service or industry specific focus. In addition, our potential
customers may also compare the benefits of outsourcing their manufacturing to us
with the merits of manufacturing products themselves.




We
compete with different companies depending on the type of service or geographic
area. We believe that the primary competitive factors in our industry include
manufacturing technology, quality, delivery, responsiveness, provision of
value-added services and price. We believe our primary competitive strengths
include our ability to provide global end-to-end services, our product design
and engineering resources, our advanced technologies, our high quality
manufacturing assembly and test services, our customer focus, our expertise in
serving diverse end markets and experienced management team.




Intellectual
Property




We
hold various United States and foreign patents primarily related to printed
circuit board technologies, methods of manufacturing printed circuit boards,
enclosures, memory modules and enterprise computing (servers and storage). For
other proprietary processes, we rely primarily on trade secret protection. We
also have registered trademarks in the United States and many other countries
throughout the world.




From
time to time, we receive communications from third parties that include
assertions with respect to intellectual property rights. Although we have no
knowledge that our products and/or services infringe upon the intellectual
property rights of third parties in any material respect, we cannot assure you
that third parties will not assert infringement claims against us in the future.
If such an assertion were to be made, it may become necessary or useful for us
to enter into licensing arrangements or to resolve such an issue through
litigation. However, we cannot assure you that such license rights would be
available to us on commercially acceptable terms, if at all, or that any such
litigation would be resolved favorably. Additionally, such litigation could be
lengthy and costly and could materially affect our financial condition
regardless of the outcome of such litigation.




Environmental
Controls




We
are subject to a variety of local, state and federal environmental laws and
regulations in the United States, as well as foreign laws and regulations
relating to the treatment, storage, use, discharge, emission and disposal of
chemicals, solid waste and other hazardous materials used during our
manufacturing processes. We are also subject to occupational safety and health
laws, product take back, product labeling and product content requirements.
Proper waste disposal is a major consideration in particular for printed circuit
board manufacturers because metals and chemicals are used in the manufacturing
process. Water used in the printed circuit board manufacturing process must be
treated to remove metal particles and other contaminants before it can be
discharged into municipal sanitary sewer systems. We operate on-site wastewater
treatment systems at our printed circuit board manufacturing plants in order to
treat wastewater generated in the fabrication process.





20




In
addition, although the electronics assembly process generates significantly less
wastewater than printed circuit board fabrication, maintenance of environmental
controls is also important in the electronics assembly process because such
operations can generate lead dust. Upon vacating a facility, we are responsible
for remediating the lead dust from the interior of the manufacturing facility.
Although there are no applicable standards for lead dust remediation in
manufacturing facilities, we endeavor to make efforts to remove the residues. To
date, lead dust remediation costs have not been material to our operations. We
also monitor for airborne concentrations of lead in our buildings and are not
aware of any significant lead concentrations in excess of the applicable OSHA or
other local standards.





We
have a range of corporate programs in place with regard to environmental
compliance and reduction of the use of hazardous materials in manufacturing. In
the environmental compliance area, we have developed corporate-wide standardized
environmental management systems, auditing programs and policies to enable us to
better manage environmental compliance activities. Our facilities are also
certified under ISO 14001, a set of standards and procedures relating to
environmental compliance management. In addition, the electronics industry is
subject to the European Union’s Restrictions of Hazardous Substances, or RoHS,
and Waste Electrical and Electronic Equipment, or WEEE, directives which took
effect beginning in July 2006. Parallel initiatives have been adopted in other
jurisdictions, including several states in the United States and the Peoples’
Republic of China. RoHS limits the use of lead, mercury and certain other
specified substances in electronics products and WEEE requires producers to
assume responsibility for the collection, recycling and management of waste
electronic products and components. We have implemented procedures to make our
manufacturing process compliant with RoHS and the European Union's Registration,
Evaluation and Authorization of Chemicals (REACH) legislation and we believe
products sold by us into countries with restrictions on the concentrations of
hazardous materials contained in those products comply with such restrictions.
In the case of WEEE, the compliance responsibility rests primarily with OEMs
rather than with EMS companies.





Asbestos
containing materials, or ACM, are present at several of our manufacturing
facilities. Although the ACM is being managed and controls have been put in
place pursuant to ACM operations and maintenance plans, the presence of ACM
could give rise to remediation obligations and other liabilities. No third-party
claims relating to ACM have been brought at this time.





21




Our
plants generally operate under environmental permits issued by governmental
authorities. For the most part, these permits must be renewed periodically and
are subject to revocation in the event of violations of environmental laws. Any
such revocation could require us to cease or limit production at one or more of
our facilities, thereby having an adverse impact on our results of operations.
We have not experienced any material revocations to date.





Primarily
as a result of certain of our acquisitions, we have incurred liabilities
associated with environmental contamination at certain of our facilities. These
liabilities relate to ongoing investigation and remediation activities at a
number of sites, including our facilities located in Irvine, California (a
former facility acquired as part of our acquisition of Elexsys); Owego, New York
(a current facility that we acquired with our acquisition of Hadco Corporation);
Derry, New Hampshire (a non-operating facility of Hadco), Fort Lauderdale,
Florida (a former facility of Hadco) and Phoenix, Arizona (a site we acquired
with our acquisition of Hadco). We have been named in a lawsuit alleging
operations at our former facility in Santa Ana, California contributed to
groundwater contamination. There can be no assurance that other similar
third-party claims will not arise and will not result in material liability to
us. In addition, there are some sites, including our facility in Gunzenhausen,
Germany (acquired from Alcatel) that are known to have groundwater contamination
caused by a third-party, and that third-party has provided indemnity to us for
the liability.





We
have also been named as a potentially responsible party at a contaminated
disposal site, operated by another party at the Casmalia Resources site as a
result of the past disposal of hazardous waste by companies we have acquired or
by our corporate predecessors. Although liabilities for such historic disposal
activities have not materially affected our financial condition to date, we
cannot assure you that past disposal activities will not result in liability
that will materially affect us in the future.





We
use environmental consultants primarily for risk assessments and remediation,
including remedial investigation and feasibility studies, remedial action
planning and design, and site remediation. These consultants provide information
to us regarding the nature and extent of site contamination, acceptable
remediation alternatives, and estimated costs associated with each remediation
alternative. This information is considered by us, together with other
information, when determining the appropriate amount to accrue for environmental
liabilities.




Employees




As
of October 3, 2009, we had 38,602 employees, including 6,904 temporary
employees. None of our U.S. employees are represented by a labor union. In some
international locations, particularly in Western Europe, Latin America and the
Middle East, our employees are represented by labor unions on either a national
or plant level or are subject to collective bargaining agreements. Some Western
European countries and Latin American countries also have mandatory legal
provisions regarding terms of employment, severance compensation and other
conditions of employment that are more restrictive than U.S. laws. We believe
our relationship with our employees is good.







22




Available
Information




Our
Internet address is http://www.sanmina-sci.com.
We make available through our website, free of charge, our Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended,
as soon as reasonably practicable after we electronically file such material
with, or furnish it to, the Securities and Exchange Commission, or SEC. All
reports we file with the SEC are also available free of charge via EDGAR through
the SEC’s website at http://www.sec.gov.




EXECUTIVE
OFFICERS




The
following table sets forth the name, position and age of our current executive
officers and their ages as of October 3, 2009.




Name
            Age
            PositionJure
      Sola
            58
            Chairman
      of the Board and Chief Executive OfficerHari
      Pillai
            49
            President
      and Chief Operating OfficerRobert
      K. Eulau
            48
            Executive
      Vice President and Chief Financial OfficerMichael
      Tyler
            53
            Executive
      Vice President, General Counsel and Corporate SecretaryDennis
      Young
            58
            Executive
      Vice President of Worldwide Sales and MarketingDavid
      Pulatie
            67
            Executive
      Vice President of Global Human
Resources




Jure Sola
has served as our chief executive officer since April 1991, as chairman of our
board of directors from April 1991 to December 2001 and from December 2002 to
present, and co-chairman of our board of directors from December 2001 to
December 2002. In 1980, Mr. Sola co-founded Sanmina and initially held the
position of vice president of sales. In October 1987, he became our vice
president and general manager, responsible for manufacturing operations and
sales and marketing and was president from October 1989 to March
1996.




Hari
Pillai joined us in 1994 and has served in manufacturing management
positions since that time. In January 2002, Mr. Pillai was appointed
president and general manager of our EMS division and in October 2004 was
appointed president, global EMS operations. In October 2008, Mr. Pillai was
promoted to President and Chief Operating Officer.







23




Robert K.
Eulau has served as our executive vice president and chief financial
officer since September 14, 2009. Prior to joining us, he served as executive
vice president, chief operating officer and chief financial officer of
privately-owned Alien Technology Corporation, a developer of radio frequency
identification products, from March 2006 through
June 2008. Previously, he was senior vice president and chief
financial officer of publicly-traded Rambus Inc., a technology licensing
company, from May 2001 through March 2006. Prior to Rambus, Mr. Eulau
served over 15 years with Hewlett Packard Company in various leadership roles,
including vice president and chief financial officer of HP’s Business Customer
Organization,  and vice president and chief financial officer of HP’s
Computing Products business.




Michael
Tyler has served as our executive vice president and general counsel
since April 2007. Mr. Tyler became our corporate secretary in June 2007.
Prior to joining us, he was senior vice president, chief legal and
administrative officer of Gateway, Inc., a major personal computer
manufacturer, where he was employed from 2000-2007. Prior to that, he served as
senior corporate counsel International, at Northrop Grumman Corporation from
1995 to 2000, as an associate at the law firm Heller, Ehrman, White &
McAuliffe from 1991 to 1995, and as a law clerk for the United States Court of
Appeals for the Ninth Circuit from 1987 to 1988.




Dennis
Young has served as executive vice president of worldwide sales and
marketing since March 2003. Prior to joining us, Mr. Young was senior vice
president of sales from May 2002 to March 2003 and vice president of sales from
March 1998 to May 2002 of Pioneer-Standard Electronics, a provider of industrial
and consumer electronic products.




David
Pulatie has served as executive vice president of global human resources
since December 2008. Prior to that, he was senior vice president of human
resources for Phelps Dodge Corporation, a mining concern, from March 1999 until
January 2006. Previously, Mr. Pulatie had spent over 33 years in
progressive U.S. and international senior human resources positions at Motorola,
Inc., an electronics manufacturer, most recently as senior vice president, HR
Government Relations.





24





Item 1A.  Risk Factors





Continued
adverse market conditions in the electronics industry could reduce our future
sales and earnings per share.





The
business environment in the electronics industry is challenging due to adverse
worldwide economic conditions. There has been an erosion of global consumer
confidence amidst concerns over declining asset values, inflation, volatility in
energy costs, geopolitical issues, the availability and cost of credit, rising
unemployment, and the stability and solvency of financial institutions,
financial markets, businesses, and sovereign nations. These concerns have slowed
global economic growth and have resulted in recessions in many countries,
including in the U.S., Europe and certain countries in Asia. The conditions have
resulted, and may result in the future, in our customers delaying purchases of
the products we manufacture for them and our customers placing purchase orders
for lower volumes of products than previously experienced or anticipated. We
cannot accurately predict future levels of demand for our customers’ electronics
products. Consequently, our past operating results, earnings and cash flows may
not be indicative of our future operating results, earnings and cash
flows.





If
these economic conditions continue to persist or worsen, in addition to our
customers or potential customers reducing or delaying orders, a number of other
negative effects on our business could result, including the insolvency of key
suppliers, which could result in production delays, shorter payment terms from
suppliers due to reduced availability of credit default insurance in the market,
the inability of customers to obtain credit, and the insolvency of one or more
customers. Any of these effects could impact our ability to effectively manage
inventory levels and collect receivables, increase our need for cash, and
decrease our net revenue and profitability.





Many
of the industries to which we provide products have recently experienced
significant financial difficulty, with some of the participants filing for
bankruptcy. Such significant financial difficulty, if experienced by one or more
of our customers, may negatively affect our business due to the decreased demand
of these financially distressed customers, the potential inability of these
companies to make full payment on amounts owed to us, or both. For example, one
of our customers, Nortel Networks, has filed a petition for reorganization under
bankruptcy law. As a result of this filing, in the first quarter of 2009, we
reversed revenue and recorded an inventory provision in an aggregate amount of
$10 million with respect to this customer.





We
are subject to intense competition in the EMS industry which could cause us to
lose sales and therefore hurt our financial performance.




The
EMS industry is highly competitive and the industry has been experiencing an
increase in excess manufacturing capacity, particularly in light of slowing U.S.
and international economies. Our competitors include major global EMS providers
such as Celestica, Inc., Flextronics International Ltd., Hon Hai
(Foxconn) and Jabil Circuit, Inc., as well as other EMS companies that have
a regional, product, service or industry specific focus. Some of these companies
have greater manufacturing and financial resources than we do. We also face
competition from current and potential OEM customers who may elect to
manufacture their own products internally rather than outsourcing to EMS
providers.




We
may not be able to offer prices as low as some of our competitors because those
competitors may have lower operating costs as a result of their geographic
location or the services they provide or because these competitors are willing
to provide EMS services at prices that result in lower gross margins in order to
utilize more of their capacity. If we are unable or unwilling to offer prices
that are competitive with other EMS companies, our net sales may decline. We
have experienced instances in which customers have transferred all or certain
portions of their business to competitors in response to more attractive pricing
quotations than we have been willing to offer to retain such customers, and
there can be no assurance that we will not lose business in the future in
response to such competitive pricing or other inducements which may be offered
by our competitors.







25





Our
operating results are subject to significant uncertainties, which make
predictability of our future sales and net income difficult.




Our
operating results are subject to significant uncertainties,
including:




•
            conditions
      in the economy as a whole and in the electronics
  industry;




•
            timing
      of orders from customers and the accuracy of their
    forecasts;




•
            timing
      of expenditures in anticipation of increased sales, customer product
      delivery requirements and shortages of components or
  labor;




•
            mix
      of products ordered by and shipped to major customers, as high volume and
      low complexity manufacturing services typically have lower gross margins
      than more complex and lower volume
services;




•
            degree
      to which we are able to utilize our available manufacturing
      capacity;




•
            our
      ability to effectively plan production and manage our inventory and fixed
      assets;




•
            customer
      insolvencies resulting in bad debt or inventory exposures that are in
      excess of our reserves;




•
            our
      ability to efficiently move manufacturing activities to lower cost regions
      without adversely affecting customer relationships and while controlling
      costs related to the closure of facilities and employee
      severance;




•
            pricing
      and other competitive pressures;




•
            fluctuations
      in component prices;




•
            political
      and economic developments in countries in which we have
      operations;




•
            component
      shortages, which could cause us to be unable to meet customer delivery
      schedules;




•
            timing
      of new product development by our customers which creates demand for our
      services; and




•
            levels
      of demand in the end markets served by our
  customers.







26




A
portion of our operating expenses is relatively fixed in nature and planned
expenditures are based in part on anticipated orders, which are difficult to
predict. If we do not receive anticipated orders as expected, our profitability
will decline. Moreover, our ability to reduce our costs as a result of current
or future restructuring efforts may be limited because consolidation of
operations can be a costly and lengthy process to complete.




Consolidation
in the electronics industry may adversely affect our business by increasing
competition or customer buying power and increasing prices we pay for
components.





Consolidation
in the electronics industry among our customers, our suppliers and/or our
competitors may increase as companies combine to achieve further economies of
scale and other synergies, especially in light of the worldwide economic
downturn. Consolidation in the electronics industry could result in an
increasing number of very large electronics companies offering products in
multiple sectors of the electronics industry. The significant purchasing and
market power of these large companies could increase competitive pressures on
us. In addition, if one of our customers is acquired by another company that
does not rely on us to provide EMS services either because it has its own
production facilities or relies on another provider of similar services, we may
lose that customer’s business. There can be no assurance the new owner of our
customer will continue to purchase products from us after the acquisition has
been completed. In addition, consolidation in the electronics industry may also
result in excess manufacturing capacity among EMS companies, which could drive
our profitability down. Similarly, consolidation among our suppliers could
result in a sole or limited source for certain components used in our customers’
products. Any such consolidation could cause us to be required to pay increased
prices for such components, which would reduce our gross margin and
profitability.





Our
early redemptions of debt and repurchases of stock have reduced our working
capital and liquidity.




During 2009, we repurchased $46.9
million of our debt in the open market and we also repurchased 10.1 million
shares of our common stock for an aggregate of $29.2 million. Further, on
November 16, 2009, we redeemed our remaining outstanding debt due in 2010 for
$175.7 million plus accrued interest. These repurchases have reduced our working
capital. Although the redemptions of debt improve our operating results by
reducing our interest expense, the redemptions and stock repurchases have
reduced our liquidity. If we should repurchase or redeem additional debt or
equity, our working capital and liquidity would be further reduced.







27





Adverse
changes in the key end markets we target could harm our business by reducing our
sales.




We
provide EMS services to companies that sell products in the communications,
computing and storage, multimedia, industrial and semiconductor systems, defense
and aerospace, medical and automotive sectors of the electronics industry.
Adverse changes in these markets could reduce demand for our customers’ products
and make these customers more sensitive to the cost of our EMS services, either
of which could reduce our sales, gross margins and net income. Factors affecting
any of our customers’ industries in general, or our customers in particular,
could seriously harm our business. These factors include:




•
            short
      product life cycles leading to continuing new requirements and
      specifications for our customers products, the failure of which to meet
      could cause us to lose business;




•
            failure
      of our customers’ products to gain widespread commercial acceptance which
      could decrease the volume of orders customers place with us;
      and




•
            recessionary
      periods in our customers’ markets which decrease orders from affected
      customers.




We
rely on a relatively small number of customers for a substantial portion of our
sales, and declines in sales to these customers would reduce our net sales and
net income.





Although
no single customer generates 10% or more of our sales, a significant portion of
our sales is generated by a small number of customers. Sales to our ten largest
customers represented 48.0% of our net sales during fiscal 2009. We expect to
continue to depend upon a relatively small number of customers for a significant
percentage of our sales. Consolidation among our customers may further
concentrate our business in a limited number of customers and expose us to
increased risks related to dependence on a small number of customers. In
addition, a significant reduction in sales to any of our large customers or
significant pricing and margin pressures exerted by a customer would adversely
affect our operating results. In the past, some of our large customers have
significantly reduced or delayed the volume of manufacturing services ordered
from us as a result of changes in their business, consolidations or divestitures
or for other reasons. In particular, certain of our customers have from time to
time entered into manufacturing divestiture transactions with other EMS
companies, and such transactions could adversely affect our revenues with these
customers. We cannot assure you that present or future large customers will not
terminate their manufacturing arrangements with us or significantly change,
reduce or delay the amount of manufacturing services ordered from us, any of
which would reduce our net sales and net income.





28





We
generally do not obtain long-term volume purchase commitments from customers
and, therefore, cancellations, reductions in production quantities and delays in
production by our customers could reduce our sales and net income.




We
generally do not obtain firm, long-term purchase commitments from our customers.
As a result, customers may cancel their orders, reduce production quantities or
delay production for a number of reasons. In the event our customers experience
significant decreases in demand for their products and services, our customers
may cancel orders, delay the delivery of some of the products that we
manufacture or place purchase orders for fewer products than we previously
anticipated. Even when our customers are contractually obligated to purchase
products from us, we may be unable or, for other business reasons, choose not to
enforce our contractual rights. Cancellations, reductions or delays of orders by
customers would:




•
            reduce
      our sales and net income by decreasing the volumes of products that we
      manufacture for our customers;




•
            delay
      or eliminate recovery of our expenditures for inventory purchased in
      preparation for customer orders;
and




•
            lower
      our asset utilization, which would result in lower gross margins and lower
      net income.




In
addition, customers are increasingly requiring that we transfer the
manufacturing of their products from one facility to another to achieve cost
reductions and other objectives. These transfers have resulted in increased
costs to us due to facility downtime or less than optimal utilization of our
manufacturing capacity. These transfers also have required us to close or reduce
operations at certain facilities, particularly those in high cost locations such
as the United States, Canada and Western Europe, and as a result we have
incurred significant costs for the closure of facilities, employee severance and
related matters. We also have encountered occasional delays and complications
related to the transition of manufacturing programs to new locations. We may be
required to relocate our manufacturing operations in the future and,
accordingly, we may incur additional costs that decrease our net
income.




We
may experience component shortages, which could cause us to delay shipments to
customers and reduce our sales and net income.




We
are dependent on certain suppliers, including limited and sole source suppliers,
to provide key components we incorporate into our products. We have experienced
in the past, and may experience in the future, delays in component deliveries,
which in turn could cause delays in product shipments and require the redesign
of certain products. In particular, we have experienced shortages of
application-specific integrated circuits, capacitors and connectors as well as
other components. Unanticipated component shortages prevent us from making
scheduled shipments to customers and could cause us to experience a shortfall in
sales, increase our costs and adversely affect our relationship with the
affected customer and our reputation generally as a reliable service provider.
Component shortages may also increase our cost of goods sold because we may be
required to pay higher prices for components in short supply and redesign or
reconfigure products to accommodate substitute components. In addition, we may
purchase components in advance of our requirements for those components as a
result of a threatened or anticipated shortage. In this event, we may incur
additional inventory carrying costs, for which we may not be compensated, and
have a heightened risk of exposure to inventory obsolescence. As a result,
component shortages could adversely affect our operating results for a
particular period due to the resulting sales shortfall and increased
manufacturing or component costs.







29





If
demand for our higher-end, higher margin manufacturing services does not
increase, our future gross margins and operating results may be lower than
expected.




We
typically earn lower gross margins when we provide less complex EMS services. In
addition, we experience continued pressure from OEMs to reduce prices, and
competition remains intense. Pricing pressure is typically more intense for less
complex, lower margin EMS services. This price competition has affected, and
could continue to adversely affect, our gross margins. If demand for our
higher-end, higher margin manufacturing services does not increase in the
future, our gross margins and operating results in future periods may be lower
than expected.







We
are subject to risks arising from our international operations.





We
conduct our international operations primarily in Asia, Latin America, Canada
and Europe, and we continue to consider additional opportunities to make foreign
acquisitions and construct new foreign facilities. We generated 76.9% of our net
sales from non-U.S. operations during 2009, and a significant portion of
our manufacturing material was provided by international suppliers during this
period. As a result of our international operations, we are affected by economic
and political conditions in foreign countries, including:





·        the
imposition of government controls;





·        difficulties
in obtaining or complying with export license requirements;





·        political
and economic instability, including armed conflicts;





·        trade
restrictions;





·        changes
in tariffs;





·        labor
unrest and difficulties in staffing;





·        inflexible
employee contracts in the event of business downturns;





·        coordinating
communications among and managing international operations;





·        fluctuations
in currency exchange rates;





·        currency
controls;





·        increases
in duty and/or income tax rates;





·        adverse
rulings in regards to tax audits;





·        compliance
with U.S. and foreign laws concerning trade;





·        excess
costs associated with reducing employment or shutting down
facilities;





·        misappropriation
of intellectual property; and





·        constraints
on our ability to maintain or increase prices.





30




Our
operations in certain foreign locations receive favorable income tax treatment
in the form of tax holidays or other incentives. In the event that such tax
holidays or other incentives are not extended, are repealed, or we no longer
qualify for such programs, our taxes may increase, which would reduce our net
income.





Additionally,
certain foreign jurisdictions restrict the amount of cash that can be
transferred to the U.S or impose taxes and penalties on such transfers of cash.
To the extent we have excess cash in foreign locations that could be used in, or
is needed by, our U.S. operations, we may incur significant penalties
and/or taxes to repatriate these funds.





To
respond to competitive pressures and customer requirements, we may further
expand internationally in lower cost locations, particularly in Asia, Eastern
Europe and Latin America. As we pursue continued expansion in these locations,
we may incur additional capital expenditures. In addition, the cost structure in
certain countries that are now considered to be favorable may increase as
economies develop or as such countries join multinational economic communities
or organizations, causing local wages to rise. As a result, we may need to
continue to seek new locations with lower costs and the employee and
infrastructure base to support electronics manufacturing. We cannot assure you
that we will realize the anticipated strategic benefits of our international
operations or that our international operations will contribute positively to
our operating results.





We
can experience losses due to foreign exchange rate fluctuations, which would
reduce our net income.





Because
we manufacture and sell a substantial portion of our products abroad, our
operating costs are subject to fluctuations in foreign currency exchange rates.
Specifically, if the U.S. dollar weakens against the foreign currencies in which
we denominate certain of our trade accounts payable, fixed purchase obligations
and other expenses, the U.S. dollar equivalent of such expenses would increase.
We use financial instruments, primarily short-term foreign currency forward
contracts, to hedge certain forecasted foreign currency commitments arising from
trade accounts receivable, trade accounts payable and fixed purchase
obligations. Our foreign currency hedging activities depend largely upon the
accuracy of our forecasts of future sales, expenses and monetary assets and
liabilities. As such, our foreign currency forward contracts may exceed or not
cover our full exposure to exchange rate fluctuations. If these hedging
activities are not successful, we may experience significant unexpected expenses
from fluctuations in exchange rates. Although we believe our foreign exchange
hedging policies are reasonable and prudent under the circumstances, we can
provide no assurances that we will not experience losses arising from unhedged
currency fluctuations in the future, which could be significant.





31





Unanticipated
changes in our tax rates or exposure to additional income tax liabilities could
increase our taxes and decrease our net income.





We
are subject to income taxes in both the United States and various foreign
jurisdictions. Significant judgment is required in determining our worldwide
provision for income taxes and, in the ordinary course of business, there are
many transactions and calculations for which the ultimate tax determination is
uncertain. Our effective tax rates could be adversely affected by changes in the
mix of earnings in countries with differing statutory tax rates, changes in the
valuation of deferred tax assets and liabilities, changes in tax laws and other
factors. Our tax determinations are regularly subject to audit by tax
authorities and developments in those audits could adversely affect our income
tax provision. Although we believe that our tax estimates are reasonable, the
final determination of tax audits or tax disputes may be different from what is
reflected in our historical income tax provisions which could lead to an
increase in our taxes payable and a decrease in our net income.





We
may be unable to obtain sufficient financing to maintain or expand our
operations, which may cause our stock price to fall and reduce the business our
customers and vendors do with us.





In
order to allow us to better manage our working capital requirements, we entered
into a five-year $135 million credit facility in November 2008. Should we
need additional sources of liquidity above and beyond such facility, we cannot
be certain that financing will be available on acceptable terms or at all. In
addition, although we seek high quality counterparties for our financing
arrangements, there can be no assurance that any such counterparty will be able
to provide credit when and as required by our current or future financing
arrangements. If additional financing, including an expansion of the existing
credit facility, is not available when required, our ability to maintain or
increase our rates of production, expand our manufacturing capacity or refinance
our outstanding debt will be harmed, which could cause our stock price to fall
and reduce our customers’ and vendors’ willingness to do business with
us.





If
we are unable to comply with the covenants in our credit arrangements, our
outstanding debt could become immediately payable.





Our
debt agreements do not contain financial covenants currently applicable to us,
but do include a number of restrictive covenants, including prohibitions on
incurring additional debt, making investments and other restricted payments,
paying dividends and redeeming or repurchasing capital stock and debt, subject
to certain exceptions. In addition, such agreements include affirmative
covenants requiring, among other things, that we file quarterly and annual
financial statements with the SEC. If we are not able to comply with all of
these covenants, for any reason, some or all of our outstanding debt could
become immediately due and payable and the incurrence of additional debt under
the new credit facility would not be allowed. If our cash is utilized to repay
outstanding debt, we could experience an immediate and significant reduction in
working capital available to operate our business.





32





Our
failure to comply with applicable environmental laws could adversely affect our
business by causing us to pay significant amounts for clean up of hazardous
materials or for damages or fines.




We
are subject to various federal, state, local and foreign environmental laws and
regulations, including those governing the use, storage, discharge and disposal
of hazardous substances and wastes in the ordinary course of our manufacturing
operations. We also are subject to laws and regulations governing the
recyclability of products, the materials that may be included in products, and
the obligations of a manufacturer to dispose of these products after end users
have finished using them. If we violate environmental laws, we may be held
liable for damages and the costs of remedial actions and we may be subject to
revocation of permits necessary to conduct our businesses. We cannot assure you
that we will not violate environmental laws and regulations in the future as a
result of human error, equipment failure or other causes. Although we estimate
our potential liability with respect to violations or alleged violations and
accrue for such liability, we cannot assure you that our accruals will be
sufficient to cover the actual costs we incur as a result of these violations or
alleged violations. Our failure to comply with applicable environmental laws and
regulations could limit our ability to expand facilities or could require us to
acquire costly equipment or to incur other significant expenses to comply with
these laws and regulations.




Asbestos
containing materials, or ACM are present at several of our manufacturing
facilities. Although the ACM is being managed and controls have been put in
place pursuant to ACM operations and maintenance plans, the presence of ACM
could give rise to remediation obligations and other liabilities. No
governmental or third-party claims relating to ACM have been brought at this
time.




Our
plants generally operate under environmental permits issued by governmental
authorities. For the most part, these permits must be renewed periodically and
are subject to revocation in the event of violations of environmental laws.
Although we have not experienced any material revocations to date, any such
revocation could require us to cease or limit production at one or more of our
facilities, thereby having an adverse impact on our results of
operations.




Primarily
as a result of certain of our acquisitions, we have incurred liabilities
associated with environmental contamination. These liabilities include ongoing
investigation and remediation activities at a number of sites, including our
facilities located in Irvine, California (a former facility acquired as part of
our acquisition of Elexsys); Owego, New York (a current facility that we
acquired with our acquisition of Hadco Corporation); Derry, New Hampshire (a
non-operating facility of Hadco), Fort Lauderdale, Florida (a former facility of
Hadco) and Phoenix, Arizona (a site we acquired with our acquisition of Hadco).
We have been named in a lawsuit alleging operations at our former facility in
Santa Ana, California arising from our Elexsys acquisition contributed to
groundwater contamination. There can be no assurance that any other similar
third-party claims will not arise and will not result in material liability to
us. In addition, there are some sites, including our facility in Gunzenhausen,
Germany (acquired from Alcatel), that are known to have groundwater
contamination caused by a third-party, and that third-party has provided
indemnity to us for the liability.







33




We
have also been named as a potentially responsible party at one contaminated
disposal site, operated by another party at the Casmalia Resources site, as a
result of the past disposal of hazardous waste by companies we have acquired or
by our corporate predecessors. Although liabilities for such historical disposal
activities have not materially affected our financial condition to date, we
cannot assure you that past disposal activities will not result in liability
that will materially affect us in the future, nor can we provide assurance that
we do not have environmental exposures of which we are unaware and which could
adversely affect our operating results.




Over
the years, environmental laws have become, and in the future may continue to
become, more stringent, imposing greater compliance costs and increasing risks
and penalties associated with violations. We operate in several environmentally
sensitive locations and are subject to potentially conflicting and changing
regulatory agendas of political, business and environmental groups. Changes in
or restrictions on discharge limits, emissions levels, permitting requirements
and material storage or handling could require a higher than anticipated level
of operating expenses and capital investment or, depending on the severity of
the impact of the foregoing factors, costly plant relocation.




In
addition, the electronics industry became subject to the RoHS and WEEE
directives which took effect beginning in 2005. Parallel initiatives have been
adopted in other jurisdictions, including several states in the United States
and the People’s Republic of China. RoHS prohibits the use of lead, mercury and
certain other specified substances in electronics products and WEEE requires
industry OEMs to assume responsibility for the collection, recycling and
management of waste electronic products and components. Although we believe we
have implemented procedures to make our manufacturing process RoHS compliant,
non-compliance could result in significant costs and/or penalties. In the case
of WEEE, the compliance responsibility rests primarily with OEMs rather
than with EMS companies. However, OEMs may turn to EMS companies for
assistance in meeting their WEEE obligations, which could increase our
costs.




If
we manufacture or design defective products, or if our manufacturing processes
do not comply with applicable statutory and regulatory requirements, we could be
subject to damages and fines and lose customers.





We
manufacture products to our customers’ specifications, and in some cases our
manufacturing processes and facilities may need to comply with applicable
statutory and regulatory requirements. For example, many of the medical devices
that we manufacture, as well as the facilities and manufacturing processes that
we use to produce them, are regulated by the United States Food and Drug
Administration. In addition, our customers’ products and the manufacturing
processes that we use to produce them often are highly complex. As a result,
products that we design or manufacture may at times contain design or
manufacturing defects, and our manufacturing processes may be subject to errors
or may not be in compliance with applicable statutory and regulatory
requirements. Defects in the products we design or manufacture may result in
repair costs, delayed shipments to customers or reduced or cancelled customer
orders. If these defects or deficiencies are significant, our business
reputation may also be damaged. The failure of the products that we design or
manufacture or of our manufacturing processes and facilities to comply with
applicable statutory and regulatory requirements may subject us to legal fines
or penalties and, in some cases, require us to shut down or incur considerable
expense to correct a manufacturing program or facility. In addition, these
defects may result in product liability claims against us. The magnitude of such
claims may increase as we expand our medical, automotive, and aerospace and
defense manufacturing services because defects in medical devices, automotive
components and aerospace and defense systems could seriously harm users of these
products. Even if our customers are responsible for defects in the design of a
product, we could nonetheless be named in a product liability suit over such
defects and could be required to expend significant resources defending
ourselves.







34





If
our products are subject to warranty or liability claims, we may incur
significant costs, which would reduce our net income.




Our
customers may experience defects in our designs or deficiencies with respect to
our manufacturing services. We may be exposed to warranty or manufacturers’
liability claims as a result of these defects or deficiencies, and some claims
may relate to customer product recalls. We also design products on a contract
basis or jointly with our customers. The design services that we provide can
expose us to different or greater potential liabilities than those we face when
providing our regular manufacturing services. For example, we have increased
exposure to potential product liability claims resulting from injuries caused by
defects in products we design, as well as potential claims that products we
design infringe third-party intellectual property rights. Such claims could
subject us to significant liability for damages and, regardless of their merits,
could be time-consuming and expensive to resolve. A claim for damages arising
from such defects or deficiencies could damage our reputation and result in us
being liable for the costs of return and repair of such defective products or
for damages for any injuries or other losses incurred by our customers or their
end users. Any such costs could be significant and would reduce our net
income.




We
may not be successful in implementing and integrating strategic transactions or
in divesting non-strategic assets, which could cause our financial results to
fail to meet our forecasts.




From
time to time, we may undertake strategic transactions that give us the
opportunity to access new customers and new end-customer markets, to obtain new
manufacturing and service capabilities and technologies, to enter new geographic
manufacturing locations, to lower our manufacturing costs and improve the
margins on our product mix, and to further develop existing customer
relationships. Strategic transactions involve many difficulties and
uncertainties, including the following:




•
            integrating
      acquired operations and businesses;




•
            allocating
      management resources;




•
            scaling
      up production and coordinating management of operations at new
      sites;




•
            separating
      operations or support infrastructure for entities
  divested;




•
            managing
      and integrating operations in geographically dispersed
      locations;




•
            maintaining
      customer, supplier or other favorable business relationships of acquired
      operations and terminating unfavorable
  relationships;




•
            integrating
      the acquired company’s systems into our management information
      systems;




•
            addressing
      unforeseen liabilities of acquired businesses, including environmental
      liabilities;




•
            operating
      in the geographic market or industry sector of the business acquired in
      which we may have little or no
experience;




•
            improving
      and expanding our management information systems to accommodate expanded
      operations; and




•
            losing
      key employees of acquired
operations.







35




Any
of these factors could prevent us from realizing the anticipated benefits of a
strategic transaction, and our failure to realize these benefits could reduce
our sales below and increase our costs above our forecasts. We may not be
successful in identifying future strategic opportunities or in consummating any
strategic transactions that we pursue on favorable terms, if at all. Although
our goal is to improve our business and maximize stockholder value, any
transactions that we complete may ultimately fail to increase our sales and net
income and stock price.




Restructuring
of our operations could require us to take an accounting charge which would
reduce our net income.




We
have incurred significant expenses related to restructuring of our operations in
the past. For example, we have moved certain of our operations from higher-cost
to lower-cost locations to meet customer requirements. Future changes in our
customers’ requirements or in our tax strategies could result in the need for us
to further restructure our operations. In addition, we have incurred
unanticipated costs related to the transfer of operations to lower-cost
locations, including costs related to integrating new facilities, managing
operations in dispersed locations and realigning our business processes. We also
have incurred costs related to workforce reductions, work stoppages and labor
unrest resulting from the closure of our facilities in higher-cost locations. We
may be required to record additional charges related to restructuring activities
in the future, but cannot predict the timing of such charges. Any such charges
would reduce our net income.




Our
key personnel are critical to the continued growth of our business and we cannot
assure you that they will remain with us.




Our
success depends upon the continued service of our executive officers and other
key personnel. Generally, these employees are not bound by employment or
non-competition agreements. We cannot assure you that we will retain our
officers and key employees, particularly our highly skilled operations managers
and engineers involved in the manufacture of existing products and development
of new products and processes. The competition for these employees is intense.
In addition, if one or more of our executive officers or key employees were to
join a competitor or otherwise compete directly or indirectly with us or
otherwise be unavailable to us, we could lose customers and our sales and gross
margins could decrease.




If
we are unable to protect our intellectual property or infringe, or are alleged
to infringe, upon intellectual property of others, we could lose sales or be
required to pay significant amounts in costs or damages.




We
rely on a combination of copyright, patent, trademark and trade secret laws and
restrictions on disclosure to protect our intellectual property rights. We
cannot be certain that the steps we have taken will prevent unauthorized use of
our technology. Any failure to protect our intellectual property rights would
diminish or eliminate the competitive advantages that we derive from our
proprietary technology.







36




We
may become involved in litigation in the future to protect our intellectual
property or because others may allege that we infringe on their intellectual
property. These claims and any resulting lawsuits could subject us to
significant liability for damages and invalidate our proprietary rights. In
addition, these lawsuits, regardless of their merits, likely would be time
consuming and expensive to resolve and would divert management’s time and
attention. Any potential intellectual property litigation alleging our
infringement of a third-party’s intellectual property also could force us or our
customers to:




•
            stop
      producing products that use the challenged intellectual
      property;




•
            obtain
      from the owner of the infringed intellectual property a license to sell
      the relevant technology at an additional cost, which license may not be
      available on reasonable terms, or at all;
or




•
            redesign
      those products or services that use the infringed
    technology.




Any
costs we incur from having to take any of these actions could be
substantial.




We
may not have sufficient insurance coverage for certain of the risks and
liabilities we assume in connection with the products and services we provide to
our customers, which could leave us responsible for certain costs and damages
incurred by our customers.




We
carry various forms of business and liability insurance that we believe are
reasonable and customary for similarly situated companies in our industry.
However, we do not have insurance coverage for all of the risks and liabilities
we assume in connection with the products and services we provide to our
customers, such as potential warranty, product liability and product recall
claims. As a result, such liability claims may only be partially covered under
our insurance policies. We continue to monitor the insurance marketplace to
evaluate the availability of and need to obtain additional insurance coverage.
However, should we sustain a significant uncovered loss, our net income would be
reduced.




Changes
in financial accounting standards or policies have affected, and in the future
may affect, our reported financial condition or results of operations.
Additionally, changes in securities laws and regulations have increased, and are
likely to continue to increase, our operating costs.




We
prepare our consolidated financial statements in conformity with accounting
principles generally accepted in the United States, or U.S. GAAP. Our
preparation of financial statements in accordance with U.S. GAAP requires
that we make estimates and assumptions that affect the recorded amounts of
assets and liabilities, disclosure of those assets and liabilities at the date
of the financial statements and the recorded amounts of expenses during the
reporting period. A change in the facts and circumstances surrounding those
estimates could result in a change to our estimates and could impact our future
operating results.







37




In
addition, these principles are subject to interpretation by the Financial
Accounting Standards Board (FASB), the SEC and various bodies formed to
interpret and create appropriate accounting policies. A change in those policies
can have a significant effect on our reported results and may affect our
reporting of transactions which are completed before a change is announced.
Accounting policies affecting many other aspects of our business, including
rules relating to revenue recognition, off-balance sheet transactions,
stock-based compensation, restructurings, asset disposals and asset retirement
obligations, intangible assets, derivative and other financial instruments and
in-process research and development charges, have recently been revised or are
under review. Changes to those rules or the questioning of how we interpret or
implement those rules may have a material adverse effect on our reported
financial results or on the way we conduct business. For example, the SEC has
recently proposed a timetable by which U.S. companies would adopt International
Financial Reporting Standards. Although at a very early stage of consideration
by regulatory agencies, adoption of such standards could substantially change
our reporting practices in a number of areas, including revenue recognition and
recording of assets and liabilities.




Finally,
the Sarbanes-Oxley Act of 2002 required changes in our corporate governance,
public disclosure and compliance practices. The number of rules and regulations
applicable to us has increased and may continue to increase our legal and
financial compliance costs and increased the amount of time management must
devote to compliance activities, such as the requirement for management to
annually report in our annual report its conclusions concerning the
effectiveness of our system of internal control over financial reporting. These
developments could also make it more difficult for us to attract and retain
qualified members of our board of directors, particularly to serve on our audit
committee, and qualified executive officers in light of an increase in actual or
perceived liability for serving in such positions.




The
impact of price fluctuations could reduce our net income.




The cost of commodities, parts and
components used in the manufacturing of our products has fluctuated
significantly in the past. Should we not be successful in adjusting our
pricing to account for such fluctuations, our gross margins, and therefore net
income, would decline.




We
are subject to a continuing government investigation concerning our historical
stock option practices, which could result in our liability for significant
penalties and costs.





As
a result of an investigation of our accounting for stock options, we filed a
comprehensive Form 10-K for 2006 which restated our consolidated financial
statements for prior years and which reduced our net income due to mispriced
stock options granted in prior periods. Following this filing, we became subject
to federal and state lawsuits, as well as investigations by the SEC and the
Department of Justice (“DoJ”). Of these matters, only the DoJ investigation
remains open, all other matters having been concluded. We cannot predict the
final resolution of the DoJ investigation, which could result in the payment of
significant penalties and costs to indemnify current or former officers and
directors of the Company.





38





We
are subject to risks associated with natural disasters and global
events.





We
conduct a significant portion of our activities including manufacturing,
administration and data processing at facilities located in the State of
California and other seismically active areas that have experienced major
earthquakes in the past, as well as other natural disasters. Our insurance
coverage with respect to natural disasters is limited and is subject to
deductibles and coverage limits. Such coverage may not be adequate or continue
to be available at commercially reasonable rates and terms. In the event of a
major earthquake or other disaster affecting one or more of our facilities, our
operations and management information systems could be significantly
disrupted.  Such events could also delay or prevent product
manufacturing and shipment for the time required to transfer production, repair,
rebuild or replace the affected manufacturing facilities. This time frame could
be lengthy and result in significant expenses for repair and related costs. In
addition, concerns about terrorism or an outbreak of epidemic diseases could
have a negative effect on travel and our business operations and result in
reduced sales and net income.




Item 1B.  Unresolved Staff
Comments




None







39





Item 2.  Properties




Facilities.  Our
customers market numerous products throughout the world and therefore need to
access manufacturing services on a global basis. To enhance our EMS offerings,
we seek to locate our facilities either near our customers and our customers’
end markets in major centers for the electronics industry or, when appropriate,
in lower cost locations. Many of our plants located near customers and their end
markets are focused primarily on final system assembly and test, while plants
located in lower cost areas are engaged primarily in higher volume, less complex
component and subsystem manufacturing and assembly.




We
continue to evaluate our global manufacturing operations and restructure our
facilities and operations to bring our manufacturing capacity in line with
demand and our manufacturing strategy and to provide cost efficient services for
our customers. Through this process, we have closed certain facilities not
required to satisfy current demand levels. We provide extensive operations in
lower cost locations including Latin America, Eastern Europe, China and
Southeast Asia and we plan to expand our presence in these lower cost locations
as appropriate to meet the needs of our customers.




As
of October 3, 2009, the approximate square footage of our manufacturing
facilities by country was as follows:




Approximate
                Square
      FootageBrazil
            
            
            258,673Canada
            
            
            72,760China
            
            
            2,509,315Finland
            
            
            269,453Germany
            
            
            354,090Hong
      Kong
            
            
            19,000Hungary
            
            
            592,388India
            
            
            278,500Indonesia
            
            
            99,210Ireland
            
            
            110,000Israel
            
            
            301,275Malaysia
            
            
            508,862Mexico
            
            
            1,946,836Singapore
            
            
            607,413Sweden
            
            
            58,676Thailand
            
            
            326,293United
      Kingdom
            
            
            30,000United
      States
            
            
            2,939,586Total
            
            
            11,282,330




In
addition to the above, we have 295,308 square feet of logistics and other
non-manufacturing space that we are currently using and also have 3,256,262
square feet of inactive facilities that are closed or in the process of being
closed as of October 3, 2009, of which 1,732,100 square feet is for domestic
locations and 1,524,162 square feet for international locations. Moreover,
575,394 square feet of the inactive facilities is leased to third parties. We
are currently undertaking an aggressive program to sublease or terminate leases
for unused facilities and to sell owned properties that are no longer expected
to serve our future needs.







40




As
of October 3, 2009, our active manufacturing facilities consist of 8,268,721
square feet in facilities that we own, with the remaining 3,013,609 square feet
in leased facilities under lease terms expiring between 2009 and
2036.




We
believe our existing facilities are adequate to meet our reasonably foreseeable
requirements. We regularly evaluate our expected future facilities
requirements.




Certifications and
Registrations.  Certifications and registrations under industry
standards are important to our business because many customers rely on them to
confirm our adherence to manufacturing process and quality standards. Certain
markets, such as telecommunications, medical, aviation, defense, aerospace and
automotive, require adherence to industry-specific standards. Substantially all
of our manufacturing facilities are registered under ISO 9001:2008, a
standard published by the International Organization for Standardization. As
part of the ISO 9001:2008 certification process, we have a highly developed
quality management system and continually improve its effectiveness in
accordance with its requirements. We use this registration to demonstrate our
ability to consistently provide product that meets customer and applicable
regulatory requirements and enhance customer satisfaction through its effective
application. ISO 9001:2008 registration is of particular importance to our
customers throughout the world.




In
addition to ISO 9001:2008, most of our facilities are TL 9000 registered.
The TL 9000 quality system requirements and quality system metrics are designed
specifically for the telecommunications industry to promote consistency and
efficiency, reduce redundancy and improve customer satisfaction. Included in the
TL 9000 system are performance-based metrics that quantify reliability and
quality performance of the product. The majority of our facilities are also
Underwriters Laboratory compliant. These standards define requirements for
quality, manufacturing process control and manufacturing documentation and are
required by many OEMs in the communications sector of the electronics
industry.




Our
medical products division has identified certain manufacturing facilities to be
centers of excellence for medical products manufacturing. These facilities are
FDA and ISO 13485:2003 registered and fully compliant to the FDA’s quality
systems regulations.




Our
defense and aerospace operations are headquartered in the Huntsville, Alabama
area and are housed in a facility dedicated to meeting the specialized needs of
our defense and aerospace customers. This Defense and Aerospace operation, as
well as other selected operations around the world, are AS9100 registered. The
Defense and Aerospace operation is also certified under various U.S. military
specifications as well as under ANSI and other standards appropriate for defense
and aerospace suppliers.




Our
automotive facilities are strategically located worldwide. Substantially all of
our automotive facilities are ISO/TS 16949:2008 registered and also certified
under the Automotive Industry Standard.







41





Item 3.  Legal
Proceedings




As
previously disclosed, we were subject to federal and state lawsuits, as well as
investigations by the SEC and the Department of Justice (“DoJ”), in connection
with certain of our historical stock option administration
practices.  Of these matters, only the DoJ investigation remains open,
all other matters having been concluded.





Non-US
      Proceedings




A
non-US governmental entity has made a claim for penalties against us asserting
that we did not comply with bookkeeping rules in accordance with applicable tax
regulations. We have provided documents that we believe demonstrate our
compliance with these tax regulations. We have appealed the penalties in
administrative court, and have not paid the penalties pending review by the
court. The administrative court has not indicated when it will issue a decision.
We believe we have a meritorious position in this matter and are contesting this
claim vigorously.




Other
      Proceedings




We
are also subject to other routine legal proceedings, as well as demands, claims
and threatened litigation, that arise in the normal course of our business. The
ultimate outcome of any litigation is uncertain and unfavorable outcomes could
have a negative impact on our results of operations and financial condition.
Regardless of outcome, litigation can have an adverse impact on us as a result
of incurrence of defense costs, diversion of management resources and other
factors. We record liabilities for legal proceedings when a loss becomes
probable and the amount of loss can be reasonably estimated.




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




No matters were submitted to a vote of
our security holders during the fourth quarter of 2009.







42




PART
II




Item 5.  Market for Registrant’s Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.




Market
Information




Our
common stock is traded on the NASDAQ National Market under the symbol SANM. The
following table lists the high and low intra-day prices for our common stock as
reported on NASDAQ.




2009
            
            High
            
            
            LowFirst
      quarter
            
            $
            9.06
            
            
            $
            1.62Second
      quarter
            
            $
            3.17
            
            
            $
            1.08Third
      quarter
            
            $
            4.32
            
            
            $
            1.80Fourth
      quarter
            
            $
            9.06
            
            
            $
            2.16





2008
            
            High
            
            
            LowFirst
      quarter
            
            $
            14.64
            
            
            $
            9.72Second
      quarter
            
            $
            11.16
            
            
            $
            6.90Third
      quarter
            
            $
            10.20
            
            
            $
            7.46Fourth
      quarter
            
            $
            15.96
            
            
            $
            6.30




As
of November 19, 2009, we had approximately 1,828 common stockholders of
record. On November 19, 2009, the last reported sales price of our common
stock on the NASDAQ National Market was $8.36 per share.




The
following graph compares the cumulative 5-year total return provided
shareholders on Sanmina-SCI Corporation's common stock relative to the
cumulative total returns of the S&P 500 index and the NASDAQ Electronic
Components index. An investment of $100 (with reinvestment of all dividends) is
assumed to have been made in our common stock and in each of the indexes on
September 30, 2004 and its relative performance is tracked through October 3,
2009.




43











44




9/30/04
            
            
            9/30/05
            
            
            9/30/06
            
            
            9/30/07
            
            
            9/27/08
            
            
            10/3/09Sanmina-SCI
      Corporation
            
            
            100.00
            
            
            
            60.85
            
            
            
            53.05
            
            
            
            30.07
            
            
            
            23.26
            
            
            
            19.34S&P
      500
            
            
            100.00
            
            
            
            112.25
            
            
            
            124.37
            
            
            
            144.81
            
            
            
            112.99
            
            
            
            105.18NASDAQ
      Electronic Components
            
            
            100.00
            
            
            
            118.95
            
            
            
            112.83
            
            
            
            137.42
            
            
            
            95.53
            
            
            
            98.63








The
stock price performance included in this graph is not necessarily indicative of
future stock price performance.





Dividends




We
have never declared or paid cash dividends on our common stock. We currently
expect to retain future earnings for use in the operation and expansion of our
business and do not anticipate paying cash dividends in the foreseeable future.
Additionally, our ability to pay dividends is limited pursuant to covenants
contained in our various debt agreements. See also “Item 7—Management’s
Discussion and Analysis of Financial Condition and Results of
Operations—Liquidity and Capital Resources.”




Stock
Repurchases




On
October 27, 2008, our Board of Directors authorized us to spend up to
approximately $35 million on share repurchases. As of October 3, 2009, we had
repurchased 10.1 million shares of common stock, representing approximately 11%
of our outstanding shares, for an aggregate purchase price of $29.2 million,
including commissions, under the program. The authorization is effective through
December 31, 2009, unless otherwise determined by the Board of
Directors.




The
table below sets forth information regarding repurchases of our common stock
during the year ended October 3, 2009.
 TOTAL
                  NUMBER OF
                  SHARES
                  PURCHASED,
      ALL OF WHICH WERE PURSUANT TO PUBLICLY ANNOUNCED PROGRAMS
                
                
                AVERAGE
                  PRICE PAID
                  PER SHARE
                
                
                MAXIMUM
                  DOLLAR VALUE OF
                  SHARES THAT
                  MAY YET BE
                  PURCHASED
                  UNDER THE
                  PROGRAMS(In
      thousands)
                
                
                
                
                
                (In
      thousands)Month
      #1September 28,
      2008 through October 25, 2008
                
                
                —
                
                
                $
                —
                
                
                $
                35,000Month
      #2October 26,
      2008 through November 22, 2008
                
                
                3,501
                
                
                $
                3.24
                
                
                $
                23,621Month
      #5January
      25, 2009 through February 21, 2009
                
                
                3,027
                
                
                $
                2.04
                
                
                $
                17,509Month
      #6February
      22, 2009 through March 28, 2009
                
                
                804
                
                
                $
                1.74
                
                
                $
                16,114Month
      #8April
      26, 2009 through May 23, 2009
                
                
                2,583
                
                
                $
                3.60
                
                
                $
                6,872Month
      #9May
      24, 2009 through June 27, 2009
                
                
                176
                
                
                $
                3.84
                
                
                $
                5,804Total
                
                
                10,091
                
                
                $
                2.88
 (1) All
months shown are our fiscal months. We did not repurchase any shares in months
omitted from the above table.





45





Item 6.  Selected Financial
Data





The
following selected financial data should be read in conjunction with
“Item 7—Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and “Item 8—Financial Statements and Supplementary
Data,” included elsewhere in this Form 10-K.




FIVE
YEAR SELECTED FINANCIAL HIGHLIGHTS




Consolidated
Statements of Operations Data:




Year
      Ended2009
            
            
            2008
            
            
            2007
            
            
            2006
            
            
            2005(In
      thousands, except per share data)Net
      sales
            
            $
            5,177,481
            
            
            $
            7,202,403
            
            
            $
            7,137,793
            
            
            $
            7,645,118
            
            
            $
            7,644,932Operating
      income (loss)
            
            $
            (4,656
            )
            
            $
            (384,160
            )
            
            $
            (1,023,061
            )
            
            $
            28,537
            
            
            $
            (528,019
            )Loss
      from continuing operations before income taxes and cumulative effect of
      accounting changes
            
            $
            (112,570
            )
            
            $
            (490,331
            )
            
            $
            (1,142,027
            )
            
            $
            (174,933
            )
            
            $
            (678,084
            )Provision
      for (benefit from) income taxes
            
            
            23,652
            
            
            
            21,005
            
            
            
            (534
            )
            
            
            (10,638
            )
            
            
            364,394Cumulative
      effect of accounting changes, net of tax
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            2,830
            
            
            
            —Loss
      from continuing operations
            
            $
            (136,222
            )
            
            $
            (511,336
            )
            
            $
            (1,141,493
            )
            
            $
            (161,465
            )
            
            $
            (1,042,478
            )Income
      from discontinued operations, net of tax
            
            
            —
            
            
            
            24,987
            
            
            
            6,836
            
            
            
            19,908
            
            
            
            8,532Net
      Loss
            
            $
            (136,222
            )
            
            $
            (486,349
            )
            
            $
            (1,134,657
            )
            
            $
            (141,557
            )
            
            $
            (1,033,946
            )Basic
      and diluted earnings (loss) per share:Continuing
      operations
            
            $
            (1.65
            )
            
            $
            (5.78
            )
            
            $
            (12.99
            )
            
            $
            (1.84
            )
            
            $
            (12.02
            )Discontinued
      operations
            
            $
            —
            
            
            $
            0.28
            
            
            $
            0.08
            
            
            $
            0.23
            
            
            $
            0.10Net
      loss
            
            $
            (1.65
            )
            
            $
            (5.50
            )
            
            $
            (12.91
            )
            
            $
            (1.61
            )
            
            $
            (11.92
            )Shares
      used in computing basic and diluted per share amounts
            
            
            82,528
            
            
            
            88,454
            
            
            
            87,853
            
            
            
            87,661
            
            
            
            86,762




Consolidated
Balance Sheet Data:




As
      of Year Ended2009
            
            
            2008
            
            
            2007
            
            
            2006
            
            
            2005(In
      thousands)Cash
      and cash equivalents
            
            $
            899,151
            
            
            $
            869,801
            
            
            $
            933,424
            
            
            $
            491,829
            
            
            $
            1,068,053Net
      working capital
            
            $
            1,280,136
            
            
            $
            1,574,339
            
            
            $
            1,618,375
            
            
            $
            1,516,754
            
            
            $
            1,672,481Total
      assets
            
            $
            3,123,897
            
            
            $
            3,530,727
            
            
            $
            4,669,955
            
            
            $
            5,862,430
            
            
            $
            6,269,128Long-term
      debt (excluding current portion)
            
            $
            1,262,014
            
            
            $
            1,481,985
            
            
            $
            1,588,072
            
            
            $
            1,507,112
            
            
            $
            1,666,768Stockholders’
      equity
            
            $
            543,140
            
            
            $
            695,958
            
            
            $
            1,173,147
            
            
            $
            2,270,563
            
            
            $
            2,383,811





46





Item 7.  Management’s Discussion and Analysis
of Financial Condition and Results of Operations




This
report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements relate to our expectations for
future events and time periods. All statements other than statements of
historical fact are statements that could be deemed to be forward-looking
statements, including any statements regarding trends in future sales or results
of operations, gross margin or operating margin, expenses, earnings or losses
from operations, cash flow, inventory turns ,synergies or other financial items;
any statements of the plans, strategies and objectives of management for future
operations; any statements concerning developments, performance or industry
ranking; any statements regarding future economic conditions or performance; any
statements regarding pending investigations, claims or disputes; any statements
of expectation or belief; and any statements of assumptions underlying any of
the foregoing. Generally, the words “anticipate,” “believe,” “plan,” “expect,”
“future,” “intend,” “may,” “will,” “should,” “estimate,” “predict,” “potential,”
“continue” and similar expressions identify forward-looking 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. As a result of the factors described herein, and
in the documents incorporated herein by reference, including, in particular,
those factors described under “Factors Affecting Operating Results,” we
undertake no obligation to publicly disclose any revisions to these
forward-looking statements to reflect events or circumstances occurring
subsequent to filing this report with the Securities and Exchange
Commission.




Overview




We
are a leading independent global provider of customized, integrated electronics
manufacturing services, or EMS. Our revenue is generated from sales of our
services primarily to original equipment manufacturers, or OEMs, in the
communications; enterprise computing and storage; multimedia; industrial and
semiconductor capital equipment; defense and aerospace; medical; renewable
energy and automotive industries.




During
2008, the Company sold its personal computing and associated logistics business
(“PC Business”) and has reflected the PC Business as discontinued operations in
the consolidated financial statements. All references in this section to our
operating results pertain only to our continuing operations and all references
to years refer to our fiscal years ending on the last Saturday of each year
closest to September 30th. Fiscal 2008 and 2007 were each 52 weeks and 2009
was 53 weeks, with the additional week included in the fourth
quarter.




A
relatively small number of customers have historically generated a significant
portion of our net sales. Sales to our ten largest customers represented
approximately 48% of our net sales for each of fiscal 2009, 2008, and 2007. For
2009 and 2008, no customer represented 10% or more of our net sales. For 2007,
one customer represented 10.4% of our net sales.







47




We
typically generate a significant portion of our net sales from international
operations. Consolidated net sales generated from non-U.S. operations were
76.9%, 73.1%, and 69.2% for 2009, 2008 and 2007, respectively. The concentration
of international operations has resulted primarily from a desire on the part of
many of our customers to move production to lower cost locations in regions such
as Asia, Latin America and Eastern Europe. We expect this trend to
continue.




Historically,
we have had substantial recurring sales from existing customers. We typically
enter into supply agreements with our major OEM customers. These agreements
generally have terms ranging from three to five years and cover the manufacture
of a range of products. Under these agreements, a customer typically agrees to
purchase its requirements for specific products in particular geographic areas
from us. These agreements generally do not obligate the customer to purchase
minimum quantities of products. In some circumstances, our supply agreements
with customers provide for cost reduction objectives during the term of the
agreement.




At
the end of 2008, economic conditions began to deteriorate and financial markets
became unstable and extremely volatile. During the first half of 2009, the
economy continued to worsen and negatively affected our results of operations.
The economy began to stabilize and improved slightly during the second half of
2009; however, economic conditions throughout 2009 were significantly worse than
those during 2008 and 2007. Our results of operations were negatively affected
by general economic conditions in 2009.




We
have experienced fluctuations in our results of operations in the past and may
continue to experience such fluctuations in the future.




Summary
Results of Operations




The
following table presents our key operating results:




Year
      EndedOctober
      3,
                2009
            
            
            September 27,
                2008
            
            
            September 29,
                2007(In
      thousands)Net
      sales
            
            $
            5,177,481
            
            
            $
            7,202,403
            
            
            $
            7,137,793Gross
      profit
            
            $
            322,478
            
            
            $
            524,106
            
            
            $
            454,516Operating
      loss
            
            $
            (4,656
            )
            
            $
            (384,160
            )
            
            $
            (1,023,061
            )Loss
      from continuing operations
            
            $
            (136,222
            )
            
            $
            (511,336
            )
            
            $
            (1,141,493
            )Income
      from discontinued operations,net
      of tax
            
            $
            —
            
            
            $
            24,987
            
            
            $
            6,836Net
      loss
            
            $
            (136,222
            )
            
            $
            (486,349
            )
            
            $
            (1,134,657
            )





48





Key
performance measures




The
following table presents certain key performance measures that management
utilizes to assess its management of working capital:




As
      ofOctober
      3,
                2009
            
            
            September 27,
                2008Days
      sales outstanding(1)
            
            
            48
            
            
            
            52Inventory
      turns(2)
            
            
            6.1
            
            
            
            7.7Accounts
      payable days(3)
            
            
            60
            
            
            
            53Cash
      cycle days(4)
            
            
            46
            
            
            
            46






(1)
            Days
      sales outstanding, or DSO, is calculated as the ratio of ending accounts
      receivable, net, to average daily net sales for the
    quarter.




(2)
            Inventory
      turns (annualized) are calculated as the ratio of four times our cost of
      sales for the quarter to inventory at period
  end.




(3)
            Accounts
      payable days is calculated as the ratio of 365 days divided by
      accounts payable turns, in which accounts payable turns is calculated as
      the ratio of four times our cost of sales for the quarter to accounts
      payable at period end.




(4)
            Cash
      cycle days is calculated as the ratio of 365 days to inventory turns,
      plus days sales outstanding minus accounts payable
  days.




If necessary, calculations as of
October 3, 2009 have been adjusted to reflect inclusion of an additional week in
the period ended October 3, 2009.




Critical
Accounting Policies and Estimates




Management’s
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements which have been prepared in
accordance with accounting principles generally accepted in the United States.
We review the accounting policies used in reporting our financial results on a
regular basis. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
net sales and expenses and related disclosure of contingent assets and
liabilities. On an ongoing basis, we evaluate the process used to develop
estimates for certain reserves and contingent liabilities, including those
related to product returns, accounts receivable, inventories, investments,
intangible assets, income taxes, warranty obligations, environmental matters,
restructuring, contingencies and litigation. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable
for making judgments about the carrying value of assets and liabilities that are
not readily apparent from other sources. Our actual results may differ
materially from these estimates.




We
believe the following critical accounting policies reflect the more significant
judgments and estimates used by us in preparing our consolidated financial
statements:







49




Accounts Receivable and Other
Related Allowances—We estimate uncollectible accounts, product returns
and other adjustments related to current period net sales to establish related
allowances. In making these estimates, we analyze the creditworthiness of our
customers, past experience, changes in customer demand, and the overall economic
climate in the industries we serve. If actual uncollectible accounts, product
returns or other adjustments differ significantly from our estimates, the amount
of sales or operating expenses we report would be affected. One of our most
significant credit risks is the ultimate realization of our accounts receivable.
This risk is mitigated by (i) a significant portion of sales to
well-established companies, (ii) ongoing credit evaluation of our
customers, and (iii) frequent contact with our customers, especially our
most significant customers, which enables us to monitor changes in their
business operations and to respond accordingly. To establish our allowance for
doubtful accounts, we estimate the credit risk associated with accounts
receivable. We evaluate credit risk related to specific customers based on the
current economic environment; however, we are not able to predict the inability
of our customers to meet their financial obligations to us. We believe the
allowances we have established are adequate under the circumstances; however, a
change in the economic environment or a customer’s financial condition could
cause our estimates of allowances, and consequently the provision for doubtful
accounts, to change, which could have a significant adverse impact on our
financial position and/or results of operations. To establish the allowance for
product returns and other adjustments, we primarily utilize data regarding
historical adjustments.




Inventories—We state
inventories at the lower of cost (first-in, first-out method) or market value.
Cost includes raw materials, and labor and manufacturing overhead incurred for
finished goods and work-in-process. We regularly evaluate the carrying value of
our inventories. Provisions are made to reduce excess and obsolete inventories
to their estimated net realizable values. The ultimate realization of inventory
carrying amounts is affected by changes in customer demand for inventory that
customers are not contractually obligated to purchase and inventory held for
specific customers who are experiencing financial difficulties. Inventory
reserves are established based on forecasted demand, past experience with
specific customers, the ability to redistribute inventory to other programs or
back to our suppliers, and whether customers are contractually obligated to pay
for the related inventory. Prepayments received from customers for excess and
obsolete inventories that have not been shipped to customers or otherwise
disposed of are netted against inventory.




We
procure inventory based on specific customer orders and forecasts. Customers
have limited rights of modification (for example, cancellations) with respect to
these orders. Customer modifications to orders affecting inventory previously
procured by us and our purchases of inventory beyond customer needs may result
in excess and obsolete inventory for the related customers. Although we may be
able to use some excess components and raw materials for other products we
manufacture, a portion of the cost of this excess inventory may not be returned
to the vendors or recovered from customers. Write-offs or write-downs of
inventory could relate to:







50




•
            declines
      in the market value of inventory;




•
            inventory
      held for specific customers who are experiencing financial difficulty;
      and




•
            changes
      in customer demand for inventory, such as cancellation of orders, and our
      purchases of inventory beyond customer needs that result in excess
      quantities on hand that we are not able to return to the vendor, use to
      fulfill orders from other customers or charge back to the
      customer.




Our
practice is to dispose of excess and obsolete inventory as soon as practicable
after such inventory has been identified as having no value to us.




Tangible and Other Definite-lived
Intangible Assets—We review long-lived tangible and other definite-lived
intangible assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset or asset group may not be
recoverable. An asset is considered impaired if its carrying amount exceeds the
undiscounted future net cash flows the asset is expected to generate. If an
asset or asset group is considered impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the asset exceeds its
fair value. For asset groups for which a building is the primary asset, we
estimate fair value primarily based on data received from commercial real estate
brokers. For other assets, we estimate fair value based on projected discounted
future net cash flows using a credit adjusted discount rate. Management applies
significant judgment in estimating future cash flows.




Income Taxes—We estimate our
income tax provision or benefit in each of the jurisdictions in which we
operate, including estimating exposures related to examinations by taxing
authorities. We believe our accruals for tax liabilities are adequate for all
open years, based on our assessment of many factors including past experience
and interpretations of tax law applied to the facts of each matter. Although we
believe our accruals for tax liabilities are adequate, tax regulations are
subject to interpretation and the tax controversy process is inherently lengthy
and uncertain; therefore, our assessments can involve a series of complex
judgments about future events and rely heavily on estimates and assumptions. To
the extent the probable tax outcome of these matters changes, such changes in
estimates will impact our income tax provision in the period in which such
determination is made.




We
must also make judgments regarding the realizability of deferred tax assets. The
carrying value of our net deferred tax assets is based on our belief that it is
more likely than not that we will generate sufficient future taxable income in
certain jurisdictions to realize these deferred tax assets. A valuation
allowance is established for deferred tax assets when we believe realization of
such assets is not more likely than not.. Our judgments regarding
future taxable income may change due to changes in market conditions, new or
modified tax laws, tax planning strategies or other factors. If our assumptions,
and consequently our estimates, change in the future, the valuation allowances
we have established may be increased or decreased, resulting in a respective
increase or decrease in income tax expense. Our effective tax rate is highly
dependent upon the geographic distribution of our worldwide earnings or losses,
the tax regulations and tax holidays in each geographic region, the availability
of tax credits and carryforwards, and the effectiveness of our tax planning
strategies.







51




We
adopted Financial Accounting Standards Board (“FASB”) Interpretation
No. 48, Accounting for
Uncertainty in Income Taxes—an interpretation of FASB Statement
No. 109, (ASC Topic 740, Income Taxes), in 2008.
FIN 48 (ASC Topic 740) prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position that an entity takes or expects to take in a tax return. Additionally,
FIN 48 (ASC Topic 740) provides guidance on de-recognition, classification,
interest and penalties, accounting in interim periods, disclosures, and
transition. Under FIN 48 (ASC Topic 740), an entity may only recognize or
continue to recognize tax positions that meet a “more likely than not”
threshold. We recognize interest and penalties related to unrecognized tax
benefits as a component of tax expense.




Results
of Operations




Years
Ended October 3, 2009, September 27, 2008 and September 29,
2007.




The
following table presents certain statements of operations data expressed as a
percentage of net sales.




Year
      EndedOctober
      3,
                2009
            
            
            September 27,
                2008
            
            
            September 29,
                2007(In
      percentage)Net
      sales
            
            
            100.0
            
            
            
            100.0
            
            
            
            100.0Cost
      of sales
            
            
            93.8
            
            
            
            92.7
            
            
            
            93.6Gross
      margin
            
            
            6.2
            
            
            
            7.3
            
            
            
            6.4Operating
      expenses:Selling,
      general and administrative
            
            
            4.6
            
            
            
            4.4
            
            
            
            5.0Research
      and development
            
            
            0.3
            
            
            
            0.3
            
            
            
            0.4Restructuring
      costs
            
            
            1.1
            
            
            
            1.1
            
            
            
            0.6Amortization
      of intangible assets
            
            
            0.1
            
            
            
            0.1
            
            
            
            0.1Impairment
      of goodwill, tangible and other intangible assets
            
            
            0.2
            
            
            
            6.7
            
            
            
            14.6Total
      operating expenses
            
            
            6.3
            
            
            
            12.6
            
            
            
            20.7





52





Net
Sales




Net
sales for 2009 decreased 28.1%, or $2.0 billion, to $5.2 billion, from
$7.2 billion in 2008. The decrease was primarily the result of a weak
global economy, which reduced demand across all of our end markets. Sales
decreased $834.5 million in our communications end market, $466.7million in our
high-end computing end market, $390.9 million in our multi-media end market,
$267.0 million in our automotive, defense and aerospace, and industrial and
semiconductor capital equipment end markets, and $65.8 million in our medical
end market.




Net
sales for 2008 increased 0.9% to $7.2 billion, from $7.1 billion in
2007. The increase was primarily related to stronger demand from customers in
our communications and defense and aerospace end-markets, which increased by
$141.9 million and $106.1 million, respectively. These increases were
partially offset by reduced demand of $101.8 million in our high-end
computing end-market, $36.8 million in our industrial and semiconductor
capital equipment end-market and $26.3 million in our medical
end-market.




Gross
Margin




Gross
margin was 6.2%, 7.3% and 6.4% in 2009, 2008 and 2007, respectively. The
decrease from 2008 to 2009 was primarily a result of significantly lower
business volume in 2009, partially offset by improvements resulting from various
cost reduction initiatives that lowered our cost base. The increase from 2007 to
2008 was due primarily to higher margins in our defense and aerospace business
resulting from increased demand and favorable changes in product mix to more
proprietary products, as well as higher margins in our printed circuit board
fabrication business resulting from consolidation of capacity and greater
efficiencies. Margins also improved in our other EMS divisions as a result of
improved operating efficiencies. These improvements were partially offset by
decreased revenue, primarily in our high-end computing end-market, and factory
start-up and production transition costs. We expect gross margins to continue to
fluctuate in the future.




We have experienced fluctuations in
gross margin in the past and may continue to do so in the future. Fluctuations
in our gross margins may be caused by a number of factors,
including:




•
            Greater
      competition in the EMS industry and pricing pressures from OEMs due
      to greater focus on cost reduction;




•
            Changes
      in the overall volume of our
business;




•
            Changes
      in the mix of high and low margin products demanded by our
      customers;




•
            Changes
      in customer demand and sales volumes for our vertically integrated system
      components and subassemblies;




•
            Provisions
      for excess and obsolete inventory;




•
            Level
      of operational efficiency;




•
            Pricing
      pressure on electronic components resulting from economic conditions in
      the electronics industry, with EMS companies competing more aggressively
      on cost to obtain new or maintain existing business;
  and




•
            Our
      ability to transition manufacturing and assembly operations to lower cost
      regions in an efficient manner.







53





Selling,
General and Administrative




Selling,
general and administrative expenses were $238.2 million,
$317.0 million and $355.8 million in 2009, 2008 and 2007,
respectively. As a percentage of net sales, selling, general and administrative
expenses were 4.6% for 2009, 4.4% for 2008, and 5.0% for 2007. The decrease in
absolute dollars from 2008 to 2009 was attributable to company-wide cost
reduction initiatives, approximately 80% of which were related to reductions in
staffing related costs. The slight increase in 2009 as a percentage of sales was
primarily attributable to lower net sales for 2009.




The
decrease in absolute dollars from 2007 to 2008 was primarily attributable to
reduced personnel-related costs of $15.8 million resulting from staffing
reductions in various functions, a reduction of $7.0 million for
information technology infrastructure and related spending, reduced expenses of
$6.1 million in connection with matters arising out of our stock option
investigation and restatement, a reduction of $5.5 million in stock-based
compensation expense and a reduction of $4.0 million in audit and
Sarbanes-Oxley related expenses. The decrease in 2008 as a percentage of sales
was primarily attributable to decreased expenses as noted above and higher net
sales in 2008.




Research
and Development




Research
and development expenses were $16.7 million, $19.5 million and
$30.1 million in 2009, 2008 and 2007, respectively. As a percentage of net
sales, research and development expenses were 0.3% for 2009 and 2008, and 0.4%
for 2007. The decrease in absolute dollars from 2008 to 2009 was the result of
reductions in staffing related costs as we continue to focus on joint
development activities. The decrease in both dollars and as a percentage of net
sales from 2007 to 2008 was primarily a result of our decision to reduce ODM
activities and to focus on joint development activities, partially offset by
increased spending for our defense and aerospace business to support anticipated
growth in this end-market.




Impairment
of Goodwill, Tangible and Other Intangible Assets




During
2009, we recorded asset impairment charges of $10.2 million related primarily to
a decline in the fair value of certain properties that were previously
restructured.







54




During
2008, we recorded a goodwill impairment charge of $478.7 million due to the
expected effect of deteriorating general economic conditions on our future cash
flows, the illiquidity of the credit markets and the decline in the stock market
generally, and in our stock price in particular. We also recorded impairment
charges of $5.0 million, primarily related to decreases in the fair value
of certain assets held for sale.




During
2007, we recorded a goodwill impairment charge of $1.0 billion due to a
decline in sales, both domestically and internationally, a decrease in expected
future cash flows, and a decline in our stock price.




Restructuring
Costs




Costs
associated with restructuring activities, other than those activities related to
business combinations, are accounted for in accordance with SFAS No. 146,
“Accounting for Costs
Associated with Exit or Disposal Activities”(ASC Topic 420, Exit or Disposal Cost
Obligations), or SFAS No. 112, “Employers’ Accounting for
Postemployment Benefits”(ASC Topic 712, Compensation – Nonretirement
Postemployment Benefits), as applicable. Pursuant to SFAS No. 112
(ASC Topic 712), restructuring costs related to employee severance are recorded
when probable and estimable based on our policy with respect to severance
payments. For all other restructuring costs, a liability is recognized in
accordance with SFAS No. 146 (ASC Topic 420) only when
incurred.
 
 2009
Restructuring Plan


During
2009, we initiated a restructuring plan as a result of the slowdown in the
global electronics industry and worldwide economy. The plan was designed to
improve capacity utilization levels and reduce costs by consolidating
manufacturing and other activities in locations with higher efficiencies and
lower costs. Costs associated with this plan are expected to include employee
severance, costs related to facilities and equipment that are no longer in use,
and other costs associated with the exit of certain contractual arrangements due
to facility closures. All actions under this plan were initiated and
substantially completed during 2009 and costs for this plan are expected to be
in the range of $45 million to $50 million, of which $41 million had been
incurred as of October 3, 2009. We expect actions under this plan to increase
our gross and operating margins and be cash flow positive within 12 to 24 months
of implementation as cash outlays for severance and facility closures will be
recovered by cost savings and asset sales resulting from actions under the plan.
However, there can be no assurance that these benefits will be achieved due to
possible changes in the restructuring plan that may increase costs or any
failure of anticipated asset sales to generate projected amounts. Below is a
summary of restructuring costs associated with facility closures and other
consolidation efforts implemented under this plan:





55




Employee
      Termination /
              Severanceand
      Related Benefits
              Cash
            
            
            Leases
      and Facilities Shutdown and Consolidation Costs
              Cash
            
            
            Impairment
              of
      Assets or Redundant
              Assets
              Non-Cash
            
            
            Total(In thousands)Balance
      at September 27, 2008
            
            $
            —
            
            
            $
            —
            
            
            $
            —
            
            
            $
            —Charges
      to operations
            
            
            28,705
            
            
            
            11,718
            
            
            
            1,200
            
            
            
            41,623Charges
      utilized
            
            
            (22,556
            )
            
            
            (9,577
            )
            
            
            (1,200
            )
            
            
            (33,333
            )Reversal
      of accrual
            
            
            (569
            )
            
            
            —
            
            
            
            —
            
            
            
            (569
            )Balance
      at October 3, 2009
            
            $
            5,580
            
            
            $
            2,141
            
            
            $
            —
            
            
            $
            7,721





During
2009, we closed or consolidated six facilities and recorded restructuring
charges of $28.1 million for employee termination costs, of which $22.6 million
has been utilized and $5.6 million is expected to be paid during 2010. These
costs were provided for approximately 4,000 terminated employees.





Restructuring
Plans — Prior Years





Below
is a summary of restructuring costs associated with facility closures and other
consolidation efforts that were implemented in prior fiscal years:





56




Employee
      Termination / Severance and Related Benefits Cash
            
            
            Leases
      and Facilities Shutdown and Consolidation Costs Cash
            
            
            Impairment
      of Fixed Assets or Redundant Fixed Assets
                Non-Cash
            
            
            Total(In
      thousands)Balance
      at September 30, 2006
            
            $
            21,349
            
            
            $
            9,804
            
            
            $
            —
            
            
            $
            31,153Charges
      (recovery) to operations
            
            
            35,169
            
            
            
            11,195
            
            
            
            (831
            )
            
            
            45,533Charges
      recovered (utilized)
            
            
            (47,873
            )
            
            
            (12,132
            )
            
            
            831
            
            
            
            (59,174
            )Reversal
      of accrual
            
            
            (2,505
            )
            
            
            (441
            )
            
            
            —
            
            
            
            (2,946
            )Balance
      at September 29, 2007
            
            
            6,140
            
            
            
            8,426
            
            
            
            —
            
            
            
            14,566Charges
      to operations
            
            
            64,126
            
            
            
            16,519
            
            
            
            2,456
            
            
            
            83,101Charges
      utilized
            
            
            (45,248
            )
            
            
            (19,765
            )
            
            
            (2,456
            )
            
            
            (67,469
            )Reversal
      of accrual
            
            
            (833
            )
            
            
            (892
            )
            
            
            —
            
            
            
            (1,725
            )Balance
      at September 27, 2008
            
            
            24,185
            
            
            
            4,288
            
            
            
            —
            
            
            
            28,473Charges
      to operations
            
            
            8,988
            
            
            
            7,869
            
            
            
            3,692
            
            
            
            20,549Charges
      utilized
            
            
            (23,842
            )
            
            
            (10,466
            )
            
            
            (3,692
            )
            
            
            (38,000
            )Reversal
      of accrual
            
            
            (4,156
            )
            
            
            (187
            )
            
            
            —
            
            
            
            (4,343
            )Balance
      at October 3, 2009
            
            $
            5,175
            
            
            $
            1,504
            
            
            $
            —
            
            
            $
            6,679




During 2009, we recorded restructuring
charges for employee termination benefits for approximately 1,400 employees who
were terminated in connection with restructuring plans developed prior to
2009.




During
2008, we closed or consolidated four facilities and recorded restructuring
charges for employee termination benefits for approximately 2,900
employees.




During
2007, we closed or consolidated eight facilities and terminated approximately
6,700 employees.




Restructuring
Plans — All Years




Accrued
restructuring costs as of October 3, 2009 were $14.4 million. In connection
with restructuring actions we have already implemented under our restructuring
plan, we expect to pay remaining facilities related restructuring liabilities of
$3.6 million through 2012 and the majority of severance costs of
$10.8 million through 2010.




The
recognition of restructuring charges requires us to make judgments and estimates
regarding the nature, timing and amount of costs associated with planned exit
activities, including estimating sublease income and the fair values, less
selling costs, of property, plant and equipment to be disposed of. Our estimates
of future liabilities may change, requiring us to record additional
restructuring charges or reduce the amount of liabilities already
recorded.







57





Interest
Income and Expense




Interest
income was $6.5 million, $19.7 million and $28.8 million in 2009,
2008 and 2007, respectively. The decrease from 2008 to 2009 was primarily
attributable to lower interest rates on invested cash as a result of weakening
economic conditions and uncertainty and volatility in the financial markets.
This decrease was partially offset by a higher average cash balance in 2009. The
decrease from 2007 to 2008 was primarily attributable to lower interest rates on
invested cash and lower average cash balances in 2008 due to the fact that we
borrowed $600.0 million during the first quarter of 2007 to fund the
repayment of certain debt obligations that matured in the second quarter of
2007. Of the amount borrowed, $532.9 million was distributed to a trustee
and held in an escrow account until repayment of the debt. We earned interest
while the cash was held in escrow.




Interest
expense was $117.0 million, $127.2 million and $168.3 million in
2009, 2008 and 2007, respectively. The decrease from 2008 to 2009 was primarily
due to a significant reduction in interest rates during 2009, which reduced
interest expense on our variable rate debt. In addition, our average debt
balance was lower in 2009 due to repurchase of $46.9 million of debt during the
year. The decrease from 2007 to 2008 was primarily attributable to the absence
of interest expense in 2008 on a $600 million loan that was outstanding in
the first quarter of 2007 and repaid during the third quarter of 2007, decreased
weighted average borrowings under our revolving credit facility during 2008, the
absence of interest expense in 2008 on our 3% Notes that were repaid during the
second quarter of 2007, and lower interest rates during 2008. These decreases
were partially offset by higher interest expense incurred in 2008 on
$600 million of debt we issued during the third quarter of
2007.




Other
Income (Expense), net




Other
income (expense), net was $(6.0) million, $3.6 million and $23.7
million in 2009, 2008 and 2007, respectively. The following table summarizes the
major components of other income (expense), net (in thousands):




Year
      EndedOctober
      3,
                2009
            
            
            September 27,
                2008
            
            
            September 29,
                2007Foreign
      exchange gains/(losses)
            
            $
            (8,498
            )
            
            $
            3,487
            
            
            $
            1,994Interest
      rate swaps not designated as hedging instruments
            
            
            5,694
            
            
            
            —
            
            
            
            —Gain
      from fixed asset disposals
            
            
            1,804
            
            
            
            311
            
            
            
            18,997Gain
      (loss) from investments
            
            
            695
            
            
            
            (508
            )
            
            
            2,133Impairment
      of long-term investments
            
            
            (4,531
            )
            
            
            —
            
            
            
            —Other,
      net
            
            
            (1,134
            )
            
            
            263
            
            
            
            610Total
            
            $
            (5,970
            )
            
            $
            3,553
            
            
            $
            23,734




We reduce our exposure to currency
fluctuations through the use of foreign currency hedging instruments; however,
hedges are established based on forecasts of foreign currency transactions. To
the extent actual amounts differ from forecasted amounts, we will have exposure
to currency fluctuations, resulting in foreign exchange gains or
losses.







58




In 2009, we discontinued hedge
accounting for certain of our interest rate swaps upon termination of one of the
four outstanding swaps. The remaining three swaps were terminated in the
following quarter. From the date hedge accounting was discontinued until the
date the remaining three swaps were terminated, changes in the fair value of the
swaps resulted in recognition of a $5.7 million gain.




The decrease in other income (expense),
net, from $23.7 million in 2007 to $3.6 million in 2008 was primarily
attributable to the recognition in 2007 of $16.5 million in gains from the
sale of previously restructured manufacturing facilities and equipment and a
$2.5 million gain from the sale of one of our manufacturing
operations.




Gain
/ (Loss) on Extinguishment of Debt




During 2009, we repurchased $46.9
million of our 2010 and 2014 Notes at a discount to par value. In connection
with these repurchases, we recorded a gain of $8.5 million, net of unamortized
debt issuance costs of $0.8 million that were expensed upon repurchase of the
notes and a $6.1 million charge associated with dedesignation of a related
interest rate swap. Since the issuance of our 2010 and 2014 Notes for an
aggregate principal amount of $600 million in 2007, we have redeemed or
repurchased $342.6 million of these notes, including redemption of the remaining
outstanding 2010 Notes of $175.7 million on November 16, 2009. Therefore, as of
November 16, 2009, we have $257.4 million of 2014 Notes outstanding. As of
October 3, 2009, we had interest rate swaps of $300 million against the 2010 and
2014 Notes. Based on our repurchases of these notes and our intention to redeem
the 2010 Notes in November 2009, which occurred on November 16, 2009, we
dedesignated $43 million of our interest rate swaps as of October 3, 2009 and
recorded a $6.1 million charge, representing the value of the dedesignated
portion of the interest rate swap previously recorded in accumulated other
comprehensive income.




During
2008, we redeemed $120 million of our Senior Floating Rate Notes due in
2010 at par. In connection with this redemption, $2.2 million of
unamortized debt issuance costs were expensed.




On
June 12, 2007, we used the net proceeds from the issuance of our 2010 and
2014 Notes, together with cash on hand, to repay in full the principal amount
and accrued interest on certain other debt. We recorded a loss on extinguishment
of debt of $3.2 million, representing unamortized debt issuance costs, in
connection with this transaction.







59





Provision
for (Benefit from) Income Taxes




Our
effective tax rate (benefit) on loss from continuing operations was 21.0% for
2009, 4.3% for 2008, and (0.1)% for 2007. Our effective tax rate for 2009 was
substantially higher than the federal statutory benefit rate of (35.0)%
primarily due to taxes on profitable foreign subsidiaries, taxes on dividends
and other foreign income deemed includable in the U.S., and an increase in our
valuation allowance on future tax benefits due to current net operating losses
for which we were not able to recognize a tax benefit.




Our
effective tax rate for 2008 was substantially higher than the federal statutory
benefit rate of (35.0)% primarily due to the non-deductibility of our goodwill
impairment, taxes on profitable foreign subsidiaries, and taxes on dividends and
other foreign income deemed includable in the U.S. Our effective tax rate for
2007 was substantially higher than the federal statutory rate primarily due the
non-deductibility of our goodwill impairment and, to a lesser extent, an
increase in our valuation allowance on future tax benefits.




Liquidity
and Capital Resources




Year
      EndedOctober
      3,
                2009
            
            
            September 27,
                2008
            
            
            September 29,
                2007(In
      thousands)Net
      cash provided by (used in):Operating
      activities
            
            $
            197,230
            
            
            $
            39,265
            
            
            $
            485,937Investing
      activities
            
            
            (91,916
            )
            
            
            11,383
            
            
            
            (16,864
            )Financing
      activities
            
            
            (79,795
            )
            
            
            (120,000
            )
            
            
            (43,775
            )Effect
      of exchange rate changes
            
            
            3,831
            
            
            
            5,729
            
            
            
            16,297Increase
      (decrease) in cash and cash equivalents
            
            $
            29,350
            
            
            $
            (63,623
            )
            
            $
            441,595




Cash
and cash equivalents were $899.2 million at October 3, 2009 and
$869.8 million at September 27, 2008. Our cash levels vary during any
given quarter depending on the timing of collections from customers and payments
to suppliers, the extent and timing of sales of receivables and other
factors.







60




Net
cash provided by operating activities was $197.2 million,
$39.3 million and $485.9 million for 2009, 2008 and 2007, respectively. In
2009, we generated $218.8 million of cash from changes in net operating assets,
which consist primarily of accounts receivable, inventories, accounts payable,
and accrued liabilities. Cash generated from changes in net operating assets
reflects our focused efforts to reduce the level of net operating assets
required to fund our operations as evidenced by improvements in days sales
outstanding (48 at October 3, 2009, versus 52 at September 27, 2008) and
accounts payable days (60 at October 3, 2009, versus 53 at September 27, 2008).
Although we were able to improve these key metrics, the economic slowdown
negatively affected our inventory turns in 2009. In absolute dollars, inventory
decreased by $52.0 million, but due to lower sales levels our inventory turns
decreased from 7.7 turns in 2008 to 6.1 turns in 2009. We expect to improve our
inventory turns in the coming periods, although there can be no assurance that
this result will be achieved due to customer requirements to purchase inventory,
business volume and other factors. Additionally, we generated $21.6 million of
cash in 2009 from our operating results excluding non-cash items. Cash provided
by operating activities in 2008 was primarily from our operating results
adjusted to exclude non-cash items such as depreciation and amortization, stock
based compensation expense, goodwill impairment and similar items. This source
of cash was reduced by net working capital changes of $82.1 million
resulting primarily from the divestiture of our PC Business. Cash provided by
operating activities in 2007 was primarily from changes in net operating assets
resulting from improvements in days sales outstanding and inventory turns, and
reflecting our increased emphasis on working capital management. Working capital
was $1.3 billion at October 3, 2009 and $1.6 billion at
September 27, 2008.




Net
cash provided by (used in) investing activities was $(91.9) million, $11.4
million and $(16.9) million for 2009, 2008 and 2007, respectively. In 2009, we
used $65.9 million of cash for capital expenditures and $29.7 million to acquire
a business operation from JDSU Uniphase. In 2008, we sold our PC business for
$89.1 million, sold certain assets for $30.6 million and received $13.3 million
from maturities of short-term investments. These items were partially offset by
$121.5 million of capital expenditures. In 2007, we used $88.4 million of cash
for capital expenditures and generated $50.2 million of cash from sales of
certain assets and $22.0 million of cash from the sale of a
business.




Net
cash used in financing activities was $79.8 million, $120.0 million
and $43.8 million for 2009, 2008 and 2007, respectively. In 2009, we used
$31.5 million of cash to repurchase certain debt at a discount prior to its
maturity, we spent $29.2 million to repurchase shares of our common stock and we
posted $19.1 million of collateral in the form of cash against certain of our
collateralized obligations. In 2008, we redeemed $120 million of debt at par
prior to its maturity. In 2007, we issued $600 million of debt and used the net
proceeds of $588 million and other cash to repay $625 million of existing
debt.




As
of October 3, 2009, the Company had $1.4 billion of total debt outstanding
under various debt instruments. On November 16, 2009, the Company redeemed
$175.7 million of outstanding debt as discussed further below.







61




Senior Floating Rate
Notes.  On June 12, 2007, we issued $300 million of
Senior Floating Rate Notes due 2010 (the “2010 Notes”) and $300 million of
Senior Floating Rate Notes due 2014 (the “2014 Notes”). The notes accrue
interest at a rate per annum, reset in full quarterly, equal to the three-month
LIBOR plus 2.75%. The 2010 Notes outstanding as of October 3, 2009 were redeemed
on November 16, 2009 and the 2014 Notes will mature on June 15,
2014.




The
2014 Notes are senior unsecured obligations and rank equal in right of payment
with all of our existing and future senior unsecured debt. We may redeem the
2014 Notes in whole or in part at redemption prices ranging from 100% to 102% of
the principal amount of the 2014 Notes, plus accrued and unpaid
interest.




On
November 16, 2009, we redeemed the remaining outstanding 2010 Notes in the
principal amount of $175.7 million. In 2009, we repurchased $4.3 million and
$42.6 million of our 2010 and 2014 Notes, respectively. In 2008, we redeemed
$120.0 million of our 2010 Notes at par. Since the issuance of our 2010 and
2014 Notes for an aggregate principal amount of $600 million in 2007, we have
redeemed or repurchased $342.6 million of these notes, including redemption of
the remaining outstanding 2010 Notes of $175.7 million on November 16, 2009.
Therefore, as of November 16, 2009, we have $257.4 million of 2014 Notes
outstanding.




On
June 12, 2007, we entered into interest rate swap transactions with
independent third parties to partially hedge our Notes. The interest rate swaps
had a total notional amount of $300.0 million and were designated as cash
flow hedges. Under the swap agreements, we pay the counterparties a fixed rate
of 5.594% in exchange for a three month LIBOR rate on the swaps. These swap
agreements effectively fix the interest rate at 8.344% through 2014 on the
hedged portion of debt. As of October 3, 2009, we had interest rate swaps of
$300 million against the 2010 and 2014 Notes. Based on our repurchases of these
notes and our intention to redeem the 2010 Notes in November 2009, which
occurred on November 16, 2009, we dedesignated our interest rate swaps as of
October 3, 2009 and redesignated $257 million of the swaps as hedging
instruments on the same day. As a result of this dedesignation and
redesignation, we recorded a $6.1 million charge to gain (loss) on
extinguishment of debt, representing the value of the $43 million net
dedesignated portion of the interest rate swap previously recorded in
accumulated other comprehensive income. We believe the likelihood that floating
rate debt in the amount of $257 million will exist through swap maturity in 2014
is probable and therefore will continue to apply hedge accounting to this
portion of the swap.







62




8.125% Senior Subordinated
Notes.  On February 15, 2006, we issued $600 million
of 8.125% Senior Subordinated Notes due 2016 (the “8.125% Notes”) with a
maturity date of March 1, 2016. The 8.125% Notes are unsecured and
subordinated in right of payment to all of our existing and future senior
debt.




We
may redeem the 8.125% Notes, in whole or in part, at any time prior to
March 1, 2011, at a redemption price equal to the sum of (1) the
principal amount of the 8.125% Notes to be redeemed, (2) accrued and unpaid
interest on those 8.125% Notes and (3) a make-whole premium. We may redeem
the 8.125% Notes, in whole or in part, beginning on March 1, 2011, at
declining redemption prices ranging from 104.063% to 100% of the principal
amount of the 8.125% Notes, plus accrued and unpaid interest with the actual
redemption price to be determined based on the date of redemption.




6.75% Senior Subordinated
Notes.  On February 24, 2005, we issued $400 million
of 6.75% Senior Subordinated Notes due 2013 (the “6.75% Notes”) with a maturity
date of March 1, 2013. We entered into interest rate swap agreements with
four independent swap counterparties to hedge our interest rate exposures
related to the 6.75% Notes. The swap agreements were terminated in 2009 as
discussed below.




The
6.75% Notes are unsecured and subordinated in right of payment to all of our
existing and future senior debt. We may redeem the 6.75% Notes, in whole or in
part, at declining redemption prices ranging from 103.375% to 100% of the
principal amount, plus accrued and unpaid interest, with the actual redemption
price to be determined based on the date of redemption.





During
the first quarter of 2009, we terminated our revolving credit facility and
entered into a new credit facility. In connection with the termination of the
revolving credit facility, we also terminated an interest rate swap associated
with our 6.75% Notes. During the second quarter of 2009, we received termination
notices from our remaining counterparties exercising their right pursuant to
embedded call options to cancel the remaining interest rate swaps.





Asset-backed Lending
Facility.  In the first quarter of 2009, we entered into a
Loan, Guaranty and Security Agreement (the “Loan Agreement”), among us, the
financial institutions party thereto from time to time as lenders, and Bank of
America, N.A., as agent for such lenders to replace a senior credit facility
which was terminated in the first quarter of 2009.







63




The
Loan Agreement provides for a $135 million secured asset-backed revolving
credit facility, subject to a reduction of between $25 million to $50 million
depending on the amount of our borrowing base, with an initial $50 million
letter of credit sublimit. The facility may be increased by an additional
$200 million upon obtaining additional commitments from the lenders then
party to the Loan Agreement or new lenders. The Loan Agreement expires on the
earlier of (i) the date that is 90 days prior to the maturity date of
the 6.75% Notes if such notes are not repaid, redeemed, defeased, refinanced or
reserved for under the borrowing base under the Loan Agreement prior to such
date or (ii) November 19, 2013 (the “Maturity Date”).




Loans
may be advanced under the Loan Agreement based on a borrowing base derived from
specified percentages of the value of eligible accounts receivable and
inventory. The borrowing base is subject to certain customary reserves and
eligibility criteria. If at any time the aggregate principal amount of the loans
outstanding plus the face amount of undrawn letters of credit under the Loan
Agreement exceed the borrowing base then in effect, we must make a payment or
post cash collateral (in the case of letters of credit) in an amount sufficient
to eliminate such excess. There are currently no loans and $25.3 million in
letters of credit outstanding under the Loan Agreement.




Loans
under the Loan Agreement bear interest, at our option, at a rate equal to LIBOR
or a base rate equal to Bank of America, N.A.’s announced prime rate, in each
case plus a spread. A commitment fee accrues on any unused portion of the
commitments under the Loan Agreement at a rate per annum based on usage.
Principal, together with accrued and unpaid interest, is due on the Maturity
Date. Our obligations under the Loan Agreement are secured by certain accounts
receivable and other assets.




Sales of Accounts
Receivable.  On June 26, 2008 we entered into a two year
global revolving trade receivables purchase agreement with a financial
institution that allows us to sell accounts receivable. The maximum face amount
of accounts receivable that may be outstanding at any time under this agreement
is $250 million. The purchase price for receivables sold under this program
ranges from 95% to 100% of the face amount. We pay LIBOR plus a spread for the
period from the date a receivable is sold to the date the receivable is
collected. Sold receivables are subject to certain limited recourse provisions.
We continue to service, administer and collect sold receivables on behalf of the
purchaser in exchange for a servicing fee.







64




During
2009, we sold $137.5 million of receivables for which we received proceeds of
$130.6 million.  As of October 3, 2009, $8.4 million of sold
receivables were subject to certain recourse provisions and $20.5 million of
sold receivables remained outstanding.





In
accordance with SFAS No. 140, (ASC Topic 860) as amended by SFAS
No. 156, “Accounting for
Servicing of Financial Assets an Amendment of FASB Statement No. 140”(ASC Topic 860, Transfers and Services),
accounts receivable sold in 2009, 2008 and 2007 were removed from our
consolidated balance sheets and reflected as cash provided by operating
activities in the consolidated statements of cash flows.





Other Liquidity
Matters.  Current weak economic conditions and tightening of
credit markets have increased the risk of delinquent or uncollectible accounts
receivable. Additionally, such factors have negatively affected our sales, net
income and operating cash flows. We expect this trend to continue in the near
term.





On
January 14, 2009, one of our customers, Nortel Networks, filed a petition
for reorganization under bankruptcy law. As a result, we performed an analysis
as of December 27, 2008 to quantify our potential exposure, considering factors
such as which legal entities of the customer are included in the bankruptcy
reorganization, future demand from Nortel Networks, and administrative and
reclamation claim priority. As a result of the analysis, we determined that
certain accounts receivable may not be collectible and therefore deferred
recognition of revenue in the amount of $5.0 million for shipments made in the
first quarter of 2009. Additionally, we determined that certain inventory
balances may not be recoverable and provided a reserve for such inventories in
the amount of $5.0 million in the first quarter of 2009. We updated our analysis
at October 3, 2009 and determined that no additional reserves were necessary.
Our estimates are subject to change as additional information becomes
available.





In
the ordinary course of business, we are or may become party to legal
proceedings, claims and other contingencies, including environmental matters and
examinations and investigations by government agencies. As of October 3, 2009,
we had reserves of $29.3 million related to such matters. We may not be
able to accurately predict the outcome of these matters or the amount or timing
of cash flows that may be required to defend ourselves or to settle such
matters. For further information regarding legal proceedings, see Part II,
Item 1. Legal Proceedings. Additionally, we participate as a plaintiff in
certain legal proceedings and may receive cash in connection with these matters.
We do not recognize income for these matters until cash is received or
realizable. We expect to receive a payment of up to $35 million in December 2009
in connection with one of these matters, but there can be no assurance as to the
exact amount or timing of this payment.





65




As
of October 3, 2009, we had a liability of $31.5 million for uncertain tax
positions. Our estimate of our liability for uncertain tax positions is based on
a number of subjective assessments, including the likelihood of a tax obligation
being assessed, the amount of taxes (including interest and penalties), that
would ultimately be payable, and our ability to settle any such obligations on
favorable terms. Therefore, the amount of future cash flows associated with
uncertain tax positions may be significantly higher or lower than our recorded
liability.




We
have entered into, and continue to enter into, various transactions that
periodically require collateral. These obligations have historically arisen from
customs, import/export, VAT, utility services, debt financing, foreign exchange
contracts and interest rate swaps. We have collateralized, and may from time to
time collateralize, such obligations as a result of counterparty requirements or
for economic reasons. As of October 3, 2009, we had collateral of $29.1 million
in the form of cash against certain of our collateralized obligations. This
amount is included in other noncurrent assets on the consolidated balance
sheet.




Our
liquidity needs are largely dependent on changes in our working capital,
including the extension of trade credit by our suppliers, investments in
facilities and equipment, and repayments of obligations under outstanding
indebtedness. Our primary sources of liquidity include cash of
$899.2 million, our $135 million credit facility, our $250 million accounts
receivable sales program and cash generated from operations. As of October 3,
2009, we were eligible to borrow $61.8 million under our credit
facility.




Our
debt agreements do not contain financial covenants currently applicable to us,
but do include a number of customary affirmative covenants, negative covenants
and events of default. If we are unable to comply with these requirements in the
future, we may be required to seek waivers or amendments. We may not be able to
obtain such waivers or amendments on terms acceptable to us or at all, and, in
such case, we could be required to immediately repay certain outstanding debt or
our ability to conduct our business could otherwise be materially adversely
impacted. We were in compliance with these requirements as of October 3,
2009.





We
repaid our 2010 Notes on November 16, 2009. Our next debt maturity is in
2013. We may, however, consider early redemptions of our debt in future periods,
possibly using proceeds from additional debt or equity financings. In addition
to our existing covenant requirements, future debt financing may require us to
comply with financial ratios and covenants. Equity financing, if required, may
result in dilution to existing stockholders.





We
announced on October 27, 2008 that our Board of Directors had approved a
stock repurchase program covering up to 10% of our shares based on our closing
stock price on October 29, 2008, which equates to repurchases of
approximately $35.0 million. Purchases under the program shall be made at
prevailing market prices or in privately negotiated transactions. The program
shall continue through December 31, 2009, unless otherwise determined by
the Board of Directors. During 2009, we repurchased 10.1 million shares of our
common stock, representing approximately 11% of our outstanding shares, for a
total of $29.2 million, including commissions.





66




We believe our existing cash resources
and other sources of liquidity, together with cash generated from operations and
planned sales of assets, will be sufficient to meet our working capital
requirements through at least the next 12 months. Should demand for our
products decrease significantly over the next 12 months, the available cash
provided by operations could be adversely impacted.




Contractual
Obligations




The
following is a summary of our long-term debt, including interest, and operating
lease obligations as of October 3, 2009:




Year
      EndedTotal
            
            
            2010
            
            
            2011
            
            
            2012
            
            
            2013
            
            
            2014
            
            
            Thereafter(In
      thousands)Long-term
      debt, including interest
            
            $
            1,945,848
            
            
            $
            273,820
            
            
            $
            97,227
            
            
            $
            97,227
            
            
            $
            481,551
            
            
            $
            322,268
            
            
            $
            673,755Operating
      leases
            
            
            74,639
            
            
            
            24,245
            
            
            
            16,872
            
            
            
            9,587
            
            
            
            6,000
            
            
            
            3,307
            
            
            
            14,628Total
      contractual obligations
            
            $
            2,020,487
            
            
            $
            298,065
            
            
            $
            114,099
            
            
            $
            106,814
            
            
            $
            487,551
            
            
            $
            325,575
            
            
            $
            688,383





We
also have outstanding firm purchase orders with certain suppliers for the
purchase of inventory. These purchase orders are generally short-term in nature.
Orders for standard, or catalog, items can typically be canceled with little or
no financial penalty. Our policy regarding non-standard or customized items
dictates that such items are only ordered specifically for customers who have
contractually assumed liability for the inventory. In addition, a substantial
portion of catalog items covered by our purchase orders are procured for
specific customers based on their purchase orders or a forecast under which the
customer has contractually assumed liability for such material. Accordingly, the
amount of liability from purchase obligations under these purchase orders is not
expected to be significant or meaningful.




We
provided guarantees to various third parties in the form of letters of credit
totaling $25.3 million as of October 3, 2009. The letters of credit cover
various guarantees including workers’ compensation claims and customs
duties.




We
have defined benefit pension plans with an underfunded amount of
$16.7 million at October 3, 2009. We will be required to provide additional
funding to these plans in the future.




Our
future needs for financial resources include increases in working capital to
support anticipated sales growth, investments in facilities and equipment and
repayments of outstanding indebtedness. Additionally, in 2010, we anticipate
incurring additional cash outlays in connection with our past restructuring
activities for expenses recorded as incurred in accordance with U.S.
GAAP.







67





Quarterly
Results (Unaudited)




The
following tables contain selected unaudited quarterly financial data for the
eight fiscal quarters in 2009 and 2008. In management’s opinion, the unaudited
data has been prepared on the same basis as the audited information and includes
all adjustments (consisting only of normal recurring adjustments) necessary for
a fair presentation of the data for the periods presented. Our results of
operations have varied and may continue to fluctuate significantly from quarter
to quarter. The results of operations in any period should not be considered
indicative of the results to be expected from any future period.




Year
      Ended October 3, 2009First
      Quarter
            
            
            Second
      Quarter
            
            
            Third
      Quarter
            
            
            Fourth
      Quarter(In
      thousands, except per share data)Net
      sales
            
            $
            1,419,264
            
            
            $
            1,195,107
            
            
            $
            1,209,150
            
            
            $
            1,353,960Gross
      profit
            
            $
            83,798
            
            
            $
            68,590
            
            
            $
            75,760
            
            
            $
            94,330Gross
      margin(1)
            
            
            5.9
            %
            
            
            5.7
            %
            
            
            6.3
            %
            
            
            7.0
            %Operating
      income (loss)
            
            $
            1,936
            
            
            $
            (13,166
            )
            
            $
            (1,147
            )
            
            $
            7,721Operating
      margin (loss)
            
            
            0.1
            %
            
            
            (1.1
            )%
            
            
            (0.1
            )%
            
            
            0.6
            %Net
      loss
            
            $
            (25,273
            )
            
            $
            (37,538
            )
            
            $
            (41,126
            )
            
            $
            (32,285
            )Basic
      and diluted net loss per share
            
            $
            (0.29
            )
            
            $
            (0.45
            )
            
            $
            (0.51
            )
            
            $
            (0.41
            )






(1)
            Improvement
      in the fourth quarter, relative to the third quarter, is primarily
      attributable to increased volume and a more favorable product mix, whereby
      higher gross margin products represented a greater percentage of our net
      sales.







68




Year
      Ended September 27, 2008First
      Quarter
            
            
            Second
      Quarter
            
            
            Third
      Quarter
            
            
            Fourth
      Quarter(2)(In
      thousands, except per share data)Net
      sales
            
            $
            1,778,140
            
            
            $
            1,817,431
            
            
            $
            1,903,253
            
            
            $
            1,703,579Gross
      profit
            
            $
            128,929
            
            
            $
            124,645
            
            
            $
            139,641
            
            
            $
            130,891Gross
      margin(1)
            
            
            7.3
            %
            
            
            6.9
            %
            
            
            7.3
            %
            
            
            7.7
            %Operating
      income (loss)
            
            $
            26,816
            
            
            $
            (8,613
            )
            
            $
            39,738
            
            
            $
            (442,101
            )Operating
      margin (loss)
            
            
            1.5
            %
            
            
            (0.5
            )%
            
            
            2.1
            %
            
            
            (26.0
            )%Income
      (loss) from continuing operations
            
            $
            (9,453
            )
            
            $
            (39,937
            )
            
            $
            11,969
            
            
            $
            (473,915
            )Income
      (loss) from discontinued operations
            
            $
            17,369
            
            
            $
            15,523
            
            
            $
            3,359
            
            
            $
            (11,264
            )Net
      income (loss)
            
            $
            7,916
            
            
            $
            (24,414
            )
            
            $
            15,328
            
            
            $
            (485,179
            )Basic
      net income (loss) from continuing operations per share
            
            $
            (0.11
            )
            
            $
            (0.45
            )
            
            $
            0.14
            
            
            $
            (5.35
            )Basic
      net income (loss) from discontinued operations per share
            
            $
            0.20
            
            
            $
            0.17
            
            
            $
            0.03
            
            
            $
            (0.13
            )Basic
      net income (loss) per share
            
            $
            0.09
            
            
            $
            (0.28
            )
            
            $
            0.17
            
            
            $
            (5.48
            )Diluted
      net income (loss) from continuing operations per share
            
            $
            (0.11
            )
            
            $
            (0.45
            )
            
            $
            0.14
            
            
            $
            (5.35
            )Diluted
      net income (loss) from discontinued operations per share
            
            $
            0.20
            
            
            $
            0.17
            
            
            $
            0.03
            
            
            $
            (0.13
            )Diluted
      net income (loss) per share
            
            $
            0.09
            
            
            $
            (0.28
            )
            
            $
            0.17
            
            
            $
            (5.48
            )






(1)
            Improvement
      in the fourth quarter, relative to the third quarter, is partially
      attributable to favorable resolutions of certain inventory and warranty
      claims.




(2)
            Includes
      a goodwill impairment charge of
  $478.7 million.







69





Item 7A.  Quantitative and Qualitative
Disclosures About Market Risk




Interest
Rate Risk




Our
exposures to market risk for changes in interest rates relate primarily to
certain debt obligations. Currently, we do not use derivative financial
instruments in our investment portfolio. We invest in high quality credit
issuers and, by policy, limit the amount of principal exposure with any one
issuer. As stated in our policy, we seek to ensure the safety and preservation
of our invested principal funds by limiting default and market
risk.




We
seek to mitigate default risk by investing in high quality credit securities and
by positioning our investment portfolio to respond to a significant reduction in
credit rating of any investment issuer, guarantor or depository. We seek to
mitigate market risk by limiting the principal and investment term of funds held
with any one issuer and by investing funds in marketable securities with active
secondary or resale markets. As of October 3, 2009, we had no short-term
investments.




As
of October 3, 2009, we had $1.4 billion of debt, of which $1.0 billion bears
interest at a fixed rate and $257 million of variable rate debt has been
converted to fixed rate through the use of interest rate swaps. Accordingly, our
exposure to interest rate changes is limited to variable rate debt of $176
million, which was redeemed on November 16, 2009 (see Note 17). The effect of an
immediate 10% change in interest rates would not be material to our results of
operations.





Foreign
Currency Exchange Risk




We
transact business in foreign countries. Our foreign exchange policy requires
that we take certain steps to limit our foreign exchange exposures in certain
assets and liabilities and forecasted cash flows. However, such policy does not
require us to hedge all foreign exchange exposures. Further, foreign currency
hedges are based on forecasted transactions, the amount of which may differ from
that actually incurred. As a result, we can experience foreign exchange rate
gains and losses in our results of operations.




Our
primary foreign currency cash flows are in certain Asian and European countries,
Brazil, Canada and Mexico. We enter into short-term foreign currency forward
contracts to hedge currency exposures associated with certain assets and
liabilities denominated in foreign currencies. These contracts typically have
maturities of three months or less and are not designated as part of a hedging
relationship in accordance with SFAS No. 133 (ASC Topic 815). All
outstanding foreign currency forward contracts are marked-to-market at the end
of the period with unrealized gains and losses included in other income
(expense), net, in the consolidated statements of operations. At October 3, 2009
and September 27, 2008, we had outstanding foreign currency forward
contracts to exchange various foreign currencies for U.S. dollars in the
aggregate notional amount of $354.2 million and $341.6 million,
respectively. We also utilize foreign currency forward and option contracts to
hedge certain operational (“cash flow”) exposures resulting from changes in
foreign currency exchange rates. Such exposures result from portions of
forecasted sales, cost of sales and expenses denominated in currencies other
than the functional currency. These contracts typically are less than
12 months in duration and are accounted for as cash flow hedges under SFAS
No. 133 (ASC Topic 815), subject to periodic assessment of effectiveness.
The effective portion of changes in the fair value of the contracts is recorded
in stockholders’ equity as a separate component of accumulated other
comprehensive income and is recognized in the consolidated statement of
operations when the hedged item affects earnings. The ineffective portion of the
hedges was not material for 2009. We had forward and option contracts related to
cash flow hedges in various foreign currencies in the aggregate notional amount
of $32.1 million and $49.3 million at October 3, 2009 and
September 27, 2008, respectively.




The
net impact of an immediate 10% change in exchange rates would not be material to
our consolidated financial statements, provided we are appropriately hedged.
However, if we are not adequately hedged, we could incur significant gains or
losses.







70





Item 8.  Financial Statements and
Supplementary Data




The
information required by this item is incorporated by reference to the financial
statements included in “Part IV—Item 15(a)(1),” the financial
statement schedule included in “Part IV—Item 15(a)(2)” and the
selected quarterly financial data included in
“Part II—Item 7—Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Quarterly Results (Unaudited).”




Item 9.  Changes In and Disagreements With
Accountants on Accounting and Financial Disclosure




Not
applicable.




Item 9A.  Controls and
Procedures




(a)
            Management’s
      Report on Internal Control Over Financial
  Reporting




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Securities Exchange Act of 1934, as amended, or the Exchange Act). Our
management, including our Chief Executive Officer and Chief Financial Officer,
conducted an evaluation of the effectiveness of our internal control over
financial reporting as of October 3, 2009. In making this assessment, our
management used the criteria established in Internal Control—Integrated
Framework, issued by The Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Our management has concluded that, as of October 3,
2009, our internal control over financial reporting was effective based on the
COSO criteria. The effectiveness of our internal control over financial
reporting as of October 3, 2009 has been audited by KPMG LLP, an
independent registered public accounting firm, as stated in their attestation
report which is included in Item 15 of this Annual Report on
Form 10-K.




(b)
            Changes
      in Internal Control Over Financial
Reporting




There
was no change in our internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal quarter ended October 3, 2009 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.







71




(c)
            Evaluation
      of Disclosure Controls and
Procedures




Our
management is responsible for establishing and maintaining our disclosure
controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under
the Exchange Act. Our management, including our Chief Executive Officer and
Chief Financial Officer, does not expect that our disclosure controls and
procedures will prevent all error and all fraud. Disclosure controls and
procedures, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that their objectives are met. Further, the
design of disclosure controls and procedures must reflect the fact that there
are resource constraints, and the benefits of disclosure controls and procedures
must be considered relative to their costs. Because of the inherent limitations
in all control systems, no evaluation of disclosure controls and procedures can
provide absolute assurance that all disclosure control issues and instances of
fraud, if any, within the Company have been detected. Nonetheless, our Chief
Executive Officer and Chief Financial Officer have concluded that, as of October
3, 2009, our disclosure controls and procedures were (1) designed to provide
reasonable assurance of achieving their objectives and (2) effective to provide
reasonable assurance that information required to be disclosed in the reports we
file and submit under the Exchange Act is recorded, processed, summarized and
reported as and when required, and that such information is accumulated and
communicated to our management, including the Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding its required
disclosure.




(d)           Internal
Controls with Respect to Stock Options




Pursuant to the Stipulation of
Settlement dated February 26, 2009 approved in connection with the settlement of
our derivative litigation, we agreed to include in our annual report on internal
control over financial reporting management’s assessment of the adequacy of our
internal controls with respect to stock grants. Management’s assessment of the
effectiveness of internal control over financial reporting contained in
subsection (a) above includes our assessment of the effectiveness of our
internal controls with respect to stock options.




Item 9B.  Other
Information




Not
applicable.


PART
III




The
information called for by Items 10, 11, 12, 13 and 14 of Part III are
incorporated by reference from our definitive Proxy Statement to be filed in
connection with our 2009 Annual Meeting of Stockholders pursuant to
Regulation 14A, except that the information regarding our executive
officers called for by Item 401(b) of Regulation S-K has been included
in Part I of this report.







72





PART
IV




Item 15.  Exhibits and Financial Statement
Schedules




(a)
            (1) The following
      financial statements are filed as part of this
  report:




PageReports
      of Independent Registered Public Accounting Firm
            81Financial
      Statements:Consolidated
      Balance Sheets, As of October 3, 2009 and September 27,
      2008
            82Consolidated
      Statements of Operations, Years Ended October 3, 2009, September 27,
      2008 and September 29, 2007
            83Consolidated
      Statements of Comprehensive Loss, Years Ended October 3, 2009,
      September 27, 2008 and September 29, 2007
            84Consolidated
      Statements of Stockholders’ Equity, Years Ended October 3, 2009,
      September 27, 2008 and September 29, 2007
            85Consolidated
      Statements of Cash Flows, Years Ended October 3, 2009, September 27,
      2008 and September 29, 2007
            86Notes
      to Consolidated Financial Statements
            87




(2)
            The
      following financial statement schedule of Sanmina-SCI Corporation is filed
      as part of this report on Form 10-K and should be read in conjunction
      with our Financial Statements included in this
    Item 15:




Schedule II—Valuation
and Qualifying Accounts




All
other schedules are omitted because they are not applicable or the required
information is shown in the Financial Statements or the notes
thereto.






(3)
            Refer
      to item 15(b) immediately
below.







73




(b)
              Exhibits
  Exhibit
                Number
              
              Description3.1(1)
              Restated
      Certificate of Incorporation of the Registrant, dated January 31,
      1996.3.2(2)
              Certificate
      of Amendment of the Restated Certificate of Incorporation of the
      Registrant, dated March 9, 2001.3.3(3)
              Certificate
      of Designation of Rights, Preferences and Privileges of Series A
      Participating Preferred Stock of the Registrant, dated May 31,
      2001.3.4(4)
              Certificate
      of Amendment of the Restated Certificate of Incorporation of the
      Registrant, dated December 7, 2001.3.5(5)
              Amended
      and Restated Bylaws of the Registrant adopted by the Board of Directors on
      December 1, 2008.3.6(6)
              Certificate
      of Amendment of the Restated Certificate of Incorporation of the
      Registrant, as amended, dated July 27, 2009.4.1(7)
              Preferred
      Stock Rights Agreement, dated as of May 17, 2001 between the
      Registrant and Wells Fargo National Bank, Minnesota, N.A., including the
      form of Certificate of Determination, the form of Rights Certificate and
      the Summary of Rights attached thereto as Exhibits A, B, and
      C.4.2(8)
              Supplemental
      Indenture No. 3, dated as of October 7, 2005, to the
      Subordinated Indenture, by and among SCI Systems, Inc., Sanmina-SCI
      USA, Inc. and J.P. Morgan Trust Company, National Association, as
      trustee.4.3(9)
              Subordinated
      Indenture dated March 15, 2000, between SCI Systems, Inc. and
      Bank One Trust Company, National Association, as Trustee (“Subordinated
      Indenture”).4.4(10)
              Supplemental
      Indenture No. 1, dated as of March 15, 2000, to the Subordinated
      Indenture, between SCI Systems, Inc. and Bank One Trust Company,
      National Association, as Trustee.4.5(11)
              Supplemental
      Indenture No. 2, dated as of December 7, 2001, to the
      Subordinated Indenture, by and among SCI Systems, Inc., Sanmina
      Corporation, as Guarantor, and Bank One Trust Company, National
      Association, as Trustee.4.6(12)
              Indenture,
      dated as of December 23, 2002, among the Registrant, the Guarantors
      Party thereto and State Street Bank and Trust Company of California, N.A.,
      as trustee.4.7(13)
              First
      Supplemental Indenture, dated as of July 21, 2003, among
      Newisys, Inc., the Registrant and U.S. Bank National Association, as
      trustee.4.8(14)
              Second
      Supplemental Indenture, dated as of September 30, 2005, among
      Sanmina-SCI USA, Inc., the Registrant and U.S. Bank National
      Association, as trustee.4.9(15)
              Intercreditor
      Agreement, dated as of December 23, 2002, by and among, as second
      lien collateral trustees, LaSalle Business Credit, Inc., as
      collateral agent, State Street Bank and Trust Company of California, N.A.
      and each New First Lien Claimholder Representative which may become a
      party from time to time, and the Registrant.4.10(16)
              Second
      Lien Collateral Trust Agreement, dated as of December 23, 2002, by
      and among the Registrant, the subsidiaries of the Registrant party thereto
      and State Street Bank and Trust Company of California, N.A., as second
      lien collateral trustee.4.11(17)
              Indenture,
      dated as of February 24, 2005, among the Registrant, the guarantors
      party thereto and U.S. Bank National Association, as
    trustee.4.12(18)
              First
      Supplemental Indenture, dated as of September 30, 2005, among
      Sanmina-SCI USA, Inc., the Registrant and U.S. Bank National
      Association, as trustee.4.13(19)
              Second
      Supplemental Indenture, dated as of January 3, 2007, among the
      Registrant and U.S. Bank National Association, as
  trustee.
 74
 Exhibit
                Number
              
              Description4.14(20)
              Indenture,
      dated as of February 15, 2006, among the Registrant, certain
      subsidiaries of the Registrant as guarantors thereunder and U.S. Bank
      National Association, as trustee.4.15(21)
              First
      Supplemental Indenture, dated as of January 3, 2007, among the
      Registrant and U.S. Bank National Association, as
  trustee.4.16(22)
              Amended
      and Restated Credit and Guaranty Agreement, dated as of December 16,
      2005, among the Registrant, the guarantors party thereto, the lenders
      party thereto, Citibank, N.A., as Collateral Agent, and Bank of America,
      N.A., as Administrative Agent.4.17(23)
              Amendment
      No.3 and Waiver to Amended and Restated Credit and Guaranty Agreement,
      dated as of December 29, 2006, among the Registrant, the guarantors
      party thereto, the lenders party thereto, Citibank, N.A., as Collateral
      Agent, and Bank of America, N.A., as Administrative
  Agent.4.18(24)
              Amendment
      No. 4 to Amended and Restated Credit and Guaranty Agreement, dated as
      of June 5, 2007, by and among Registrant, each of the subsidiaries of
      Registrant party thereto, the lenders party thereto, Citibank, N.A., as
      collateral agent, and Bank of America, N.A., as Administrative
      Agent.4.19(25)
              Indenture,
      dated as of June 12, 2007, among Registrant, the guarantors party
      thereto, and Wells Fargo Bank, National Association as trustee, relating
      to the Senior Floating Rate Notes due 2010.4.20(26)
              Indenture,
      dated as of June 12, 2007, among Registrant, the guarantors party
      thereto, and Wells Fargo Bank, National Association as trustee, relating
      to the Senior Floating Rate Notes due 2014.10.1(27)
              Amended
      1990 Incentive Stock Plan.10.2(28)(29)
              1999
      Stock Plan.10.3(30)
              Addendum
      to the 1999 Stock Plan (Additional Terms and Conditions for Employees of
      the French subsidiary(ies)), dated February 21,
  2001.10.4(31)
              1995
      Director Option Plan.10.5(32)
              1996
      Supplemental Stock Plan.10.6(33)
              Hadco
      Corporation Non-Qualified Stock Option Plan, as Amended and Restated
      July 1, 1998.10.7(34)
              SCI
      Systems, Inc. 1994 Stock Option Incentive Plan.10.8.(35)
              SCI
      Systems, Inc. 2000 Stock Incentive Plan.10.9.(36)
              SCI
      Systems, Inc. Board of Directors Deferred Compensation
      Plan.10.10(37)
              Form
      of Indemnification Agreement executed by the Registrant and its officers
      and directors pursuant to the Delaware reincorporation.10.11(38)(29)
              Amended
      and Restated Sanmina-SCI Corporation Deferred Compensation Plan for
      Outside Directors.10.12(39)
              Rules
      of the Sanmina-SCI Corporation Stock Option Plan 2000
      (Sweden).10.13(40)
              Rules
      of the Sanmina-SCI Corporation Stock Option Plan 2000
      (Finland).10.14(41)(29)
              Amended
      and Restated Sanmina-SCI Corporation Deferred Compensation Plan dated
      June 9, 2008.10.15(42)
              2003
      Employee Stock Purchase Plan.10.16(43)
              Committed
      Account Receivable Purchase Agreement, dated April 1, 2005, between
      Sanmina-SCI UK Limited and Citibank
  International Plc.10.17(44)
              Committed
      Account Receivable Purchase Agreement, dated April 1, 2005, between
      Sanmina-SCI Magyarorszag Elektronikai Gyarto Kft and Citibank
      International Plc.10.18(45)
              Revolving
      Receivables Purchase Agreement, dated as of September 23, 2005, among
      Sanmina-SCI Magyarorszag Elektronikai Gyarto Kft, Sanmina-SCI Systems de
      Mexico S.A. de C.V., as Originators, the Registrant and Sanmina-SCI
      UK Ltd., as Servicers, the banks and financial institutions party
      thereto from time to time, and Deutsche Bank AG New York, as
      Administrative Agent.10.19(46)
              Randy
      Furr separation agreement.
 75
 Exhibit
                Number
              
              Description10.20(47)
              Revolving
      Trade Receivables Purchase Agreement, dated as of September 21, 2007,
      among Sanmina-SCI Magyarorszag Elekronikai Gyarto Kft and Sanmina-SCI
      Systems de Mexico, S.A. de C.V., as Originators, the Registrant,
      Sanmina-SCI UK Ltd., and Sanmina-SCI Israel Medical Ltd., as
      Servicers, the banks and financial institutions party thereto from time to
      time, and Deutsche Bank AG New York, as Administrative
    Agent.10.21(48)
              Form
      of First Amendment to the Revolving Trade Receivables Purchase Agreement,
      dated as of September 21, 2007, among Sanmina-SCI Magyarorszag
      Elektronikai Gyarto Kft and Sanmina-SCI Systems de Mexico, S.A. de
      C.V., as Originators, the Registrant and Sanmina-SCI UK Ltd., as
      Servicers, the several banks and other financial institutions or entities
      from time to time party thereto, as Purchasers, and Deutsche Bank AG New
      York Branch, as Administrative Agent, dated November 26,
      2007.10.22(49)(29)
              Employment
      Agreement dated as of August 28, 2007 by and between the Registrant
      and Joseph Bronson.10.23(50)(29)
              Employment
      Agreement dated as of June 15, 2007 by and between the Registrant and
      Walter Hussey.10.24(51)(29)
              Employment
      Agreement dated as of March 2, 2007 by and between the Registrant and
      Michael Tyler.10.25(52)
              Asset
      Purchase and Sale Agreement dated February 17, 2008 by and among the
      Registrant, Sanmina-SCI USA Inc., SCI Technology, Inc.,
      Sanmina-SCI Systems de Mexico S.A. de C.V., Sanmina-SCI Systems
      Services de Mexico S.A. de C.V., Sanmina-SCI Hungary Electronics
      Manufacturing Limited Liability Company, Sanmina-SCI Australia
      PTY LTD and Foxteq Holdings, Inc.10.26(53)
              Amendment
      to Asset Purchase Agreement dated February 17, 2008 by and among the
      Registrant, Sanmina-SCI USA Inc., SCI Technology, Inc.,
      Sanmina-SCI Systems de Mexico S.A. de C.V., Sanmina-SCI Systems
      Services de Mexico S.A. de C.V., Sanmina-SCI Hungary Electronics
      Manufacturing Limited Liability Company, Sanmina-SCI Australia
      PTY LTD and Foxteq Holdings, Inc., dated July 7,
      2008.10.27(54)(29)
              Description
      of fiscal 2008 Non-employee Directors Compensation
      Arrangements.10.28(55)(29)
              Employment
      offer letter dated July 20, 2004 between the Registrant and David
      White.10.29(56)
              Asset
      Purchase Agreement dated April 25, 2008 by and among Sanmina-SCI
      USA Inc., Sanmina-SCI Systems de Mexico S.A. de C.V.,
      Sanmina-SCI Systems Services de Mexico S.A. de C.V., Lenovo
      (Singapore) Pte.Ltd. and Lenovo Centro Tecnologico, SdeRL de
      C.V.10.30(57)
              First
      Amendment Agreement, dated as of November 26, 2007 to the Revolving
      Trade Receivables Purchase Agreement dated as of September 21, 2007
      among Sanmina-SCI Magyarorszag Elektronikai Gyarto Kft and Sanmina-SCI
      Systems de Mexico, S.A. de C.V., as Originators, the Registrant and
      Sanmina-SCI UK Ltd, as Services, the several banks and other
      financial institutions or entities from time to time parties thereto, as
      Purchasers and Deutsche Bank AG New York Branch, as Administrative
      Agent.10.31(58)
              Second
      Amendment Agreement, dated as of March 21, 2008 to the Revolving
      Trade Receivables Purchase Agreement dated as of September 21, 2007
      among Sanmina-SCI Magyarorszag Elektronikai Gyarto Kft and Sanmina-SCI
      Systems de Mexico, S.A. de C.V., as Originators, the Registrant and
      Sanmina-SCI UK Ltd, as Services, the several banks and other
      financial institutions or entities from time to time parties thereto, as
      Purchasers and Deutsche Bank AG New York Branch, as Administrative
      Agent.10.32(59)
              Third
      Amendment Agreement, dated as of April, 30, 2008 to the Revolving Trade
      Receivables Purchase Agreement dated as of September 21, 2007 among
      Sanmina-SCI Magyarorszag Elektronikai Gyarto Kft and Sanmina-SCI Systems
      de Mexico, S.A. de C.V., as Originators, the Registrant and
      Sanmina-SCI UK Ltd, as Services, the several banks and other
      financial institutions or entities from time to time parties thereto, as
      Purchasers and Deutsche Bank AG New York Branch, as Administrative
      Agent.10.33(60)(29)
              Revised
      form of Officer and Director Indemnification
  Agreement.
 
  76
 
 Exhibit
                Number
              
              Description10.34(61)
              Revolving
      Trade Receivables Purchase Agreement dated June 26, 2008 by and
      among, the Registrant, Deutsche Bank AG New York, as administrative agent,
      and Sanmina-SCI Magyarország Elektronikai Gyártó Kft, Sanmina Magyarország
      Elektrotechnikai Részegységgyártó Kft, Sanmina-SCI EMS Haukipudas OY, a
      limited liability company incorporated under the laws of the Republic of
      Finland, Sanmina-SCI Enclosure Systems OY, Sanmina-SCI Systems Singapore
      Pte. Ltd,, Sanmina-SCI Israel Medical Systems Ltd., Sanmina-SCI
      Systems Canada, Inc., Sanmina-SCI Systems (Thailand) Ltd., and
      Sanmina-SCI UK Ltd.10.35(62)(29)
              Sanmina-SCI
      FY 2008 Corporate Annual G&A Short Term Incentive
  Plan.10.36(63)
              Loan,
      Guaranty and Security Agreement, dated as of November 19, 2008, among
      the Registrant and certain of its subsidiaries as borrowers, Sanmina-SCI
      Systems (Canada) Inc. and SCI Brockville Corp., as Designated
      Canadian Guarantors, the financial institutions party thereto from time to
      time as lenders and Bank of America, N.A., as agent for such
      lenders.10.37(64)
              2009
      Incentive Plan.10.38(65)
              Credit
      and Security Agreement dated as of November 24, 2008 by and among Sanmina
      SPV LLC, the lenders named therein and Deutsche Bank AG, New York Branch,
      as administrative agent and collateral agent.10.39(66)
              Receivables
      Transfer and Contribution Agreement entered into as of November 24, 2008
      by and between Sanmina SPV LLC and the Registrant.10.40(66)(29)
              Deferred
      Compensation Plan for Outside Directors amended and restated effective
      January 1, 2009.10.41(66)(29)
              Deferred
      Compensation Plan effective January 1, 2009.10.42(66)(29)
              Description
      of Fiscal 2009 Non-employee Director Compensation
      Arrangements.10.43(66)(29)
              Form
      of Stock Option Agreement for use under the 2009 Incentive
      Plan.10.44(66)(29)
              Form
      of Restricted Stock Unit Agreement for use under the 2009 Incentive
      Plan.10.45(66)(29)
              Form
      of Restricted Stock Agreement for use under the 2009 Incentive
      Plan.10.46(29)
              Employment
      offer letter dated September 4, 2009 between the
      Registrant  and Bob Eulau (filed herewith).10.47(29)
              Amendment
      to Employment Agreement by and between the Registrant and Michael Tyler
      dated November 15, 2007 (filed herewith).14.1(63)
              Code
      of Business Conduct and Ethics of the Registrant.21.1
              Subsidiaries
      of the Registrant (filed herewith).23.1
              Consent
      of KPMG LLP, independent registered public accounting firm (filed
      herewith).31.1
              Certification
      of the Principal Executive Officer pursuant to Securities Exchange Act
      Rules 13a-14(a) and 15d-14(a), as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002 (filed
      herewith).31.2
              Certification
      of the Principal Financial Officer pursuant to Securities Exchange Act
      Rules 13a-14(a) and 15d-14(a), as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002 (filed
      herewith).32.1(67)
              Certification
      of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
      (furnished herewith).32.2(67)
              Certification
      of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
      (furnished herewith).
   (1)
              Incorporated
      by reference to Exhibit 3.2 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 30, 1996, SEC File
      No. 000-21272, filed with the Securities and Exchange Commission
      (“SEC”) on December 24, 1996.
 (2)
              Incorporated
      by reference to Exhibit 3.1(a) to the Registrant’s Quarterly Report
      on Form 10-Q for the fiscal quarter ended March 31, 2001, filed
      with the SEC on May 11,
2001.
  77
  (3)
              Incorporated
      by reference to Exhibit 3.1.2 to the Registrant’s Registration
      Statement on Form S-4, filed with the SEC on August 10,
      2001.
 (4)
              Incorporated
      by reference to Exhibit 3.1.3 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 29, 2001, filed
      with the SEC on December 21,
2001.
 (5)
              Incorporated
      by reference to Exhibit 3.2 to Registrant’s Current Report on
      Form 8-K, filed with the SEC on December 5,
  2008.
 (6)
              Incorporated
      by reference to Exhibit 3.6 to Registrant’s Current Report on
      Form 8-K, filed with the SEC on August 19,
  2009.
 (7)
              Incorporated
      by reference to Exhibit 4.2 to the Registrant’s Registration
      Statement on Form 8-A, filed with the SEC on May 25,
      2001.
 (8)
              Incorporated
      by reference to Exhibit 4.2.3 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended October 1, 2005, filed with
      the SEC on December 29, 2005.
 (9)
              Incorporated
      by reference to Exhibit 2.2 to SCI Systems, Inc.’s Registration
      Statement on Form 8-A12B, SEC File No. 001-12821, filed with the
      SEC on March 9, 2000.
 (10)
              Incorporated
      by reference to Exhibit 4.1 to SCI Systems, Inc.’s Current
      Report on Form 8-K, SEC File No. 001-12821, filed with the SEC
      on April 5, 2000.
 (11)
              Incorporated
      by reference to Exhibit 4.5.2 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 28, 2002, filed
      with the SEC on December 4,
2002.
 (12)
              Incorporated
      by reference to Exhibit 4.7 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended December 28, 2002, filed
      with the SEC on February 11,
2003.
 (13)
              Incorporated
      by reference to Exhibit 4.7.1 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended October 1, 2005, filed with
      the SEC on December 29, 2005.
 (14)
              Incorporated
      by reference to Exhibit 4.7.2 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended October 1, 2005, filed with
      the SEC on December 29, 2005.
 (15)
              Incorporated
      by reference to Exhibit 4.9 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended December 28, 2002, filed
      with the SEC on February 11,
2003.
 (16)
              Incorporated
      by reference to Exhibit 4.10 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended December 28, 2002, filed
      with the SEC on February 11,
2003.
 (17)
              Incorporated
      by reference to Exhibit 4.1 to the Registrant’s Current Report on
      Form 8-K, filed with the SEC on February 24,
    2005.
 (18)
              Incorporated
      by reference to Exhibit 4.13.1 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended October 1, 2005, filed with
      the SEC on December 29, 2005.
 (19)
              Incorporated
      by reference to Exhibit 4.13.2 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 30, 2006, filed
      with the SEC on January 3,
2007.
 (20)
              Incorporated
      by reference to Exhibit 4.1 to the Registrant’s Current Report on
      Form 8-K, filed with the SEC on February 17,
    2006.
 (21)
              Incorporated
      by reference to Exhibit 4.14.1 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 30, 2006, filed
      with the SEC on January 3,
2007.
 (22)
              Incorporated
      by reference to Exhibit 10.1 to the Registrant’s Current Report on
      Form 8-K, filed with the SEC on December 22,
    2005.
 (23)
              Incorporated
      by reference to Exhibit 4.15.1 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 30, 2006, filed
      with the SEC on January 3,
2007.
 (24)
              Incorporated
      by reference to Exhibit 10.1 to the Registrant’s Current Report on
      Form 8-K, filed with the SEC on June 6,
  2007.
 (25)
              Incorporated
      by reference to Exhibit 4.1 to the Registrant’s Current Report on
      Form 8-K, filed with the SEC on June 13,
  2007.
 (26)
              Incorporated
      by reference to Exhibit 4.2 to the Registrant’s Current Report on
      Form 8-K, filed with the SEC on June 13,
  2007.
 (27)
              Incorporated
      by reference to Exhibit 10.2 to the Registrant’s Annual Report on
      Form 10-K, SEC File No. 000-21272, filed with the SEC on
      December 29, 1994.
 (28)
              Incorporated
      by reference to Exhibit 4.3 to the Registrant’s Registration
      Statement on Form S-8, filed with the SEC on May 25,
      1999.
  78
  (29)
              Compensatory
      plan in which an executive officer or director
    participates.
 (30)
              Incorporated
      by reference to Exhibit 10.29.1 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 28, 2002, filed
      with the SEC on December 4,
2002.
 (31)
              Incorporated
      by reference to Exhibit 10.4 to the Registrant’s Registration
      Statement on Form S-8, SEC File No. 333-23565, filed with the
      SEC on March 19, 1997.
 (32)
              Incorporated
      by reference to Exhibit 10.1 to the Registrant’s Registration
      Statement on Form S-8, SEC File No. 333-23565, filed with the
      SEC on March 19, 1997.
 (33)
              Incorporated
      by reference to Exhibit 4.2 to the Registrant’s Registration
      Statement on Form S-8, filed with the SEC on June 23,
      2000.
 (34)
              Incorporated
      by reference to Exhibit 4.1 to the Registrant’s Registration
      Statement on Form S-8, filed with the SEC on December 20,
      2001.
 (35)
              Incorporated
      by reference to Exhibit 4.2 to the Registrant’s Registration
      Statement on Form S-8, filed with the SEC on December 20,
      2001.
 (36)
              Incorporated
      by reference to Exhibit 4.3 to the Registrant’s Registration
      Statement on Form S-8, filed with the SEC on December 20,
      2001.
 (37)
              Incorporated
      by reference to Exhibit 10.4 to the Registrant’s Registration
      Statement on Form S-1, SEC File No. 33-70700, filed with the SEC
      on February 19, 1993.
 (38)
              Incorporated
      by reference to Exhibit 10.75 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended June 28, 2008, filed with
      the SEC on August 4, 2008.
 (39)
              Incorporated
      by reference to Exhibit 10.50 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 28, 2002, filed
      with the SEC on December 4,
2002.
 (40)
              Incorporated
      by reference to Exhibit 10.50.1 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 28, 2002, filed
      with the SEC on December 4,
2002.
 (41)
              Incorporated
      by reference to Exhibit 10.74 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended June 28, 2008, filed with
      the SEC on August 4, 2008.
 (42)
              Incorporated
      by reference to Exhibit 4.1 to the Registrant’s Registration
      Statement on Form S-8, filed with the SEC on April 23,
      2003.
 (43)
              Incorporated
      by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended April 2, 2005, filed with
      the SEC on May 12, 2005.
 (44)
              Incorporated
      by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended April 2, 2005, filed with
      the SEC on May 12, 2005.
 (45)
              Incorporated
      by reference to Exhibit 10.57 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended October 1, 2005, filed with
      the SEC on December 29, 2005.
 (46)
              Incorporated
      by reference to Exhibit 10.58 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended October 1, 2005, filed with
      the SEC on December 29, 2005.
 (47)
              Incorporated
      by reference to Exhibit 10.59 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 29, 2007, filed
      with the SEC on November 28,
2007.
 (48)
              Incorporated
      by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended December 29, 2007, filed
      with the SEC on January 31,
2008.
 (49)
              Incorporated
      by reference to Exhibit 10.60 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 29, 2007, filed
      with the SEC on November 28,
2007.
 (50)
              Incorporated
      by reference to Exhibit 10.61 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 29, 2007, filed
      with the SEC on November 28,
2007.
  79
  (51)
              Incorporated
      by reference to Exhibit 10.62 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 29, 2007, filed
      with the SEC on November 28,
2007.
 (52)
              Incorporated
      by reference to Exhibit 10.64 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended March 29, 2008, filed
      with the SEC on May 6, 2008.
 (53)
              Incorporated
      by reference to Exhibit 10.71 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended June 28, 2008, filed with
      the SEC on August 4, 2008.
 (54)
              Incorporated
      by reference to Exhibit 10.65 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended March 29, 2008, filed
      with the SEC on May 6, 2008.
 (55)
              Incorporated
      by reference to Exhibit 10.66 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended March 29, 2008, filed
      with the SEC on May 6, 2008.
 (56)
              Incorporated
      by reference to Exhibit 10.67 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended March 29, 2008, filed
      with the SEC on May 6, 2008.
 (57)
              Incorporated
      by reference to Exhibit 10.68 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended March 29, 2008, filed
      with the SEC on May 6, 2008.
 (58)
              Incorporated
      by reference to Exhibit 10.69 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended March 29, 2008, filed
      with the SEC on May 6, 2008.
 (59)
              Incorporated
      by reference to Exhibit 10.70 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended March 29, 2008, filed
      with the SEC on May 6, 2008.
 (60)
              Incorporated
      by reference to Exhibit 10.42 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended June 28, 2008, filed with
      the SEC on August 4, 2008.
 (61)
              Incorporated
      by reference to Exhibit 10.72 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended June 28, 2008, filed with
      the SEC on August 4, 2008.
 (62)
              Incorporated
      by reference to Exhibit 10.73 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended June 28, 2008, filed with
      the SEC on August 4, 2008.
 (63)
              Incorporated
      by reference to the same number exhibit of the Registrant’s Annual Report
      on Form 10-K for the fiscal year ended September 27, 2008, filed
      with the SEC on November 24,
2008.
 (64)
              Incorporated
      by reference to Exhibit 10.37 of the Registrant’s Current Report on
      Form 8-K, filed with the SEC on  January 30,
      2009.
 (65)
              Incorporated
      by reference to Exhibit 10.38 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended December 27, 2008, filed
      with the SEC on February 2,
2009.
 (66)
              Incorporated
      by reference to the same number exhibit of the Registrant’s Quarterly
      Report on Form 10-Q for the fiscal quarter ended March 28, 2009,
      filed with the SEC on May 5,
2009.
 (67)
              This
      exhibit shall not be deemed “filed” for purposes of Section 18 of the
      Securities Exchange Act of 1934 or otherwise subject to the liabilities of
      that Section, nor shall it be deemed incorporated by reference in any
      filings under the Securities Act of 1933 or the Securities Exchange Act of
      1934, whether made before or after the date hereof and irrespective of any
      general incorporation language in any
filings.




80





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




The
Board of Directors and Stockholders




Sanmina-SCI
Corporation:




We
have audited the accompanying consolidated balance sheets of Sanmina-SCI
Corporation and subsidiaries (the Company) as of October 3, 2009 and
September 27, 2008, and the related consolidated statements of operations,
comprehensive loss, stockholders’ equity, and cash flows for each of the fiscal
years in the three-year period ended October 3, 2009. In connection with our
audits of the consolidated financial statements, we also have audited financial
statement schedule II as set forth under Item 15. We also have audited
the Company’s internal control over financial reporting as of October 3, 2009,
based on criteria established in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). The Company’s management is responsible for these
consolidated financial statements and financial statement schedule, and for
maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Management’s Report on Internal
Control over Financial Reporting appearing under Item 9A. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule and an opinion on the Company’s
internal control over financial reporting based on our audits.




We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement and whether effective
internal control over financial reporting was maintained in all material
respects. Our audits of the consolidated financial statements included
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audits also included performing such other procedures as
we considered necessary in the circumstances. We believe that our audits provide
a reasonable basis for our opinions.




A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the
financial statements.




Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.




In
our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Sanmina-SCI
Corporation and subsidiaries as of October 3, 2009 and September 27, 2008,
and the results of their operations and their cash flows for each of the fiscal
years in the three-year period ended October 3, 2009, in conformity with U.S.
generally accepted accounting principles. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein. Also in our opinion, the
Company maintained, in all material respects, effective internal control over
financial reporting as of October 3, 2009, based on criteria established in
Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission.




As
discussed in note 2 to the consolidated financial statements, the Company
adopted the provisions of Financial Accounting Standards Board Interpretation
No. 48, Accounting
for Uncertainty
in Income Taxes —an interpretation of FASB Statement No. 109(ASC
Topic 740, Income
Taxes), at the beginning of fiscal 2008.


/s/
KPMG LLP
  Mountain
View, California
 December
1, 2009
 
 81
 
 SANMINA-SCI
CORPORATION
  CONSOLIDATED
BALANCE SHEETS
  As
      ofOctober
      3,
                  2009
              
              
              September 27,
                  2008(In
      thousands, except par value)ASSETSCurrent
      assets:Cash
      and cash equivalents
              
              $
              899,151
              
              
              $
              869,801Accounts
      receivable, net of allowances of $13,422 and $14,934,
      respectively
              
              
              668,474
              
              
              
              986,312Inventories
              
              
              761,391
              
              
              
              813,359Prepaid
      expenses and other current assets
              
              
              78,128
              
              
              
              100,399Assets
      held for sale
              
              
              68,902
              
              
              
              43,163Total
      current assets
              
              
              2,476,046
              
              
              
              2,813,034Property,
      plant and equipment, net
              
              
              543,497
              
              
              
              599,908Other
              
              
              104,354
              
              
              
              117,785Total
      assets
              
              $
              3,123,897
              
              
              $
              3,530,727LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable
              
              $
              780,876
              
              
              $
              908,151Accrued
      liabilities
              
              
              140,926
              
              
              
              191,022Accrued
      payroll and related benefits
              
              
              98,408
              
              
              
              139,522Current
      portion of long-term debt
              
              
              175,700
              
              
              
              —Total
      current liabilities
              
              
              1,195,910
              
              
              
              1,238,695Long-term
      liabilities:Long-term
      debt
              
              
              1,262,014
              
              
              
              1,481,985Other
              
              
              122,833
              
              
              
              114,089Total
      long-term liabilities
              
              
              1,384,847
              
              
              
              1,596,074Commitments
      and contingencies (Note 6)Stockholders’
      equity:Preferred
      stock, $.01 par value, authorized 833 shares, none issued and
      outstanding
              
              
              —
              
              
              
              —Common
      stock, $.01 par value, authorized 166,667 shares, 91,914 and 91,680 shares
      issued, respectively, and 78,566 and 88,502 shares outstanding,
      respectively
              
              
              5,501
              
              
              
              5,501Treasury
      stock, 13,348 and 3,179 shares, respectively, at cost
              
              
              (213,720
              )
              
              
              (184,725
              )Additional
      paid-in capital
              
              
              6,007,431
              
              
              
              5,991,605Accumulated
      other comprehensive income
              
              
              52,350
              
              
              
              55,777Accumulated
      deficit
              
              
              (5,308,422
              )
              
              
              (5,172,200
              )Total
      stockholders’ equity
              
              
              543,140
              
              
              
              695,958Total
      liabilities and stockholders’ equity
              
              $
              3,123,897
              
              
              $
              3,530,727
  See
accompanying notes to the consolidated financial statements.
  
 82
 
 SANMINA-SCI
CORPORATION
  CONSOLIDATED
STATEMENTS OF OPERATIONS
  Year
      EndedOctober
      3,
                  2009
              
              
              September 27,
                  2008
              
              
              September 29,
                  2007(In
      thousands, except per share amounts)Net
      sales
              
              $
              5,177,481
              
              
              $
              7,202,403
              
              
              $
              7,137,793Cost
      of sales
              
              
              4,855,003
              
              
              
              6,678,297
              
              
              
              6,683,277Gross
      profit
              
              
              322,478
              
              
              
              524,106
              
              
              
              454,516Operating
      expenses:Selling,
      general and administrative
              
              
              238,194
              
              
              
              317,045
              
              
              
              355,768Research
      and development
              
              
              16,685
              
              
              
              19,546
              
              
              
              30,080Restructuring
      and integration costs
              
              
              57,260
              
              
              
              81,376
              
              
              
              42,587Amortization
      of intangible assets
              
              
              4,817
              
              
              
              6,600
              
              
              
              6,601Impairment
      of goodwill, tangible and other intangible assets
              
              
              10,178
              
              
              
              483,699
              
              
              
              1,042,541Total
      operating expenses
              
              
              327,134
              
              
              
              908,266
              
              
              
              1,477,577Operating
      loss
              
              
              (4,656
              )
              
              
              (384,160
              )
              
              
              (1,023,061
              )Interest
      income
              
              
              6,499
              
              
              
              19,744
              
              
              
              28,766Interest
      expense
              
              
              (116,988
              )
              
              
              (127,231
              )
              
              
              (168,291
              )Other
      income (expense), net
              
              
              (5,970
              )
              
              
              3,553
              
              
              
              23,734Gain
      (loss) on extinguishment of debt
              
              
              8,545
              
              
              
              (2,237
              )
              
              
              (3,175
              )Interest
      and other income (expense), net
              
              
              (107,914
              )
              
              
              (106,171
              )
              
              
              (118,966
              )Loss
      from continuing operations before income taxes
              
              
              (112,570
              )
              
              
              (490,331
              )
              
              
              (1,142,027
              )Provision
      for (benefit from) income taxes
              
              
              23,652
              
              
              
              21,005
              
              
              
              (534
              )Loss
      from continuing operations
              
              
              (136,222
              )
              
              
              (511,336
              )
              
              
              (1,141,493
              )Income
      from discontinued operations, net of tax
              
              
              —
              
              
              
              24,987
              
              
              
              6,836Net
      loss
              
              $
              (136,222
              )
              
              $
              (486,349
              )
              
              $
              (1,134,657
              )Basic
      and diluted earnings (loss) per share:Continuing
      operations
              
              $
              (1.65
              )
              
              $
              (5.78
              )
              
              $
              (12.99
              )Discontinued
      operations
              
              $
              —
              
              
              $
              0.28
              
              
              $
              0.08Net
      loss
              
              $
              (1.65
              )
              
              $
              (5.50
              )
              
              $
              (12.91
              )Weighted-average
      shares used in computing basic and diluted
                per
      share amounts:
              
              
              82,528
              
              
              
              88,454
              
              
              
              87,853
  See
accompanying notes to the consolidated financial statements.
  
 83
 
 SANMINA-SCI
CORPORATION
  CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
  Year
      EndedOctober
      3,
                  2009
              
              
              September 27,
                  2008
              
              
              September 29,
                  2007(In
      thousands)Net
      loss
              
              $
              (136,222
              )
              
              $
              (486,349
              )
              
              $
              (1,134,657
              )Other
      comprehensive income (loss):Net
      unrealized loss on derivative financial instruments, net of
      tax
              
              
              (10,322
              )
              
              
              (11,891
              )
              
              
              (11,376
              )Foreign
      currency translation adjustments
              
              
              11,545
              
              
              
              8,340
              
              
              
              26,798Changes
      in unrecognized net actuarial loss and unrecognized transition costs, net
      of tax
              
              
              (4,650
              )
              
              
              (1,732
              )
              
              
              3,030Comprehensive
      loss
              
              $
              (139,649
              )
              
              $
              (491,632
              )
              
              $
              (1,116,205
              )
  See
accompanying notes to the consolidated financial statements.
  
 84
 
 SANMINA-SCI
CORPORATION
  CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
  Common
      Stock andAdditional
      Paidin
      Capital
              
              
              Treasury
      StockNumber
      of
                  Shares
              
              
              Amount
              
              
              Number
      of
                  Shares
              
              
              Amount
              
              
              Accumulated
                    OtherComprehensive
                  Income
              
              
              Accumulated
                  Deficit
              
              
              Total(In
      thousands)BALANCE
      AT
                SEPTEMBER 30,
      2006
              
              
              91,963
              
              
              $
              5,958,376
              
              
              
              (3,146
              )
              
              $
              (186,361
              )
              
              $
              42,608
              
              
              $
              (3,544,060
              )
              
              $
              2,270,563Cumulative
      effect of SAB No. 108 adjustment
              
              
              —
              
              
              
              7,134
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (7,134
              )
              
              
              —Exercise
      of common stock options
              
              
              —
              
              
              
              3
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              3Cancellations
      of restricted stock and options, net of issuances
              
              
              (503
              )
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —Cumulative
      translation adjustment
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              26,798
              
              
              
              —
              
              
              
              26,798Unrealized
      loss on derivative financial instruments, net of tax
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (11,376
              )
              
              
              —
              
              
              
              (11,376
              )Changes
      in unrecognized net actuarial loss and unrecognized transition costs, net
      of tax
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              3,030
              
              
              
              —
              
              
              
              3,030Stock-based
      compensation, net of tax adjustments
              
              
              —
              
              
              
              17,479
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              17,479Disposition
      of treasury stock
              
              
              —
              
              
              
              487
              
              
              
              13
              
              
              
              820
              
              
              
              —
              
              
              
              —
              
              
              
              1,307Net
      loss
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (1,134,657
              )
              
              
              (1,134,657
              )BALANCE
      AT
                SEPTEMBER 29,
      2007
              
              
              91,460
              
              
              $
              5,983,479
              
              
              
              (3,133
              )
              
              $
              (185,541
              )
              
              $
              61,060
              
              
              $
              (4,685,851
              )
              
              $
              1,173,147Issuances
      of restricted stock and options, net of cancellations
              
              
              220
              
              
              
              (1
              )
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (1
              )Cumulative
      translation adjustment
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              8,340
              
              
              
              —
              
              
              
              8,340Unrealized
      loss on derivative financial instruments, net of tax
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (11,891
              )
              
              
              —
              
              
              
              (11,891
              )Changes
      in unrecognized net actuarial loss and unrecognized transition costs, net
      of tax
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (1,732
              )
              
              
              —
              
              
              
              (1,732
              )Stock-based
      compensation
              
              
              —
              
              
              
              14,337
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              14,337Repurchases
      of treasury stock
              
              
              —
              
              
              
              (709
              )
              
              
              (46
              )
              
              
              816
              
              
              
              —
              
              
              
              —
              
              
              
              107Net
      loss
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (486,349
              )
              
              
              (486,349
              )BALANCE
      AT
                SEPTEMBER 27,
      2008
              
              
              91,680
              
              
              $
              5,997,106
              
              
              
              (3,179
              )
              
              $
              (184,725
              )
              
              $
              55,777
              
              
              $
              (5,172,200
              )
              
              $
              695,958Issuances
      of restricted stock and options, net of cancellations
              
              
              234
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —Cumulative
      translation adjustment
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              11,545
              
              
              
              —
              
              
              
              11,545Unrealized
      loss on derivative financial instruments, net of tax
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (10,322
              )
              
              
              —
              
              
              
              (10,322
              )Changes
      in unrecognized net actuarial loss and unrecognized transition costs, net
      of tax
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (4,650
              )
              
              
              —
              
              
              
              (4,650
              )Stock-based
      compensation
              
              
              —
              
              
              
              15,994
              
              
              
              
              
              
              
              
              
              
              
              —
              
              
              
              —
              
              
              
              15,994Repurchases
      of treasury stock
              
              
              —
              
              
              
              (168
              )
              
              
              (10,169
              )
              
              
              (28,995
              )
              
              
              —
              
              
              
              —
              
              
              
              (29,163
              )Net
      loss
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (136,222
              )
              
              
              (136,222
              )BALANCE
      AT
                OCTOBER
      3, 2009
              
              
              91,914
              
              
              $
              6,012,932
              
              
              
              (13,348
              )
              
              $
              (213,720
              )
              
              $
              52,350
              
              
              $
              (5,308,422
              )
              
              $
              543,140
  See
accompanying notes to the consolidated financial statements.
  
 85
 
 SANMINA-SCI
CORPORATION
  CONSOLIDATED
STATEMENTS OF CASH FLOWS
  Year
      EndedOctober 3,
                  2009
              
              
              September 27,
                  2008
              
              
              September 29,
                  2007(In
      thousands)CASH
      FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:Net
      loss
              
              $
              (136,222
              )
              
              $
              (486,349
              )
              
              $
              (1,134,657
              )Adjustments
      to reconcile net loss to cash provided by operating
      activities:Depreciation
      and amortization
              
              
              89,928
              
              
              
              96,820
              
              
              
              117,194Stock-based
      compensation expense
              
              
              15,994
              
              
              
              14,337
              
              
              
              17,479Non-cash
      restructuring costs (recovery)
              
              
              4,892
              
              
              
              2,928
              
              
              
              (4,177
              )Provision
      (benefit) for doubtful accounts, product returns and other net sales
      adjustments
              
              
              (1,133
              )
              
              
              (1,073
              )
              
              
              3,186Deferred
      income taxes
              
              
              834
              
              
              
              (1,478
              )
              
              
              (3,633
              )Gain
      on disposals of property, plant and equipment, net
              
              
              (1,804
              )
              
              
              (311
              )
              
              
              (18,997
              )Impairment
      of assets and long-term investments
              
              
              14,657
              
              
              
              487,727
              
              
              
              1,099,650(Gain)
      loss on extinguishment of debt
              
              
              (8,545
              )
              
              
              2,237
              
              
              
              3,175Loss
      on sale of business
              
              
              —
              
              
              
              6,923
              
              
              
              —Other,
      net
              
              
              (126
              )
              
              
              (373
              )
              
              
              (656
              )Changes
      in operating assets and liabilities, net of acquisitions and
      divestitures:Accounts
      receivable
              
              
              319,754
              
              
              
              249,950
              
              
              
              308,927Inventories
              
              
              80,325
              
              
              
              197,792
              
              
              
              260,085Prepaid
      expenses and other assets
              
              
              42,363
              
              
              
              31,957
              
              
              
              (65,046
              )Accounts
      payable
              
              
              (119,110
              )
              
              
              (554,096
              )
              
              
              (39,351
              )Accrued
      liabilities and other long-term liabilities
              
              
              (104,577
              )
              
              
              (7,726
              )
              
              
              (57,242
              )Cash
      provided by operating activities
              
              
              197,230
              
              
              
              39,265
              
              
              
              485,937CASH
      FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:Net
      proceeds from sales of short-term investments
              
              
              —
              
              
              
              12,713
              
              
              
              2,551Net
      proceeds (use) from sales (purchases) of long-term
    investments
              
              
              (200
              )
              
              
              4,754
              
              
              
              929Purchases
      of property, plant and equipment
              
              
              (65,931
              )
              
              
              (121,478
              )
              
              
              (88,358
              )Proceeds
      from sales of property, plant and equipment
              
              
              3,927
              
              
              
              30,564
              
              
              
              50,231Proceeds
      from sale of business
              
              
              —
              
              
              
              89,094
              
              
              
              22,000Cash
      paid for businesses acquired, net of cash acquired
              
              
              (29,712
              )
              
              
              (4,264
              )
              
              
              (4,217
              )Cash
      provided by (used in) investing activities
              
              
              (91,916
              )
              
              
              11,383
              
              
              
              (16,864
              )CASH
      FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:Change
      in restricted cash
              
              
              (19,140
              )
              
              
              —
              
              
              
              —Repayments
      of long-term debt
              
              
              (31,492
              )
              
              
              (120,000
              )
              
              
              (1,125,000
              )Proceeds
      from long-term debt, net of issuance costs
              
              
              —
              
              
              
              —
              
              
              
              1,181,409Payments
      of notes and credit facilities, net
              
              
              —
              
              
              
              —
              
              
              
              (100,184
              )Repurchases
      of common stock
              
              
              (29,163
              )
              
              
              —
              
              
              
              —Cash
      used in financing activities
              
              
              (79,795
              )
              
              
              (120,000
              )
              
              
              (43,775
              )Effect
      of exchange rate changes
              
              
              3,831
              
              
              
              5,729
              
              
              
              16,297Increase
      (decrease) in cash and cash equivalents
              
              
              29,350
              
              
              
              (63,623
              )
              
              
              441,595Cash
      and cash equivalents at beginning of year
              
              
              869,801
              
              
              
              933,424
              
              
              
              491,829Cash
      and cash equivalents at end of year
              
              $
              899,151
              
              
              $
              869,801
              
              
              $
              933,424Supplemental
      disclosures of cash flow information:Cash
      paid during the yearInterest
              
              $
              108,299
              
              
              $
              116,970
              
              
              $
              150,113Income
      taxes (excludes refunds of $3.6 million, $26.2 million, and
      $24.8 million in 2009, 2008, and 2007, respectively)
              
              $
              30,167
              
              
              $
              35,768
              
              
              $
              47,106
  See
accompanying notes to the consolidated financial statements.
  
 86
 
 SANMINA-SCI
CORPORATION
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  Note 1.
Organization of Sanmina-SCI
  Sanmina-SCI
Corporation (“Sanmina-SCI,” or the “Company”) was incorporated in Delaware in
1989. The Company is an independent global provider of customized, integrated
electronics manufacturing services, or EMS. The Company provides these services
to original equipment manufacturers, or OEMs, primarily in the communications,
enterprise computing and storage, multimedia, industrial and semiconductor
capital equipment, defense and aerospace, medical, renewable energy and
automotive industries. The Company’s services consist primarily of product
design and engineering, including initial development, detailed design,
prototyping, validation, preproduction services and manufacturing design, volume
manufacturing of complete systems, components and subassemblies, final system
assembly and test, direct order fulfillment and logistics services and
after-market product service and support. System components and subassemblies
manufactured by the Company include printed circuit boards, printed circuit
board assemblies, backplanes and backplane assemblies, enclosures, cable
assemblies, precision machine components, optical modules and memory
modules.
  Basis
of Presentation
 
 On
July 20, 2009, the Board of Directors of the Company authorized a reverse split
of the Company’s common stock at a ratio of one-for-six, effective August 14,
2009. All previously reported share and per share amounts have been restated in
the accompanying consolidated financial statements and related notes to reflect
the reverse stock split.
 
 In
June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting
Principles” (“Codification”) (ASC Topic 105, Generally Accepted Accounting
Principles). The Company included both the legacy GAAP (pre-codification
standards) and the Codification reference throughout the notes of the
consolidated financial statements, with the exception of certain standards that
shall be authoritative until such time they are integrated into the
Codification.
 
 In 2008, the
Company sold its personal computing and associated logistics business ("PC
Business") and has reflected the PC Business as discontinued operations in the
consolidated financial statements. Unless otherwise
noted, discussions in the notes to consolidated financial statements pertain
only to the Company’s continuing operations.
  Reclassification
  The Company reclassified $16.8 million
from accounts receivable, net to accounts payable on the September 27, 2008
consolidated balance sheet to conform to the current presentation. This amount
represents net credit balances associated with customer claims and
adjustments.
  
 87
 
 Note 2.
Summary of Significant Accounting Policies
  Fiscal Year.  The
Company operates on a 52 or 53 week year ending on the Saturday nearest
September 30. Fiscal years 2008 and 2007 were each 52 weeks and fiscal
2009 was 53 weeks, with the additional week included in the fourth quarter.
All references to years relate to fiscal years unless otherwise
noted.
  Principles of
Consolidation.  The consolidated financial statements include
the Company’s accounts and those of its wholly-owned subsidiaries. All
intercompany accounts and transactions have been eliminated.
  Foreign Currency
Translation.  For foreign subsidiaries using the local currency
as their functional currency, assets and liabilities are translated at exchange
rates in effect at the balance sheet date and income and expenses are translated
at average exchange rates. The effects of these translation adjustments are
reported as a separate component of stockholders’ equity. For foreign
subsidiaries using the US dollar as their functional currency, remeasurement
adjustments for non-functional currency monetary assets and liabilities are
included in other income (expense), net in the accompanying consolidated
statements of operations. Additionally, remeasurement gains and losses arising
from long-term intercompany loans denominated in a currency other than an
entity’s functional currency are charged or credited to accumulated other
comprehensive income if repayment of the loan is not anticipated in the
foreseeable future.
  Derivative Instruments and Hedging
Activities.  The Company conducts business on a global basis in
several currencies, which exposes the Company to movements in foreign currency
exchange rates. The Company uses derivatives, such as foreign currency forward
contracts and foreign currency option contracts, to minimize the volatility of
earnings and cash flows associated with changes in foreign currency exchange
rates.
  The
Company also uses interest rate swaps to minimize volatility in earnings and
cash flows associated with changes in interest rates on its existing debt
obligations.
  The
Company accounts for derivative instruments and hedging activities in accordance
with Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative
Instruments and Hedging Activities” (ASC Topic 815, Derivatives and Hedging), as amended by SFAS
No. 138, “Accounting for
Certain Derivative Instruments and Hedging Activities—an Amendment of
SFAS 133”(ASC Topic 815, Derivatives and Hedging), and SFAS No. 149,
“Amendment of Statement 133 on
Derivative Instruments and Hedging Activities”(ASC Topic 815, Derivatives and Hedging). In accordance with these
standards, each derivative instrument is recorded in the consolidated balance
sheets at its fair value as either an asset or a liability. If the derivative is
designated as a cash flow hedge, the effective portion of changes in the fair
value of the derivative is recorded in stockholders’ equity as a separate
component of accumulated other comprehensive income and is recognized in the
consolidated statements of operations when the hedged item affects earnings.
Ineffective portions of changes in the fair value of cash flow hedges are
immediately recognized in the consolidated statement of operations. If the
derivative is designated as a fair value hedge, changes in the fair value of the
derivative and of the item being hedged are recognized in earnings in the
current period.
  
 88
 
 Derivative
instruments are entered into for periods of time consistent with the related
underlying exposures and are not entered into for speculative purposes. The
Company documents all relationships between derivative instruments and related
hedged items, as well as its risk-management objectives and strategies for
undertaking various hedging transactions.
  The
Company’s foreign exchange forward and option contracts and interest rate swaps
potentially expose the Company to credit risk to the extent the counterparties
may be unable to meet the terms of the agreement. The Company minimizes such
risk by seeking high quality counterparties. The Company has not incurred, and
does not expect to incur, material losses as a result of default by
counterparties.
  Management Estimates and
Uncertainties.  The preparation of consolidated financial
statements in conformity with generally accepted accounting principles in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenue and expenses during the reporting
period. Significant estimates made in preparing the consolidated financial
statements relate to allowances for accounts receivable; provisions for
inventories, product returns, warranties, restructuring costs, environmental
matters, and legal exposures; determining liabilities for uncertain tax
positions; determining the realizability of deferred tax assets; determining
fair values of reporting units for purposes of goodwill impairment tests;
determining fair values of tangible and intangible assets for purposes of
impairment tests; and determining forfeiture rates, volatility and expected life
assumptions for purposes of stock compensation expense calculations. Actual
results could differ materially from these estimates.
  Financial Instruments and
Concentration of Credit Risk.  Financial instruments consist of
cash and cash equivalents, foreign currency forward and option contracts,
interest rate swap agreements, accounts receivable, accounts payable and debt
obligations. With the exception of certain of the Company’s debt obligations
(refer to note 4. Financial Instruments and Concentration of Credit Risks),
the fair value of these financial instruments approximates their carrying amount
as of October 3, 2009 and September 27, 2008 due to the nature, or short
maturity, of these instruments, or the fact that the instruments are recorded at
fair value in the consolidated balance sheets.
  Cash and Cash
Equivalents.  The Company considers all highly-liquid
investments with a maturity of three months or less at the time of purchase to
be cash equivalents.
  
 89
 
 The
Company invests daily surplus funds overnight in institutional money market
funds. The money market funds invest in highly-rated and highly-liquid fixed
income securities with the primary objectives of capital preservation, liquidity
and a level of current income consistent with their investment policies. Money
market funds typically invest in government securities, certificates of deposit,
corporate commercial paper, or other highly-liquid and low-risk securities.
Money market funds attempt to keep their net asset value at a constant $1.00 per
share.
  Cash
and cash equivalents consisted of the following:
  As
      ofOctober
      3,
                  2009
              
              
              September 27,
                  2008(In
      thousands)Cash
      and bank balances
              
              $
              466,251
              
              
              $
              521,944Money
      market funds
              
              
              432,900
              
              
              
              347,171Other
      security funds
              
              
              —
              
              
              
              686Total
              
              $
              899,151
              
              
              $
              869,801
 
  Accounts Receivable and Other
Related Allowances.  The Company estimates uncollectible
balances, product returns and other adjustments related to current period net
sales and had allowances of $13.4 million and $14.9 million as of
October 3, 2009 and September 27, 2008, respectively. One of the Company’s
most significant risks is the ultimate realization of its accounts receivable.
This risk is mitigated by ongoing credit evaluations of customers and frequent
contact with customers, especially the most significant customers, which enables
the Company to monitor changes in its customers’ business operations and respond
accordingly. To establish the allowance for doubtful accounts, the Company
estimates credit risk associated with accounts receivable by analyzing the
creditworthiness of its customers, past experience, changes in customer demand,
and the overall economic climate in industries that it serves. To establish the
allowance for product returns and other adjustments, the Company primarily
utilizes historical data regarding such adjustments.
  Sales of Accounts
Receivable.  In 2008, the Company entered into a two-year
global revolving trade receivables purchase agreement (“Global Receivables
Program”) with a financial institution that allows the Company to sell accounts
receivable. The maximum face amount of accounts receivable that may be
outstanding at any time under this agreement is
$250 million.  The purchase price for receivables sold under this
agreement ranges from 95% to 100% of face amount. The Company pays LIBOR plus a
spread for the period from the date a receivable is sold to its collection date.
Sold receivables are subject to certain limited recourse provisions under which
the Company has not experienced any credit losses. Discount charges in 2009, as
well as the Company’s retained interest in accounts receivable as of October 3,
2009, were not material. The Global Receivables Program has a foreign component
and a U.S. component.
  
 90
 
 The
foreign component is governed by a Revolving Trade Receivables Purchase
Agreement. Sales of receivables under the foreign component were
$20.7 million in 2009, of which $8.4 million was subject to certain
recourse provisions as of October 3, 2009.
  The
U.S. component is governed by a Credit and Security Agreement that requires the
Company to make an absolute transfer of accounts receivable to a special purpose
entity (Borrower) to ensure that such transferred receivables are unavailable to
the Company’s creditors and to ensure the interests of such transferred
receivables are fully transferred to the Borrower and its agent. The Borrower is
a qualifying special purpose entity as defined in SFAS No. 140 “Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liability” (ASC
Topic 860, Transfers and
Services) and accordingly, the Company does not consolidate this entity
pursuant to FASB Interpretation No. 46R, “Consolidation of Variable Interest
Entities”(ASC Topic 810, Consolidation). Sales of
receivable under this program were $116.8 million in 2009, for which the Company
received proceeds of 111.0 million. As of October 3, 2009, $20.5 million of sold
receivables were outstanding.
  In
accordance with SFAS No. 140 (ASC Topic 860), accounts receivable sold are
removed from the Company’s consolidated balance sheets and included in cash
provided by operating activities in the consolidated statements of cash
flows.
  Inventories.  Inventories
are stated at the lower of cost (first-in, first-out method) or market. Cost
includes labor, materials and manufacturing overhead.
  Provisions
are made to reduce excess inventories to their estimated net realizable values.
The ultimate realization of inventory carrying amounts is primarily affected by
changes in customer demand. Inventory provisions are established based on
forecasted demand, past experience with specific customers, the age and nature
of the inventory, the ability to redistribute inventory to other programs or
back to suppliers, and whether customers are contractually obligated to pay for
the related inventory. Payments received from customers for excess inventory
held by the Company are recorded as a reduction of inventory.
  Assets Held For
Sale.  In accordance with SFAS No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets”(ASC Topic 360, Property, Plant, and
Equipment), the Company classifies long-lived assets to be sold as
held-for-sale in the period in which all of the following criteria are met:
management having the appropriate authority commits to a plan to sell the asset;
the asset is available for immediate sale in its present condition; an active
program to locate a buyer and other actions required to sell the asset have been
initiated; sale of the asset is probable and expected to occur within one year;
the asset is being actively marketed for sale at a price that is reasonable in
relation to its fair value; and actions required to complete the plan indicate
that it is unlikely significant changes to the plan will be made or that the
plan will be withdrawn.
  
 91
 
 Assets
held-for-sale are not depreciated and are measured at the lower of carrying
amount or fair value less costs to sell. During 2009 and 2008, the Company
recorded impairment charges of $6.2 million and $7.6 million (including
$4.0 million related to discontinued operations), respectively, related to
assets held-for-sale.
  Property, Plant and Equipment,
net.  Property, plant and equipment are stated at cost or, in
the case of property and equipment acquired through business combinations
accounted for as a purchase, at fair value based upon the allocated purchase
price at the acquisition date. Depreciation is provided on a straight-line basis
over 20 to 40 years for buildings and five to 20 years for machinery,
equipment, furniture and fixtures. Leasehold improvements are amortized on a
straight-line basis over the shorter of the lease term or the useful life of the
asset.
  The
Company reviews long-lived tangible assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset or asset
group may not be recoverable. An asset is considered impaired if its carrying
amount exceeds the undiscounted future net cash flows the asset is expected to
generate. If an asset or asset group is considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the asset exceeds its fair value. For asset groups for which the
primary asset is a building, the Company estimates fair value based on data
provided by commercial real estate brokers. For other asset groups, the Company
estimates fair value based on projected discounted future net cash flows using a
credit adjusted discount rate.
  Other Intangible
Assets.  The Company has certain other intangible assets that
are subject to amortization. These assets consist primarily of intellectual
property and customer relationships obtained in acquisitions. These assets are
carried at cost less accumulated amortization, and are amortized to expense on a
straight-line basis over estimated useful lives ranging from five to eight
years.
  The
Company reviews other intangible assets for impairment  whenever
events or changes in circumstances indicate that the carrying amount of an asset
or asset group may not be recoverable. An asset is considered impaired if its
carrying amount exceeds the undiscounted future net cash flows the asset is
expected to generate. If an asset or asset group is considered to be impaired,
the impairment to be recognized is measured by the amount by which the carrying
amount of the asset exceeds its fair value. The Company estimates fair value
primarily based on projected discounted future net cash flows using a credit
adjusted discount rate.
  Long-Term
Investments.  The Company has investments in non-public
companies which are carried at cost. The Company monitors these investments for
other-than-temporary impairment and records appropriate reductions in carrying
value when necessary. In 2009, the Company recorded impairment expense of $4.5
million related to long-term investments that decreased in fair value due to the
current global economic environment. As of October 3, 2009 and
September 27, 2008, total long-term investments were $1.9 million and
$6.2 million, respectively. Long-term investments are classified as other
non-current assets in the consolidated balance sheets.
  
 92
 
 Revenue
Recognition.  The Company derives revenue principally from
sales of manufacturing services, which include final system assembly and test
and which are evidenced by purchase orders received from the Company’s
customers. Other sources of revenue include order fulfillment and logistic
services, and sales of certain inventory, including raw materials, to customers
who reschedule, amend or cancel purchase orders after the Company has procured
inventory to fulfill the customers’ purchase orders. The Company recognizes
revenue for manufacturing services and sales of certain inventory when a
persuasive arrangement between the Company and the buyer exists, the price is
fixed or determinable, title to the product or the inventory is transferred to
the customer and collectibility is reasonably assured. Generally, there are no
formal customer acceptance requirements or further obligations related to the
product or the inventory subsequent to transfer of title. In specific instances
in which there are customer acceptance requirements or the Company has further
non-warranty related obligations, revenue is recognized upon formal acceptance
or completion of the Company’s obligations. Provisions are made for estimated
sales returns and other adjustments at the time revenue is recognized. Such
provisions were not material to the consolidated financial statements for any
period presented herein. For sales of other services, revenue is recognized when
the services have been performed. The Company presents sales net of sales taxes
and value-added taxes in its consolidated statements of operations. Amounts
billed to customers for shipping and handling are recorded as revenue and
shipping and handling costs incurred by the Company are included in cost of
sales.
  Warranty
Reserve.  The Company establishes a warranty reserve for
shipped products based on individual manufacturing contract requirements and
past warranty experience. At each period end, the balance is reviewed to ensure
its adequacy.
  Restructuring
Costs.  The Company recognizes restructuring costs resulting
from excess manufacturing or administrative facilities that it chooses to close
or consolidate, as well as from other exit activities. In connection with the
Company’s exit activities, the Company records restructuring charges for
employee termination costs, long-lived asset impairments, costs related to
leased facilities to be abandoned or subleased, and other exit-related costs.
These charges are incurred pursuant to formal plans developed and approved by
management and accounted for in accordance with SFAS No. 146, “Accounting for Costs Associated
with Exit or Disposal Activities”(ASC Topic 420, Exit or Disposal Cost
Obligations),
and EITF 95-3, “Recognition of Liabilities in
Connection with a Purchase Business Combination”(ASC Topic 805, Business Combinations). When applicable, employee
termination costs are recorded pursuant to SFAS No. 112, “Employer’s Accounting for
Postemployment Benefits”(ASC Topic 712, Compensation – Nonretirement
Postemployment Benefits). Pursuant to SFAS
No. 112 (ASC Topic 712), restructuring costs related to employee severance
are recorded when probable and estimable. The recognition of restructuring
charges requires the Company’s management to make judgments and estimates
regarding the nature, timing, and amount of costs associated with the planned
exit activity, including estimating sublease income and the fair value, less
selling costs, of property, plant and equipment to be disposed of. Estimates of
future liabilities may change, requiring the Company to record additional
restructuring charges or to reduce the amount of liabilities already recorded.
At the end of each reporting period, the Company evaluates the remaining accrual
balances to ensure their adequacy, that no excess accruals are retained and that
the utilization of the accruals is for the intended purpose in accordance with
developed exit plans. In the event circumstances change and an accrual is no
longer required, the accrual is reversed.
  Stock-Based
Compensation.  The Company measures compensation expense based
on estimated fair values of all stock-based awards, including employee stock
options, restricted stock units and awards and stock purchase
rights.
  The
Company uses the Black-Scholes option pricing model to estimate the fair value
of stock-based awards. The Black-Scholes model requires the use of highly
subjective and complex assumptions, including the option’s expected term and the
price volatility of the underlying stock. The expected term of options is based
on observed historical exercise patterns. Expected volatility is based on
historical volatility over the expected life of the options. For restricted
stock units and awards, compensation expense is calculated based on the fair
market value of the Company’s stock on the date of grant. With respect to
performance-based options, compensation expense is recognized only when it is
deemed probable that the performance probability criteria will be
met.
  
 93
 
 Income taxes.  The
Company estimates its income tax provision or benefit in each of the
jurisdictions in which it operates, including estimating exposures and making
judgments regarding the realizability of deferred tax assets. The carrying value
of the Company’s net deferred tax assets is based on its belief that it is more
likely than not that the Company will generate sufficient future taxable income
in certain jurisdictions to realize these deferred tax assets. A valuation
allowance has been established for deferred tax assets which the Company does
not believe meet the “more likely than not” criteria established by SFAS
No. 109, “Accounting for
Income Taxes”(ASC Topic 740, Income Taxes). The Company’s judgments
regarding future taxable income may change due to tax planning strategies,
changes in tax laws, changes in market conditions, which may affect the
geographic distribution of worldwide income or loss, or other factors. If the
Company’s assumptions, and consequently its estimates, change in the future, the
valuation allowances it has established may be increased or decreased, resulting
in a respective increase or decrease in income tax expense. The Company’s tax
rate is highly dependent upon the geographic distribution of its worldwide
income or losses, the tax regulations and tax holidays in each geographic
region, the availability of tax credits and carryforwards, and the effectiveness
of its tax planning strategies.
  The
Company adopted Financial FASB Interpretation No. 48, “Accounting for Uncertainty in Income
Taxes—an interpretation of FASB Statement No. 109” (ASC Topic 740,
Income Taxes), in 2008.
Application of this interpretation involves an assessment of whether each income
tax position is “more likely than not” of being sustained on audit, including
resolution of related appeals or litigation process, if any. For each income tax
position that meets the “more likely than not” recognition threshold, the
Company then assesses the largest amount of tax benefit that is greater than 50%
likely of being realized upon effective settlement with the tax authority. There
was no cumulative effect to retained earnings upon adoption of FIN 48 (ASC
Topic 740).
  Loss Per
Share.  Basic and diluted net loss per share are computed by
dividing net loss by the weighted average number of shares of common stock
outstanding during the period.
  Recent Accounting
Pronouncements.  In June 2009, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standard
No. 166 (SFAS No. 166),“Accounting for Transfers of Financial Assets an amendment to FASB Statement No.
140”. SFAS No. 166 eliminates the concept of a qualifying special-purpose
entity (“QSPE”), creates more stringent conditions for reporting a transfer of a
portion of financial assets as a sale, clarifies other sale-accounting criteria,
and changes the initial measurement of a transferor’s interest in transferred
financial assets. SFAS No. 166 will be effective for the Company in the first
quarter of 2011. The Company currently uses a QSPE in conjunction with sales of
accounts receivable from customers in the United States. Upon adoption of SFAS
166, the Company will be required to consolidate the QSPE if it is still in
existence. The Company plans to implement an accounts receivable sales program
that does not require use of a QSPE prior to adoption of this
standard.
 
 
 94
 
 In
December 2007, the FASB issued SFAS No. 141(R) (Revised 2007),
“Business Combinations”
(ASC Topic 805, Business
Combinations). This statement defines the acquirer as the entity that
obtains control of one or more businesses in a business combination, establishes
the acquisition date as the date that the acquirer achieves control and requires
the acquirer to recognize the assets acquired, liabilities assumed and any
noncontrolling interest at their fair values as of the acquisition date. In
addition, SFAS No. 141(R) (ASC Topic 805) requires expensing of
acquisition-related and restructure-related costs, recognition of contingent
consideration at fair value as of the acquisition date, measurement of equity
securities issued at the date of close of the transaction and capitalization of
in-process research and development related intangibles. In April 2009, the FASB
issued FSP FAS 141(R)-1, “Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination that Arise from Contingencies”(ASC Topic 805, Business Combinations). An
acquirer will recognize at fair value, at the acquisition date, an asset
acquired or a liability assumed that arises from a contingency if the
acquisition date fair value of that asset or liability can be determined during
the measurement period. If the acquisition date fair value cannot be determined
during the measurement period, an asset or liability shall be recognized at the
acquisition date if (i) information available before the end of the measurement
period indicates that it is probable that an asset existed or that a liability
had been incurred at the acquisition date and (ii) the amount of the asset or
liability can be reasonably estimated. SFAS No. 141(R) (ASC Topic 805)
and FSP FAS 141(R)-1 (ASC Topic 805) are effective for the Company’s business
combinations occurring on or after October 4, 2009.
 
 Note 3.
Balance Sheet Items
  Inventories
  Components
of inventories were as follows:
  As
      ofOctober 3,
                  2009
              
              
              September 27,
                  2008(In
      thousands)Raw
      materials
              
              $
              500,666
              
              
              $
              591,119Work-in-process
              
              
              118,531
              
              
              
              106,784Finished
      goods
              
              
              142,194
              
              
              
              115,456Total
              
              $
              761,391
              
              
              $
              813,359
 
 95
 
 Property,
Plant and Equipment, net
  Property,
plant and equipment consisted of the following:
  As
      ofOctober
      3,
                  2009
              
              
              September 
      27,
                  2008(In
      thousands)Machinery
      and equipment
              
              $
              1,370,514
              
              
              $
              1,426,341Land
      and buildings
              
              
              481,979
              
              
              
              519,960Leasehold
      improvements
              
              
              58,896
              
              
              
              52,511Furniture
      and fixtures
              
              
              18,530
              
              
              
              20,9191,929,919
              
              
              
              2,019,731Less:
      Accumulated depreciation and amortization
              
              
              (1,399,238
              )
              
              
              (1,441,496
              )530,681
              
              
              
              578,235Construction
      in progress
              
              
              12,816
              
              
              
              21,673Property,
      plant and equipment, net
              
              $
              543,497
              
              
              $
              599,908
  Depreciation
expense was $83.7 million, $89.3 million and $109.6 million for
2009, 2008 and 2007, respectively.
  Goodwill
  During 2008, the Company recorded a
goodwill impairment charge of $478.7 million due to the expected
effect  on the Company’s future cash flows of deteriorating general
economic conditions, the illiquidity of the credit markets and the decline in
the stock market generally, and in the Company’s stock price in particular.
Additionally, $32.0 million of goodwill associated with the Company’s PC
Business was reduced to zero upon completion of the sale of the PC Business. As
a result of these items, the Company had no goodwill balance as of October 3,
2009 or September 27, 2008.
  Other
Intangible Assets
  Gross
and net carrying values of other intangible assets were as follows:
  Gross
      Carrying Amount
              
              
              Impairment
      of Intangibles
              
              
              Accumulated
      Amortization
              
              
              Net
      Carrying Amount(In
      thousands)As
      of October 3, 2009
              
              $
              73,085
              
              
              $
              (7,928
              )
              
              $
              (55,726
              )
              
              $
              9,431As
      of September 27, 2008
              
              $
              72,106
              
              
              $
              (7,928
              )
              
              $
              (49,529
              )
              
              $
              14,649
 
 96
  Intangible
asset amortization expense was $5.1 million in 2009 and $7.6 million
for both 2008 and 2007 (including $0.3 million in cost of sales in 2009 and
$1.0 million in cost of sales for both 2008 and 2007). Other intangible
assets are included in other non-current assets on the consolidated balance
sheets.
  Estimated
future annual amortization of other intangible assets is as
follows:
  Year Ended:
              
              (In
      thousands)2010
              
              $
              3,1182011
              
              
              1,6932012
              
              
              9342013
              
              
              5602014
              
              
              461Thereafter
              
              
              2,665Total
              
              $
              9,431
  Accrued
Liabilities
  Accrued
liabilities consisted of the following:
  As
      ofOctober 3,
                  2009
              
              
              September 27,
                  2008(In
      thousands)Income
      taxes payable
              
              $
              29,073
              
              
              $
              34,305Restructuring
              
              
              14,400
              
              
              
              32,824Warranty
      reserve
              
              
              15,716
              
              
              
              18,974Other
              
              
              81,737
              
              
              
              104,919Total
              
              $
              140,926
              
              
              $
              191,022
  Warranty
Reserve.  The following tables present warranty reserve
activity:
  Balance
      as of
                  September 27,
                  2008
              
              
              Additions
      to
                  Accrual
              
              
              Accrual
                  Utilized
              
              
              Balance
      as of
                  October 3,
                  2009(In
      thousands)$
              18,974
              
              
              $
              12,267
              
              
              $
              (15,525
              )
              
              $
              15,716
 
 Balance
      as of
                  September 29,
                  2007
              
              
              Additions
      to
                  Accrual
              
              
              Accrual
                  Utilized
              
              
              Balance
      as of
                  September 27,
                  2008(In
      thousands)$
              23,094
              
              
              $
              20,403
              
              
              $
              (24,523
              )
              
              $
              18,974
 
 97
 
 Note
4. Financial Instruments and Concentration of Credit Risks
  The
estimated fair values of the Company’s debt obligations, based on quoted market
prices, as of October 3, 2009 were as follows:
  Carrying
                  Amount
              
              
              Fair
      Value(In
      thousands)$300 Million
      Senior Floating Rate Notes due 2010
              
              $
              175,700
              
              
              $
              173,9436.75%
      Senior Subordinated Notes due 2013
              
              $
              400,000
              
              
              $
              372,000$300 Million
      Senior Floating Rate Notes due 2014
              
              $
              257,410
              
              
              $
              211,0768.125%
      Senior Subordinated Notes due 2016
              
              $
              600,000
              
              
              $
              564,000
  Financial
instruments that potentially subject the Company to credit risk consist of cash,
cash equivalents, trade accounts receivable, foreign exchange forward and option
contracts, and interest rate swap agreements. The carrying value of assets such
as cash, cash equivalents and accounts receivable is expected to approximate
fair value due to the assets’ short duration. Foreign exchange forward and
option contracts and interest rate swap agreements are recorded on the Company’s
balance sheets at fair value. The Company maintains the majority of its cash and
cash equivalents with recognized financial institutions that follow its
investment policy. The Company has not experienced any significant losses on
these investments to date. One of the most significant credit risks is the
ultimate realization of accounts receivable. This risk is mitigated by ongoing
credit evaluations of the Company’s customers and frequent contact with the
Company’s customers, especially its most significant customers, thus enabling it
to monitor changes in business operations and respond accordingly. The Company
generally does not require collateral for sales on credit. The Company considers
these concentrations of credit risks when estimating its allowance for doubtful
accounts.
  For
2009 and 2008, no customer represented 10% or more of the Company’s net sales or
gross accounts receivable. For 2007, one customer represented 10.4% of the
Company’s net sales, but less than 10% of gross accounts receivable at year
end.
 
 The
Company partially adopted SFAS No. 157, “Fair Value Measurements”(ASC
Topic 820, Fair Value
Measurements and Disclosures), at the beginning of 2009
for all financial assets and liabilities that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least annually).
SFAS No. 157 (ASC Topic 820) defines fair value, establishes a framework for
measuring fair value and expands disclosures about fair value measurements. The
Company has elected to defer the adoption related to non-financial assets and
liabilities in accordance with FSP FAS 157-2, “Effective Date of FASB Statement
No. 157” (ASC Topic 820, Fair Value Measurements and
Disclosures). The partial adoption of SFAS No. 157 (ASC Topic 820)
did not have a material impact on the Company’s consolidated financial
statements as of and for the year ended October 3, 2009.
 
 
 98
 
 The
Company adopted FSP FAS 157-4, “Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly” (ASC Topic
820, Fair Value Measurements
and Disclosures) which provides guidance when determining whether there
has been a significant decrease in the volume and level of activity in the
market for an asset or liability as well as other factors to consider in
identifying transactions that are not orderly. The adoption of FSP FAS 157-4
(ASC Topic 820) did not impact the Company’s financial position or results of
operations.
 
 The Company’s financial assets and financial liabilities subject to the
requirements of SFAS No. 157 (ASC Topic 820) are as follows:
 
 ·           Money
market funds
 
 ·           Mutual
funds
 
 ·           Time
deposits
 
 ·           Corporate
bonds
 
 ·           Foreign
currency forward and option contracts
 
 ·           Interest
rate swaps
 
 SFAS
No. 157 (ASC Topic 820) defines fair value as the price that would be
received from selling an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. When
determining fair value measurements for assets and liabilities required or
permitted to be recorded at fair value, the Company considers the principal or
most advantageous market in which it would transact and also considers
assumptions that market participants would use when pricing an asset or
liability.
 
 Inputs
to valuation techniques used to measure fair value are prioritized into three
broad levels, as follows:
  Level
      1:
              
              Observable
      inputs that reflect quoted prices (unadjusted) in active markets for
      identical assets or liabilities.
                Level
      1 assets and liabilities consist of money market fund deposits, time
      deposits and marketable debt and equity instruments.Level
      2:
              
              Inputs
      that reflect quoted prices, other than quoted prices included in Level 1,
      that are observable for the assets or liabilities, such as quoted prices
      for similar assets or liabilities in active markets; quoted prices for
      identical assets or liabilities in less active markets; or inputs that are
      derived principally from or corroborated by observable market data by
      correlation.Level
      3:
              
              Inputs
      that are unobservable to the valuation methodology which are significant
      to the measurement of the fair value of assets or
    liabilities.
 
 99
  The
following table presents information as of October 3, 2009 with respect to
assets and liabilities measured at fair value on a recurring basis:
  Presentation in the Consolidated Balance SheetFair Value
                Measurements Using
                Level
      1, Level 2 or Level 3
              
              Cash and
                cash
                equivalents
              
              
              Prepaidexpenses
                and othercurrent
                assets
              
              
              Other
                assets
              
              
              Accrued
                Liabilities
              
              
              Other
                long-term
                liabilities(In
      thousands)Assets:Money
      Market Funds
              Level
      1
              
              $
              432,900
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —Mutual
      Funds
              Level
      2
              
              
              —
              
              
              
              —
              
              
              
              1,245
              
              
              
              —
              
              
              
              —Time
      Deposits
              Level
      1
              
              
              110,121
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —Corporate Bonds— Foreign Real
      Estate
              Level
      2
              
              
              —
              
              
              
              —
              
              
              
              2,875
              
              
              
              —
              
              
              
              —Derivatives
      not designated as hedging instruments under FAS 133: Foreign Currency
      Forward Contracts
              Level
      2
              
              
              —
              
              
              
              2,970
              
              
              
              —
              
              
              
              —
              
              
              
              —Total
      assets measured at fair value
              
              
              $
              543,021
              
              
              $
              2,970
              
              
              $
              4,120
              
              
              $
              —
              
              
              $
              —Liabilities:Derivatives
      designated as hedging instruments under FAS 133: Interest Rate
      Swaps
              Level
      2
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              (33,567
              )Derivatives
      not designated as hedging instruments under FAS 133: Foreign Currency
      Forward Contracts and interest rate swaps
              Level
      2
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (5,829
              )
              
              
              (6,071
              )Total
      liabilities measured at fair value
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              (5,829
              )
              
              $
              (39,638
              )
  The
Company sponsors deferred compensation plans for eligible employees and
non-employee members of its Board of Directors that allow participants to defer
payment of part or all of their compensation. Assets and liabilities associated
with these plans of approximately $9.7 million as of October 3, 2009 are
recorded as other non-current assets and other long-term liabilities in the
consolidated balance sheet. The Company’s results of operations are not affected
by these plans since changes in the fair value of the assets are offset by
changes in the fair value of the liabilities. As such, assets and liabilities
associated with these plans have not been included in the above
table.
 
 
 100
 
 The
Company has elected to use the income approach to value derivatives, using
observable Level 2 market expectations at the measurement date and standard
valuation techniques to convert future amounts to a single present value amount
assuming that participants are motivated, but not compelled to transact. The
Company seeks high quality counterparties for all its financing arrangements.
For interest rate swaps, Level 2 inputs include futures contracts on LIBOR for
the first three years, swap rates beyond three years at commonly quoted
intervals, and credit default swap rates for the Company and relevant
counterparties. For currency contracts, Level 2 inputs include foreign currency
spot and forward rates, interest rates and credit default swap rates at commonly
quoted intervals. Mid-market pricing is used as a practical expedient for fair
value measurements. SFAS No. 157 (ASC Topic 820, Fair Value Measurements and
Disclosures) requires the fair value measurement of an asset or liability
to reflect the nonperformance risk of the entity and the counterparty.
Therefore, the counterparty’s creditworthiness when in an asset position and the
Company’s creditworthiness when in a liability position has been considered in
the fair value measurement of derivative instruments.
 
 The
Company adopted SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement
No. 133” (ASC Topic 815, Derivatives and Hedging) in
the second quarter of 2009. SFAS No. 161 (ASC Topic 815) requires qualitative
disclosures about objectives and strategies for using derivatives, quantitative
disclosures about fair value amounts of and gains and losses on derivative
instruments, and disclosures about credit-risk-related contingent features in
derivative agreements.
 
 The
Company is exposed to certain risks related to its ongoing business operations.
The primary risks managed by using derivative instruments are interest rate risk
and foreign exchange rate risk.
 
 Interest
rate swaps are entered into on occasion to manage interest rate risk associated
with the Company's borrowings. The Company issued $600 million of floating
rate notes in 2007 and entered into interest rate swap agreements with two
independent swap counterparties to partially hedge its interest rate exposure
related to floating rate debt. The swap agreements, with an aggregate notional
amount of $300 million and expiration dates in 2014, effectively convert a
portion of the variable interest rate obligation to a fixed interest rate
obligation and are accounted for as cash flow hedges under
SFAS No. 133 (ASC Topic 815). Under the terms of the swap agreements,
the Company pays the independent swap counterparties a fixed rate of 5.594% and,
in exchange, the swap counterparties pay the Company an interest rate equal to
the three-month LIBOR. These swap agreements effectively fix the interest rate
at 8.344% through 2014 for the hedged portion of the debt. Since the issuance of
the 2010 and 2014 Notes for an aggregate principal amount of $600 million in
2007, the Company has redeemed or repurchased $342.6 million of these notes,
including redemption of the remaining outstanding 2010 Notes of $175.7 million
on November 16, 2009. Therefore, as of November 16, 2009, the Company has $257.4
million of 2014 Notes outstanding. As of October 3, 2009, the Company had
interest rate swaps of $300 million against the 2010 and 2014 Notes. Based on
the Company’s repurchases of these notes and its intention to redeem the 2010
Notes in November 2009, which occurred on November 16, 2009, the Company
dedesignated its interest rate swaps as of October 3, 2009 and redesignated $257
million of the swaps as hedging instruments on the same day. As a result of this
dedesignation and redesignation, the Company recorded a $6.1 million charge to
gain (loss) on extinguishment of debt, representing the value of the $43 million
net dedesignated portion of the interest rate swap previously recorded in
accumulated other comprehensive income. On October 9, 2009, the Company
terminated $43 million of its interest rate swap with the swap counterparty. The
change in the fair value of this portion of the swap between October 3, 2009 and
October 9, 2009 was not significant. The Company believes the likelihood that
floating rate debt in the amount of $257 million will exist through swap
maturity in 2014 is probable and therefore will continue to apply hedge
accounting to this portion of the swap.
 
 
 101
 
 Forward
and/or option contracts on various foreign currencies are entered into monthly
to manage foreign currency risk associated with forecasted foreign currency
transactions and certain monetary assets and liabilities denominated in foreign
currencies.
 
 The
Company’s primary foreign currency cash flows are in certain Asian and European
countries, Brazil and Mexico. The Company utilizes foreign currency forward
and/or option contracts to hedge certain operational (“cash flow”) exposures
resulting from changes in foreign currency exchange rates. Such exposures result
from forecasted sales denominated in currencies different from those for cost of
sales and other expenses. These contracts are typically less than 12 months
in duration and are accounted for as cash flow hedges.
 
 The
Company also enters into short-term foreign currency forward contracts to hedge
currency exposures associated with certain assets and liabilities denominated in
foreign currencies. The Company typically has forward contracts on approximately
15 foreign currencies at each period end. These contracts have maturities of
three months or less and are not designated as accounting hedges. Accordingly,
all outstanding foreign currency forward contracts not designated as accounting
hedges are marked-to-market at the end of each period with unrealized gains and
losses included in other income (expense), net, in the consolidated statements
of operations.
 
 As
of October 3, 2009, the Company had the following outstanding foreign currency
forward contracts that were entered into to hedge foreign currency
exposures:
 
 Foreign
      Currency Forward Contracts
              
              Number
      of
                Contracts
              
              
              Notional
      Amount
                (USD
      in thousands)Designated
              
              
              Non-designatedBuy
      Singapore Dollars
              
              
              3
              
              
              $
              4,685
              
              
              $
              69,848Buy
      Mexican Pesos
              
              
              3
              
              
              
              7,514
              
              
              
              10,447Buy
      Israel New Shekels
              
              
              5
              
              
              
              5,465
              
              
              
              7,241Buy
      Malaysian Ringgit
              
              
              3
              
              
              
              2,647
              
              
              
              1,964Buy
      Thailand Baht
              
              
              2
              
              
              
              1,675
              
              
              
              831Buy
      Hungarian Forint
              
              
              4
              
              
              
              2,361
              
              
              
              4,045Buy
      Canadian Dollars
              
              
              2
              
              
              
              —
              
              
              
              2,702Buy
      Hong Kong Dollars
              
              
              1
              
              
              
              —
              
              
              
              2,633Buy
      Japanese Yen
              
              
              2
              
              
              
              —
              
              
              
              8,648Buy
      Sweden Krona
              
              
              1
              
              
              
              —
              
              
              
              33,257Buy
      Indian Rupee
              
              
              1
              
              
              
              —
              
              
              
              3,805Sell
      Chinese Renminbi
              
              
              2
              
              
              
              3,780
              
              
              
              8,643Sell
      Euros
              
              
              5
              
              
              
              3,943
              
              
              
              184,843Sell
      Hungarian Forint
              
              
              1
              
              
              
              —
              
              
              
              5,031Sell
      Brazilian Real
              
              
              1
              
              
              
              —
              
              
              
              8,524Sell
      Great British Pounds
              
              
              1
              
              
              
              —
              
              
              
              1,757Total
      notional amount
              
              
              
              
              
              $
              32,070
              
              
              $
              354,219
 
 
 102
 
 For
derivative instruments that are designated and qualify as a cash flow hedge, the
effective portion of the gain or loss on the derivative is reported as a
component of accumulated other comprehensive income (AOCI), an equity account,
and reclassified into earnings in the same period or periods during which the
hedged transaction affects earnings. Gains and losses on the derivative
representing hedge ineffectiveness are recognized in current earnings and were
not material in 2009. As of October 3, 2009, AOCI related to foreign currency
forward contracts was not material and AOCI related to interest rate swaps was a
loss of $33.7 million, of which $12.9 million is expected to be amortized to
interest expense over the next 12 months.
 
 The
following table presents the effect of cash flow hedging relationships on the
Company’s consolidated statement of operations for the three months ended
October 3, 2009:
 
 Derivatives
      in Cash Flow Hedging Relationship
              
              Amount
      of Gain/(Loss) Recognized in OCI on Derivative (Effective
      Portion)
              
              Location
      of Gain/(Loss) Reclassified
                from
      Accumulated OCI into Income
                (Effective
      Portion)
              
              Amount
      of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective
      Portion)(In
      thousands)Interest
      rate swaps
              
              $
              (4,256
              )
              Interest
      expense
              
              $
              (3,960
              )Foreign
      currency forward contracts
              
              
              205
              
              Cost
      of sales
              
              
              262Total
              
              $
              (4,051
              )
              
              
              $
              (3,698
              )
  The
following table presents the effect of cash flow hedging relationships on the
Company’s consolidated statement of operations for the year ended October 3,
2009:
 
 Derivatives
      in Cash Flow Hedging Relationship
              
              Amount
      of Gain/(Loss) Recognized in OCI on Derivative (Effective
      Portion)
              
              Location
      of Gain/(Loss) Reclassified
                from
      Accumulated OCI into Income
                (Effective
      Portion)
              
              Amount
      of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective
      Portion)(In
      thousands)Interest
      rate swaps
              
              $
              (22,590
              )
              Interest
      expense
              
              $
              (11,701
              )Foreign
      currency forward contracts
              
              
              (4,142
              )
              Cost
      of sales
              
              
              (4,709
              )Total
              
              $
              (26,732
              )
              
              
              $
              (16,410
              )
 
 103
 
 Note 5.
Debt
  Long-term
debt consisted of the following:
  As
      ofOctober
      3,
                  2009
              
              
              September 27,
                  2008(In
      thousands)Senior
      Floating Rate Notes due 2010
              
              $
              175,700
              
              
              $
              180,0006.75%
      Senior Subordinated Notes due 2013
              
              
              400,000
              
              
              
              400,000Senior
      Floating Rate Notes due 2014
              
              
              257,410
              
              
              
              300,0008.125%
      Senior Subordinated Notes due 2016
              
              
              600,000
              
              
              
              600,000Interest
      Rate Swaps
              
              
              4,604
              
              
              
              1,985Total
              
              $
              1,437,714
              
              
              $
              1,481,985Less:
      current portion (“2010 Notes”)
              
              
              (175,700
              )
              
              
              —Total
      long-term debt
              
              $
              1,262,014
              
              
              $
              1,481,985
  Senior Floating Rate
Notes.  On June 12, 2007, the Company issued
$300 million of Senior Floating Rate Notes due 2010 (the “2010 Notes”) and
$300 million of Senior Floating Rate Notes due 2014 (the “2014 Notes”). The
notes accrue interest equal to the three-month LIBOR plus 2.75%. The 2010 Notes
outstanding as of October 3, 2009 were redeemed on November 16, 2009 (see Note
17) and the 2014 Notes mature on June 15, 2014. As of October 3, 2009,
unamortized debt issuance costs of $5.2 million are being amortized to
interest expense over the life of the debt using the effective interest
method.
  The
2014 Notes are senior unsecured obligations of the Company and rank equal in
right of payment with all of the Company’s existing and future senior unsecured
debt. The Company may redeem the 2014 Notes, in whole or in part, at redemption
prices ranging from 100% to 102% of the principal amount of the 2014 Notes, plus
accrued and unpaid interest.
  On
November 16, 2009, the Company redeemed all outstanding 2010 Notes in the amount
of $175.7 million, at par. During 2009, the Company repurchased $4.3 million and
$42.6 million of its 2010 and 2014 Notes, respectively. Upon repurchase, holders
of the notes received $31.5 million, plus accrued interest of $0.4 million. In
connection with repurchases made during 2009, the Company recorded a gain of
$8.5 million, net of unamortized debt issuance costs of $0.8 million and a
charge of $6.1 million related to an interest rate swap that was dedesignated.
During 2008, the Company redeemed $120.0 million of the 2010 Notes at par.
Upon redemption, unamortized debt issuance costs of $2.2 million were
expensed.
 
 
 104
 
 On
June 12, 2007, the Company entered into interest rate swap transactions
with independent third parties to partially hedge the Notes. The interest rate
swaps had a total notional amount of $300.0 million and were designated as
cash flow hedges. Under the swap agreements, the Company pays a fixed rate of
5.594% in exchange for a three month LIBOR rate on the swaps. These swap
agreements effectively fix the interest rate at 8.344% through 2014 for the
hedged portion of the debt.
 
 Since
the issuance of the Company’s 2010 and 2014 Notes for an aggregate principal
amount of $600 million in 2007, the Company has redeemed or repurchased $342.6
million of these notes, including redemption of the remaining outstanding 2010
Notes of $175.7 million on November 16, 2009. Therefore, as of November 16,
2009, the Company has $257.4 million of 2014 Notes outstanding. As of October 3,
2009, the Company had interest rate swaps of $300 million against the 2010 and
2014 Notes. Based on the Company’s repurchases of these notes and its intention
to redeem the 2010 Notes in November 2009, which occurred on November 16, 2009,
the Company dedesignated its interest rate swaps as of October 3, 2009 and
redesignated $257 million of the swaps as hedging instruments on the same day.
As a result of this dedesignation and redesignation, the Company recorded a $6.1
million charge to gain (loss) on extinguishment of debt, representing the value
of the $43 million net dedesignated portion of the interest rate swap previously
recorded in accumulated other comprehensive income. The Company terminated $43
million of its interest rate swap with the swap counterparty on October 3, 2009.
The Company believes the likelihood that floating rate debt in the amount of
$257 million will exist through swap maturity in 2014 is probable and therefore
will continue to apply hedge accounting to this portion of the
swap.
  8.125% Senior Subordinated
Notes.  On February 15, 2006, the Company issued
$600 million of 8.125% Senior Subordinated Notes due 2016 (the “8.125%
Notes”) with a maturity date of March 1, 2016. As of October 3, 2009,
$13.8 million of unamortized debt issuance costs are being amortized to
interest expense over the life of the debt using the effective interest method.
The 8.125% Notes are unsecured and subordinated in right of payment to all of
the Company’s existing and future senior debt.
 
 The
Company may redeem the 8.125% Notes, in whole or in part, at any time prior to
March 1, 2011, at a redemption price that is equal to the sum of
(1) the principal amount of the 8.125% Notes to be redeemed,
(2) accrued and unpaid interest on those 8.125% Notes and (3) a
make-whole premium. The Company may redeem the 8.125% Notes, in whole or in
part, beginning on March 1, 2011, at declining redemption prices ranging
from 104.063% to 100% of the principal amount of the 8.125% Notes, plus accrued
and unpaid interest, with the actual redemption price to be determined based on
the date of redemption.
 
 6.75% Senior Subordinated
Notes.  On February 24, 2005, the Company issued
$400 million of its 6.75% Senior Subordinated Notes due 2013 (the “6.75%
Notes”), with a maturity date of March 1, 2013. The Company entered into
interest rate swap agreements with four independent swap counterparties to hedge
its interest rate exposures related to the 6.75% Notes. The swap agreements were
terminated in 2009 as discussed below. As of October 3, 2009, unamortized debt
issuance costs of $7.6 million are being amortized to interest expense over the
life of the debt using the effective interest method.
 
 
 105
 
 The
6.75% Notes are unsecured and subordinated in right of payment to all of the
Company’s existing and future senior debt. The Company may redeem the 6.75%
Notes, in whole or in part, at any time prior to March 1, 2009, at a
redemption price that is equal to the sum of (1) the principal amount of
the 6.75% Notes to be redeemed, (2) accrued and unpaid interest and
(3) a make-whole premium. The Company may redeem the 6.75% Notes, in whole
or in part, beginning on March 1, 2009, at declining redemption prices
ranging from 103.375% to 100% of the principal amount, plus accrued and unpaid
interest, with the actual redemption price to be determined based on the date of
redemption.
  During
the first quarter of 2009, the Company terminated its revolving credit facility
and entered into a new credit facility. In connection with the termination of
the revolving credit facility, the Company also terminated an interest rate swap
associated with its 6.75% Notes. As a result of terminating the swap, the
Company was required to discontinue hedge accounting for the terminated swap and
the remaining three swaps designated under SFAS No. 133, (ASC Topic 815), as
hedges of the 6.75% Notes. These swaps were being accounted for as fair value
hedges. At the date hedge accounting was discontinued, the swaps had a fair
value of $5.7 million, which was recorded as long-term debt and is being
amortized as a reduction to interest expense over the remaining life of the debt
of four years. During the second quarter of 2009, the Company received
termination notices from its remaining counterparties exercising their right
pursuant to embedded call options to cancel the interest rate swaps. In
connection with the termination of these swaps, the Company received a payment
consisting of a call premium of $11.4 million plus accrued interest. Of the
amount received, $5.7 million was recorded as long-term debt (as discussed
above) and $5.7 million, representing the change in fair value of the swaps from
the date hedge accounting was discontinued until the date the swaps were
terminated, was recorded as a gain in other income (expense), net.
 
 The
2014 Notes, 8.125% Notes and 6.75% Notes do not include financial covenants, but
do include covenants that limit the Company’s ability to, among other things:
incur additional debt, make investments and other restricted payments, pay
dividends on capital stock, or redeem or repurchase capital stock or
subordinated obligations; create specified liens; sell assets; create or permit
restrictions on the ability of its restricted subsidiaries to pay dividends or
make other distributions to the Company; engage in transactions with affiliates;
incur layered debt; and consolidate or merge with or into other companies or
sell all or substantially all of its assets. The restricted covenants are
subject to a number of important exceptions and qualifications.
  The
indentures for these notes provide for customary events of default, including
payment defaults, breaches of covenants, certain payment defaults at final
maturity or acceleration of certain other indebtedness, failure to pay certain
judgments, certain events of bankruptcy, insolvency and reorganization and
certain instances in which a guarantee ceases to be in full force and effect. If
any event of default occurs and is continuing, subject to certain exceptions,
the trustee or the holders of at least 25% in aggregate principal amount of the
then outstanding notes may declare all the notes to be due and payable
immediately, together with any accrued and unpaid interest, if any. In the case
of an event of default resulting from certain events of bankruptcy, insolvency
or reorganization, such amounts with respect to the notes will be due and
payable immediately without any declaration or other act on the part of the
trustee or the holders of the notes.
  
 106
 
 Following
a change of control, as defined in the indentures to these notes, the Company
will be required to make an offer to repurchase all or any portion of the notes
at a purchase price of 101% of the principal amount, plus accrued and unpaid
interest.
  The
Company was in compliance with covenants for the above debt instruments as of
October 3, 2009.
  Asset-backed Lending
Facility.  On November 19, 2008, the Company entered into
a Loan, Guaranty and Security Agreement (the “Loan Agreement”), among the
Company, the financial institutions party thereto from time to time as lenders,
and Bank of America, N.A., as agent for such lenders to replace a senior credit
facility which was terminated in the first quarter of 2009.
  The
Loan Agreement provides for a $135 million secured asset-backed revolving
credit facility, subject to a reduction of between $25 million to $50 million
depending on the Company’s borrowing availability, with an initial
$50 million letter of credit sublimit. The facility may be increased by an
additional $200 million upon obtaining additional commitments from the
lenders then party to the Loan Agreement or new lenders. The Loan Agreement
expires on the earlier of (i) the date that is 90 days prior to the
maturity date of the 6.75% Notes if such notes are not repaid, redeemed,
defeased, refinanced or reserved for under the borrowing base under the Loan
Agreement prior to such date or (ii) November 19, 2013 (the “Maturity
Date”). As of October 3, 2009, there were no loans and $25.3 million in
letters of credit outstanding under the Loan Agreement, and the Company was
eligible to borrow $61.8 million.
  Loans
may be advanced under the Loan Agreement based on a borrowing base derived from
specified percentages of the value of eligible accounts receivable and
inventory. If at any time the aggregate principal amount of the loans
outstanding plus the face amount of undrawn letters of credit under the Loan
Agreement exceed the borrowing base then in effect, the Company must make a
payment or post cash collateral (in the case of letters of credit) in an amount
sufficient to eliminate such excess.
  Loans
under the Loan Agreement bear interest, at the Company’s option, at a rate equal
to LIBOR or a base rate equal to Bank of America, N.A.’s announced prime rate,
in each case plus a spread. A commitment fee accrues on any unused portion of
the commitments under the Loan Agreement at a rate per annum based on usage.
Principal, together with accrued and unpaid interest, is due on the Maturity
Date.
  The
Company’s obligations under the Loan Agreement are secured by (1) all U.S.
and Canadian accounts receivable (with automatic lien releases occurring at time
of sale of each accounts receivable transaction for those customers included in
the “U.S. Facility”); (2) all U.S. and Canadian deposit accounts (except
accounts used for collections for certain transactions); (3) all U.S. and
Canadian inventory and associated obligations and documents; and (4) a 65%
pledge of the capital stock of the Company’s first-tier foreign
subsidiaries.
  
 107
 
 The
Loan Agreement contains a financial covenant that was not applicable to us
as of October 3, 2009, and customary affirmative covenants, including covenants
regarding the payment of taxes and other obligations, maintenance of insurance,
reporting requirements and compliance with applicable laws and regulations.
Further, the Loan Agreement contains customary negative covenants limiting the
ability of the Company under certain circumstances, among other things, to use
the facility to make investments, acquisitions and certain restricted payments,
and to sell assets. Upon an event of default, the lenders may declare all
outstanding principal and accrued but unpaid interest under the Loan Agreement
immediately due and payable. Events of default under the Loan Agreement include
payment defaults, cross defaults with certain other indebtedness, breaches of
covenants or representations and warranties, change in control of the Company
and bankruptcy events.
  Maturities
of long-term debt as of October 3, 2009 were as follows:
  (In
      thousands)2010
              
              $
              175,7002011
              
              
              —2012
              
              
              —2013
              
              
              400,0002014
              
              
              257,410Thereafter
              
              
              600,000Total
              
              $
              1,433,110
 
  Note 6.
Commitments and Contingencies
  Operating
Leases.  The Company leases certain of its facilities and
equipment under non-cancelable operating leases expiring at various dates
through 2036. The Company is responsible for utilities, maintenance, insurance
and property taxes under these leases. Future minimum lease payments, net of
sublease income, under operating leases are as follows:
  (In
      thousands)2010
              
              $
              24,2452011
              
              
              16,8722012
              
              
              9,5872013
              
              
              6,0002014
              
              
              3,307Thereafter
              
              
              14,628Total
              
              $
              74,639
 
 108
  Rent
expense, net of sublease income, under operating leases was $22.4 million,
$31.0 million and $37.1 million for 2009, 2008 and 2007,
respectively.
  Sale-leaseback.  During
2008, the Company entered into a sale-leaseback transaction for certain fixed
assets. In connection with the transaction, fixed assets were sold for
$26.5 million and simultaneously leased back under an operating lease for a
period of four years. The gain on sale was not significant and is being
amortized to income over the lease term. Future minimum lease payments relating
to the lease of these fixed assets were $13.0 million as of October 3, 2009
and are included in the above table.
  Environmental
Matters.  Primarily as a result of certain acquisitions, the
Company has exposures associated with environmental contamination at certain
facilities. These exposures relate to ongoing investigation and remediation
activities at a number of sites.
  As
of October 3, 2009, the Company is in the process of remediating environmental
contamination at one of its sites in the United States. The Company expects to
incur costs of $12.5 million for assessment, testing and remediation of
this site. The Company uses environmental consultants primarily for risk
assessments and remediation, including remedial investigation and feasibility
studies, remedial action planning and design, and site remediation. These
consultants provide information to the Company regarding the nature and extent
of site contamination, acceptable remediation alternatives, and estimated costs
associated with each remediation alternative. This information is considered by
the Company, together with other information, when determining the appropriate
amount to accrue for environmental liabilities. Actual costs upon completion of
this process could differ from the amount estimated. To date, $7.4 million
of such costs have been incurred. The Company intends to sell this site upon
completion of its remediation efforts. Costs incurred in connection with
remediation activities have been capitalized to the extent the estimated fair
value of the site exceeds its carrying cost. In 2009 and 2008, the Company
recorded an impairment charge of $3.3 million and $1.0 million,
respectively, to write down the carrying value of this site to its estimated
fair value.
  Litigation and other
contingencies.  From time to time, the Company is a party to
litigation, claims and other contingencies, including environmental matters and
examinations and investigations by governmental agencies, which arise in the
ordinary course of business. The Company cannot predict what effect these
matters may have on its results of operations, financial condition or cash
flows. Refer to “Item 3—Legal Proceedings”.
  On
January 14, 2009, one of the Company’s customers, Nortel Networks, filed a
petition for reorganization under bankruptcy law. As a result, the Company
performed an analysis as of December 27, 2008 to quantify its potential
exposure, considering factors such as which legal entities of the customer are
included in the bankruptcy reorganization, future demand from Nortel Networks,
and administrative and reclamation claim priority. As a result of the analysis,
the Company determined that certain accounts receivable may not be collectible
and therefore deferred recognition of revenue in the amount of $5.0 million for
shipments made in the first quarter of 2009. Additionally, the Company
determined that certain inventory balances may not be recoverable and provided a
reserve for such inventories in the amount of $5.0 million in the first quarter
of 2009. The Company updated its analysis at October 3, 2009 and determined that
no additional reserves were necessary. The Company’s estimates are subject to
change as additional information becomes available.
  
  
 109
  The Company records a contingent
liability when it is probable that a loss has been incurred and the amount is
reasonably estimable. As of October 3, 2009, the Company had reserves of
$29.3 million for environmental matters, litigation and other
contingencies, not including reserves for uncertain tax positions, which the
Company believes is adequate. Such reserves are included in accrued liabilities
or other long-term liabilities on the consolidated balance sheet.
 Note 7.
Income Taxes
  The
Company allocates income tax expense or benefit among continuing operations,
discontinued operations, other comprehensive income, and items charged or
credited directly to stockholders’ equity. The amount allocated to continuing
operations is the tax effect of the pretax income or loss from continuing
operations that occurred during the year, plus or minus income tax effects of
changes in circumstances that cause a change in judgment about the realization
of deferred tax assets in future years and changes in tax laws or rates. The
portion of income tax expense or benefit that remains after allocation to
continuing operations is then allocated to discontinued operations, other
comprehensive income and items charged or credited directly to stockholders’
equity.
  Domestic
and foreign components of loss from continuing operations before income taxes
were as follows:
  Year
      EndedOctober
      3,
                  2009
              
              
              September 27,
                  2008
              
              
              September 29,
                  2007(In
      thousands)Domestic
              
              $
              (122,013
              )
              
              $
              (401,613
              )
              
              $
              (1,256,956
              )Foreign
              
              
              9,443
              
              
              
              (88,718
              )
              
              
              114,929Total
              
              $
              (112,570
              )
              
              $
              (490,331
              )
              
              $
              (1,142,027
              )
  The
provision for (benefit from) income taxes consists of the
following:
  Year
      EndedOctober
      3,
                  2009
              
              
              September 27,
                  2008
              
              
              September 29,
                  2007(In
      thousands)Federal-Current
              
              $
              —
              
              
              $
              (2,818
              )
              
              $
              (17,250
              )State-Current
              
              
              250
              
              
              
              (117
              )
              
              
              (5,981
              )ForeignCurrent
              
              
              22,703
              
              
              
              27,415
              
              
              
              26,330Deferred
              
              
              699
              
              
              
              (3,475
              )
              
              
              (3,633
              )23,402
              
              
              
              23,940
              
              
              
              22,697Total
      provision for (benefit from) incometaxes
              
              $
              23,652
              
              
              $
              21,005
              
              
              $
              (534
              )
 
 110
  The
tax effects of temporary differences that give rise to significant portions of
deferred tax assets and liabilities are as follows:
  As
      ofOctober
      3,
                  2009
              
              
              September 27,
                  2008(In
      thousands)Deferred
      tax assets:Reserves
      and accruals not currently deductible
              
              $
              84,334
              
              
              $
              89,839U.S.
      net operating loss carryforwards
              
              
              404,493
              
              
              
              398,506Foreign
      net operating loss carryforwards
              
              
              180,859
              
              
              
              245,635Acquisition
      related intangibles
              
              
              132,031
              
              
              
              149,941Depreciation
      differences and property, plant and equipment impairment
      reserves
              
              
              60,477
              
              
              
              60,715Tax
      credit carryforwards
              
              
              8,370
              
              
              
              8,370Unrealized
      losses on derivative financial instruments
              
              
              14,960
              
              
              
              11,073Stock
      compensation expense
              
              
              3,562
              
              
              
              3,611Other
              
              
              6,606
              
              
              
              6,700Valuation
      allowance
              
              
              (855,953
              )
              
              
              (904,581
              )Total
      deferred tax assets
              
              
              39,739
              
              
              
              69,809Deferred
      tax liabilities on foreign earnings
              
              
              (21,789
              )
              
              
              (52,264
              )Net
      deferred tax assets
              
              
              17,950
              
              
              $
              17,545Recorded
      as:Current
      deferred tax assets
              
              $
              15,673
              
              
              $
              16,400Non-current
      deferred tax assets
              
              
              8,969
              
              
              
              8,270Non-current
      deferred tax liabilities
              
              
              (6,692
              )
              
              
              (7,125
              )Net
      deferred tax assets
              
              $
              17,950
              
              
              $
              17,545
  The
Company offsets current deferred tax assets and liabilities and noncurrent
deferred tax assets and liabilities by tax-paying jurisdiction. The resulting
net amounts by tax jurisdiction are then aggregated without further
offset.
  The
Company has a valuation allowance against its deferred tax assets which
primarily relate to U.S. operations. The underlying net operating loss
carryforwards are still available to the Company to offset future taxable income
in the U.S., subject to applicable tax laws and regulations. Due to continuing
losses during 2009 and 2008 in the U.S. and certain other countries, the Company
has determined that a valuation allowance is required with respect to deferred
tax assets as of October 3, 2009 and September 27, 2008. Although
realization is not assured, the Company believes it is more likely than not that
the remaining deferred tax assets will be realized. The amount of net deferred
tax assets, however, could be reduced or increased in the future if actual
facts, including estimates of future taxable income, differ from current
estimates. The Company’s valuation allowance decreased $48.6 million during 2009
and increased $67.1 million during 2008.
  
 111
  The
Company reorganized the legal structure of its international operations in 2009.
The reorganization was taxable in the U.S., but was offset with current year
losses, resulting in no tax effect.  For 2009, U.S. income taxes
have not been provided for approximately $117.3 million of cumulative
undistributed earnings of several non-U.S. subsidiaries. The Company
intends to reinvest these earnings indefinitely in operations outside of the
U.S.Determination
of the amount of unrecognized deferred tax liability on these undistributed
earnings is not practicable.
  As
of October 3, 2009, the Company has cumulative net operating loss carryforwards
for federal, state and foreign tax purposes of $1,038.5 million,
$840.9 million and $616.7 million, respectively. The federal and state
net operating loss carryforwards begin expiring in 2023 and 2010, respectively,
and expire at various dates through 2029. Substantially all of the foreign net
operating loss carryforwards may be carried forward indefinitely. The Tax Reform
Act of 1986 and similar state provisions impose restrictions on the utilization
of net operating loss and tax credit carryforwards in the event of an “ownership
change” as defined in the Internal Revenue Code. As of October 3, 2009, the
Company had $20.7 million of federal net operating losses subject to an
annual limitation and may utilize approximately $1.7 million of these net
operating losses each year.
  The
Company has been granted tax holidays for certain of its subsidiaries in
Singapore, Malaysia, Thailand, China and India. The tax benefit arising from
these tax holidays was $3.0 million for 2009 ($0.04 per diluted share),
$5.5 million for 2008 ($0.06 per diluted shares), and $6.4 million for
2007 ($0.07 per diluted shares). The tax holiday in Malaysia expired in June
2009, and the tax holidays in the other countries expire through 2012, excluding
potential renewals, and are subject to certain conditions with which the Company
expects to comply.
  Following
is a reconciliation of the statutory federal tax rate to the effective tax rate
resulting from the computation of the provision for (benefit from) income
taxes:
  As
      ofOctober
      3,
                  2009
              
              
              September 27,
                  2008
              
              
              September 29,
                  2007Federal
      tax at statutory rate
              
              
              (35.00
              )%
              
              
              (35.00
              )%
              
              
              (35.00
              )%Foreign
      income at other than U.S. rates
              
              
              17.85
              
              
              
              11.08
              
              
              
              (1.82
              )Dividends
      and foreign income inclusion
              
              
              24.72
              
              
              
              8.32
              
              
              
              1.11Change
      in valuation allowance
              
              
              4.65
              
              
              
              (0.39
              )
              
              
              7.28Permanent
      items
              
              
              8.57
              
              
              
              1.60
              
              
              
              0.35State
      income taxes, net of federal benefit
              
              
              0.22
              
              
              
              0.02
              
              
              
              (0.44
              )Non-deductible
      goodwill impairment
              
              
              —
              
              
              
              18.65
              
              
              
              28.84Audit
      settlement and related closing of statutes of limitation
              
              
              —
              
              
              
              —
              
              
              
              0.07Other
              
              
              —
              
              
              
              —
              
              
              
              (0.44
              )Provision
      for (benefit from) income taxes
              
              
              21.01
              %
              
              
              4.28
              %
              
              
              (0.05
              )%
  112
 
 A reconciliation of the beginning and
ending amount of total unrecognized tax benefits, excluding accrued penalties
and interest, is as follows:
 Year
      EndedOctober
      3,
                2009
              
              
              September
      27,
                2008(in
      thousands)Balance,
      beginning of year
              
              $
              21,170
              
              
              $
              17,040Increase
      related to prior year tax positions
              
              
              2,830
              
              
              
              889Decrease
      related to prior year tax positions
              
              
              (4,868
              )
              
              
              (498
              )Increase
      related to current year tax positions
              
              
              11,383
              
              
              
              4,271Decrease
      related to lapse of statute of limitations
              
              
              (696
              )
              
              
              (532
              )Settlements
              
              
              (1,961
              )
              
              
              —Balance,
      end of year
              
              $
              27,858
              
              
              $
              21,170
  The total balance of unrecognized tax
benefits at October 3, 2009, if recognized, would affect the effective rate on
income.
  As
of the date of adoption of FIN 48 (ASC Topic 740) in 2008, the Company had
accrued $2.9 million for the payment of interest and penalties relating to
unrecognized tax benefits. The Company reversed $1.3 million of net interest and
penalties related to unrecognized tax benefits during 2009 and accrued an
additional $1.8 million of interest and penalties  related to
unrecognized tax benefits during 2008. The Company recognizes interest and
penalties related to unrecognized tax benefits as a component of income tax
expense.
  The
Company conducts business globally and, as a result, files income tax returns in
the United States federal jurisdiction and various state and foreign
jurisdictions. In the normal course of business, the Company is subject to
examination by taxing authorities throughout the world. It is reasonably
possible that unrecognized tax benefits specific to one individual tax position
could significantly increase or decrease within the next 12 months based on
final determinations by a taxing authority.
  In general, the Company is no longer
subject to United States federal or state income tax examinations for years
before 2003, except to the extent that tax attributes in these years were
carried forward to years remaining open for audit, and to examinations for years
prior to 2002 in its major foreign jurisdictions.
  
 113
 
 Note 8.
Restructuring Costs
  Costs
associated with restructuring activities, other than those activities related to
business combinations, are accounted for in accordance with SFAS No. 146,
“Accounting for Costs
Associated with Exit or Disposal Activities”(ASC Topic 420, Exit or Disposal Cost
Obligations), or SFAS No. 112, “Employers’ Accounting for
Postemployment Benefits”(ASC Topic 712, Compensation – Nonretirement
Postemployment Benefits), as applicable. Pursuant to SFAS No. 112
(ASC Topic 712), restructuring costs related to employee severance are recorded
when probable and estimable based on the Company’s policy with respect to
severance payments. For all other restructuring costs, a liability is recognized
in accordance with SFAS No. 146 (ASC Topic 420) only when
incurred.
  2009
Restructuring Plan
 
 During
2009, the Company initiated a restructuring plan as a result of the slowdown in
the global electronics industry and worldwide economy. The plan was designed to
improve capacity utilization levels and reduce costs by consolidating
manufacturing and other activities in locations with higher efficiencies and
lower costs. Costs associated with this plan are expected to include employee
severance, costs related to facilities and equipment that are no longer in use,
and other costs associated with the exit of certain contractual arrangements due
to facility closures. All actions under this plan were initiated and
substantially completed during 2009 and costs for this plan are expected to be
in the range of $45 million to $50 million, of which $41 million had been
incurred as of October 3, 2009. Below is a summary of restructuring costs
associated with facility closures and other consolidation efforts implemented
under this plan:
 
 Employee
      Termination
                Severance
                and
      Related Benefits
                Cash
              
              
              Leases
      and Facilities Shutdown and Consolidation Costs
                Cash
              
              
              Impairment
                of
      Assets or Redundant
                Assets
                Non-Cash
              
              
              Total(In thousands)Balance
      at September 27, 2008
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —Charges
      to operations
              
              
              28,705
              
              
              
              11,718
              
              
              
              1,200
              
              
              
              41,623Charges
      utilized
              
              
              (22,556
              )
              
              
              (9,577
              )
              
              
              (1,200
              )
              
              
              (33,333
              )Reversal
      of accrual
              
              
              (569
              )
              
              
              —
              
              
              
              —
              
              
              
              (569
              )Balance
      at October 3, 2009
              
              $
              5,580
              
              
              $
              2,141
              
              
              $
              —
              
              
              $
              7,721
 
 During
2009, the Company closed or consolidated six facilities and recorded
restructuring charges of $28.1 million for employee termination costs, of which
$22.6 million has been utilized and $5.6 million is expected to be paid during
2010. These costs were provided for approximately 4,000 terminated
employees.
 
 
 114
 
 Restructuring
Plans — Prior Years
 
 Below
is a summary of restructuring costs associated with facility closures and other
consolidation efforts:
  Employee
      Termination / Severance and Related Benefits Cash
              
              
              Leases
      and Facilities Shutdown and Consolidation Costs Cash
              
              
              Impairment
      of Fixed Assets or Redundant Fixed Assets Non-Cash
              
              
              Total(In
      thousands)Balance
      at September 30, 2006
              
              $
              21,349
              
              
              $
              9,804
              
              
              $
              —
              
              
              $
              31,153Charges
      (recovery) to operations
              
              
              35,169
              
              
              
              11,195
              
              
              
              (831
              )
              
              
              45,533Charges
      recovered (utilized)
              
              
              (47,873
              )
              
              
              (12,132
              )
              
              
              831
              
              
              
              (59,174
              )Reversal
      of accrual
              
              
              (2,505
              )
              
              
              (441
              )
              
              
              —
              
              
              
              (2,946
              )Balance
      at September 29, 2007
              
              
              6,140
              
              
              
              8,426
              
              
              
              —
              
              
              
              14,566Charges
      to operations
              
              
              64,126
              
              
              
              16,519
              
              
              
              2,456
              
              
              
              83,101Charges
      utilized
              
              
              (45,248
              )
              
              
              (19,765
              )
              
              
              (2,456
              )
              
              
              (67,469
              )Reversal
      of accrual
              
              
              (833
              )
              
              
              (892
              )
              
              
              —
              
              
              
              (1,725
              )Balance
      at September 27, 2008
              
              
              24,185
              
              
              
              4,288
              
              
              
              —
              
              
              
              28,473Charges
      to operations
              
              
              8,988
              
              
              
              7,869
              
              
              
              3,692
              
              
              
              20,549Charges
      utilized
              
              
              (23,842
              )
              
              
              (10,466
              )
              
              
              (3,692
              )
              
              
              (38,000
              )Reversal
      of accrual
              
              
              (4,156
              )
              
              
              (187
              )
              
              
              —
              
              
              
              (4,343
              )Balance
      at October 3, 2009
              
              $
              5,175
              
              
              $
              1,504
              
              
              $
              —
              
              
              $
              6,679
  During 2009, the Company recorded
restructuring charges for employee termination benefits for approximately 1,400
employees who were terminated in connection with restructuring plans developed
prior to 2009.
  During
2008, the Company closed or consolidated four facilities and recorded
restructuring charges for employee termination benefits for approximately 2,900
employees.
  During
2007, the Company closed or consolidated eight facilities and terminated
approximately 6,700 employees.
  Restructuring
Plans – All Years
  Accrued
restructuring costs as of October 3, 2009 were $14.4 million. In connection
with restructuring actions the Company has already implemented under its
restructuring plan, the Company expects to pay remaining facilities related
restructuring liabilities of $3.6 million through 2012 and the majority of
severance costs of $10.8 million through 2010.
  The recognition of restructuring
charges requires the Company to make judgments and estimates regarding the
nature, timing, and amount of costs associated with planned exit activities,
including estimating sublease income and the fair values, less selling costs, of
property, plant and equipment to be disposed of. The Company’s estimates of
future liabilities may change, requiring it to record additional restructuring
charges or reduce the amount of liabilities already recorded.
  
 115
 
 Note 9.
Loss Per Share
  Basic
and diluted amounts per share are computed by dividing net income or loss by the
weighted average number of shares of common stock outstanding during the period,
as follows:
  Year
      EndedOctober 3,
                  2009
              
              
              September 27,
                  2008
              
              
              September 29,
                  2007(In
      thousands, except per share amounts)Numerator:Loss
      from continuing operations
              
              $
              (136,222
              )
              
              $
              (511,336
              )
              
              $
              (1,141,493
              )Income
      from discontinued operations,net
      of tax
              
              
              —
              
              
              
              24,987
              
              
              
              6,836Net
      Loss
              
              $
              (136,222
              )
              
              $
              (486,349
              )
              
              $
              (1,134,657
              )Denominator:Weighted
      average number of shares—basicand
      diluted
              
              
              82,528
              
              
              
              88,454
              
              
              
              87,853Basic
      and diluted income (loss) per share from:Continuing
      operations
              
              $
              (1.65
              )
              
              $
              (5.78
              )
              
              $
              (12.99
              )Discontinued
      operations
              
              $
              —
              
              
              $
              0.28
              
              
              $
              0.08Net
      loss
              
              $
              (1.65
              )
              
              $
              (5.50
              )
              
              $
              (12.91
              )
  The
following table presents weighted-average dilutive securities that were excluded
from the above calculation because their inclusion would have had an
anti-dilutive effect (in thousands):
  Year
      EndedOctober 3,
                  2009
              
              
              September 27,
                  2008
              
              
              September 29,
                  2007Potentially
      dilutive securities:Employee
      stock options
              
              
              8,003
              
              
              
              7,590
              
              
              
              7,749Restricted
      awards and units
              
              
              528
              
              
              
              689
              
              
              
              523Total
              
              
              8,531
              
              
              
              8,279
              
              
              
              8,272
 116
 
 As
of October 3, 2009, all of the Company’s outstanding stock options and
restricted stock awards and units were anti-dilutive under SFAS No. 128,
“Earnings Per Share”
(ASC Topic 260, Earnings Per
Share), either because the exercise price was higher than the Company’s
stock price, the application of the treasury stock method resulted in an
anti-dilutive effect or the Company incurred a net loss. Had the Company
reported net income instead of a net loss for 2009, 0.2 million of the
8.5 million potentially dilutive securities would have been included in the
calculation of diluted earnings per share.
  There were no outstanding convertible
debentures in 2009 or 2008. After-tax interest expense of $5.0 million
related to convertible debentures for 2007 was not excluded from the calculation
of diluted loss per share because to do so would have been anti-dilutive. In
addition, the related share equivalents on conversion of the debt were not
included as to do so would have been anti-dilutive.
  Note 10.
Stock-Based Compensation
  Stock-based
compensation expense, excluding a $3.9 million tax benefit in 2007, was as
follows:
  Year
      EndedOctober 3,
                  2009
              
              
              September 27,
                  2008
              
              
              September 29,
                  2007(In
      thousands)Cost
      of sales
              
              $
              7,209
              
              
              $
              6,556
              
              
              $
              7,459Selling,
      general & administrative
              
              
              8,446
              
              
              
              7,073
              
              
              
              12,568Research &
      development
              
              
              339
              
              
              
              307
              
              
              
              565Continuing
      operations
              
              
              15,994
              
              
              
              13,936
              
              
              
              20,592Discontinued
      operations
              
              
              —
              
              
              
              401
              
              
              
              800Total
              
              $
              15,994
              
              
              $
              14,337
              
              
              $
              21,392
 
 Year
      EndedOctober
      3,
                  2009
              
              
              September 27,
                  2008
              
              
              September 29,
                  2007(In
      thousands)Stock
      options
              
              $
              9,705
              
              
              $
              7,932
              
              
              $
              4,693Restricted
      stock awards
              
              
              185
              
              
              
              160
              
              
              
              11,539Restricted
      stock units
              
              
              6,104
              
              
              
              5,844
              
              
              
              4,360Continuing
      operations
              
              
              15,994
              
              
              
              13,936
              
              
              
              20,592Discontinued
      operations
              
              
              —
              
              
              
              401
              
              
              
              800Total
              
              $
              15,994
              
              
              $
              14,337
              
              
              $
              21,392
 
 117
 
 Stock
Options
  The
Company’s stock option plans provide employees the right to purchase common
stock at the fair market value of such shares on the grant date. The Company
recognizes compensation expense for such awards over the vesting period, which
is generally four to five years. The contractual term of all options is ten
years. For option grants made prior to 2006, the Company recognizes compensation
expense using the multiple option approach. For option grants made subsequent to
the adoption of SFAS No. 123R (ASC Topic 718, Compensation – Stock
Compensation), the Company recognizes compensation expense ratably over
the service period.
  In
2007, the Company executed tender offers to exchange certain outstanding options
to purchase shares of its common stock, whether vested or unvested, for new
options (the “Exchange Offer”). A total of 2,000 eligible option holders
participated. Subject to the terms and conditions of the Exchange Offer, the
Company granted new options to purchase an aggregate of 2,964,292 shares of its
common stock in exchange for the options tendered and accepted pursuant to the
Exchange Offer. The Company is recognizing $17.0 million of expense over a
three year period in connection with this exchange.
  Assumptions
used to estimate the fair value of stock options granted, excluding the Exchange
Offer, were as follows:
  Year
      EndedOctober
      3,
                  2009
              
              
              September 27,
                  2008
              
              
              September 29,
                  2007Volatility
              
              
              79.8
              %
              
              
              61.1
              %
              
              
              54.3
              %Risk-free
      interest rate
              
              
              2.20
              %
              
              
              3.23
              %
              
              
              4.64
              %Dividend
      yield
              
              
              0
              %
              
              
              0
              %
              
              
              0
              %Expected
      life of options
              
              5.0 years
              
              
              5.0 years
              
              
              5.3 years
  118
 
 A
summary of stock option activity is as follows:
 Number
      of
                  Shares
              
              
              Weighted-
                  Average
                  Exercise
      Price
                  ($)
              
              
              Weighted-
                  Average
                  Remaining
                  Contractual
                  Term
                  (Years)
              
              
              Aggregate
                  Intrinsic
                  Value
      of
                  In-The-Money
                  Options
                  ($)(In thousands)
              
              
              
              
              
              
              
              
              (In thousands)Outstanding,
      September 30, 2006
              
              
              8,452
              
              
              
              50.82
              
              
              
              6.22
              
              
              
              458Granted
              
              
              4,107
              
              
              
              20.10Exercised/Cancelled/Forfeited/Expired
              
              
              (5,387
              )
              
              
              46.38Outstanding,
      September 29, 2007
              
              
              7,172
              
              
              
              36.60
              
              
              
              7.50
              
              
              
              29Granted
              
              
              1,742
              
              
              
              10.14Cancelled/Forfeited/Expired
              
              
              (1,204
              )
              
              
              35.22Outstanding,
      September 27, 2008
              
              
              7,710
              
              
              
              30.84
              
              
              
              7.31
              
              
              
              117Granted
              
              
              5,177
              
              
              
              3.62Exercised/Cancelled/Forfeited/Expired
              
              
              (1,781
              )
              
              
              44.25Outstanding,
      October 3, 2009
              
              
              11,106
              
              
              
              16.00
              
              
              
              8.11
              
              
              
              26,008Vested
      and expected to vest, October 3, 2009
              
              
              9,578
              
              
              
              17.37
              
              
              
              7.95
              
              
              
              20,484Exercisable,
      October 3, 2009
              
              
              3,968
              
              
              
              31.50
              
              
              
              6.27
              
              
              
              184
  The
weighted-average grant date fair value per share of stock options granted was
$2.41, $5.40, and $5.94 during 2009, 2008, and 2007, respectively. The aggregate
intrinsic value in the preceding table represents the total pre-tax intrinsic
value of in-the-money options that would have been received by the option
holders had all option holders exercised their options at the Company’s closing
stock price on the date indicated.
  As
of October 3, 2009, there was $29.6 million of total unrecognized
compensation expense related to stock options. This amount is expected to be
recognized over a weighted average period of 3.43 years.
  Restricted
Stock Awards
  The
Company grants awards of restricted stock to executive officers, directors and
certain management employees. These awards vest over periods ranging from one to
four years and compensation expense is recognized ratably over the vesting
period.
  Compensation
expense was $0.2 million for 2009 and 2008 and $12.0 million for
2007.
  There
were 15.2 thousand restricted stock awards granted during 2009 with a
weighted-average grant date per share fair value of $2.64. No restricted stock
awards were granted during 2008 or 2007. As of October 3, 2009,
unrecognized compensation expense related to restricted stock awards was
immaterial.
  
 119
  A
summary of activities related to nonvested restricted shares is as
follows:
 Number
      of Shares
              
              
              Weighted
      Average
                  Grant-Date
                  Fair
      Value ($)(In thousands)Nonvested
      at September 30, 2006
              
              
              506
              
              
              
              62.58Vested/Forfeited
              
              
              (58
              )
              
              
              51.36Nonvested
      at September 29, 2007
              
              
              448
              
              
              
              63.24Vested
              
              
              (420
              )
              
              
              64.68Nonvested
      at September 27, 2008
              
              
              28
              
              
              
              41.82Granted
              
              
              15
              
              
              
              2.64Vested
              
              
              (20
              )
              
              
              38.89Nonvested
      at October 3, 2009
              
              
              23
              
              
              
              18.22
  Restricted
Stock Units
  The
Company issues restricted stock units to executive officers, directors and
certain management employees. These units vest over periods ranging from one to
four years and are automatically exchanged for shares of common stock at the
vesting date. Compensation expense associated with these units is recognized
ratably over the vesting period.
  Compensation
expense was $6.1 million, $5.8 million and $4.4 million for 2009,
2008 and 2007, respectively.
  The
weighted-average grant date per share fair value of restricted stock units
granted was $1.80, $9.78 and $20.76 in 2009, 2008 and 2007, respectively. At
October 3, 2009, unrecognized compensation expense related to restricted stock
units was approximately $3.3 million. This expense is expected to be
recognized over a weighted-average period of 5 months.
  
 120
  A summary of nonvested restricted share
units is as follows:
 Number
      of
                  Shares
              
              
              Weighted-
                  Grant
      Date
                  Fair
      Value
                  Per
      Share
                  ($)
              
              
              Weighted-
                  Average
                  Remaining
                  Contractual
                  Term
                  (Years)
              
              
              Aggregate
                  Intrinsic
                  ($)(In thousands)
              
              
              
              
              
              
              
              
              (In thousands)Nonvested
      restricted stock units at September 30, 2006
              
              
              254
              
              
              
              28.74
              
              
              
              3.54
              
              
              
              5,709Granted
              
              
              880
              
              
              
              20.76Vested/Cancelled
              
              
              (125
              )
              
              
              24.30Nonvested
      restricted stock units at September 29, 2007
              
              
              1,009
              
              
              
              22.26
              
              
              
              1.84
              
              
              
              12,837Granted
              
              
              87
              
              
              
              9.78Vested/Cancelled
              
              
              (292
              )
              
              
              14.02Nonvested
      restricted stock units at September 27, 2008
              
              
              804
              
              
              
              21.18
              
              
              
              1.15
              
              
              
              7,915Granted
              
              
              261
              
              
              
              1.80Vested/Cancelled
              
              
              (328
              )
              
              
              17.07Nonvested
      restricted stock units at October 3, 2009
              
              
              737
              
              
              
              16.17
              
              
              
              .41
              
              
              
              6,494Nonvested
      restricted stock units expected to vest atOctober
      3, 2009
              
              
              568
              
              
              
              16.17
              
              
              
              .41
              
              
              
              5,001
  Employee
Stock Purchase Plan
  In
2003, the Board of Directors and stockholders of the Company approved the 2003
Employee Stock Purchase Plan (the “2003 ESPP”). Under the 2003 ESPP, employees
may purchase, on a periodic basis, a limited number of shares of common stock
through payroll deductions over a six-month period. The per share purchase price
is 85% of the fair market value of the stock at the beginning or end of the
offering period, whichever is lower. The 2003 ESPP was suspended at the
beginning of 2007. As of October 3, 2009, approximately 1,022,205 shares are
available for issuance under the 2003 ESPP.
  Note 11.
Stockholders’ Equity
  On
January 26, 2009, the Company’s stockholders approved the 2009 Incentive
Plan (“2009 Plan”) and the reservation of 7.5 million shares of common stock for
issuance thereunder. The 2009 Plan provides for the grant of incentive stock
options, nonstatutory stock options, restricted stock, restricted stock units,
stock appreciation rights, performance units, and performance shares. The per
share exercise price for shares to be issued pursuant to exercise of an option
will be no less than 100% of the fair market value per share on the date of
grant.
 
 Upon
approval of the 2009 Plan, all of the Company’s other stock plans were
terminated as to future grants. Although these plans have been terminated, they
will continue to govern all awards granted under them prior to termination of
the awards.
 
 121
  At
October 3, 2009, an aggregate of 15.4 million shares were authorized for future
issuance under the Company's stock plans, which include stock options
and restricted stock awards and units, and a total of 3.2 million shares of
common stock were available for grant. Awards under the 2009 plan that expire or
are cancelled without delivery of shares generally become available for issuance
under the plan.
 
 Stock
option activity under the Company’s option plans during 2009, 2008 and 2007 is
disclosed in note 10—Stock-Based Compensation.
  The
following table summarizes information regarding stock options outstanding at
October 3, 2009:
  Options
      Outstanding
              
              
              Option
      Vested and ExercisableRange of Weighted Exercise
      Prices
              
              Number
                  Outstanding
              
              
              Weighted
                  Average
                  Remaining
                  Contractual
      Life
              
              
              Weighted
                  Average
                  Exercise
                  Price
                  ($)
              
              
              Number
                  Exercisable
              
              
              Weighted
                  Average
                  Exercise
                  Price
                  ($)(In
      thousands)
              
              
              
              
              
              
              
              
              
              (In
      thousands)$1.50—$2.94
              
              
              1,980
              
              
              
              9.30
              
              
              
              2.41
              
              
              
              11
              
              
              
              1.80$2.95—$4.45
              
              
              2,991
              
              
              
              9.91
              
              
              
              4.44
              
              
              
              —
              
              
              
              —$4.46—$11.88
              
              
              1,465
              
              
              
              8.36
              
              
              
              10.07
              
              
              
              605
              
              
              
              9.84$11.89—$12.78
              
              
              462
              
              
              
              7.92
              
              
              
              12.76
              
              
              
              161
              
              
              
              12.76$12.79—$21.12
              
              
              1,964
              
              
              
              7.61
              
              
              
              21.04
              
              
              
              1,303
              
              
              
              21.07$21.13—$27.00
              
              
              1,174
              
              
              
              5.89
              
              
              
              23.40
              
              
              
              821
              
              
              
              23.66$27.01—$288.93
              
              
              1,070
              
              
              
              3.96
              
              
              
              65.62
              
              
              
              1,067
              
              
              
              65.70$1.50—$288.93
              
              
              11,106
              
              
              
              8.11
              
              
              
              16.00
              
              
              
              3,968
              
              
              
              31.50
 
 
 Stock Repurchase
Program.   On October 27, 2008, the Company’s Board
of Directors authorized the Company to spend up to approximately $35 million on
share repurchases. The authorization is effective through December 2009.
The Company repurchased 10.1 million shares of its common stock, representing
approximately 11% of the Company’s outstanding shares, for a total of $29.2
million, including commissions, in 2009.
 
 Reverse Stock
Split.  On July 20, 2009, the Board of Directors of the Company
authorized a reverse split of its common stock at a ratio of one for six,
effective August 14, 2009. The Company’s stockholders previously approved the
reverse split in September 2008. As a result of the reverse split, every six
shares of common stock outstanding were combined into one share of common stock.
The reverse split did not affect the amount of equity the Company has nor did it
affect the Company’s market capitalization.
 
 
 122
 
 Accumulated Other Comprehensive
Income.Accumulated other comprehensive income, net of tax as applicable,
consisted of the following:
  As
      ofOctober
      3,
                  2009
              
              
              September 27
                  2008(In
      thousands)Foreign
      currency translation adjustments
              
              $
              93,848
              
              
              $
              82,303Unrealized
      holding losses on derivative financial instruments
              
              
              (33,589
              )
              
              
              (23,267
              )Unrecognized
      net actuarial loss and unrecognized transition cost
              
              
              (7,909
              )
              
              
              (3,259
              )Total
              
              $
              52,350
              
              
              $
              55,777
 
 Note 12.
Employee Benefit Plans
 
 The
Company has various defined contribution retirement plans that cover the
majority of its employees. These retirement plans permit participants to elect
to have contributions made to the retirement plans in the form of salary
deferrals. Under these retirement plans, the Company may match a portion of
employee contributions. Amounts contributed by the Company were
$2.8 million, $8.9 million and $10.2 million during 2009, 2008
and 2007, respectively.
  The Company sponsors deferred
compensation plans for eligible employees and non-employee members of its board
of directors. These plans allow eligible participants to defer payment of all or
part of their compensation. Deferrals under these plans were $1.9 million
and $1.5 million for 2009 and 2008, respectively. As of October 3, 2009 and
September 27, 2008, $9.6 million and $9.5 million, respectively, associated with
these plans were recorded in other long-term liabilities in the consolidated
balance sheets.
  SCI
Systems had defined benefit pension plans covering substantially all employees
in the United States and Brockville, Ontario, Canada. These plans generally
provided pension benefits that are based on compensation levels and years of
service. Annual contributions to the plans were made according to the
established laws and regulations of the applicable countries and were funded
annually at amounts that approximated the maximum deductible for income taxes.
The merger between Sanmina Corporation and SCI Systems in December 2001 resulted
in a plan curtailment as described in SFAS No. 88 (ASC Topic 715, Compensation – Retirement
Benefits) and benefits were calculated and frozen as of December 31,
2001. Employees who had not yet vested will continue to be credited with service
until vesting occurs, but no additional benefits will accrue.
  The
Company also provides defined benefit pension plans in certain other countries.
The assumptions used for calculating the obligation for non-U.S. plans depend on
the local economic environment and regulations. The measurement date for the
Company’s pension plans is October 3, 2009.
  
 123
 
 Changes
in benefit obligations for the plans described above were as follows (in
thousands):
  As
      of
                  October
      3, 2009
              
              
              As
      of
                  September 27,
      2008
              
              
              As
      of
                  September 29,
      2007Change in Benefit
    Obligations
              
              U.S.
              
              
              Non-U.S.
              
              
              U.S.
              
              
              Non-U.S.
              
              
              U.S.
              
              
              Non-U.S.Beginning
      benefit obligation
              
              $
              28,974
              
              
              $
              25,767
              
              
              $
              33,586
              
              
              $
              27,115
              
              
              $
              36,277
              
              
              $
              26,491Service
      cost
              
              
              —
              
              
              
              558
              
              
              
              —
              
              
              
              698
              
              
              
              —
              
              
              
              868Interest
      cost
              
              
              1,598
              
              
              
              1,482
              
              
              
              1,829
              
              
              
              1,584
              
              
              
              2,067
              
              
              
              1,467Actuarial
      (gain) loss
              
              
              4,448
              
              
              
              1,011
              
              
              
              (148
              )
              
              
              (4,573
              )
              
              
              1,955
              
              
              
              (4,070
              )Benefits
      paid
              
              
              (6,931
              )
              
              
              (2,369
              )
              
              
              (6,293
              )
              
              
              (1,438
              )
              
              
              (6,713
              )
              
              
              (831
              )Settlement
      / Curtailment
              
              
              —
              
              
              
              349
              
              
              
              —
              
              
              
              202
              
              
              
              —
              
              
              
              —Other*
              
              
              —
              
              
              
              (688
              )
              
              
              —
              
              
              
              2,179
              
              
              
              —
              
              
              
              3,190Ending
      benefit obligation
              
              $
              28,089
              
              
              $
              26,110
              
              
              $
              28,974
              
              
              $
              25,767
              
              
              $
              33,586
              
              
              $
              27,115
  *
              Primarily
      related to fluctuations in exchange rates between foreign currencies and
      the US dollar.
  Weighted-average
actuarial assumptions used to determine benefit obligations were as
follows:
  U.S.
      Pensions
              
              
              Non-U.S.
      PensionsAs
      of
              
              
              As
      ofOctober
      3,
                  2009
              
              
              September 27,
                  2008
              
              
              October
      3,
                  2009
              
              
              September 27,
                  2008Discount
      rate
              
              
              5.25
              %
              
              
              6.25
              %
              
              
              5.87
              %
              
              
              5.40
              %Rate
      of compensation increases
              
              
              —
              
              
              
              —
              
              
              
              1.60
              %
              
              
              1.40
              %
  The
Company evaluates these assumptions on a regular basis taking into consideration
current market conditions and historical market data. The discount rate is used
to measure expected future cash flows at present value on the measurement date.
This rate represents the market rate for high-quality fixed income investments.
A lower discount rate would increase the present value of the benefit
obligation. Other assumptions include demographic factors such as retirement,
mortality, and turnover.
  
 124
 
 Changes
in plan assets and funded status for the plans described above were as follows
(in thousands):
  As
      of
                  October
      3, 2009
              
              
              As
      of
                  September 27,
      2008
              
              
              As
      of
                  September 29,
      2007Change in Plan Assets
              
              U.S.
              
              
              Non-U.S.
              
              
              U.S.
              
              
              Non-U.S.
              
              
              U.S.
              
              
              Non-U.S.Beginning
      fair value
              
              $
              22,324
              
              
              $
              —
              
              
              $
              27,442
              
              
              $
              —
              
              
              $
              26,820
              
              
              $
              —Actual
      return
              
              
              (730
              )
              
              
              —
              
              
              
              (1,575
              )
              
              
              —
              
              
              
              2,265
              
              
              
              —Employer
      contributions
              
              
              5,501
              
              
              
              19,684
              
              
              
              2,750
              
              
              
              1,438
              
              
              
              5,070
              
              
              
              831Benefits
      paid
              
              
              (6,931
              )
              
              
              (2,369
              )
              
              
              (6,293
              )
              
              
              (1,438
              )
              
              
              (6,713
              )
              
              
              (831
              )Ending
      fair value
              
              $
              20,164
              
              
              $
              17,315
              
              
              $
              22,324
              
              
              $
              —
              
              
              $
              27,442
              
              
              $
              —Under
      Funded Status
              
              $
              (7,925
              )
              
              $
              (8,795
              )
              
              $
              (6,650
              )
              
              $
              (25,767
              )
              
              $
              (6,144
              )
              
              $
              (27,115
              )
  Weighted-average
asset allocations by asset category for the U.S. plan were as
follows:
  As
      ofTarget
              
              
              October
      3,
                  2009
              
              
              September 27,
                  2008Equity
      securities
              
              
              50
              %
              
              
              47
              %
              
              
              49
              %Debt
      securities
              
              
              50
              %
              
              
              53
              %
              
              
              51
              %Total
              
              
              100
              %
              
              
              100
              %
              
              
              100
              %
  During
2009, the investment allocation consisted primarily of investments in equity
instruments and bonds. In general, the investment strategy is designed to ensure
that pension assets are available to pay benefits as they come due and minimize
market risk. During 2009, the investment allocation consisted primarily of
investments in the State Street Passive Bond Market Index and in the
S&P 500 Index for the U.S. plan. The non-U.S. plans are managed
consistent with regulations or market practice of the country in which the
assets are invested.
  Non-U.S.
plan assets were fully invested in cash as of October 3, 2009.
 
 125
  The
funded status of the plans, reconciled to the amount reported on the
consolidated balance sheets, is as follows (in thousands):
  As
      of
                  October 3,
      2009
              
              
              As
      of
                  September 27,
      2008
              
              
              As
      of
                  September 29,
      2007U.S.
              
              
              Non-U.S.
              
              
              U.S.
              
              
              Non-U.S.
              
              
              U.S.
              
              
              Non-U.S.Under
      Funded Status at Year End
              
              $
              (7,925
              )
              
              $
              (8,795
              )
              
              $
              (6,650
              )
              
              $
              (25,767
              )
              
              $
              (6,144
              )
              
              $
              (27,115
              )Unrecognized
      transition obligation
              
              
              —
              
              
              
              999
              
              
              
              —
              
              
              
              2,185
              
              
              
              —
              
              
              
              275Unrecognized
      net actuarial (gain) loss
              
              
              12,300
              
              
              
              (4,982
              )
              
              
              8,765
              
              
              
              (5,768
              )
              
              
              7,474
              
              
              
              (2,258
              )Net
      amount recognized in Consolidated
                Balance
      Sheet
              
              $
              4,375
              
              
              $
              (12,778
              )
              
              $
              2,115
              
              
              $
              (29,350
              )
              
              $
              1,330
              
              
              $
              (29,098
              )Components
      of Net Amount Recognized in Consolidated Balance SheetAccrued
      benefit liability (current)
              
              $
              —
              
              
              $
              (570
              )
              
              $
              —
              
              
              $
              (800
              )
              
              $
              —
              
              
              $
              (656
              )Liability
      for benefits (non-current)
              
              
              (7,925
              )
              
              
              (8,225
              )
              
              
              (6,650
              )
              
              
              (24,967
              )
              
              
              (6,144
              )
              
              
              (26,459
              )Accumulated
      other comprehensive income
              
              
              12,300
              
              
              
              (3,983
              )
              
              
              8,765
              
              
              
              (3,583
              )
              
              
              7,474
              
              
              
              (1,983
              )Net
      asset (liability) recognized in Consolidated
                Balance
      Sheet
              
              $
              4,375
              
              
              $
              (12,778
              )
              
              $
              2,115
              
              
              $
              (29,350
              )
              
              $
              1,330
              
              
              $
              (29,098
              )
  Estimated
amortization from accumulated other comprehensive income into net periodic
benefit cost in 2010 is as follows (in thousands):
  U.S.
              
              
              Non-U.S.Amortization
      of actuarial (gain) loss
              
              $
              1,201
              
              
              $
              (193
              )Amortization
      of transition obligation
              
              
              —
              
              
              
              309Total
              
              $
              1,201
              
              
              $
              116
  The
accumulated benefit obligation for all defined benefit pension plans was
$52.6 million and $52.8 million at October 3, 2009 and
September 27, 2008, respectively.
  
 126
 
 The
following table provides information for pension plans with an accumulated
benefit obligation in excess of plan assets (in thousands):
  As
      of
                  October 3,
      2009
              
              
              As
      of
                  September 27,
      2008U.S.
              
              
              Non-U.S.
              
              
              U.S.
              
              
              Non-U.S.Projected
      benefit obligation
              
              $
              28,089
              
              
              $
              26,110
              
              
              $
              28,974
              
              
              $
              25,767Accumulated
      benefit obligation
              
              $
              28,089
              
              
              $
              24,549
              
              
              $
              28,974
              
              
              $
              23,806Fair
      value of plan assets
              
              $
              20,164
              
              
              $
              17,315
              
              
              $
              22,324
              
              
              $
              —
  Components
of net periodic benefit costs were as follows (in thousands):
  As
      of
                  October 3,
      2009
              
              
              As
      of
                  September 27,
      2008
              
              
              As
      of
                  September 29,
      2007U.S.
              
              
              Non-U.S.
              
              
              U.S.
              
              
              Non-U.S.
              
              
              U.S.
              
              
              Non-U.S.Service
      cost
              
              $
              —
              
              
              $
              558
              
              
              $
              —
              
              
              $
              698
              
              
              $
              —
              
              
              $
              868Interest
      cost
              
              
              1,598
              
              
              
              1,482
              
              
              
              1,829
              
              
              
              1,584
              
              
              
              2,067
              
              
              
              1,467Return
      on plan assets
              
              
              (1,839
              )
              
              
              —
              
              
              
              (2,079
              )
              
              
              —
              
              
              
              (2,029
              )
              
              
              —Settlement
      charge
              
              
              2,757
              
              
              
              1,302
              
              
              
              1,719
              
              
              
              90
              
              
              
              1,391
              
              
              
              —Amortization
      of:—Actuarial
      (gain) loss
              
              
              724
              
              
              
              (243
              )
              
              
              496
              
              
              
              (131
              )
              
              
              647
              
              
              
              (4
              )—Transition
      obligation
              
              
              —
              
              
              
              405
              
              
              
              —
              
              
              
              507
              
              
              
              —
              
              
              
              36Net
      periodic benefit cost
              
              $
              3,240
              
              
              $
              3,504
              
              
              $
              1,965
              
              
              $
              2,748
              
              
              $
              2,076
              
              
              $
              2,367
  Weighted-average
assumptions used to determine benefit costs were as follows:
  U.S.
      Pensions
              
              
              Non-U.S.
      PensionsAs
      of
              
              
              As
      ofOctober
      3,
                  2009
              
              
              September 27,
                  2008
              
              
              October
      3,
                  2009
              
              
              September 27,
                  2008Discount
      rate
              
              
              6.25
              %
              
              
              6.00
              %
              
              
              5.40
              %
              
              
              5.30
              %Expected
      return on plan assets
              
              
              8.50
              %
              
              
              8.50
              %
              
              
              —
              
              
              
              —Rate
      of compensation increases
              
              
              —
              
              
              
              —
              
              
              
              1.40
              %
              
              
              1.90
              %
 
 127
  The
expected long-term rate of return on assets for the U.S. pension plans used in
these calculations is assumed to be 8.5%. Several factors, including historical
rates of returns, expectations of future returns for each major asset class in
which the plan invests, the weight of each asset class in the target mix, the
correlations between asset classes and their expected volatilities are
considered in developing the asset return assumptions. Plan assets for non-U.S.
pension plans were contributed by the Company at the end of 2009. Therefore, the
expected rate of return on such assets was not applicable for 2009.
  Estimated
future benefit payments are as follows:
  Pension
      Benefits(In
      thousands)2010
              
              $
              3,8622011
              
              $
              3,8102012
              
              $
              3,7632013
              
              $
              3,7252014
              
              $
              3,718Years
      2015 through 2019
              
              $
              18,808
 
 Note 13.
Acquisition
 
 On
March 29, 2009, the Company completed its purchase of all outstanding stock of a
JDS Uniphase Corp. (“JDSU”) entity and began to provide manufacturing services
to JDSU pursuant to an arrangement entered into in conjunction with the
acquisition. The business acquired from JDSU manufactures a variety of optical
components and modules that are used in JDSU’s optical communication business,
which ultimately serves telecommunications service providers, cable operators
and network equipment manufacturers. As a result of this purchase, the Company
acquired leading-edge optical technology, strengthened its research and
development capabilities and expanded its optical manufacturing capabilities
into a low-cost manufacturing region.
 
 The
total purchase price of $30.0 million was allocated to tangible and identifiable
intangible assets based on their estimated fair values. The Company performed a
valuation of the net assets acquired as of March 31, 2009 (valuation date) with
the assistance of a third party valuation firm. The excess of the fair value of
net assets acquired over the purchase price was $2.7M, which was recorded as
negative goodwill and subsequently allocated to long-term assets in accordance
with SFAS No. 141 (ASC Topic 805, Business
Combinations).
 
 
 128
 
 The
purchase price was allocated as follows:
 
 (In
      thousands)Current
      assets
              
              $
              38,514Non-current
      assets, including intangible assets of $1.0 million
              
              
              12,671Current
      liabilities
              
              
              (17,705
              )Non-current
      liabilities
              
              
              (3,468
              )Total
              
              $
              30,012
  The
consolidated financial statements include the operating results of the acquired
business from the date of acquisition.
  Note 14.
Other Income (Expense), Net
 
 Other
income (expense), net was $(6.0) million, $3.6 million and $23.7
million in 2009, 2008 and 2007, respectively. The following table summarizes the
major components of other income (expense), net (in thousands):
  Year
      EndedOctober
      3,
                  2009
              
              
              September 27,
                  2008
              
              
              September 29,
                  2007Foreign
      exchange gains/(losses)
              
              $
              (8,498
              )
              
              $
              3,487
              
              
              $
              1,994Interest
      rate swap gains
              
              
              5,694
              
              
              
              —
              
              
              
              —Gain
      from fixed asset disposals
              
              
              1,804
              
              
              
              311
              
              
              
              18,997Gain
      (loss) from investments
              
              
              695
              
              
              
              (508
              )
              
              
              2,133Impairment
      of long-term investments
              
              
              (4,531
              )
              
              
              —
              
              
              
              —Other,
      net
              
              
              (1,134
              )
              
              
              263
              
              
              
              610Total
              
              $
              (5,970
              )
              
              $
              3,553
              
              
              $
              23,734
  The Company reduces its exposure to
currency fluctuations through the use of foreign currency hedging instruments,
however, hedges are established based on forecasts of foreign currency
transactions. To the extent actual amounts differ from forecasted amounts, the
Company will have exposure to currency fluctuations, resulting in foreign
exchange gains or losses.
  In 2009, the Company discontinued hedge
accounting for certain interest rate swaps due to the termination of one of its
four outstanding swaps. The remaining three swaps were terminated in the
following quarter. From the date hedge accounting was discontinued until the
date the remaining three swaps were terminated, changes in the fair value of the
swaps resulted in recognition of a $5.7 million gain.
 
 129
  The Company impaired $4.5 million of
long-term investments in 2009. These investments were carried at cost on the
consolidated balance sheet and were deemed to be impaired as a result of the
poor financial condition of the underlying companies or funds.
 The
decrease in other income (expense), net from $23.7 million in 2007 to
$3.6 million in 2008 was primarily attributable to more asset sales in
2007, whereby $16.5 million in gains were realized from the sale of
previously restructured manufacturing facilities and equipment and a
$2.5 million gain was realized from the sale of one of the Company’s
manufacturing operations.
 
 Note 15.
Discontinued Operations
 
 The
Company’s PC Business serviced three customers, one of whom transitioned its
business in 2008 to a new third-party contract manufacturing provider as a
result of the Company’s decision to exit the PC Business. The remaining portion
of the Company’s PC Business was sold in two separate transactions, as described
below.
  Foxconn
      Transaction
  On
February 17, 2008, the Company entered into an Asset Purchase and Sale
Agreement (“Purchase Agreement”) with Foxteq Holdings, Inc. (“Foxconn”),
pursuant to which Foxconn agreed to purchase certain assets of the Company’s PC
Business located in Hungary, Mexico and the United States for total
consideration equal to the net book value of the assets being sold plus a
specified premium. In addition, Foxconn agreed to pay the Company a contingent
payment based on certain sales generated during the 12 months following the
closing date of the transaction. The Foxconn transaction was completed on
July 7, 2008.
  The
Purchase Agreement contains customary representations, warranties and covenants
of each party, and indemnification provisions whereby each party agreed to
indemnify the other, subject to certain limitations, for breaches of
representations and warranties, breaches of covenants and other matters. In
addition, subject to certain conditions, the Purchase Agreement provides that
the Company will reimburse Foxconn for certain severance obligations relating to
employees terminated by Foxconn within three months following the closing of the
transaction or if Foxconn terminates certain other employees within twelve
months following the closing of the transaction. The Company accrued for
reimbursement of severance when payment was considered probable and estimable.
The Company has not incurred and does not expect to incur material liabilities
pursuant to these provisions.
  
 130
 
 Lenovo
      Transaction
  On
April 25, 2008, the Company entered into an Asset Purchase Agreement
(“Purchase Agreement”) with Lenovo (Singapore) Pte. Ltd. and Lenovo Centro
Tecnologico, SdeRL de C.V. (“Lenovo”), pursuant to which Lenovo agreed to
purchase certain assets and assume certain liabilities related to the Company’s
PC Business located in Monterrey, Mexico. The Lenovo transaction was completed
on June 2, 2008.
  The
Purchase Agreement contains customary representations, warranties, and
indemnification provisions whereby each party agreed to indemnify the other for
breaches of representations and warranties, breaches of covenants and other
matters.
  Combined
      Transactions
  The
Company received aggregate proceeds of $89.1 million and recorded a loss of
$6.9 million, net of a write-off of the goodwill associated with the PC
segment, with respect to both of these transactions. Additionally, the Company
or its assignor agreed to provide certain transitional engineering, information
technology and accounting services to the buyers for a period of approximately
twelve months after the closing of the transactions. Consideration received by
the Company for such services was not material.
  Financial
results of the PC Business reported as discontinued operations were as
follows:
  Year
      EndedSeptember 27,
                  2008
              
              
              September 29,
                  2007(In
      thousands)Revenue
              
              $
              1,802,452
              
              
              $
              3,246,461Income
      before taxes
              
              $
              32,418
              
              
              $
              21,124Provision
      for income taxes
              
              $
              7,431
              
              
              $
              14,288Net
      income
              
              $
              24,987
              
              
              $
              6,836
 
 131
 
 Note 16.
Business Segment, Geographic and Customer Information
  SFAS
No. 131, “Disclosure
about Segments of an Enterprise and Related Information”(ASC Topic 280,
Segment Reporting),
establishes standards for reporting information about operating segments,
products and services, geographic areas of operations and major customers.
Operating segments are defined as components of an enterprise for which separate
financial information is available that is evaluated regularly by the chief
operating decision maker or decision making group in deciding how to allocate
resources and in assessing performance. The Company operates in one operating
segment.
  Information
by geographic segment was as follows:
  Year
      EndedOctober
      3,
                  2009
              
              
              September 27,
                  2008
              
              
              September 29,
                  2007(In
      thousands)Net
      salesDomestic
              
              $
              1,198,102
              
              
              $
              1,936,777
              
              
              $
              2,200,599Mexico
              
              
              1,104,371
              
              
              
              1,508,470
              
              
              
              1,427,497China
              
              
              1,137,020
              
              
              
              1,241,302
              
              
              
              852,582Singapore
              
              
              521,284
              
              
              
              745,041
              
              
              
              675,441Other
      international
              
              
              1,216,704
              
              
              
              1,770,813
              
              
              
              1,981,674Total
              
              $
              5,177,481
              
              
              $
              7,202,403
              
              
              $
              7,137,793Operating
      lossDomestic
              
              $
              (110,297
              )
              
              $
              (458,915
              )
              
              $
              (1,074,761
              )International
              
              
              105,641
              
              
              
              74,755
              
              
              
              51,700Total
              
              $
              (4,656
              )
              
              $
              (384,160
              )
              
              $
              (1,023,061
              )Depreciation
      and amortization:Domestic
              
              $
              26,117
              
              
              $
              35,179
              
              
              $
              42,096International
              
              
              63,811
              
              
              
              61,641
              
              
              
              75,098Total
              
              $
              89,928
              
              
              $
              96,820
              
              
              $
              117,194Capital
      expenditures:Domestic
              
              $
              10,376
              
              
              $
              26,820
              
              
              $
              27,968International
              
              
              55,555
              
              
              
              94,658
              
              
              
              60,390Total
              
              $
              65,931
              
              
              $
              121,478
              
              
              $
              88,358
 
 As
      ofOctober
      3,
                  2009
              
              
              September 27,
                  2008(In
      thousands)Long-lived
      assets (excludes intangibles and deferred tax assets):Domestic
              
              $
              193,023
              
              
              $
              214,165Mexico
              
              
              113,597
              
              
              
              119,683China
              
              
              81,466
              
              
              
              80,967Other
      international
              
              
              224,313
              
              
              
              228,256Total
              
              $
              612,399
              
              
              $
              643,071
 
 132
  Except
for those countries noted above, no other foreign country’s sales exceeded 10%
of the Company’s total net sales for 2009, 2008 or 2007 and no other foreign
country’s assets represented more than 10% of consolidated long-lived assets as
of October 3, 2009 or September 27, 2008.
  Net
sales and operating loss for 2008 and 2007 have been adjusted to conform to the
current presentation.
  A
small number of customers generate a significant portion of the Company’s net
sales. Sales to the Company’s ten largest customers represented 48.0%, 48.2% and
48.4% for 2009, 2008 and 2007, respectively. For 2009 and 2008, no customer
represented 10% or more of net sales. For 2007, one customer represented 10.4%
of net sales.
  Note 17.
Subsequent Events
 
 On
November 16, 2009, the Company redeemed its remaining outstanding 2010 Notes of
$175.7 million, at par plus accrued interest.
  The
Company expects to receive a payment of up to $35 million in December 2009 in
connection with certain legal proceedings, but there can be no assurance as to
the exact timing of this payment.
  In
accordance with SFAS No. 165, “Subsequent Events”(ASC
Topic 855, Subsequent
Events), the Company evaluated subsequent events through December 1,
2009, the date at which the financial statements were issued.
  133
 
 FINANCIAL
STATEMENT SCHEDULE
  The
financial statement Schedule II—VALUATION AND QUALIFYING ACCOUNTS is filed
as part of this Form 10-K.
  SANMINA-SCI
CORPORATION
 SCHEDULE
II—VALUATION AND QUALIFYING ACCOUNTS
  Balance
      at Beginning of Period
              
              
              Charged
      (Credited) to Operations
              
              
              Charges
      Utilized
              
              
              Balance
      at End of Period(In
      thousands)Allowances
      for Doubtful Accounts, Product Returns and Other Net Sales
      adjustmentsFiscal
      year ended September 29, 2007
              
              $
              20,179
              
              
              $
              3,186
              
              
              $
              (6,636
              )
              
              $
              16,729Fiscal
      year ended September 27, 2008
              
              $
              16,729
              
              
              $
              (1,073
              )
              
              $
              (722
              )
              
              $
              14,934Fiscal
      year ended October 3, 2009
              
              $
              14,934
              
              
              $
              (1,133
              )
              
              $
              (379
              )
              
              $
              13,422
 
 
 134
 
 SIGNATURES
  Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
  Sanmina-SCI
      Corporation
                (Registrant)By:
              /s/
      Jure
      SolaJure
      SolaChairman
      and Chief Executive Officer
 Date:
December 1, 2009
  Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
 Signature
                
                
                Title
                
                
                Date/s/
      Jure Sola
                Chief
      Executive Officer and Director(Principal
      Executive Officer)
                December
      1, 2009Jure
      Sola/s/
      Robert K. Eulau
                Chief
      Financial Officer(Principal
      Financial Officer)
                December
      1, 2009Robert
      K. Eulau/s/
      Todd Schull
                Senior
      Vice President and CorporateController
      (Principal AccountingOfficer)
                December
      1, 2009Todd
      Schull/s/
      Neil Bonke
                Director
                December
      1, 2009Neil
      Bonke/s/
      Alain Couder
                Director
                December
      1, 2009Alain
      Couder/s/
      John P. Goldsberry
                Director
                December
      1, 2009John
      P. Goldsberry/s/
      Joseph Licata
                Director
                December
      1, 2009Joseph
      Licata/s/
      Jean Manas
                Director
                December
      1, 2009Jean
      Manas/s/
      Mario M. Rosati
                Director
                December
      1, 2009Mario
      M. Rosati/s/
      A. Eugene Sapp, Jr.
                Director
                December
      1, 2009A.
      Eugene Sapp, Jr./s/
      Wayne Shortridge
                Director
                December
      1, 2009Wayne
      Shortridge/s/
      Jackie M. Ward
                Director
                December
      1, 2009Jackie
      M. Ward
 135
 
 EXHIBIT
INDEX
 Exhibit
                  Number
                
                Description3.1(1)
                Restated
      Certificate of Incorporation of the Registrant, dated January 31,
      1996.3.2(2)
                Certificate
      of Amendment of the Restated Certificate of Incorporation of the
      Registrant, dated March 9, 2001.3.3(3)
                Certificate
      of Designation of Rights, Preferences and Privileges of Series A
      Participating Preferred Stock of the Registrant, dated May 31,
      2001.3.4(4)
                Certificate
      of Amendment of the Restated Certificate of Incorporation of the
      Registrant, dated December 7, 2001.3.5(5)
                Amended
      and Restated Bylaws of the Registrant adopted by the Board of Directors on
      December 1, 2008.3.6(6)
                Certificate
      of Amendment of the Restated Certificate of Incorporation of the
      Registrant, as amended, dated July 27, 2009.4.1(7)
                Preferred
      Stock Rights Agreement, dated as of May 17, 2001 between the
      Registrant and Wells Fargo National Bank, Minnesota, N.A., including the
      form of Certificate of Determination, the form of Rights Certificate and
      the Summary of Rights attached thereto as Exhibits A, B, and
      C.4.2(8)
                Supplemental
      Indenture No. 3, dated as of October 7, 2005, to the
      Subordinated Indenture, by and among SCI Systems, Inc., Sanmina-SCI
      USA, Inc. and J.P. Morgan Trust Company, National Association, as
      trustee.4.3(9)
                Subordinated
      Indenture dated March 15, 2000, between SCI Systems, Inc. and
      Bank One Trust Company, National Association, as Trustee (“Subordinated
      Indenture”).4.4(10)
                Supplemental
      Indenture No. 1, dated as of March 15, 2000, to the Subordinated
      Indenture, between SCI Systems, Inc. and Bank One Trust Company,
      National Association, as Trustee.4.5(11)
                Supplemental
      Indenture No. 2, dated as of December 7, 2001, to the
      Subordinated Indenture, by and among SCI Systems, Inc., Sanmina
      Corporation, as Guarantor, and Bank One Trust Company, National
      Association, as Trustee.4.6(12)
                Indenture,
      dated as of December 23, 2002, among the Registrant, the Guarantors
      Party thereto and State Street Bank and Trust Company of California, N.A.,
      as trustee.4.7(13)
                First
      Supplemental Indenture, dated as of July 21, 2003, among
      Newisys, Inc., the Registrant and U.S. Bank National Association, as
      trustee.4.8(14)
                Second
      Supplemental Indenture, dated as of September 30, 2005, among
      Sanmina-SCI USA, Inc., the Registrant and U.S. Bank National
      Association, as trustee.4.9(15)
                Intercreditor
      Agreement, dated as of December 23, 2002, by and among, as second
      lien collateral trustees, LaSalle Business Credit, Inc., as
      collateral agent, State Street Bank and Trust Company of California, N.A.
      and each New First Lien Claimholder Representative which may become a
      party from time to time, and the Registrant.4.10(16)
                Second
      Lien Collateral Trust Agreement, dated as of December 23, 2002, by
      and among the Registrant, the subsidiaries of the Registrant party thereto
      and State Street Bank and Trust Company of California, N.A., as second
      lien collateral trustee.4.11(17)
                Indenture,
      dated as of February 24, 2005, among the Registrant, the guarantors
      party thereto and U.S. Bank National Association, as
    trustee.4.12(18)
                First
      Supplemental Indenture, dated as of September 30, 2005, among
      Sanmina-SCI USA, Inc., the Registrant and U.S. Bank National
      Association, as trustee.4.13(19)
                Second
      Supplemental Indenture, dated as of January 3, 2007, among the
      Registrant and U.S. Bank National Association, as
  trustee.
 
  136
  
 Exhibit
                  Number
                
                Description4.14(20)
                Indenture,
      dated as of February 15, 2006, among the Registrant, certain
      subsidiaries of the Registrant as guarantors thereunder and U.S. Bank
      National Association, as trustee.4.15(21)
                First
      Supplemental Indenture, dated as of January 3, 2007, among the
      Registrant and U.S. Bank National Association, as
  trustee.4.16(22)
                Amended
      and Restated Credit and Guaranty Agreement, dated as of December 16,
      2005, among the Registrant, the guarantors party thereto, the lenders
      party thereto, Citibank, N.A., as Collateral Agent, and Bank of America,
      N.A., as Administrative Agent.4.17(23)
                Amendment
      No.3 and Waiver to Amended and Restated Credit and Guaranty Agreement,
      dated as of December 29, 2006, among the Registrant, the guarantors
      party thereto, the lenders party thereto, Citibank, N.A., as Collateral
      Agent, and Bank of America, N.A., as Administrative
  Agent.4.18(24)
                Amendment
      No. 4 to Amended and Restated Credit and Guaranty Agreement, dated as
      of June 5, 2007, by and among Registrant, each of the subsidiaries of
      Registrant party thereto, the lenders party thereto, Citibank, N.A., as
      collateral agent, and Bank of America, N.A., as Administrative
      Agent.4.19(25)
                Indenture,
      dated as of June 12, 2007, among Registrant, the guarantors party
      thereto, and Wells Fargo Bank, National Association as trustee, relating
      to the Senior Floating Rate Notes due 2010.4.20(26)
                Indenture,
      dated as of June 12, 2007, among Registrant, the guarantors party
      thereto, and Wells Fargo Bank, National Association as trustee, relating
      to the Senior Floating Rate Notes due 2014.10.1(27)
                Amended
      1990 Incentive Stock Plan.10.2(28)(29)
                1999
      Stock Plan.10.3(30)
                Addendum
      to the 1999 Stock Plan (Additional Terms and Conditions for Employees of
      the French subsidiary(ies)), dated February 21,
  2001.10.4(31)
                1995
      Director Option Plan.10.5(32)
                1996
      Supplemental Stock Plan.10.6(33)
                Hadco
      Corporation Non-Qualified Stock Option Plan, as Amended and Restated
      July 1, 1998.10.7(34)
                SCI
      Systems, Inc. 1994 Stock Option Incentive Plan.10.8.(35)
                SCI
      Systems, Inc. 2000 Stock Incentive Plan.10.9.(36)
                SCI
      Systems, Inc. Board of Directors Deferred Compensation
      Plan.10.10(37)
                Form
      of Indemnification Agreement executed by the Registrant and its officers
      and directors pursuant to the Delaware reincorporation.10.11(38)(29)
                Amended
      and Restated Sanmina-SCI Corporation Deferred Compensation Plan for
      Outside Directors.10.12(39)
                Rules
      of the Sanmina-SCI Corporation Stock Option Plan 2000
      (Sweden).10.13(40)
                Rules
      of the Sanmina-SCI Corporation Stock Option Plan 2000
      (Finland).10.14(41)(29)
                Amended
      and Restated Sanmina-SCI Corporation Deferred Compensation Plan dated
      June 9, 2008.10.15(42)
                2003
      Employee Stock Purchase Plan.10.16(43)
                Committed
      Account Receivable Purchase Agreement, dated April 1, 2005, between
      Sanmina-SCI UK Limited and Citibank
  International Plc.10.17(44)
                Committed
      Account Receivable Purchase Agreement, dated April 1, 2005, between
      Sanmina-SCI Magyarorszag Elektronikai Gyarto Kft and Citibank
      International Plc.10.18(45)
                Revolving
      Receivables Purchase Agreement, dated as of September 23, 2005, among
      Sanmina-SCI Magyarorszag Elektronikai Gyarto Kft, Sanmina-SCI Systems de
      Mexico S.A. de C.V., as Originators, the Registrant and Sanmina-SCI
      UK Ltd., as Servicers, the banks and financial institutions party
      thereto from time to time, and Deutsche Bank AG New York, as
      Administrative Agent.10.19(46)
                Randy
      Furr separation agreement.
 
  137
  
 Exhibit
                  Number
                
                Description10.20(47)
                Revolving
      Trade Receivables Purchase Agreement, dated as of September 21, 2007,
      among Sanmina-SCI Magyarorszag Elekronikai Gyarto Kft and Sanmina-SCI
      Systems de Mexico, S.A. de C.V., as Originators, the Registrant,
      Sanmina-SCI UK Ltd., and Sanmina-SCI Israel Medical Ltd., as
      Servicers, the banks and financial institutions party thereto from time to
      time, and Deutsche Bank AG New York, as Administrative
    Agent.10.21(48)
                Form
      of First Amendment to the Revolving Trade Receivables Purchase Agreement,
      dated as of September 21, 2007, among Sanmina-SCI Magyarorszag
      Elektronikai Gyarto Kft and Sanmina-SCI Systems de Mexico, S.A. de
      C.V., as Originators, the Registrant and Sanmina-SCI UK Ltd., as
      Servicers, the several banks and other financial institutions or entities
      from time to time party thereto, as Purchasers, and Deutsche Bank AG New
      York Branch, as Administrative Agent, dated November 26,
      2007.10.22(49)(29)
                Employment
      Agreement dated as of August 28, 2007 by and between the Registrant
      and Joseph Bronson.10.23(50)(29)
                Employment
      Agreement dated as of June 15, 2007 by and between the Registrant and
      Walter Hussey.10.24(51)(29)
                Employment
      Agreement dated as of March 2, 2007 by and between the Registrant and
      Michael Tyler.10.25(52)
                Asset
      Purchase and Sale Agreement dated February 17, 2008 by and among the
      Registrant, Sanmina-SCI USA Inc., SCI Technology, Inc.,
      Sanmina-SCI Systems de Mexico S.A. de C.V., Sanmina-SCI Systems
      Services de Mexico S.A. de C.V., Sanmina-SCI Hungary Electronics
      Manufacturing Limited Liability Company, Sanmina-SCI Australia
      PTY LTD and Foxteq Holdings, Inc.10.26(53)
                Amendment
      to Asset Purchase Agreement dated February 17, 2008 by and among the
      Registrant, Sanmina-SCI USA Inc., SCI Technology, Inc.,
      Sanmina-SCI Systems de Mexico S.A. de C.V., Sanmina-SCI Systems
      Services de Mexico S.A. de C.V., Sanmina-SCI Hungary Electronics
      Manufacturing Limited Liability Company, Sanmina-SCI Australia
      PTY LTD and Foxteq Holdings, Inc., dated July 7,
      2008.10.27(54)(29)
                Description
      of fiscal 2008 Non-employee Directors Compensation
      Arrangements.10.28(55)(29)
                Employment
      offer letter dated July 20, 2004 between the Registrant and David
      White.10.29(56)
                Asset
      Purchase Agreement dated April 25, 2008 by and among Sanmina-SCI
      USA Inc., Sanmina-SCI Systems de Mexico S.A. de C.V.,
      Sanmina-SCI Systems Services de Mexico S.A. de C.V., Lenovo
      (Singapore) Pte.Ltd. and Lenovo Centro Tecnologico, SdeRL de
      C.V.10.30(57)
                First
      Amendment Agreement, dated as of November 26, 2007 to the Revolving
      Trade Receivables Purchase Agreement dated as of September 21, 2007
      among Sanmina-SCI Magyarorszag Elektronikai Gyarto Kft and Sanmina-SCI
      Systems de Mexico, S.A. de C.V., as Originators, the Registrant and
      Sanmina-SCI UK Ltd, as Services, the several banks and other
      financial institutions or entities from time to time parties thereto, as
      Purchasers and Deutsche Bank AG New York Branch, as Administrative
      Agent.10.31(58)
                Second
      Amendment Agreement, dated as of March 21, 2008 to the Revolving
      Trade Receivables Purchase Agreement dated as of September 21, 2007
      among Sanmina-SCI Magyarorszag Elektronikai Gyarto Kft and Sanmina-SCI
      Systems de Mexico, S.A. de C.V., as Originators, the Registrant and
      Sanmina-SCI UK Ltd, as Services, the several banks and other
      financial institutions or entities from time to time parties thereto, as
      Purchasers and Deutsche Bank AG New York Branch, as Administrative
      Agent.10.32(59)
                Third
      Amendment Agreement, dated as of April, 30, 2008 to the Revolving Trade
      Receivables Purchase Agreement dated as of September 21, 2007 among
      Sanmina-SCI Magyarorszag Elektronikai Gyarto Kft and Sanmina-SCI Systems
      de Mexico, S.A. de C.V., as Originators, the Registrant and
      Sanmina-SCI UK Ltd, as Services, the several banks and other
      financial institutions or entities from time to time parties thereto, as
      Purchasers and Deutsche Bank AG New York Branch, as Administrative
      Agent.10.33(60)(29)
                Revised
      form of Officer and Director Indemnification
  Agreement.
 
  138
  
 Exhibit
                  Number
                
                Description10.34(61)
                Revolving
      Trade Receivables Purchase Agreement dated June 26, 2008 by and
      among, the Registrant, Deutsche Bank AG New York, as administrative agent,
      and Sanmina-SCI Magyarország Elektronikai Gyártó Kft, Sanmina Magyarország
      Elektrotechnikai Részegységgyártó Kft, Sanmina-SCI EMS Haukipudas OY, a
      limited liability company incorporated under the laws of the Republic of
      Finland, Sanmina-SCI Enclosure Systems OY, Sanmina-SCI Systems Singapore
      Pte. Ltd,, Sanmina-SCI Israel Medical Systems Ltd., Sanmina-SCI
      Systems Canada, Inc., Sanmina-SCI Systems (Thailand) Ltd., and
      Sanmina-SCI UK Ltd.10.35(62)(29)
                Sanmina-SCI
      FY 2008 Corporate Annual G&A Short Term Incentive
  Plan.10.36(63)
                Loan,
      Guaranty and Security Agreement, dated as of November 19, 2008, among
      the Registrant and certain of its subsidiaries as borrowers, Sanmina-SCI
      Systems (Canada) Inc. and SCI Brockville Corp., as Designated
      Canadian Guarantors, the financial institutions party thereto from time to
      time as lenders and Bank of America, N.A., as agent for such
      lenders.10.37(64)
                2009
      Incentive Plan.10.38(65)
                Credit
      and Security Agreement dated as of November 24, 2008 by and among Sanmina
      SPV LLC, the lenders named therein and Deutsche Bank AG, New York Branch,
      as administrative agent and collateral agent.10.39(66)
                Receivables
      Transfer and Contribution Agreement entered into as of November 24, 2008
      by and between Sanmina SPV LLC and the Registrant.10.40(66)(29)
                Deferred
      Compensation Plan for Outside Directors amended and restated effective
      January 1, 2009.10.41(66)(29)
                Deferred
      Compensation Plan effective January 1, 2009.10.42(66)(29)
                Description
      of Fiscal 2009 Non-employee Director Compensation
      Arrangements.10.43(66)(29)
                Form
      of Stock Option Agreement for use under the 2009 Incentive
      Plan.10.44(66)(29)
                Form
      of Restricted Stock Unit Agreement for use under the 2009 Incentive
      Plan.10.45(66)(29)
                Form
      of Restricted Stock Agreement for use under the 2009 Incentive
      Plan.10.46(29)
                Employment
      offer letter dated September 4, 2009 between the
      Registrant  and Bob Eulau (filed herewith).10.47(29)
                Amendment
      to Employment Agreement by and between the Registrant and Michael Tyler
      dated November 15, 2007 (filed herewith).14.1(63)
                Code
      of Business Conduct and Ethics of the Registrant.21.1
                Subsidiaries
      of the Registrant (filed herewith).23.1
                Consent
      of KPMG LLP, independent registered public accounting firm (filed
      herewith).31.1
                Certification
      of the Principal Executive Officer pursuant to Securities Exchange Act
      Rules 13a-14(a) and 15d-14(a), as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002 (filed
      herewith).31.2
                Certification
      of the Principal Financial Officer pursuant to Securities Exchange Act
      Rules 13a-14(a) and 15d-14(a), as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002 (filed
      herewith).32.1(67)
                Certification
      of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
      (furnished herewith).32.2(67)
                Certification
      of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
      (furnished herewith).
   (1)
                Incorporated
      by reference to Exhibit 3.2 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 30, 1996, SEC File
      No. 000-21272, filed with the Securities and Exchange Commission
      (“SEC”) on December 24, 1996.
 (2)
                Incorporated
      by reference to Exhibit 3.1(a) to the Registrant’s Quarterly Report
      on Form 10-Q for the fiscal quarter ended March 31, 2001, filed
      with the SEC on May 11,
2001.
  139
  (3)
                Incorporated
      by reference to Exhibit 3.1.2 to the Registrant’s Registration
      Statement on Form S-4, filed with the SEC on August 10,
      2001.
 (4)
                Incorporated
      by reference to Exhibit 3.1.3 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 29, 2001, filed
      with the SEC on December 21,
2001.
 (5)
                Incorporated
      by reference to Exhibit 3.2 to Registrant’s Current Report on
      Form 8-K, filed with the SEC on December 5,
  2008.
 (6)
                Incorporated
      by reference to Exhibit 3.6 to Registrant’s Current Report on
      Form 8-K, filed with the SEC on August 19,
  2009.
 (7)
                Incorporated
      by reference to Exhibit 4.2 to the Registrant’s Registration
      Statement on Form 8-A, filed with the SEC on May 25,
      2001.
 (8)
                Incorporated
      by reference to Exhibit 4.2.3 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended October 1, 2005, filed with
      the SEC on December 29, 2005.
 (9)
                Incorporated
      by reference to Exhibit 2.2 to SCI Systems, Inc.’s Registration
      Statement on Form 8-A12B, SEC File No. 001-12821, filed with the
      SEC on March 9, 2000.
 (10)
                Incorporated
      by reference to Exhibit 4.1 to SCI Systems, Inc.’s Current
      Report on Form 8-K, SEC File No. 001-12821, filed with the SEC
      on April 5, 2000.
 (11)
                Incorporated
      by reference to Exhibit 4.5.2 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 28, 2002, filed
      with the SEC on December 4,
2002.
 (12)
                Incorporated
      by reference to Exhibit 4.7 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended December 28, 2002, filed
      with the SEC on February 11,
2003.
 (13)
                Incorporated
      by reference to Exhibit 4.7.1 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended October 1, 2005, filed with
      the SEC on December 29, 2005.
 (14)
                Incorporated
      by reference to Exhibit 4.7.2 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended October 1, 2005, filed with
      the SEC on December 29, 2005.
 (15)
                Incorporated
      by reference to Exhibit 4.9 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended December 28, 2002, filed
      with the SEC on February 11,
2003.
 (16)
                Incorporated
      by reference to Exhibit 4.10 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended December 28, 2002, filed
      with the SEC on February 11,
2003.
 (17)
                Incorporated
      by reference to Exhibit 4.1 to the Registrant’s Current Report on
      Form 8-K, filed with the SEC on February 24,
    2005.
 (18)
                Incorporated
      by reference to Exhibit 4.13.1 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended October 1, 2005, filed with
      the SEC on December 29, 2005.
 (19)
                Incorporated
      by reference to Exhibit 4.13.2 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 30, 2006, filed
      with the SEC on January 3,
2007.
 (20)
                Incorporated
      by reference to Exhibit 4.1 to the Registrant’s Current Report on
      Form 8-K, filed with the SEC on February 17,
    2006.
 (21)
                Incorporated
      by reference to Exhibit 4.14.1 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 30, 2006, filed
      with the SEC on January 3,
2007.
 (22)
                Incorporated
      by reference to Exhibit 10.1 to the Registrant’s Current Report on
      Form 8-K, filed with the SEC on December 22,
    2005.
 (23)
                Incorporated
      by reference to Exhibit 4.15.1 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 30, 2006, filed
      with the SEC on January 3,
2007.
 (24)
                Incorporated
      by reference to Exhibit 10.1 to the Registrant’s Current Report on
      Form 8-K, filed with the SEC on June 6,
  2007.
 (25)
                Incorporated
      by reference to Exhibit 4.1 to the Registrant’s Current Report on
      Form 8-K, filed with the SEC on June 13,
  2007.
 (26)
                Incorporated
      by reference to Exhibit 4.2 to the Registrant’s Current Report on
      Form 8-K, filed with the SEC on June 13,
  2007.
 (27)
                Incorporated
      by reference to Exhibit 10.2 to the Registrant’s Annual Report on
      Form 10-K, SEC File No. 000-21272, filed with the SEC on
      December 29, 1994.
 (28)
                Incorporated
      by reference to Exhibit 4.3 to the Registrant’s Registration
      Statement on Form S-8, filed with the SEC on May 25,
      1999.
  140
  (29)
                Compensatory
      plan in which an executive officer or director
    participates.
 (30)
                Incorporated
      by reference to Exhibit 10.29.1 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 28, 2002, filed
      with the SEC on December 4,
2002.
 (31)
                Incorporated
      by reference to Exhibit 10.4 to the Registrant’s Registration
      Statement on Form S-8, SEC File No. 333-23565, filed with the
      SEC on March 19, 1997.
 (32)
                Incorporated
      by reference to Exhibit 10.1 to the Registrant’s Registration
      Statement on Form S-8, SEC File No. 333-23565, filed with the
      SEC on March 19, 1997.
 (33)
                Incorporated
      by reference to Exhibit 4.2 to the Registrant’s Registration
      Statement on Form S-8, filed with the SEC on June 23,
      2000.
 (34)
                Incorporated
      by reference to Exhibit 4.1 to the Registrant’s Registration
      Statement on Form S-8, filed with the SEC on December 20,
      2001.
 (35)
                Incorporated
      by reference to Exhibit 4.2 to the Registrant’s Registration
      Statement on Form S-8, filed with the SEC on December 20,
      2001.
 (36)
                Incorporated
      by reference to Exhibit 4.3 to the Registrant’s Registration
      Statement on Form S-8, filed with the SEC on December 20,
      2001.
 (37)
                Incorporated
      by reference to Exhibit 10.4 to the Registrant’s Registration
      Statement on Form S-1, SEC File No. 33-70700, filed with the SEC
      on February 19, 1993.
 (38)
                Incorporated
      by reference to Exhibit 10.75 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended June 28, 2008, filed with
      the SEC on August 4, 2008.
 (39)
                Incorporated
      by reference to Exhibit 10.50 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 28, 2002, filed
      with the SEC on December 4,
2002.
 (40)
                Incorporated
      by reference to Exhibit 10.50.1 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 28, 2002, filed
      with the SEC on December 4,
2002.
 (41)
                Incorporated
      by reference to Exhibit 10.74 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended June 28, 2008, filed with
      the SEC on August 4, 2008.
 (42)
                Incorporated
      by reference to Exhibit 4.1 to the Registrant’s Registration
      Statement on Form S-8, filed with the SEC on April 23,
      2003.
 (43)
                Incorporated
      by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended April 2, 2005, filed with
      the SEC on May 12, 2005.
 (44)
                Incorporated
      by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended April 2, 2005, filed with
      the SEC on May 12, 2005.
 (45)
                Incorporated
      by reference to Exhibit 10.57 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended October 1, 2005, filed with
      the SEC on December 29, 2005.
 (46)
                Incorporated
      by reference to Exhibit 10.58 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended October 1, 2005, filed with
      the SEC on December 29, 2005.
 (47)
                Incorporated
      by reference to Exhibit 10.59 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 29, 2007, filed
      with the SEC on November 28,
2007.
 (48)
                Incorporated
      by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended December 29, 2007, filed
      with the SEC on January 31,
2008.
 (49)
                Incorporated
      by reference to Exhibit 10.60 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 29, 2007, filed
      with the SEC on November 28,
2007.
 (50)
                Incorporated
      by reference to Exhibit 10.61 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 29, 2007, filed
      with the SEC on November 28,
2007.
  141
  (51)
                Incorporated
      by reference to Exhibit 10.62 to the Registrant’s Annual Report on
      Form 10-K for the fiscal year ended September 29, 2007, filed
      with the SEC on November 28,
2007.
 (52)
                Incorporated
      by reference to Exhibit 10.64 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended March 29, 2008, filed
      with the SEC on May 6, 2008.
 (53)
                Incorporated
      by reference to Exhibit 10.71 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended June 28, 2008, filed with
      the SEC on August 4, 2008.
 (54)
                Incorporated
      by reference to Exhibit 10.65 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended March 29, 2008, filed
      with the SEC on May 6, 2008.
 (55)
                Incorporated
      by reference to Exhibit 10.66 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended March 29, 2008, filed
      with the SEC on May 6, 2008.
 (56)
                Incorporated
      by reference to Exhibit 10.67 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended March 29, 2008, filed
      with the SEC on May 6, 2008.
 (57)
                Incorporated
      by reference to Exhibit 10.68 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended March 29, 2008, filed
      with the SEC on May 6, 2008.
 (58)
                Incorporated
      by reference to Exhibit 10.69 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended March 29, 2008, filed
      with the SEC on May 6, 2008.
 (59)
                Incorporated
      by reference to Exhibit 10.70 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended March 29, 2008, filed
      with the SEC on May 6, 2008.
 (60)
                Incorporated
      by reference to Exhibit 10.42 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended June 28, 2008, filed with
      the SEC on August 4, 2008.
 (61)
                Incorporated
      by reference to Exhibit 10.72 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended June 28, 2008, filed with
      the SEC on August 4, 2008.
 (62)
                Incorporated
      by reference to Exhibit 10.73 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended June 28, 2008, filed with
      the SEC on August 4, 2008.
 (63)
                Incorporated
      by reference to the same number exhibit of the Registrant’s Annual Report
      on Form 10-K for the fiscal year ended September 27, 2008, filed
      with the SEC on November 24,
2008.
 (64)
                Incorporated
      by reference to Exhibit 10.37 of the Registrant’s Current Report on
      Form 8-K, filed with the SEC on  January 30,
      2009.
 (65)
                Incorporated
      by reference to Exhibit 10.38 to the Registrant’s Quarterly Report on
      Form 10-Q for the fiscal quarter ended December 27, 2008, filed
      with the SEC on February 2,
2009.
 (66)
                Incorporated
      by reference to the same number exhibit of the Registrant’s Quarterly
      Report on Form 10-Q for the fiscal quarter ended March 28, 2009,
      filed with the SEC on May 5,
2009.
 (67)
                This
      exhibit shall not be deemed “filed” for purposes of Section 18 of the
      Securities Exchange Act of 1934 or otherwise subject to the liabilities of
      that Section, nor shall it be deemed incorporated by reference in any
      filings under the Securities Act of 1933 or the Securities Exchange Act of
      1934, whether made before or after the date hereof and irrespective of any
      general incorporation language in any
filings.
  142