UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER: 0-21272
SANMINA CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 77-0228183
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
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2700 N. FIRST ST., SAN JOSE, CA 95134
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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408/964-3500
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 [ ]
As of April 30, 2001, there were 319,689,599 shares outstanding of the issuer's common stock, $0.01 par value.
SANMINA CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Interim Financial Statements
Condensed Consolidated Statements of Operations..... 2
Condensed Consolidated Balance Sheets............... 3
Condensed Consolidated Statements of Cash Flows..... 4
Notes to Condensed Consolidated Financial
Statements................................................ 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 11
Item 3. Quantitative and Qualitative Disclosures about
Market Risk............................................... 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................... 18
Item 4. Submission of Matters to a Vote of Security
Holders................................................... 18
Item 6. Exhibits and Reports on Form 8-K.................... 18
Signature................................................... 19
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SANMINA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------- ------------------------
MARCH 31, APRIL 1, MARCH 31, APRIL 1,
2001 2000 2001 2000
---------- -------- ---------- ----------
Net sales.................................. $1,191,138 $948,358 $2,676,709 $1,785,713
Cost of sales.............................. 997,863 801,715 2,220,536 1,508,931
---------- -------- ---------- ----------
Gross profit............................. 193,275 146,643 456,173 276,782
---------- -------- ---------- ----------
Operating expenses:
Selling, general and administrative...... 68,071 47,714 144,280 94,310
Amortization of goodwill and
intangibles........................... 6,699 5,531 13,667 10,970
Plant closing, relocation, merger and
restructuring costs................... 24,948 -- 24,948 --
---------- -------- ---------- ----------
Total operating expenses......... 99,718 53,245 182,895 105,280
---------- -------- ---------- ----------
Operating income........................... 93,557 93,398 273,278 171,502
Other income (expense), net................ 6,838 (1,219) 12,988 (6,561)
---------- -------- ---------- ----------
Income before provision for income taxes... 100,395 92,179 286,266 164,941
Provision for income taxes................. 38,150 33,188 108,070 59,156
---------- -------- ---------- ----------
Net income............................... $ 62,245 $ 58,991 $ 178,196 $ 105,785
========== ======== ========== ==========
Earnings per share:
Basic.................................... $ 0.20 $ 0.20 $ 0.56 $ 0.36
Diluted.................................. 0.19 0.18 0.52 0.34
Shares used in computing per share amounts:
Basic.................................... 318,879 302,447 317,730 296,036
Diluted.................................. 349,015 334,185 349,389 327,491
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See accompanying notes.
SANMINA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
ASSETS
MARCH 31, SEPTEMBER 30,
2001 2000
---------- -------------
Current assets:
Cash and cash equivalents................................. $ 562,685 $ 998,242
Short-term investments.................................... 731,212 265,308
Accounts receivable, net.................................. 727,537 714,509
Inventories............................................... 592,532 608,434
Deferred income taxes..................................... 88,068 87,187
Prepaid expenses and other................................ 31,537 30,077
---------- ----------
Total current assets.............................. 2,733,571 2,703,757
Property, plant and equipment, net........................ 743,029 700,718
Long-term investments..................................... 67,293 55,917
Goodwill, intangibles and other........................... 357,687 375,208
---------- ----------
Total assets...................................... $3,901,580 $3,835,600
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 473,034 $ 541,268
Accrued liabilities and other............................. 163,967 248,872
---------- ----------
Total current liabilities......................... 637,001 790,140
---------- ----------
Long-term liabilities:
Long-term debt, net of current portion.................... 1,210,834 1,200,764
Other liabilities......................................... 80,144 85,903
---------- ----------
Total long-term liabilities....................... 1,290,978 1,286,667
---------- ----------
Stockholders' equity:
Common stock.............................................. 3,202 3,166
Additional paid-in capital................................ 1,215,372 1,168,938
Accumulated other comprehensive loss...................... (14,104) (9,503)
Retained earnings......................................... 769,131 596,192
---------- ----------
Total stockholders' equity........................ 1,973,601 1,758,793
---------- ----------
$3,901,580 $3,835,600
========== ==========
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See accompanying notes.
SANMINA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
----------------------
MARCH 31, APRIL 1,
2001 2000
--------- ---------
Cash flows from operating activities:
Net income................................................ $ 178,196 $ 105,785
Adjustments to reconcile net income to cash provided by
(used for) operating activities
Adjustment to conform year end of pooled entities...... (5,259) (6,265)
Plant closing, merger and restructuring charges........ 24,948 --
Depreciation, amortization and other................... 111,225 71,153
Changes in operating assets and liabilities, net of
acquisitions:
Accounts receivable.................................. (39,815) (183,567)
Inventories.......................................... 12,801 (79,338)
Prepaid expenses, deposits and other................. (7,758) (6,325)
Accounts payable and accrued liabilities............. (151,536) 83,757
--------- ---------
Cash provided by (used for) operating
activities...................................... 122,802 (14,800)
--------- ---------
Cash flows from investing activities:
Purchases of short-term investments....................... (859,212) (169,271)
Proceeds from maturity of short-term investments.......... 395,430 135,600
Purchases of long-term investments........................ (11,102) (5)
Purchases of property and equipment, net of
acquisitions........................................... (125,014) (75,997)
Cash paid for businesses acquired, net of cash acquired... -- (70,195)
--------- ---------
Cash used for investing activities................ (599,898) (179,868)
--------- ---------
Cash flows from financing activities:
Proceeds of long-term liabilities......................... 2,649 9,664
Proceeds from sale of common stock, net of taxes.......... 43,754 560,590
--------- ---------
Cash provided by financing activities............. 46,403 570,254
--------- ---------
Effect of exchange rate changes............................. (4,864) (3,426)
--------- ---------
Decrease in cash and cash equivalents....................... (435,557) 372,160
Cash and cash equivalents at beginning of period............ 998,242 149,281
--------- ---------
Cash and cash equivalents at end of period.................. $ 562,685 $ 521,441
========= =========
Supplemental cash flow information
Cash paid during the period for:
Interest.................................................. $ 9,463 $ 21,485
Income taxes.............................................. $ 200,191 $ 48,152
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See accompanying notes.
SANMINA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Sanmina Corporation ("Sanmina") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules or regulations. The interim financial statements are unaudited, but reflect all adjustments which are, in the opinion of management, necessary for a fair presentation.
The results of operations for the six months ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ending September 29, 2001. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto for the year ended September 30, 2000, included in Sanmina's annual report on Form 10-K.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Sanmina's fiscal year ends on the Saturday nearest September 30. All general references to years relate to fiscal years unless otherwise noted.
NOTE 2 -- ACQUISITIONS
On March 1, 2001, Sanmina acquired AB Segerstrom and Svensson ("Segerstrom"), a global supplier of integrated enclosure systems headquartered in Sweden. The transaction was structured as a stock-for-stock exchange and was accounted for as a pooling of interests. Under the terms of the agreement, each Segerstrom common share and convertible debenture was converted into approximately 0.4519 shares of Sanmina common stock. Sanmina acquired approximately 94% of the outstanding shares of Segerstrom pursuant to its offer to acquire Segerstrom. Sanmina has commenced a compulsory acquisition process for the remaining shares in accordance with Swedish law and business practice. Approximately 12.2 million shares of common stock will be issued to acquire Segerstrom, reflecting both the acquired Segerstrom shares and those acquired from the compulsory acquisition process. Segerstrom has ten manufacturing facilities in Sweden, Finland, Hungary, Scotland and Brazil.
As mentioned above, the merger was accounted for as pooling of interests and the condensed consolidated financial statements have been restated to reflect the combined operations of all entities for the periods presented. Prior to being acquired by Sanmina, Segerstrom operated under a calendar year end, and accordingly, Segerstrom statements of operations, shareholders' equity and cash flows for the three and six month periods ended June 30, 2000 have been combined with the corresponding Sanmina consolidated statements for the three and six month periods ended April 1, 2000. During fiscal 2001, Segerstrom's year-end was changed from December 31 to a 52 or 53 week year ending on the Saturday nearest September 30 to conform to Sanmina's fiscal year end. Accordingly, an adjustment was made to retained earnings in the first quarter of fiscal 2001 to eliminate the duplication of $5.3 million of net income for Segerstrom for the three months of Segerstrom operations ended December 31, 2000. Revenues for the three months ended December 31, 2000 were $96 million. For the three months ended December 31, 2000, Segerstrom cash provided by operating activities of $5.9 million, cash used for investing activities of $4.8 million and cash provided by financing activities of $ 0.4 million have been excluded from the consolidated statement of cash flows for the six months ended March 31, 2001.
SANMINA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
As a result of the pooling of interests accounting with Segerstrom, Sanmina has restated its historical results of operations to include the results of operations of Segerstrom. The financial information presented gives effect to this restatement. A reconciliation of the financial statements for the three and six months ended April 1, 2000, to previously reported information is as follows (in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
Revenue:
Sanmina.................................. $875,247 $1,638,948
Segerstrom............................... 74.409 149,959
Eliminations............................. (1,298) (3,194)
-------- ----------
Combined.............................. $948,358 $1,785,713
======== ==========
Net Income:
Sanmina.................................. $ 55,562 $ 98,354
Segerstrom............................... 3,429 7,431
-------- ----------
Combined.............................. $ 58,991 $ 105,785
======== ==========
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Plant closing, relocation, merger and restructuring costs of $24.9 million are comprised of $7.2 million for executive and other severance, attributable to approximately 470 people and related costs, primarily from the Segerstrom employees in Europe, of which 175 people had been terminated as of March 31, 2001, (accrual made in accordance with the criteria in EITF 94-3 "Liability Recognition for Costs to Exit an Activity" including certain costs incurred in a restructuring), $12.5 million for investment banking, accounting, legal and related fees and expenses for the Segerstrom acquisition, and $5.2 million of other related restructuring costs, which are related to the consolidation of duplicate facilities primarily in Europe. These activities are expected to be completed by March 2002. Below is a summary of the activity related to the charges (in thousands):
PROVISION
CHARGED TO CHARGES BALANCE AT
OPERATIONS UTILIZED MARCH 31, 2001
---------- -------- --------------
Cash Provisions:
Employee severance and related expenses........ $ 7,220 $ (886) $ 6,334
Segerstrom merger fees......................... 12,523 (7,013) 5,510
Shut down and consolidation costs of duplicate
facilities.................................. 2,354 -- 2,354
------- ------- -------
Total cash provisions.................. $22,097 $(7,899) $14,198
======= ======= =======
Non-cash:
Writeoff of impaired or redundant fixed
assets...................................... $ 2,851
-------
Total.................................. $24,948
=======
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SANMINA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Sanmina had previously recorded plant closing, relocation, merger and restructuring costs associated with various acquisitions, primarily Hadco and Essex, completed in fiscal 2000. Below is a summary of the activity (in thousands):
BALANCE AT
SEPTEMBER 30, CHARGES BALANCE AT
2000 UTILIZED MARCH 31, 2001
------------- -------- --------------
Cash Provisions:
Employee severance, restructuring and other
expenses.......................................... $15,574 $ (474) $15,100
Merger fees.......................................... 1,348 (567) 781
------- ------- -------
Total cash provisions........................ $16,922 $(1,041) $15,881
======= ======= =======
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The remaining accrued amounts represent the estimated cost to be incurred for severance and other restructuring for various Hadco and Essex facilities. These activities are expected to be completed by June 2001.
NOTE 3 -- PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Sanmina and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated.
NOTE 4 -- COMPREHENSIVE INCOME
SFAS No. 130 "Reporting Comprehensive Income" establishes standards for reporting and display of comprehensive income and its components. SFAS No. 130 requires companies to report a "comprehensive income" that includes unrealized holding gains and losses and other items that have previously been excluded from net income and reflected instead in stockholders' equity. Comprehensive income for Sanmina consists of net income plus the effect of unrealized holding gains or losses on investments classified as available-for-sale and foreign currency translation adjustments. For the six months ended March 31, 2001, the unrealized holding gain on investments and foreign currency translation adjustment were $3.0 million and $(7.5 million), respectively. For the six months ended April 1, 2000, the unrealized holding loss on investments and foreign currency translation adjustment were $0.4 million and $(4.4 million), respectively. Comprehensive income for the six months ended March 31, 2001 and April 1, 2000 was approximately $173.6 million and $101.0 million, respectively.
NOTE 5 -- LONG-LIVED ASSETS
Sanmina continually evaluates whether long-lived assets have been impaired in value. This process includes evaluating whether projected results of operations of acquired businesses would support the carrying value of related assets, including the future amortization of the remaining unamortized balance of goodwill.
SANMINA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 6 -- INVENTORIES
Inventories, net of provisions, stated at the lower of cost or market (first-in, first-out method), consist of (in thousands):
AS OF
--------------------------
MARCH 31, SEPTEMBER 30,
2001 2000
--------- -------------
Raw materials....................................... $377,624 $371,384
Work-in-process..................................... 116,023 148,404
Finished goods...................................... 98,885 88,646
-------- --------
$592,532 $608,434
======== ========
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NOTE 7 -- EARNINGS PER SHARE ("EPS")
Basic EPS was computed by dividing net income by the weighted average number of shares of common stock outstanding during the second quarter and six month periods of fiscal 2001 and 2000. Diluted EPS for the second quarter and six month periods of fiscal 2001 and 2000 includes dilutive common stock equivalents using the treasury stock method, and assumes that the convertible debt instruments were converted into common stock, if dilutive. Reconciliations of the net income and weighted average number of shares used for the diluted earnings per share computations for the second quarter and six month periods of fiscal 2001 and 2000 are as follows:
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------- ---------------------
MARCH 31, APRIL 1, MARCH 31, APRIL 1,
2001 2000 2001 2000
--------- ------------- --------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Net Income............................ $ 62,245 $ 58,991 $178,196 $105,785
Interest expense, net of tax, related
to convertible subordinated debt.... 2,577 2,706 5,228 5,424
-------- -------- -------- --------
Income for calculating earnings per
share............................... $ 64,822 $ 61,697 $183,424 $111,209
======== ======== ======== ========
Weighted average number of shares
outstanding during the period....... 318,879 302,447 317,730 296,036
Weighted average number of shares for
stock options outstanding during the
period.............................. 14,347 15,613 15,701 15,324
Weighted average number of shares if
convertible subordinated debt were
converted........................... 15,789 16,125 15,958 16,131
-------- -------- -------- --------
Weighted average number of shares..... 349,015 334,185 349,389 327,491
======== ======== ======== ========
Diluted earnings per share............ $ 0.19 $ 0.18 $ 0.52 $ 0.34
======== ======== ======== ========
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SANMINA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 8 -- LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
AS OF
---------------------------
MARCH 31, SEPTEMBER 30,
2001 2000
---------- -------------
Convertible Subordinated Notes due 2004.................... $ 350,000 $ 350,000
9 1/2% Senior Subordinated Notes due 2008.................. 12,120 12,118
Convertible Subordinated Notes due 2012.................... 2,201 2,886
Zero Coupon Convertible Subordinated Notes due 2020........ 768,452 753,385
Convertible debt due 2003, converted in March 2001......... -- 2,702
Revolving Credit Agreements................................ 10,974 8,565
Obligations under capital leases with interest rates
ranging from 7.0% to 7.75%............................... 10,592 17,598
Bank loans due through August 2010, at rates ranging from
4.63% to 6.10%........................................... 62,109 68,710
Other long term debt....................................... 5,837 --
Variable Rate Mortgages.................................... 1,657 1,741
---------- ----------
Total............................................ 1,223,942 1,217,705
Less: current portion...................................... (13,108) (16,941)
---------- ----------
Total long-term debt............................. $1,210,834 $1,200,764
========== ==========
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NOTE 9 -- STOCK SPLIT
On December 13, 2000, Sanmina announced that its Board of Directors had approved a two-for-one stock split payable in the form of a 100 percent stock dividend. This stock split was effective for shareholders of record on December 18, 2000, and certificates reflecting the stock split were issued on January 8, 2001. Share and per share data have been retroactively adjusted to give effect to the split.
NOTE 10 -- BUSINESS SEGMENT AND CONCENTRATION OF CREDIT RISK
Sanmina adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," during fiscal 1999. SFAS No. 131 established standards for reporting information about operating segments in annual financial statements and requires selected information about operating segments in interim financial reports issued to stockholders. It also established standards for related disclosures about products and services, geographic areas and major customers. Operating segments are defined as components of an enterprise about 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.
Sanmina's chief operating decision maker is the Chief Operating Officer. Based on the evaluation of financial information by the Chief Operating Officer, management currently believes that Sanmina operates in two geographic segments, domestic (U.S.A.) and international operations. Revenues are attributable to the country in which the product is manufactured. During the three and six months ended March 31, 2001 and April 1, 2000, there were no material assets or revenues from any individual foreign country. Each segment manufactures, tests and services a full spectrum of complex printed circuit boards, custom backplane interconnect devices, electronic assembly services and integrated enclosure systems. The chief operating decision maker evaluates performance based upon each segment's operating income. Operating income is defined as income before interest income or interest expense and taxes.
SANMINA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The following summarizes financial information by geographic segment (in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------- ------------------------
MARCH 31, APRIL 1, MARCH 31, APRIL 1,
2001 2000 2001 2000
---------- -------- ---------- ----------
Net Sales
Domestic......................... $ 926,131 $705,402 $2,076,750 $1,313,268
International.................... 313,453 271,421 673,904 537,088
Intersegment..................... (48,446) (28,465) (73,945) (64,643)
---------- -------- ---------- ----------
Total.................... $1,191,138 $948,358 $2,676,709 $1,785,713
========== ======== ========== ==========
Operating Income
Domestic......................... $ 81,163 $ 83,929 $ 232,531 $ 145,516
International.................... 12,394 9,469 40,747 25,986
Intersegment..................... -- -- -- --
---------- -------- ---------- ----------
Total.................... $ 93,557 $ 93,398 $ 273,278 $ 171,502
========== ======== ========== ==========
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AS OF
--------------------------
MARCH 31, SEPTEMBER 30,
2001 2000
--------- -------------
Long Lived Assets (excludes goodwill and intangibles)
Domestic.................................................. $684,439 $631,139
International............................................. 151,793 153,686
-------- --------
Total............................................. $836,232 $784,825
======== ========
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Although Sanmina seeks to diversify its customer base, a small number of customers are responsible for a significant portion of Sanmina's net sales. During the three months ended March 31, 2001 and April 1, 2000, sales to Sanmina's ten largest customers accounted for 51.8% and 54.1% respectively, of Sanmina's net sales. For the six months ended March 31, 2001 and April 1, 2000, sales to Sanmina's ten largest customers accounted for 52.4% and 54.5% respectively, of Sanmina's net sales In the three and six months ended March 31, 2001 none of Sanmina's customers individually represented over 10.0% of net sales. In the three and six months ended April 1, 2000, only one of Sanmina's customers individually represented over 10.0% of net sales.
NOTE 11 -- RECENT ACCOUNTING PRONOUNCEMENTS
In June 1999, the Financial Accounting Standards Board issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities -- Deferral of the Effective Date of FASB Statement No. 133," which amends SFAS No. 133 to be effective for all fiscal years beginning after June 15, 2000. SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement also requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The adoption of SFAS No. 133 in the first quarter of fiscal 2001 did not have a material impact on Sanmina's financial position, results of operations or cash flows.
In December 1999, the Securities and Exchange Commission issued SAB No. 101, "Revenue Recognition in Financial Statements," which will be effective for Sanmina in the fourth quarter of fiscal 2001. Sanmina is currently analyzing this statement and management does not expect the adoption of this statement to have a material effect on its results of operations or cash flows.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Sanmina Corporation ("Sanmina") was incorporated in Delaware in May 1989 to acquire its predecessor company, which had been in the printed circuit board and backplane business since 1980. Sanmina is a leading independent provider of customized integrated electronic manufacturing services ("EMS"), including turnkey electronic assembly and manufacturing management services, to original equipment manufacturers ("OEMs") in the electronics industry. Sanmina's main customers include major industry leaders such as Alcatel, Cisco Systems, Inc., Ericcson, Nokia, Nortel Networks, Inc., Lucent Technologies, Motorola and Tellabs. Sanmina's electronic manufacturing services consist primarily of the design and manufacture of complex printed circuit board assemblies using surface mount ("SMT") and pin-through hole ("PTH") interconnection technologies, the manufacture of custom designed backplane assemblies, fabrication of complex multi-layered printed circuit boards, metal stamping and plating, electronic enclosure systems, subsystem assembly, testing, and assembly of completed systems and direct order fulfillment. In addition to assembly, turnkey manufacturing management also involves procurement and materials management, as well as consultation on printed circuit board design and manufacturing. Sanmina also manufactures custom cable and wire harness assemblies.
Sanmina has 60 facilities and 14 global technology solution centers, located both domestically and internationally. Sanmina has electronics assembly, printed circuit fabrication, enclosure manufacturing, cable manufacturing, and global technology solution centers; domestically in Alabama, Arizona, California, Colorado, Massachusetts, New Hampshire, New York, North Carolina, Texas, Utah and Wisconsin; and internationally in Brazil, Canada, China, Finland, France, Hungary, Ireland, Malaysia, Mexico, Scotland and Sweden. In addition to these facilities, Sanmina has a 49.9% ownership interest in INBOARD, the remainder of which is owned by Siemens AG. INBOARD is a manufacturer of complex printed circuit boards, and is located in Germany.
On March 1, 2001, Sanmina acquired AB Segerstrom and Svensson ("Segerstrom"), a global supplier of integrated enclosure systems headquartered in Sweden. The transaction was structured as a stock-for-stock exchange and was accounted for as a pooling of interests. Under the terms of the agreement, each Segerstrom common share and convertible debenture was converted into approximately 0.4519 shares of Sanmina common stock. Sanmina acquired approximately 94% of the outstanding shares of Segerstrom pursuant to its offer to acquire Segerstrom. Sanmina has commenced a compulsory acquisition process for the remaining shares in accordance with Swedish law and business practice. Approximately 12.2 million shares of common stock will be issued to acquire Segerstrom, reflecting both the acquired Segerstrom shares and those acquired from the compulsory acquisition process. Segerstrom has ten manufacturing facilities in Sweden, Finland, Hungary, Scotland and Brazil.
Prior to being acquired by Sanmina, Segerstrom operated under a calendar year end, and accordingly, Segerstrom's statements of operations, shareholders' equity and cash flows for the three and six month periods ended June 30, 2000 have been combined with the corresponding Sanmina consolidated statements for the three and six month periods ended April 1, 2000. During fiscal 2001, Segerstrom's year-end was changed from December 31 to a 52 or 53 week year ending on the Saturday nearest September 30 to conform to Sanmina's fiscal year end. Accordingly, an adjustment was made to retained earnings in the first quarter of fiscal 2001 to eliminate the duplication of $5.3 million of net income for Segerstrom, for the three months of Segerstrom operations ended December 31, 2000. Revenues for the three months ended December 31, 2000 were $96 million. For the three months ended December 31, 2000, Segerstrom cash provided by operating activities of $5.9 million, cash used for investing activities of $4.8 million and cash provided by financing activities of $0.4 million have been excluded from the consolidated statement of cash flows for the six months ended March 31, 2001.
Sanmina's results of operations have varied and may continue to fluctuate significantly from period to period, including on a quarterly basis. Sanmina's operating results are affected by a number of factors. These factors include timing of orders from major customers, mix of product ordered by and shipped to major customers, the volume of orders as related to Sanmina's capacity, the ability of Sanmina to effectively manage
inventory and fixed assets, pricing and competitive pressures, component shortages, which could cause Sanmina to be unable to meet customer delivery schedules, and the ability of Sanmina to time expenditures in anticipation of future sales. Sanmina's results are also affected by the mix of products between backplane assemblies and printed circuit boards as well as general economic conditions in the electronics industry. Sanmina's results can also be significantly influenced by development and introduction of new products by Sanmina's customers. From time to time, Sanmina experiences changes in the volume of sales to each of its principal customers, and operating results may be affected on a period-to-period basis by these changes. Sanmina's customers generally require short delivery cycles, and a substantial portion of Sanmina's backlog is typically scheduled for delivery within six months. Quarterly sales and operating results therefore depend in large part on the volume and timing of bookings received during the quarter, which are difficult to forecast. Sanmina expects revenues for the quarter ending June 30, 2001 to be in the range of $900 million to $1 billion.
Sanmina's backlog also affects its ability to plan production and inventory levels, which could lead to fluctuations in operating results. In addition, a significant portion of Sanmina's operating expenses are relatively fixed in nature and planned expenditures are based in part on anticipated orders. Any inability to adjust spending quickly enough to compensate for any revenue shortfall may magnify the adverse impact of such revenue shortfall on Sanmina's results of operations. Results of operations in any period should not be considered indicative of the results to be expected for any future period. In addition, fluctuations in operating results may also result in fluctuations in the price of Sanmina's convertible subordinated notes and Common Stock.
Sanmina's customers include a diversified base of OEMs in the communications (telecommunications and networking), industrial and medical instrumentation and high-speed computer systems sectors of the electronics industry. These industry sectors, and the electronics industry as a whole, are subject to rapid technological change and product obsolescence. Discontinuance or modification of products being manufactured by Sanmina could adversely affect Sanmina's results of operations. The electronics industry is also subject to economic cycles and has in the past experienced, and is likely in the future to experience, recessionary periods. In particular, many sectors of the electronics industry are currently experiencing a downturn in economic conditions. This downturn is leading to reduced demand for the services provided by EMS companies. These changes in demand and in economic conditions have resulted and may continue to result in customers rescheduling of orders and shipments, which could affect Sanmina's results of operations. In addition, a protracted general recession in the electronics industry could have a material adverse effect on Sanmina's business, financial condition and results of operations. Sanmina has no firm long-term volume commitments from its customers and over the last few years has experienced reduced lead-time in customer orders. In addition, customer orders can be canceled and volume levels can be changed or delayed. The timely replacement of canceled, delayed or reduced orders with new business cannot be assured. There can be no assurance that any of Sanmina's current customers will continue to use Sanmina's manufacturing services. The loss of one or more of Sanmina's principal customers, or reductions in sales to any of such customers, could have a material adverse effect on Sanmina's business, financial condition and results of operations.
A significant portion of Sanmina's customer base and operations are located in the State of California, which is in the midst of an energy crisis that could disrupt our operations and increase our expenses. In the event of an acute power shortage, that is, when power reserves for the State of California fall below 1.5%, California has on some occasions implemented, and may in the future continue to implement, rolling blackouts throughout California. If blackouts interrupt our power supply, we could be temporarily unable to continue operations at certain of our California facilities. In addition, concerns exist that the California energy crisis could lead to worsening of economic conditions in California which could affect our California customers. Power shortages in California have also caused the wholesale price of electricity to increase, which will likely cause our operating expenses for our California facilities to increase. Accordingly, the California energy situation could adversely affect our business and results of operations.
Sanmina has pursued, and intends to continue to pursue, business acquisition opportunities, particularly when these opportunities have the potential to enable Sanmina to increase its net sales while maintaining operating margin, to access new geographic markets, to implement Sanmina's vertical integration strategy and/or to obtain facilities and equipment on terms more favorable than those generally available in the
market. Acquisitions of companies and businesses and expansion of operations involves certain risks, including (i) the potential inability to successfully integrate acquired operations and businesses or to realize anticipated synergies, economies of scale or other value, (ii) diversion of management's attention, (iii) difficulties in scaling up production at new sites and coordinating management of operations at new sites and (iv) loss of key employees of acquired operations. No assurance can be given that Sanmina will not incur problems with integrating acquired operations, and there can be no assurance that Sanmina's recent acquisitions, or any future acquisition will result in a positive contribution to Sanmina's results of operations. Furthermore, there can be no assurance that Sanmina will realize value from any such acquisition which equals or exceeds the consideration paid. In addition, there can be no assurance that Sanmina will realize anticipated strategic and other benefits from expansion of existing operations to new sites. Any such problems could have a material adverse effect on Sanmina's business, financial condition and results of operations. In addition, future acquisitions may result in dilutive issuances of equity securities, the incurrence of additional debt, increases in operating expenses, large one-time write-offs and the creation of goodwill or other intangible assets that could result in amortization expense.
In addition, Sanmina expects to pursue opportunities to acquire assembly operations being divested by electronics industry OEMs. Sanmina expects that competition for these opportunities among electronics manufacturing services firms will be intense because these transactions typically enable the acquiror to enter into long-term supply arrangements with the divesting OEM. Accordingly, Sanmina's future results of operations could be adversely affected if Sanmina is not successful in attracting a significant portion of the OEM divestiture transactions it pursues. In addition, due to the large scale and long-term nature of supply arrangements typically entered into in OEM divestiture transactions and because cost reductions are generally a major factor as to why the OEM is divesting operations, pricing of manufacturing services may be less favorable to the manufacturer than in standard contractual relationships. Accordingly, as Sanmina enters into new OEM divestiture transactions, Sanmina may experience erosion in gross margins.
RESULTS OF OPERATIONS
The following table sets forth, for the three and six months ended March 31, 2001 and April 1, 2000, certain items as a percentage of net sales. The table and the discussion below should be read in connection with the condensed consolidated financial statements and the notes thereto, which appear elsewhere in this report.
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------- ---------------------
MARCH 31, APRIL 1, MARCH 31, APRIL 1,
2001 2000 2001 2000
--------- -------- --------- --------
Net sales.................................... 100.0% 100.0% 100.0% 100.0%
Cost of sales................................ 83.8 84.5 83.0 84.5
----- ----- ----- -----
Gross profit............................... 16.2 15.5 17.0 15.5
----- ----- ----- -----
Operating expenses:
Selling, general and administrative........ 5.7 5.0 5.4 5.3
Amortization of goodwill and intangibles... 0.5 0.7 0.5 0.6
Plant closing, relocation, merger and
restructuring costs..................... 2.1 -- 0.9 --
----- ----- ----- -----
Total operating expenses........... 8.3 5.7 6.8 5.9
----- ----- ----- -----
Operating income............................. 7.9 9.8 10.2 9.6
Other income (expenses), net................. 0.5 (0.1) 0.5 (0.4)
----- ----- ----- -----
Income before provision for income taxes..... 8.4 9.7 10.7 9.2
Provision for income taxes................... (3.2) (3.5) (4.0) (3.3)
----- ----- ----- -----
Net income................................... 5.2% 6.2% 6.7% 5.9%
===== ===== ===== =====
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Sales for the second quarter of fiscal 2001 increased by 25.6% to $1.2 billion from $948.4 million in the corresponding quarter of the prior year. For the six months ended March 31, 2001, sales increased by 49.9% to $2.7 billion from $1.8 billion in the first six months ended April 1, 2000. The results reflect continued demand
for Sanmina's advanced technologies and total manufacturing solution capabilities. The increase in net sales for the second quarter of fiscal 2001 over the same period in fiscal 2000, was due primarily to overall growth in the industry segments we serve, growth of our customers, success at winning new customers and new programs from the existing customer base, the industry trend towards outsourcing, expansion of Sanmina's operations, both through acquisitions and organic growth, and a generally positive economic environment in the communications, medical and industrial instrumentation, and high-speed computer segments of the electronics industry. These industry sectors continued to experience overall growth during these periods.
As a result of the pooling of interests accounting with Segerstrom, Sanmina has restated its historical results of operations to include the results of operations of Segerstrom. The financial information presented gives effect to this restatement. A reconciliation of the financial statements for the three and six month periods ended April 1, 2000, to previously reported information is as follows (in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
Revenue:
Sanmina.......................................... $875,247 $1,638,948
Segerstrom....................................... 74.409 149,959
Eliminations..................................... (1,298) (3,194)
-------- ----------
Combined...................................... $948,358 $1,785,713
======== ==========
Net Income:
Sanmina.......................................... $ 55,562 $ 98,354
Segerstrom....................................... 3,429 7,431
-------- ----------
Combined...................................... $ 58,991 $ 105,785
======== ==========
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Gross margin increased from 15.5% in the second quarter of fiscal 2000 to 16.2% in the second quarter of fiscal 2001. For the six months ended March 31, 2001, gross margin increased to 17.0% from 15.5% in the first six months ended April 1, 2000. Sanmina expects gross margins to continue to fluctuate based on overall production and shipment volumes as well as changes in the mix of products ordered by and shipped to major customers. The increase in gross margins for the second quarter and for the six months ended March 31, 2001 was primarily attributable to improved mix and cost efficiencies and reductions and capacity utilization. This increase was offset partially by pricing terms negotiated as part of OEM divestiture transactions and additions to inventory reserves to account for changing customer demand. Due to increased competition, changes in product and customer mix, and pricing terms negotiated as part of OEM divestiture transactions, Sanmina may continue to experience fluctuations in gross margins. Changes in customer demand and sales volumes could also result in fluctuations in gross margins.
Selling, general and administrative expenses increased from $47.7 million in the second quarter of fiscal 2000 to $68.1 million in the second quarter of fiscal 2001. As a percentage of sales, selling, general and administrative expenses increased from 5.0% in the second quarter of fiscal 2000 to 5.7% for the second quarter of fiscal 2001. The absolute dollar increase in selling and general and administrative expenses over the comparable periods in fiscal 2000 was primarily the result of increased expenditures in infrastructure to support higher sales volume and other related corporate costs. For the six months ended March 31, 2001, selling, general, and administrative expenses increased to $144.3 million from $94.3 million for the first six months ended April 1, 2000. As a percentage of sales, selling, general and administrative expenses increased from 5.3% for the six months of fiscal 2000 to 5.4% for the first six months of fiscal 2001. Sanmina anticipates that operating expenses will increase in absolute dollars compared to fiscal 2000, due to additions to the sales force and other administrative expenditures to our support higher sales volume in fiscal 2001. However, operating expenses as a percentage of sales are anticipated to remain relatively constant depending upon sales volume, Sanmina's ability to achieve expected operating synergies as a result of the integration of acquired businesses and Sanmina's focus on controlling our operating expenses.
Amortization expense increased from $5.5 million in the second quarter of fiscal 2000 to $6.7 million in the second quarter of fiscal 2001. For the six months ended March 31, 2001, amortization expense increased from $11.0 million for the six months of fiscal 2000 to $13.7 million for the six months of fiscal 2001. These
amortization expenses reflect the amortization of intangibles and goodwill related to those acquisitions which were accounted for as purchase transactions.
Operating expenses increased from $53.2 million in the second quarter of fiscal 2000 to $99.7 million in the second quarter of 2001. As a percentage of sales, operating expenses increased from 5.7% to 8.3% in the second quarter of 2001 compared to the second quarter of fiscal 2000. For the six months ended, operating expenses in absolute dollars increased from $105.3 million in fiscal 2000 to $182.9 million in fiscal 2001 and operating expenses as a percentage of sales increased from 5.9% in fiscal 2000 to 6.8% in fiscal 2001. The increase in operating expenses for the first six months of fiscal 2001 as compared to the first six months in fiscal 2000 was mainly attributable to certain charges recorded in the second quarter of 2001. During the second quarter of fiscal 2001, Sanmina recorded plant closing, relocation, merger and restructuring costs of approximately $24.9 million related to the acquisition of Segerstrom. The plant closing, relocation, merger and restructuring costs of $24.9 million are comprised of $7.2 million for executive and other severance, attributable to approximately 470 people and related costs, primarily from the Segerstrom employees in Europe, of which 175 people had been terminated as of March 31, 2001, (accrual made in accordance with the criteria in EITF 94-3 "Liability Recognition for Costs to Exit an Activity" including certain costs incurred in a restructuring), $12.5 million for investment banking, accounting, legal and related fees and expenses for the Segerstrom acquisition, and $5.2 million of other related restructuring costs which are related to the consolidation of duplicate facilities primarily in Europe. These activities are expected to be completed by March 2002. Excluding merger and restructuring charges, for the first six months of fiscal 2001, operating expenses as a percentage of sales remained flat at 5.9%, as compared to the same period for fiscal 2000. Below is a summary of the activity related to the charges (in thousands):
PROVISION
CHARGED TO CHARGES BALANCE AT
OPERATIONS UTILIZED MARCH 31, 2001
---------- -------- --------------
Cash Provisions:
Employee severance and related expenses........ $ 7,220 $ (886) $ 6,334
Segerstrom merger fees......................... 12,523 (7,013) 5,510
Shut down and consolidation costs of duplicate
facilities.................................. 2,354 -- 2,354
------- ------- -------
Total cash provisions.................. $22,097 $(7,899) $14,198
======= ======= =======
Non-cash:
Writeoff of impaired or redundant fixed
assets...................................... $ 2,851
-------
Total.................................. $24,948
=======
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For the second quarter of fiscal 2001, Sanmina reported net other income of $6.8 million compared to net other expense of $1.2 million for the corresponding quarter of last year. For the six months of fiscal 2001, Sanmina reported net other income of $13.0 million compared to net other expense of $6.6 million for the six months of fiscal 2000. The components of other income and expense, comprising the overall net income or expense, are primarily interest expense on borrowings and convertible subordinated notes and interest income on cash balances and short-term investments. For the second quarter of fiscal 2001 and the first six months of fiscal 2001, the increase in net other income was largely due to interest received from additional cash flow from operations and higher cash balances.
Sanmina's provision for income taxes for the second quarter of fiscal 2001 is based upon Sanmina's estimate of the effective tax rate for fiscal 2001 of 38.0 %. For the second quarter of fiscal 2000, the effective tax rate was 36.0%. For the first six months of fiscal 2001, the effective tax rate was 37.8%.
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents, and short-term investments as of March 31 2001 and September 30, 2000 were each $1.3 billion. For the six months ending March 31, 2001, cash provided by operations was $122.8 million, which was primarily due to net income, depreciation and amortization, offset by decreases in current liabilities. Working capital increased to $2.1 billion as of March 31, 2001 compared to $1.9 billion at September 30,
2000. This increase in working capital was primarily due to increases in receivables and decreases in accounts payable and accrued liabilities.
Net cash used for investing activities for the first six months of fiscal 2001 primarily related to the purchase of property, plant, and equipment of $125.0 million and short and long-term investments of $870.3 million. These payments were offset by $395.4 million in maturities of short-term investments.
Net cash provided by financing activities for the first six months of fiscal year 2001 was related to the proceeds from the sale of common stock from the exercise of stock options and the employee stock purchase plan of $43.8 million and net proceeds of long-term liabilities of $2.6 million.
In fiscal 1999, Sanmina entered into an operating lease agreement for new facilities in San Jose, California which houses its corporate headquarters and certain assembly operations. In connection with these transactions, Sanmina pledged $52.9 million of its cash and investments as collateral for certain obligations of the lease.
Sanmina's future needs for financial resources include increases in working capital to support anticipated sales growth and investment in manufacturing facilities and equipment. Sanmina has evaluated and will continue to evaluate possible business acquisitions. In this regard, Sanmina anticipates incurring additional expenditures during fiscal 2001 in connection with the integrations of its recently acquired businesses and expenditures associated with the anticipated growth.
Sanmina believes that its existing cash resources, together with cash generated from operations, will be sufficient to meet its working capital requirements through at least the next 12 months. Sanmina may seek to raise additional capital through the issuance of either debt or equity securities. Debt financing may require Sanmina to pledge assets as collateral and comply with financial ratios and covenants. Equity financing may result in dilution to stockholders.
EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
In June 1999, the Financial Accounting Standards Board issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities -- Deferral of the Effective Date of FASB Statement No. 133," which amends SFAS No. 133 to be effective for all fiscal years beginning after June 15, 2000. SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement also requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The adoption of SFAS No. 133 in the first quarter of fiscal 2001 did not have a material impact on Sanmina's financial position, results of operations or cash flows.
In December 1999, the Securities and Exchange Commission issued SAB No. 101, "Revenue Recognition in Financial Statements," which will be effective for Sanmina in the fourth quarter of fiscal 2001. Sanmina is currently analyzing this statement and management does not expect the adoption of this statement to have a material effect on its results of operations or cash flows.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has not been a material change in our exposure to interest rate and foreign currency risks since the date of our report on Form 10-K for the fiscal year ended September 30, 2000.
Interest Rate Risk
Sanmina's exposure to market risk for changes in interest rates relate primarily to Sanmina's investment portfolio. Currently, Sanmina does not use derivative financial instruments in its investment portfolio. Sanmina invests in high credit quality issuers and, by policy, limits the amount of principal exposure to any one issuer. As stated in Sanmina's policy, Sanmina seeks to ensure the safety and preservation of its invested principal funds by limiting default and market risk.
Sanmina seeks to mitigate default risk by investing in high-credit quality securities and by positioning its investment portfolio to respond to a significant reduction in a credit rating of any investment issuer, guarantor or depository. Sanmina seeks 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.
The table below presents carrying amounts and related average interest rates by year of maturity for Sanmina's investment portfolio as of March 31, 2001 (in thousands):
YEAR ENDED
----------------------------------------------------------------------
2001 2002 2003 2004 2005 THEREAFTER TOTAL
-------- -------- ---------- ---- ---- ---------- --------
(IN THOUSANDS)
Cash equivalents, short-term, and
long-term investments........... $661,545 $275,346 $42,755 -- -- -- $979,646
Average interest rate........ 5.4% 6.5% 7.7% -- -- -- 5.8%
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Foreign Currency Exchange Risk
Sanmina transacts business in foreign countries. Sanmina's primary foreign currency cash flows are in certain European countries, Canada, Brazil and Asia. Sanmina enters into foreign exchange contracts to hedge certain of its assets and liabilities denominated in foreign currencies. At March 31, 2001, Sanmina had forward contracts to exchange various foreign currencies for U.S. dollars in the gross amount of $30.4 million. Market value gains and losses on forward exchange contracts are recognized in the Consolidated Statement of Operations as offsets to the exchange gains and losses on the hedged transactions.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Sanmina is a party to certain legal proceedings that have arisen in the ordinary course of its business. The amounts in controversy in these matters is not material to Sanmina, and Sanmina believes that the resolution of these proceedings will not have a material adverse effect on Sanmina's business, financial condition and results of operations.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On January 29, 2001, Sanmina held its annual meeting of stockholders. The votes on the matters submitted to a vote of stockholders at the meeting were reported on in Sanmina's report on Form 10-Q for the quarter ended December 30, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1(a) Certificate of Amendment to Certificate of Incorporation
(increasing authorized number of shares of common stock to 1
billion shares).
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(b) Reports on Form 8-K
On January 26, 2001, Sanmina filed a report on Form 8-K relating to the announcement of its intention to acquire the outstanding shares of AB Segerstrom & Svensson.
On January 31, 2001, Sanmina filed a report on Form 8-K relating to the announcement of the exchange ratio for each outstanding share of AB Segerstrom & Svensson.
On February 15, 2001, Sanmina filed a report on Form 8-K relating to the announcement of the extension of the acceptance date for offer to the shareholders of AB Segerstrom & Svensson.
On February 22, 2001, Sanmina filed a report on Form 8-K relating to the announcement of an increase in its offer to the shareholders of AB Segerstrom & Svensson and the Segerstrom's board reaffirmation of its recommendation to accept the offer.
On February 26, 2001, Sanmina filed a report on Form 8-K relating to the announcement of the determination of the new exchange ratio for Sanmina's offer to the shareholder's of AB Segerstrom & Svensson.
On March 1, 2001, Sanmina filed a report on Form 8-K relating to the announcement of the completion of the offer to the AB Segerstrom & Svensson shareholders.
On March 2, 2001, Sanmina filed a report on Form 8-K relating to the announcement of the shares of stock to be included in a registration statement.
SIGNATURE
Pursuant to the Requirements 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 CORPORATION
(Registrant)
Date: May 9, 2001
By: /s/ RANDY W. FURR
------------------------------------
Randy W. Furr
President and Chief Operating
Officer
By: /s/ RICK R. ACKEL
------------------------------------
Rick R. Ackel
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1(a) Certificate of Amendment to Certificate of Incorporation
(increasing authorized number of shares of common stock to 1
billion shares).
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EXHIBIT 3.1(a)
CERTIFICATE OF AMENDMENT
OF
THE RESTATED CERTIFICATE
OF INCORPORATION OF
SANMINA CORPORATION
Sanmina Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation").
DOES HEREBY CERTIFY:
FIRST: The name of this Corporation is Sanmina Corporation. This Corporation was originally incorporated under the name Sanmina Holdings, Inc., and the original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on May 9, 1989.
SECOND: That the Board of Directors of the Corporation has duly adopted resolutions setting forth a proposed amendment of the Restated Certificate of Incorporation of said Corporation, declaring said amendment to be advisable and calling for the submission thereof to the stockholders of said Corporation for adoption by written consent. The resolution setting forth the proposed amendment is as follows:
RESOLVED: That Article 4 of the Certificate of Incorporation of this Corporation be restated to read as follows:
"4. The Corporation is authorized to issue two classes of capital stock:
Preferred Stock, $0.01 par value per share, and Common Stock, $0.01 par value
per share. The total number of shares of Preferred Stock, which the Corporation
shall have the authority to issue, is 5,000,000, all of which are undesignated
series of Preferred Stock ("Blanket Preferred"). The total number of shares of
Common Stock with the Corporation shall have the authority to issue is
1,000,000,000.
The Blanket Preferred may be issued from time to time in one or more series. The Board of Directors of this Corporation is authorized to determine or alter the rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of Blanket Preferred, and or within the limitations or restrictions stated in any resolution(s) of the Board of Directors originally fixing the number of shares of Blanket Preferred constituting any series, to increase or decrease (but not below the number of any such series of Blanket Preferred then outstanding) the number of shares of such series of Blanket Preferred subsequent to the issue of shares of that series of Blanket Preferred, to determine the designation of any series and to fix the number of shares of any series of Blanket Preferred."
THIRD: That thereafter, pursuant to resolution of its Board of Directors, the approval of the stockholders of said Corporation was duly obtained in accordance with the General Corporation law of the state of Delaware at which time the necessary number of shares as required by statute were voted in favor of the amendment.
FOURTH: That said amendment was duly adopted in accordance with the provision of
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by Jure Sola, its Chairman and Christopher D. Mitchell, its Secretary, this 9th day of March, 2001.
/s/ Jure Sola
-----------------------------------
Jure Sola, CEO and Chairman
Attest:
/s/ Christopher D. Mitchell
-----------------------------------
Christopher D. Mitchell,
Secretary
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