##### Table of Contents



UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    November 25, 2005oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          
    to   Commission file number 1-11098
  SOLECTRON CORPORATION
 (Exact name of registrant as
    specified in its charter)
  Delaware

94-2447045(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification Number)   847 Gibraltar Drive
 Milpitas, California 95035
 (Address of principal executive
    offices including zip code)
  (408) 957-8500
 (Registrants telephone
    number, including area code)
   þ o
  Rule 12b-2 þ o
  Rule 12b-2 o þ
    one-to-one




---



##### 



SOLECTRON
    CORPORATION
  INDEX TO
    FORM 10-Q
  
  PART I.
    FINANCIAL INFORMATIONItem 1.

Financial
    Statements (unaudited)


2Condensed
    Consolidated Balance Sheets at November 30, 2005 and
    August 31, 2005


2Condensed
    Consolidated Statements of Operations for the three months ended
    November 30, 2005 and 2004


3Condensed
    Consolidated Statements of Comprehensive Income (Loss) for the
    three months ended November 30, 2005 and 2004


4Condensed
    Consolidated Statements of Cash Flows for the three months ended
    November 30, 2005 and 2004


5Notes to Condensed
    Consolidated Financial Statements


6Item 2.

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


23Item 3.

Quantitative and
    Qualitative Disclosures About Market Risk


42Item 4.

Controls and
    Procedures


42PART II.
    OTHER INFORMATIONItem 1.

Legal
    Proceedings


43Item 2.

Purchases of Equity
    Securities.


43Item 6.

Exhibits


44Signatures


45EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   1




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##### Table of Contents



PART I.  FINANCIAL
    INFORMATION Item 1.  Financial
    Statements SOLECTRON
    CORPORATION AND SUBSIDIARIES



CONDENSED CONSOLIDATED BALANCE SHEETS  November 30


August 312005


2005(Unaudited)(In millions)ASSETSCurrent assets:Cash, cash equivalents and
    short-term investments*

$
1,370.8


$
1,722.3Accounts receivable, net


1,287.0



1,180.7Inventories


1,232.9



1,108.5Prepaid expenses and other current
    assets


214.4



211.4Total current assets


4,105.1



4,222.9Property and equipment, net


681.6



666.3Goodwill


147.4



148.8Other assets


222.6



219.8Total assets

$
5,156.7


$
5,257.8LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Short-term debt

$
227.1


$
165.7Accounts payable


1,388.4



1,371.2Accrued employee compensation


167.0



167.0Accrued expenses and other current
    liabilities


515.0



509.6Total current liabilities


2,297.5



2,213.5Long-term debt


478.2



540.9Other long-term liabilities


76.2



59.2Total liabilities

$
2,851.9


$
2,813.6Commitments and contingenciesStockholders equity:Common stock


1.0



1.0Additional paid-in capital


7,610.3



7,774.1Accumulated deficit


(5,182.5
)


(5,206.5
)Accumulated other comprehensive
    loss


(124.0
)


(124.4
)Total stockholders equity


2,304.8



2,444.2Total liabilities and
    stockholders equity

$
5,156.7


$
5,257.8    *
    
    Includes $31.0 million and $13.2 million of restricted
    cash balances as of November 30, 2005 and August 31,
    2005, respectively, and $16.8 million and
    $26.3 million of short-term investments as of
    November 30, 2005 and August 31, 2005, respectively.   2




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES



CONDENSED
    CONSOLIDATED STATEMENTS OF OPERATIONS  Three MonthsEndedNovember 302005


2004(In millions, exceptper share data)(Unaudited)Net sales

$
2,456.4


$
2,690.6Cost of sales


2,330.8



2,535.1Gross profit


125.6



155.5Operating expenses:Selling, general and administrative


107.4



95.6Restructuring and impairment costs


0.9



0.7Operating income


17.3



59.2Interest income


12.1



5.8Interest expense


(6.7
)


(16.3
)Other income  net


1.9



4.7Operating income from continuing
    operations before income taxes


24.6



53.4Income tax expense


4.4



5.9Income from continuing operations

$
20.2


$
47.5Discontinued operations:Income from discontinued
    operations before income taxes

$
3.8


$
12.4Income tax expense






1.7Income from discontinued operations


3.8



10.7Net income

$
24.0


$
58.2Basic net income per shareContinuing operations

$
0.02


$
0.05Discontinued operations


0.01



0.01Basic net income per share

$
0.03


$
0.06Diluted net income per shareContinuing operations

$
0.02


$
0.05Discontinued operations


0.01



0.01Diluted net income per share

$
0.03


$
0.06Shares used to compute basic net
    income per share


925.2



963.2Shares used to compute diluted net
    income per share


925.9



967.4    3




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES







CONDENSED
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  Three Months EndedNovember 302005


2004(In millions)
    (Unaudited)Net income

$
24.0


$
58.2Other comprehensive income:Foreign currency translation
    adjustments, net


0.4



8.2Comprehensive income

$
24.4


$
66.4      4




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES







CONDENSED
    CONSOLIDATED STATEMENTS OF CASH FLOWS  Three MonthsEndedNovember 302005


2004(In Millions)
    (Unaudited)Cash flows from operating
    activities of continuing operations:Income from continuing operations

$
20.2


$
47.5Adjustments to reconcile net
    income to net cash (used in) provided by operating activities:Depreciation and amortization


45.1



50.0Impairment and other changes in
    property, equipment, goodwill and other long-term assets, net


5.2



0.5Stock based compensation


4.7



0.9Changes in operating assets and
    liabilities:Accounts receivable, net of
    allowance


(106.3
)


120.4Inventories


(124.3
)


53.6Prepaid expenses and other current
    assets


(13.2
)


15.9Accounts payable


17.2



(71.5
)Accrued expenses and other current
    liabilities


37.6



(18.8
)Net cash provided by (used in)
    operating activities of continuing operations


(113.8
)


198.5Cash flows from investing
    activities of continuing operations:Change in restricted cash and cash
    equivalents


(17.8
)


Sales and maturities of short-term
    investments


9.5



Proceeds from disposition of
    discontinued operations


2.1



30.0Capital expenditures


(58.9
)


(32.0
)Proceeds from sale of property and
    equipment


1.2



3.8Proceeds from sale of investment






16.0Advances to discontinued operations






(22.9
)Net cash used in investing
    activities


(63.9
)


(5.1
)Cash flows from financing
    activities of continuing operations:Net repayment of bank lines of
    credit and other debt arrangements


(0.4
)


(15.1
)Lyon repurchase


(2.0
)


Common stock repurchase


(180.4
)


Net proceeds from issuance of
    common stock






64.3Net proceeds from stock issued
    under option and employee purchase plans


0.6



1.2Net cash provided by (used in)
    financing activities of continuing operations


(182.2
)


50.4Effect of exchange rate changes on
    cash and cash equivalents


0.1



9.7Net increase (decrease) in cash
    and cash equivalents


(359.8
)


253.5Cash and cash equivalents at
    beginning of period  continuing operations


1,682.8



1,412.7Cash and cash equivalents at end
    of period  continuing operations

$
1,323.0


$
1,666.2    5




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES



Notes to Condensed Consolidated Financial Statements
    Unaudited  NOTE 1  Basis
    of Presentation and Recent Accounting Pronouncements
  Basis
    of Presentation
  Form 10-K
        Research
    and Development Expenses
    Restricted
    Cash
    Recent
    Accounting Pronouncements
   6




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial
    Statements  (Continued)
    Reclassifications
    NOTE 2  Stock-Based
    Compensation
  No. 123-R, Share-Based Payment Accounting for
    Stock Issued to Employees,
 7




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial
    Statements  (Continued)
     Three MonthsEndedNovember 30, 2004Net Earnings:As reported


58.2Fair value-based expense, net of
    tax

$
9.2Pro forma

$
49.0Net Earnings per common share:BasicAs reported

$
0.06Pro Forma

$
0.05DilutedAs reported

$
0.06Pro Forma

$
0.05     Stock
    Options
      Three Months

Three MonthsEnded

EndedStock Options

November 30, 2005

November 30, 2004Expected volatility

52%

70%Dividends Yield

zero

zeroExpected life

4.91 years

3.9 yearsRisk-free rate

4.26%

3.31%   8




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial
    Statements  (Continued)
  Three Months

Three MonthsEnded

EndedEmployee Stock Purchase
    Plan

November 30, 2005

November 30, 2004Weighted-average volatility

44%

41%Dividends Yield

zero

zeroExpected life

6 months

6 monthsRisk-free rate

3.94%

2.32%     Weighted AverageWeighted Average


RemainingShares


Exercise Price


Contractual Term(In millions)





(Years)Balance, September 1, 2005


50.9



9.75Granted


1.1



3.77Cancelled


(2.8
)


10.60Balance, November 30, 2005


49.2



9.57



6.86Exercisable, November 30, 2005


37.5



11.34



6.21         Employee
    Stock Purchase Plan
   9




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial
    Statements  (Continued)
   Restricted
    Stock Awards and Discounted Stock Options
        Pro Forma
    Net Loss and Assumptions for Fiscal Years 2005 and
    2004
    Fiscal


Fiscal2005


2004(In millions, except per-share
    data)Net income (loss) as reported

$
3.4


$
(177.4
)Stock-based employee compensation
    expense determined under fair value method, net of related tax
    effects


(58.7
)


(60.5
)Pro forma net loss

$
(55.3
)

$
(237.9
)Net loss per shareBasic and
    diluted  as reported

$
0.00


$
(0.20
)Basic and
    diluted  pro forma

$
(0.06
)

$
(0.27
)    10




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial
    Statements  (Continued)
     Fiscal

FiscalStock Options

2005

2004Expected life of options

4.5 years

3.9 yearsVolatility

57%

75%Risk-free interest rate

3.79%

2.30% to 3.06%Dividend yield

zero

zeroEmployee Stock Purchase
    PlanExpected life of purchase right

6 months

6 monthsVolatility

37%

77%Risk-free interest rate

2.90%

1.00% to 1.70%Dividend yield

zero

zero   NOTE 3  Stock
    Repurchase
    NOTE 4  Inventories
    November 30


August 312005


2005Raw materials

$
861.1


$
771.0Work-in-process


173.3



152.8Finished goods


198.5



184.7Total

$
1,232.9


$
1,108.5   NOTE 5  Accounts
    Receivable, Net
    November 30


August 312005


2005Accounts Receivable

$
1,304.7


$
1,203.0Less: Allowance for doubtful
    accounts


17.7



22.3Accounts Receivable, net

$
1,287.0


$
1,180.7  11




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial
    Statements  (Continued)
     NOTE 6  Property
    and Equipment, Net
    November 30


August 312005


2005Original Cost

$
1,843.0


$
1,818.3Less: Accumulated depreciation


1,161.4



1,152.0Total

$
681.6


$
666.3   NOTE 7  Commitments
    and Contingencies
  Synthetic
    Leases
    30-day
     12




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial
    Statements  (Continued)
   Future
    Minimum Lease Obligations
    Payments
    Due by Period
  Total

Short-Term

Q2 07  Q4
    07

FY08

FY09

FY10

FY11

Thereafter(In millions)Operating lease

$
156.7


$
40.8


$
28.8


$
19.8


$
16.4


$
13.3


$
12.6


$
25.0   Legal
    Proceedings
    Rule 10b-5 Abrams v.
    Solectron Corporation et al. No. C-03-0986
  NOTE 8  Segment
    Information and Geographic Information
   13




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial
    Statements  (Continued)
        Three MonthsEndedNovember 302005


2004Geographic net sales:United States

$
796.6


$
786.4Other North and Latin America


358.1



473.7Europe


313.9



434.1Malaysia


496.8



436.5China


259.5



340.1Other Asia Pacific


231.5



219.8$
2,456.4


$
2,690.6     November 30


August 312005


2005Long-lived assets:United States

$
306.7


$
314.3Other North and Latin America


167.5



165.7Europe


134.5



138.0Asia Pacific


289.8



275.8$
898.5


$
893.8     Three MonthsEndedNovember 302005


2004Cisco Systems


16.7%



14.1%Nortel Networks


10.2%



10.4%    14




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial
    Statements  (Continued)
   NOTE 9  Long-Term
    Debt
  0.5%
    Convertible Senior Notes due 2034
          7.375%
    Senior Notes
    Adjustable
    Conversion-Rate Equity Securities (ACES)
     15




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial
    Statements  (Continued)
      Liquid
    Yield Option Notes
    (LYONstm)
  tm tm
  tm tm
  NOTE 10  Derivative
    Instruments
          NOTE 11  Goodwill
    and Intangible Assets
    GoodwillBalance at August 31, 2005

$
148.8Goodwill adjustments


(1.4
)Balance at November 30, 2005

$
147.4  16




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial
    Statements  (Continued)
     Supply


Intellectual Property


Customer RelationshipsNovember 30, 2005

Agreements


Agreements


and Other


TotalGross amount

$
91.9


$
61.0


$
96.3


$
249.2Accumulated amortization


(86.8
)


(56.7
)


(85.7
)


(229.2
)Carrying value

$
5.1


$
4.3


$
10.6


$
20.0   Supply


Intellectual Property


Customer RelationshipsAugust 31, 2005

Agreements


Agreements


and Other


TotalGross amount

$
91.9


$
61.0


$
98.9


$
251.8Accumulated amortization


(86.7
)


(56.2
)


(84.1
)


(227.0
)Carrying value

$
5.2


$
4.8


$
14.8


$
24.8       NOTE 12  Discontinued
    Operations
     17




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial
    Statements  (Continued)
     Three MonthsEndedNovember 302005


2004Net sales

$



$
15.2Cost of sales






14.1Gross profit






1.1Operating (income)
    expenses  net


(1.7
)


(10.4
)Operating income (loss)


1.7



11.5Interest
    income  net






Other income
    (expense)  net


2.1



0.9Income (loss) before income taxes


3.8



12.4Income tax expense






1.7Income (loss) from discontinued
    operations, net of tax

$
3.8


$
10.7     Three Months Ended November
    302005


2004Net cash provided by (used in)
    operating activities of discontinued operations






(20.9
)Net cash (used in) provided by
    investing activities of discontinued operations






20.9Net cash provided by (used in)
    financing activities of discontinued operations






        18




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial
    Statements  (Continued)
    NOTE 13  Restructuring
    and Impairment
  No. 94-3,
    Three
    months ended November 30, 2005 and 2004
      Three MonthsEndedNovember 302005


2004


NatureLoss on disposal of and impairment
    of equipment and facilities, net

$
3.4


$
1.2



non-cashSeverance and benefit costs


(7.1
)


0.4



cashNet adjustment to equipment lease
    loss accrual






0.1



cashNet adjustment to facility lease
    loss accrual


2.4



(1.0
)


cashIntangible asset impairment
    charge, net


1.9







non-cashOther exit costs


0.3







cashTotal

$
0.9


$
0.7  19




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial
    Statements  (Continued)
     Restructuring
    Accrual
    Severance


Lease Accrual


Lease Accrual


Other Exitand Benefits


on Facilities


on Equipment


Costs


TotalBalance of accrual at
    August 31, 2005

$
44.9


$
31.0


$
1.7


$
0.1


$
77.7Provision


1.6



2.8







0.4



4.8Q1-FY06
    Provision Adjustments


(8.7
)


(0.4
)






(0.1
)


(9.2
)Q1-FY06
    Cash Payments


(5.2
)


(5.2
)






(0.4
)


(10.8
)Foreign Exchange Adjustment


(0.9
)






(0.1
)






(1.0
)Balance of accrual at
    November 30, 2005

$
31.7


$
28.2


$
1.6


$



$
61.5     NOTE 14  Income
    Per Share Calculation
    tm
 20




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial
    Statements  (Continued)
     Three MonthsEndedNovember 30,2005


2004Basic net income per share:Income from continuing operations

$
20.2


$
47.5Shares used in computation:Weighted average ordinary shares
    outstanding


925.2



963.2Basic net income per share

$
0.02


$
0.05Diluted net income per share:Income from continuing operations

$
20.2


$
47.5Shares used in computation:Weighted average ordinary shares
    outstanding


925.2



963.2Employee stock options


0.7



4.2Shares issuable upon conversion of
    LYONs






Shares issuable upon conversion of
    ACES






Weighted average number of shares


925.9



967.4Diluted net income per share

$
0.02


$
0.05     Three Months Ended November
    30,2005


2004Dilutive securities:Employee stock options


48.5



28.5Shares issuable upon conversion of
    LYONs


0.2



0.3Shares issuable upon conversion of
    ACES






5.8Total dilutive potential common
    shares


48.7



34.6     NOTE 15  Income
    Taxes
   21




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##### Table of Contents



SOLECTRON
    CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial
    Statements  (Continued)
         22




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##### Table of Contents



Item 2.  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Cautionary
    Statement Regarding Forward-Looking Statements
  With the exception of historical facts, the statements
    contained in this quarterly report are forward-looking
    statements within the meaning of Section 27A of the
    Securities Act of 1933, as amended, and Section 21E of the
    Securities Exchange Act of 1934, as amended (the Exchange
    Act), and are subject to the safe harbor provisions set
    forth in the Exchange Act. These forward-looking statements
    relate to matters including, but not limited to:
  
    future sales and operating results, including future
    earnings, growth, rates and trends;
    our expectations regarding valuation allowances on future tax
    benefits in various countries;
    our expectations regarding charges relating to future tax
    audits and the availability of any reserves;
    the amount of available future cash and our belief that our
    cash and cash equivalents, short-term investments, lines of
    credit and cash to be generated from continuing operations will
    be sufficient for us to meet our obligations for the next twelve
    months;
    the adequacy of our restructuring provisions and timing of
    our restructuring actions and their impact on our business or
    results of operations;
    the anticipated financial impact of recent and future
    acquisitions and divestitures and the adequacy of our provisions
    for indemnification obligations pursuant to such
    transactions;
    our ability to comply with the requirements of
    Section 404 of the Sarbanes-Oxley Act of 2002;
    our exposure to foreign currency exchange rate
    fluctuations;
    our belief that our current or future environmental liability
    exposure related to our facilities will not be material to our
    business, financial condition or results of operations; and
    various other forward-looking statements contained in
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations.  We intend that our forward-looking statements be subject to
    the safe harbors created by the Exchange Act. The
    forward-looking statements are generally accompanied by words
    such as intend, anticipate,
    believe, estimate, expect
    and other similar words and statements. Our forward-looking
    statements are based on current expectations, forecasts and
    assumptions and are subject to risks, uncertainties and changes
    in condition, significance, value and effect, including those
    discussed under the heading Risk Factors in this
    report and in our reports filed with the Securities and Exchange
    Commission on
    Forms 10-K,
    10-Q,
    8-K and
    S-3. Such risks,
    uncertainties and changes in condition, significance, value and
    effect could cause our actual results to differ materially from
    our anticipated outcomes. Although we believe that the
    assumptions underlying the forward-looking statements are
    reasonable, any of the assumptions could prove inaccurate.
    Therefore, we can give no assurance that the results implied by
    these forward-looking statements will be realized. The inclusion
    of forward-looking information should not be regarded as a
    representation by our company or any other person that the
    future events, plans or expectations contemplated by Solectron
    will be achieved. Furthermore, past performance in operations
    and share price is not necessarily indicative of future
    performance. We disclaim any intention or obligation to update
    or revise any forward-looking statements contained in the
    documents incorporated by reference herein, whether as a result
    of new information, future events or otherwise.
  Overview
   23




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##### Table of Contents



Summary
    of Results and Key Performance Indicators
    Three MonthsEndedNovember 302005


2004Net sales

$
2,456.4


$
2,690.6Gross profit


125.6



155.5Selling, general and
    administrative expense


107.4



95.6Income from continuing operations


20.2



47.5     Three Months EndedNovember 30,

August 31,

May 31,

February 28,

November 30,2005

2005

2005

2005

2004Inventory turns

8.0 turns

7.9 turns

8.1 turns

7.9 turns

7.1 turnsDays sales outstanding (DSO)

45 days

46 days

46 days

46 days

50 daysDays payable outstanding (DPO)

53 days

54 days

50 days

48 days

50 daysCash-to-cash
    cycle (C2C)

37 days

38 days

41 days

44 days

51 daysCapital expenditures (in millions)

$58.9

$48.4

$35.9

$34.1

$32.0     Critical
    Accounting Policies and Estimates
  Form 10-K
  Revenue
    Recognition
    No. 01-09,
 24




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##### Table of Contents



time-to-time, No. 00-21, .
  No. 99-19,
  Inventory
    Valuation
    Allowance
    for Doubtful Accounts
    Goodwill
   25




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##### Table of Contents



Intangible
    Assets
    Restructuring
    and Related Impairment Costs
  No. 94-3,
  Income
    Taxes
   26




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##### Table of Contents



Loss
    Contingencies
    Stock-Based
    Compensation
  Share-Based Payment
 27




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##### Table of Contents



Results
    of Operations
    Three Months Ended
    November 302005


2004Net sales


100.0
%


100.0
%Cost of sales


94.9



94.2Gross profit


5.1



5.8Operating expenses:Selling, general and administrative


4.4



3.6Restructuring and impairment costs






Operating income


0.7



2.2Interest income


0.5



0.2Interest expense


(0.3
)


(0.6
)Other income  net


0.1



0.2Operating income from continuing
    operations before income taxes


1.0



2.0Income tax expense


0.2



0.2Income from continuing operations


0.8
%


1.8
%Discontinued operations:Income from discontinued operations


0.2



0.5Income tax expense






0.1Income from discontinued operations


0.2
%


0.4
%Net income


1.0
%


2.2
%   Net
    Sales  Continuing Operations
   28




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##### Table of Contents



Three MonthsEndedNovember 302005


2004Computing & Storage


33.8%



28.7%Consumer


8.6%



17.4%Communications


18.3%



20.5%Networking


25.6%



23.1%Industrial


8.2%



5.3%Automotive


3.6%



3.3%Other


1.9%



1.7%Total


100.0%



100.0%   International
    Sales  Continuing Operations
    Major
    Customers  Continuing Operations
    Three Months EndedNovember 302005


2004Cisco Systems


16.7%



14.1%Nortel Networks


10.2%



10.4%       Gross
    Profit  Continuing Operations
     29




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##### Table of Contents



Selling,
    General and Administrative (SG&A)
    Expenses  Continuing Operations
    Restructuring
    and Impairment  Continuing Operations
        Interest
    Income  Continuing Operations
    Interest
    Expense  Continuing Operations
    Other
    (Expense)
    Income  Net  Continuing
    Operations
    Income
    Taxes  Continuing Operations
     30




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##### Table of Contents



Liquidity
    and Capital Resources  Continuing
    Operations
  Cash
    Three Months EndedNovember 302005


2004Net cash provided by (used in)
    operating activities of continuing operations


(113.8
)


198.5Net cash (used in) investing
    activities of continuing operations


(63.9
)


(5.1
)Net cash provided by (used in)
    financing activities of continuing operations


(182.2
)


50.4         Debt
  1 2
 31




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##### Table of Contents



Synthetic
    Leases
    30-day
     32




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##### Table of Contents



Restricted
    Cash
    Contractual
    Obligations and Commitments
      Payments Due by PeriodTotal


Short-Term


Q2 07  Q4
    07


FY08


FY09


FY10


FY11


Thereafter(In millions)Debt

$
710.9


$
227.1


$
0.3


$
0.1


$
1.2


$
12.8


$
451.9


$
17.5Operating lease


156.7



40.8



28.8



19.8



16.4



13.3



12.6



25.0Operating leases
    for restructured facilities and equipment


34.1



11.9



8.8



6.3



3.0



2.4



0.9



0.8Purchase obligation (1)


131.2



130.5



0.1



0.2



0.2



0.2







$
1,032.9


$
410.3


$
38.0


$
26.4


$
20.8


$
28.7


$
465.4


$
43.3     (1)
    
    We have guaranteed various purchase commitments for materials,
    supplies and services incurred during the normal course of
    business.    Off-Balance
    Sheet Arrangements and Contractual Obligations
      Discontinued
    Operations
   33




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##### Table of Contents



Three MonthsEndedNovember 302005


2004Net sales

$



$
15.2Cost of sales






14.1Gross profit






1.1Operating (income)
    expenses  net


(1.7
)


(10.4
)Operating income (loss)


1.7



11.5Interest
    income  net






Other income
    (expense)  net


2.1



0.9Income (loss) before income taxes


3.8



12.4Income tax expense






1.7Income (loss) from discontinued
    operations, net of tax

$
3.8


$
10.7        34




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##### Table of Contents



RISK
    FACTORS
  Most
    of our sales come from a small number of customers; if we lose
    any of these customers, our net sales could decline
    significantly.
      Our
    customers may cancel their orders, change production quantities
    or locations, or delay production.
    We may
    not be able to sell excess or obsolete inventory to customers or
    third parties, which could have a material adverse impact on our
    consolidated financial condition.
     35




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##### Table of Contents



Our
    non-U.S. locations represent a significant portion of our sales;
    we are exposed to risks associated with operating
    internationally.
    
    adverse movement of foreign currencies against the U.S. dollar
    in which our results are reported;
    import and export duties, and value added taxes;
    import and export regulation changes that could erode our profit
    margins or restrict exports and/or imports;
    potential restrictions on the transfer of funds;
    government and license requirements governing the transfer of
    technology and products abroad;
    disruption of local labor supply and/or transportation services;
    inflexible employee contracts in the event of business downturns;
    the burden and cost of compliance with import and export
    regulations and foreign laws;
    economic and political risks in emerging or developing
    economies; and
    risks of conflict and terrorism that could disrupt our or our
    customers and suppliers businesses.   36




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##### Table of Contents



We are
    exposed to general economic conditions, which could have a
    material adverse impact on our
    business, operating results and consolidated financial
    condition.
    Possible
    fluctuation of operating results from quarter to quarter and
    factors out of our control could affect the market price of our
    securities.
    
    differences in the profitability of the types of manufacturing
    services we provide. For example, high velocity and low
    complexity printed circuit boards and systems assembly services
    generally have lower gross profit than low volume/complex
    printed circuit boards and systems assembly services;
    our ability to maximize the hours of use of our equipment and
    facilities is dependent on the duration of the production run
    time for each job and customer;
    the amount of automation that we can use in the manufacturing
    process for cost reduction varies, depending upon the complexity
    of the product being made;
    our customers demand for our products and their ability to
    take delivery of our products and to make timely payments for
    delivered products;
    our ability to optimize the ordering of inventory as to timing
    and amount to avoid holding inventory in excess of immediate
    production needs;
    our ability to offer technologically advanced, cost-effective,
    quick response manufacturing services;
    our ability to drive down manufacturing costs in accordance with
    customer and market requirements is dependent upon our ability
    to apply Lean Six Sigma operating principles;
    fluctuations in the availability and pricing of components;
    timing of expenditures in anticipation of increased sales;
    cyclicality in our target markets;
    fluctuations in our market share;
    fluctuations in currency exchange rates;
    expenses and disruptions associated with acquisitions and
    divestitures;
    announcements of operating results and business conditions by
    our customers;
    announcements by our competitors relating to new customers or
    technological innovation or new services;
    economic developments in the electronics industry as a whole;
    credit rating and stock analyst downgrades;
    our ability to successfully integrate changes to our ERP system;
    political and economic developments in countries in which we
    have operations; and
    general market conditions. 37




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##### Table of Contents



If we
    incur more restructuring-related charges than currently
    anticipated, our consolidated financial
    condition and results of operations may suffer.
    Failure
    to attract and retain key personnel and skilled associates could
    hurt our operations.
    We
    depend on limited or sole source suppliers for critical
    components. The inability to obtain sufficient components as
    required, and under favorable purchase terms, would cause harm
    to our business.
    We
    potentially bear the risk of price increases associated with
    shortages in electronics components.
    Our
    net sales could decline if our competitors provide comparable
    manufacturing services and improved products at a lower
    cost.
   38




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##### Table of Contents



We
    depend on the continuing trend of OEMs to
    outsource.
    Our
    strategic relationships with major customers create
    risks.
    
    we may pay a purchase price to the divesting OEMs that exceeds
    the value we are ultimately able to realize from the future
    business of the OEM;
    the integration into our business of the acquired assets and
    facilities may be time-consuming and costly;
    we, rather than the divesting OEM, would bear the risk of excess
    capacity;
    we may not achieve anticipated cost reductions and efficiencies;
    we may be unable to meet the expectations of the OEM as to
    volume, product quality, timeliness and cost reductions; and
    if demand for the OEMs products declines, the OEM may
    reduce its volume of purchases, and we may not be able to
    sufficiently reduce the expenses of operating the facility or
    use the facility to provide services to other OEMs, and we might
    find it appropriate to close, rather than continue to operate,
    the facility, and any such actions would require us to incur
    significant restructuring and/or impairment charges.    Business
    disruptions could seriously harm our future revenue and
    financial condition and increase our costs and
    expenses.
   39




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##### Table of Contents



If we
    are unable to manage future acquisitions, and cost-effectively
    run our operations, our profitability could be adversely
    affected.
    Notwithstanding
    our recent divestiture of certain businesses, we will remain
    subject to certain
    indemnification obligations for a period of time after
    completion of the divestitures.
    If we
    have a material weakness in our internal controls over financial
    reporting, investors could lose
    confidence in the reliability of our financial statements, which
    could result in a decrease in the value of
    our securities.
    Our
    design and engineering services may result in additional
    exposure to product liability, intellectual
    property infringement and other claims.
   40




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##### Table of Contents



We are
    exposed to fluctuations in foreign currency exchange rates and
    interest rate fluctuations.
        Failure
    to comply with environmental regulations could harm our
    business.
       41




---



##### Table of Contents



We may
    not be able to adequately protect or enforce our intellectual
    property rights and could become involved in intellectual
    property disputes.
      Rating
    downgrades may make it more expensive for us to borrow
    money.
   Item 3.  Quantitative
    and Qualitative Disclosures about Market Risk   Item 4.  Controls
    and Procedures  Evaluation of disclosure controls and
    procedures. Rules 13a-15(e) 15d-15(e)
  Changes in internal control over financial
    reporting.
 42




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##### Table of Contents



PART II.
    OTHER INFORMATION Item 1.  Legal
    Proceedings    Rule 10b-5 Abrams v.
    Solectron Corporation et al. No. C-03-0986 C-MAC
 Item 2.  Purchases
    of Equity Securities      Total Number of


Approximately DollarShares Purchased


Value of SharesTotal Number


Average


as Part of Publicly


That May Yet beof Shares


Price Paid


Announced Plans


Purchased Under thePurchased


per Share


or Programs


Plans or ProgramsAugust
    27  September 26, 2005


20.6


$
3.97



20.6


$
98.6September
    27  October 27, 2005


26.0


$
3.79



26.0


$
  43




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##### Table of Contents



Item 6.  Exhibits    ExhibitNo

Exhibit Description3
.1*

Certificate of Incorporation of
    the Company, as amended3
.2**

Amended and Restated Bylaws of the
    Company3
.3***

Certificate of Designation Rights,
    Preferences and Privileges of Series A Participating
    PreferredStock of the Company31
.1

Certification of Chief Executive
    Officer Pursuant to Section 302(a) of the Sarbanes-Oxley
    Act of 200231
.2

Certification of Chief Financial
    Officer Pursuant to Section 302(a) of the Sarbanes-Oxley
    Act of 200232
.1

Certification of Chief Executive
    Officer Pursuant to 18 U.S.C Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 200232
.2

Certification of Chief Financial
    Officer Pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002     *
    Incorporated by reference from Exhibit 3.1 filed with
    Solectrons Form
    10-Q for the quarter
    ended February 28, 2001, Exhibit 3.1 filed with
    Solectrons
    Form 10-Q for the
    quarter ended February 25, 2000, and Exhibit 3.1 filed with
    Solectrons
    Form 10-Q for the
    quarter ended February 26, 1999.  **
    Incorporated by reference for Exhibit 3.2 filed with
    Solectrons Form
    10-Q for the quarter
    ended November 28, 2003.  ***
    Incorporated by reference from Exhibit 3.3 filed with
    Solectrons Annual Report on
    Form 10-K for the
    fiscal year ended August 31, 2001. 44




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##### Table of Contents



SOLECTRON
    CORPORATION
 SIGNATURE     (Registrant)
  By:
    /s/  Warren
    J. Ligan   Senior Vice President, Chief Accounting Officer and Interim
    Chief Financial Officer (Principal Financial
 Officer and Principal Accounting Officer)
   45




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##### Table of Contents



EXHIBIT INDEX
  Exhibit No

Exhibit Description3
.1*

Certificate of Incorporation of
    the Company, as amended3
.2**

Amended and Restated Bylaws of the
    Company3
.3***

Certificate of Designation Rights,
    Preferences and Privileges of Series A Participating
    Preferred Stock of the Company31
.1

Certification of Chief Executive
    Officer Pursuant to Section 302(a) of the Sarbanes-Oxley
    Act of 200231
.2

Certification of Chief Financial
    Officer Pursuant to Section 302(a) of the Sarbanes-Oxley
    Act of 200232
.1

Certification of Chief Executive
    Officer Pursuant to 18 U.S.C Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 200232
.2

Certification of Chief Financial
    Officer Pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002     *
    Incorporated by reference from Exhibit 3.1 filed with
    Solectrons Form
    10-Q for the quarter
    ended February 28, 2001, Exhibit 3.1 filed with
    Solectrons
    Form 10-Q for the
    quarter ended February 25, 2000, and Exhibit 3.1 filed with
    Solectrons
    Form 10-Q for the
    quarter ended February 26, 1999.  **
    Incorporated by reference for Exhibit 3.2 filed with
    Solectrons Form
    10-Q for the quarter
    ended November 28, 2003.  ***
    Incorporated by reference from Exhibit 3.3 filed with
    Solectrons Annual Report on
    Form 10-K for the
    fiscal year ended August 31, 2001.