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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 27,JULY 5, 2000
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------333-39316
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------------------
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)
DELAWARE 77-0228183
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
RANDY W. FURR
PRESIDENT AND
CHIEF OPERATING OFFICER
SANMINA CORPORATION
2700 NORTH FIRST STREET
SAN JOSE, CALIFORNIA 95134
(408) 964-3500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
CHRISTOPHER D. MITCHELL, ESQ. WILLIAM H. HINMAN JR., ESQ.
JON P. LAYMAN, ESQ. SHEARMAN & STERLING
ROSEANN M. ROTANDARO, ESQ. 1550 EL CAMINO REAL
WILSON SONSINI GOODRICH & ROSATI MENLO PARK, CA 94025
PROFESSIONAL CORPORATION (650) 330-2200
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(650) 493-9300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [ ][X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] 2
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
=================================================================================================================
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PROPOSED PROPOSED
TITLE OF EACH CLASS AMOUNT MAXIMUM MAXIMUM
OF SECURITIES TO AMOUNTTO BE OFFERING PRICE AGGREGATE AMOUNT OF
BE REGISTERED TO BE REGISTERED(1) PER SHARE(2)SHARE(1) OFFERING PRICE REGISTRATION FEEFEE(2)
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Common Stock $0.01 par value.................. 5,175,000value.............. 2,005,231 shares $108.5938 $561,972,915 $148,361
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- -------------------------------------------------------------------------------------------------------------------------$83.7813 $168,000,860 $44,352
=================================================================================================================
(1) Includes 675,000 shares that the underwriters have the option to purchase to
cover over-allotments.
(2) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act of
1933, as amended, based on the average of the high and low sales prices
as reported on the Nasdaq National Market on January 25,June 27, 2000.
------------------------(2) $40,099 of the registration fee was previously paid.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SEC ACTING PURSUANT TO SAID SECTION
8(a) MAY DETERMINE.
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2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MANYMAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE AREIT IS NOT SOLICITING OFFERSAN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS (Subject to Completion)
Issued January 27, 2000.
4,500,000 Shares
[SANMINA LOGO]================================================================================
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SUBJECT TO COMPLETION, DATED JULY 5, 2000
2,005,231 SHARES
SANMINA CORPORATION
COMMON STOCK
------------------------
SANMINA IS OFFERING 4,500,000THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF ITS COMMON STOCK.
------------------------
OUR COMMON STOCK IS QUOTED ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL
"SANM." ON JANUARY 26, 2000 THE LAST REPORTED SALE PRICE OF OUR COMMON STOCK ON
THE NASDAQ NATIONAL MARKET WAS $105 3/8 PER SHARE.
------------------------
INVESTING IN THE COMMON STOCK INVOLVES RISKS.RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
------------------------
PRICE $ A SHARE
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS SANMINA
-------- ------------- -----------
Per Share................................................. $ $ $
Total..................................................... $ $ $
Sanmina has granted the underwriters the right to purchase up to an additional
675,000 shares of6 OF THIS PROSPECTUS FOR INFORMATION THAT YOU SHOULD
CONSIDER BEFORE PURCHASING THESE SECURITIES.
Our common stock to cover over-allotments.
The Securitiesis quoted on the Nasdaq National Market System under the symbol
"SANM". On June 27, 2000, the average for the high and Exchange Commission and state securities regulators have not
approved or disapproved these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
Morgan Stanley & Co. Incorporated expects to deliver the shareslow price of our common
stock on the Nasdaq was $83.7813 per share.
The selling stockholders, who acquired these shares when Sanmina acquired Essex
AB, may offer and sell these shares from time to purchasers on ,time.
-----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is July 5, 2000.
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MORGAN STANLEY DEAN WITTER
BANC OF AMERICA SECURITIES LLC
DONALDSON, LUFKIN & JENRETTE
, 20003
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TABLE OF CONTENTS
PAGE
----
Prospectus Summary.................. 3Summary..................................................................... 5
Risk Factors........................Factors................................................................ 6
Use of Proceeds.....................Proceeds............................................................. 11
Selling Stockholders........................................................ 11
Plan of Distribution........................................................ 12
Legal Matters............................................................... 13
Price Range of Common Stock.........Experts..................................................................... 13
Dividend Policy..................... 13
Capitalization...................... 14
Selected Consolidated
Financial Data.................... 15
Management's Discussion of Financial
Condition and Results of
Operations........................ 16
PAGE
----
Business............................ 24
Management.......................... 33
Description of Capital Stock........ 35
Underwriters........................ 36
Legal Matters....................... 37
Experts............................. 37
Where You Can Find Additional Information....................... 37Information................................... 13
Information Incorporated by Reference......................... 38Reference....................................... 13
Indemnification of Directors and Officers................................... 16
-----------------------------------------
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell shares of common stock and
seeking offers to buy shares of our common stock, only in those jurisdictions where
offers and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or any sale of our common stock.
In this prospectus, "Sanmina," "we," "us," and "our" refer to Sanmina
Corporation and its subsidiaries.
Unless otherwise indicated, all information in
this prospectus assumes no exercise of the underwriters' over-allotment option.
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PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information regarding us and the common stock being sold in this offering,
including "Risk Factors" and our consolidated financial statements and notes to
those statements appearing elsewhere in this prospectus and in the documents incorporated by reference in this
prospectus.
We are a leading independent provider of customized integrated
electronic manufacturing services, known as EMS, including turnkey electronic
assembly and manufacturing management services, to original equipment
manufacturers, or OEMs, in the electronics industry. Our electronics
manufacturing services consist primarily of the manufacture of complex printed
circuit board assemblies using surface mount and pin-through-hole
interconnection technologies, the manufacture of custom designed backplane
assemblies, fabrication of complex multi-layered printed circuit boards,
electronic enclosure systems and testing and assembly of completed systems. In
addition to assembly, turnkey manufacturing management also involves procurement
and materials management, as well as consultation on printed circuit board
design and manufacturing. Through our Sanmina Cable Systems business, we also
manufacture custom cable and wire harness assemblies for electronic industry
OEMs. In addition, we have recently developed an enclosure systems business
which manufactures and assembles metal enclosures that house large electronic
systems and subsystems.
Surface mount and pin-through-hole printed circuit board assemblies are
printed circuit boards on which various electronic components, such as
integrated circuits, capacitors, microprocessors and resistors, have been
mounted. These assemblies are key functional elements of many types of
electronic products. Backplane assemblies are large printed circuit boards on
which connectors are mounted to interconnect printed circuit boards, integrated
circuits and other electronic components. Our interconnect products generally
require greater manufacturing expertise and have shorter delivery cycles than
mass produced interconnect products and therefore typically have higher profit
margins.
Our customers include leading OEMs in the communications, medical and
industrial instrumentation and high-speed computer sectors. Our principal
customers include Alcatel, Cisco Systems, Motorola, Nortel Networks and Tellabs.
We locate our manufacturing facilities near our customers and,
increasingly, our customers' end users. Our assembly plants are located in
Northern California, Richardson, Texas, the greater Boston, Massachusetts area,
Manchester, New Hampshire, Durham, North Carolina, Guntersville, Alabama,
Calgary, Alberta, Canada and Dublin, Ireland. Our printed circuit board
fabrication facilities are located in Northern California, Southern California,
the greater Boston, Massachusetts area and Nashua, New Hampshire. Sanmina Cable
Systems' principal manufacturing facility is located in Carrollton, Texas. Our
principal enclosure manufacturing facilities are located in the Toronto, Canada
area.
We have pursued and intend to continue to pursue business acquisition
opportunities, particularly when these opportunities have the potential to
enable us to increase our net sales while controlling operating expenses, to
access new customers, technologies or geographic markets, to implement our
vertical integration strategy and to obtain facilities and equipment on terms
more favorable than those generally available in the market. In particular, we
expect that we will continue to pursue opportunities to acquire assembly
operations being divested by electronics industry OEMs, particularly those in
the communications sector.
We were formed in 1989 to acquire the printed circuit board and
backplane operations of our predecessor company, which had been in the printed
circuit board and backplane business since 1980. Our principal offices are
located at 2700 North First Street, San Jose, California 95134. Our telephone
number at this location is (408) 964-3500. Our world wide web site is located at
www.sanmina.com.
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Sanmina and the Sanmina logo are trademarks of Sanmina. Trademarks of
other corporations that are referred to in this prospectus are the property of
their respective owners.
RECENT DEVELOPMENTS
In October and November 1999, we completed the acquisition of two former
Nortel Networks electronics assembly operations located in Calgary, Alberta,
Canada and Chateaudun, France for a cash purchase price of approximately $61.4
million. In October 1999, we completed the acquisition of the electronics
enclosure systems business of Devtek Electronics for a purchase price of
approximately $26.5 million. In JanuaryMarch 2000, we signed an agreement with Harris
Corporation to acquireacquired a printed circuit board
assembly operation located principally in San Antonio, Texas. In January 2000, we also reachedTexas from Harris
Corporation and an agreement
in principle with Alcatel USA to acquire an electromechanical assemblyelectronic enclosure operation located in Clinton, North
Carolina.Carolina from Alcatel USA. In connection with the Nortel transactions,April 2000, we entered into a supplymerger agreement
to provide assemblies to Nortel that were
previously manufactured by the acquired operations. We intend to enter into
similar agreementswith Hadco Corporation, a manufacturer of sophisticated electronic
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interconnect products which operates principally in connection with the Harris and Alcatel transactions. We
expect that these transactions will provide an opportunity to build significant,
long-term relationships with these customers.Salem, New Hampshire.
Completion of the HarrisHadco transaction is subject to several closing conditions,
including expirationthe approval of the waiting period under federal antitrust laws. We are currently negotiating
the definitive agreements relating to the Alcatel transaction, and completion of
the transaction is subject to entering into definitive agreements and
satisfaction of closing conditions under those agreements.Hadco's stockholders. We expect the Alcatel
and Harris transactionsHadco transaction
to be completed in MarchJune 2000. In May 2000, we acquired Essex AB, an electronic
manufacturing services supplier with operations in Sundsvall, Sweden and
April 2000,
respectively.
THE OFFERING
Common stock offered by
Sanmina..................... 4,500,000 shares
Common stock to be outstanding
after the offering.......... 63,639,587 shares
Use of proceeds............... For general corporate purposes, including
working capital, capital expenditures and
potential acquisitions of complementary
businesses, products and technologies.
Nasdaq National Market
symbol........................ SANM
We are obligated to issue shares of our common stock upon conversion of
convertible notes, and exercise of options outstanding at January 1, 2000, in
addition to the shares of common stock to be outstanding after this offering.
These shares, when issued, include:
- 4,034,427 shares issuable upon conversion of outstanding convertible
subordinated notes.
- 12,268,590 shares of common stock reserved for issuance under our stock
option and stock purchase plans, of which 6,900,233 shares were issuable
upon exercise of outstanding options.
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SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED THREE MONTHS ENDED
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SEPTEMBER 30, SEPTEMBER 30, OCTOBER 2, JANUARY 2, JANUARY 1,
1997 1998 1999 1999 2000
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(UNAUDITED)
STATEMENT OF OPERATIONS
DATA:
Net sales............... $803,064 $991,821 $1,214,744 $275,533 $459,685
Gross profit............ 162,420 207,872 252,149 52,284 77,963
Operating income
(loss)................ 87,405 133,635 140,330 (2,300) 55,154
Net income (loss)....... 49,356 85,629 93,697 (562) 36,188
Diluted earnings
(loss)per share....... $ .91 $ 1.52 $ 1.52 $ (.01) $ .58
Shares used in computing
diluted per share
amounts............... 57,616 58,597 61,662 57,380 62,722
The following table presents summary balance sheet data as of January 1,
2000. The data in the "As Adjusted" column has been adjusted to reflect the sale
of 4,500,000 shares of common stock offered by us at an assumed offering price
of $105.375 per share, after deducting estimated underwriting discounts and
commissions and estimated offering expenses. See "Use of Proceeds" and
"Capitalization."
AS OF JANUARY 1, 2000
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(UNAUDITED)
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments........... $ 354,315 $ 808,942
Working capital............................................. 671,777 1,126,404
Total assets................................................ 1,298,939 1,753,566
Long-term debt.............................................. 357,890 357,890
Stockholders' equity........................................ 666,691 1,121,318
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7Aanekoski, Tikkakoski, Finland.
RISK FACTORS
You should carefully consider the following risks before making an
investment decision. The risks described below are not the only ones we face.
Any of the following risks could seriously harm our business, financial
condition and operating results. As a result, these risks could cause the
decline of the trading price of our common stock, and you may lose all or part
of the value of your investment. You should also refer to the other information
set forth in this prospectus, including our financial statements and the related
notes thereto that are incorporated by reference into this prospectus.
WE ARE HEAVILY DEPENDENT ON THE ELECTRONICS INDUSTRY, AND CHANGES IN THE
INDUSTRY COULD HARM OUR BUSINESS AND OPERATING RESULTS.
Our business is heavily dependent on the health of the electronics
industry. Our customers are manufacturers in the communications, industrial and
medical instrumentation and high-speed computer systems segments of the
electronics industry. These industry segments, and the electronics industry as a
whole, are subject to rapid technological change and product obsolescence. Our
customers can discontinue or modify products containing components manufactured
by us. Any discontinuance or modification of orders or commitments could harm
our operating results. 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. A general recession in the electronics
industry could harm our business and operating results.
WE TYPICALLY DO NOT OBTAIN LONG-TERM VOLUME PURCHASE COMMITMENTS FROM CUSTOMERS,
AND CANCELLATIONS AND RESCHEDULING OF PURCHASE ORDERS COULD HARM OUR OPERATING
RESULTS AND CAUSE OUR STOCK PRICE TO DECLINE.
We typically do not obtain long-term volume purchase contracts from our
customers and have recently experienced reduced lead times in customer orders.
Customer orders may be canceled and volume levels may be changed or delayed. For
example, we experienced certain cancellation and rescheduling of shipment dates
of customer orders during the fourth fiscal quarter of 1998. As a result, our
results of operations for that quarter failed to meet the expectations of stock
market analysts, and the price of our common stock declined. We cannot assure
you that we will be able to replace canceled, delayed or reduced contracts with
new business. As a result, future cancellations or rescheduling of orders or
commitments could cause our operating results to be below expectations, which
would likely cause our stock price to decline.
OUR RESULTS OF OPERATIONS CAN BE AFFECTED BY A VARIETY OF FACTORS, WHICH COULD
CAUSE OUR OPERATING RESULTS TO FAIL TO MEET EXPECTATIONS AND OUR STOCK PRICE TO
DECLINE.
Our results of operations have varied and may continue to fluctuate
significantly from period to period, including on a quarterly basis. Our
operating results are affected by a number of factors. These factors include:
- timing of orders from major customers;
- mix of products ordered by and shipped to major customers, including
the mix between backplane assemblies and printed circuit board
assemblies;
- the volume of orders as related to our capacity;
- pricing and other competitive pressures;
- component shortages, which could cause us to be unable to meet
customer delivery schedules;
- our ability to effectively manage inventory and fixed assets; and
- our ability to time expenditures in anticipation of future sales.
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Our results are also affected by general economic conditions in the
electronics industry. Our results can also be significantly influenced by
development and introduction of new products by our customers. From time to
time, we experience changes in the volume of sales to each of our principal
customers, and operating results may be affected on a period-to-period basis by
these changes. Our customers generally require short delivery cycles, and a
substantial portion of our 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. Our 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 our 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 our
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 our common stock.
WE ARE DEPENDENT ON A SMALL NUMBER OF CUSTOMERS FOR A LARGE PORTION OF OUR
REVENUES, AND DECLINES IN SALES TO MAJOR CUSTOMERS COULD HARM OUR OPERATING
RESULTS.
A small number of customers are responsible for a significant portion of
our net sales. During the first quarter of fiscal year 2000, fiscal year 1999
and fiscal year 1998, sales to our ten largest customers accounted for 62%, 54%
and 53%, respectively, of our net sales. For the first quarter of fiscal 2000,
sales to Nortel Networks and Cisco Systems each represented more than 10% of our
net sales. For fiscal 1999, sales to Cisco Systems represented more than 10% of
our net sales. For fiscal 1998, sales to Cisco Systems and DSC Communications
(now a subsidiary of Alcatel USA) represented more than 10% of our net sales.
Although we cannot assure you that our principal customers will continue to
purchase products and services from us at current levels, if at all, we expect
to continue to depend upon our principal customers for a significant portion of
our net sales. Our customer concentration could increase or decrease, depending
on future customer requirements, which will be dependent in large part on market
conditions in the electronics industry segments in which our customers
participate. The loss of one or more major customers or declines in sales to
major customers could significantly harm our business and operating results and
lead to declines in the price of our common stock.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH OUR STRATEGY OF ACQUISITIONS, AND RISKS
ASSOCIATED WITH ACQUISITIONS COULD HARM OUR OPERATING RESULTS AND CAUSE OUR
STOCK PRICE TO DECLINE.
We have, for the past several fiscal years, pursued a strategy of growth
through acquisitions. This growth has come in large part through acquisitions.
These acquisitions have involved both acquisitions of entire companies, such as
the January 1996 acquisition of Golden Eagle Systems, now known as Sanmina Cable
Systems, the November 1997 acquisition of Elexsys International, Inc., the
February 1998 acquisition of Pragmatech, Inc., the November 1998 acquisition of
Altron, Incorporated, the December 1998 acquisition of Telo Electronics, Inc.
and,
the March 1999 acquisition of Manu-Tronics, Inc. and the May 2000 acquisition
of Essex AB. In April 2000, we also entered into an agreement to acquire Hadco
Corporation.
In addition, we have in other instances acquired selected assets,
principally equipment, inventory and customer contracts and, in certain cases,
facilities or facility leases. Acquisitions of this nature completed by us
include the November 1996 acquisitions of the Guntersville, Alabama operations
of Comptronix Corporation and certain assets of the custom manufacturing
services division of Lucent Technologies. In October and November 1999, we
acquired electronics assembly operations of Nortel Networks located in Calgary,
Canada and Chateaudun, France. In October 1999, we also acquired the electronics
enclosure systems business of Devtek, located in Toronto, Canada. In JanuaryMarch 2000,
we entered into an agreement with Harris Corporation to acquireacquired a printed circuit board assembly operation located principally in
San Antonio, Texas. In
January 2000, we also reached an agreement in principle
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with Alcatel USA to acquireTexas from Harris Corporation and an electromechanical assembly
operation located in Clinton, North Carolina.Carolina from Alcatel USA. Acquisitions of
companies and businesses and expansion of operations involves certain risks,
including the following:
- the potential inability to successfully integrate acquired
operations and businesses or to realize anticipated synergies,
economies of scale or other value;
- diversion of management's attention;
- difficulties in scaling up production at new sites and coordinating
management of operations at new sites;
- the possible need to restructure, modify or terminate customer
relationships of the acquired company; and
- loss of key employees of acquired operations.
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Accordingly, we may experience problems in integrating the recently
acquired operations or operations associated with any future acquisition. We
therefore can not assure you that any recent or future acquisition will result
in a positive contribution to our results of operations. Furthermore, we can not
assure you that we will realize value from any acquisition which equals or
exceeds the consideration paid. In particular, the successful combination of us
and any businesses we acquire in the future will require substantial effort from
each company, including the integration and coordination of sales and marketing
efforts. The diversion of the attention of management and any difficulties
encountered in the transition process, including, the interruption of, or a loss
of momentum in, the activities of any future acquisition, problems associated
with integration of management information and reporting systems, and delays in
implementation of consolidation plans, could harm our ability to realize the
anticipated benefits of any future acquisition. Any failure of ours to realize
the anticipated benefits of our acquisitions could harm our business and
operating results, and could cause the price of our common stock to decline. In
addition, future acquisitions may result in dilutive issuances of equity
securities, the incurrence of additional debt, large one-time write-offs and the
creation of goodwill or other intangible assets that could result in
amortization expense. These factors could harm our business and operating
results and cause the price of our common stock to decline.
In addition, we have pursued and expect to continue to pursue
opportunities to acquire assembly operations being divested by electronics
industry OEMs. We expect 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, our future results of
operations could be harmed if we are not successful in attracting a significant
portion of the OEM divestiture transactions we pursue. 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 reason why the OEM is divesting operations, pricing of manufacturing
services may be less favorable to the manufacturer than in standard contractual
relationships. For example, we experienced declines in gross margins in the
first quarter of fiscal 2000 due to our increase in sales to Nortel under our
supply agreement relating to the operations we acquired. As we enter into new
OEM divestiture transactions, we may experience further erosion in gross
margins.
Our pending transactionstransaction with Harris and Alcatel areHadco Corporation is not yet complete.
Completion of the HarrisHadco transaction is subject to several conditions, including
expirationthe approval of the waiting period under federal antitrust laws. We are currently
negotiating the definitive agreements relating to the Alcatel transaction, and
completion of the transaction is subject to entering into definitive agreements
and satisfaction of closing conditions under those agreements.Hadco's stockholders. We expect the Alcatel and Harris transactionsHadco transaction to be
completed in March 2000 and April 2000,
respectively.June 2000. If these transactions dothis transaction does not close in the time 8
10
frame we
anticipate, or areif it is not completed at all, our future operating results will
be harmed and the price of our common stock could decline.
WE MAY EXPERIENCE COMPONENT SHORTAGES, WHICH WOULD CAUSE US TO DELAY SHIPMENTS
TO CUSTOMERS, RESULTING IN POTENTIAL DECLINES IN REVENUES AND OPERATING RESULTS.
Recently, a number of components purchased by us and incorporated into
assemblies and subassemblies we produce have been the subject of shortages.
These components include application-specific integrated circuits, capacitors
and connectors. Unanticipated component shortages caused us to be unable to make
certain scheduled shipments to customers in the first quarter of fiscal 2000 and
may do so in the future. As a result, we would experience a shortfall in
revenues. We could also experience negative customer goodwill due to the delay
in shipment. Component shortages may also increase our cost of goods due to
premium charges we must pay to purchase components in short supply and due to
changes in the mix of assemblies shipped to customers. For example, shortages in
certain components negatively affected our operating results and contributed to
an increase in inventory levels during the first quarter of fiscal 2000.
Accordingly, component shortages could harm our operating results for a
particular fiscal period due to the resulting revenue shortfall or cost increase
and could also damage customer relationships over a longer-term period.
WE ARE SUBJECT TO COMPETITION AND TECHNOLOGICAL CHANGE, AND OUR BUSINESS MAY BE
HARMED BY COMPETITIVE PRESSURES AND FAILURE TO ADAPT TO TECHNOLOGICAL CHANGES.
The electronic interconnect product industry is highly fragmented and
characterized by intense competition. We compete in the technologically advanced
segment of the interconnect product market, which is also highly competitive but
is much less fragmented than the industry as a whole. Our competitors consist
primarily of larger manufacturers of interconnect products, and some of these
competitors have greater manufacturing and financial resources than us as well
as greater surface mount assembly capacity. As a participant in the interconnect
industry, we must continually develop improved manufacturing processes to
accommodate our customers' needs for increasingly complex products. During
periods of recession in the electronics industry, our competitive advantages in
the areas of quick turnaround manufacturing and responsive customer service may
be of reduced importance to electronics OEMs, who may become more price
sensitive. In addition, captive interconnect product manufacturers seek orders
in the open market to fill excess capacity, thereby increasing price
competition.
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In addition, we may be at a competitive disadvantage with respect to
price when compared to manufacturers with lower cost structures, particularly
those with offshore facilities where labor and other costs are lower. We do not
currently have offshore facilities in lower cost locations, such as Asia and
Latin America. Although we plan to establish other offshore facilities, we may
not do so in time to be competitive.
ENVIRONMENTAL MATTERS ARE A KEY CONSIDERATION IN OUR BUSINESS, AND FAILURE TO
COMPLY WITH THE REQUIREMENTS OF ENVIRONMENTAL LAWS COULD HARM OUR BUSINESS.
Proper waste disposal is a major consideration for printed circuit board
manufacturers because metals and chemicals are used in the manufacturing
process. Water used in the printed circuit board manufacturing process must be
treated to remove metal particles and other contaminants before it can be
discharged into the municipal sanitary sewer system. In addition, although the
electronics assembly process generates significantly less waste water than
printed circuit board fabrication, maintenance of environmental controls is also
important in the electronics assembly process. Each of our printed circuit board
and electronics assembly plants has personnel responsible for monitoring
environmental compliance. These individuals report to our Director of
Environmental Compliance, who has overall responsibility for environmental
matters. Each plant operates under effluent discharge permits issued by the
appropriate governmental authority. These permits must be renewed periodically
and are subject to revocation in the event of violations of environmental laws.
There can be no assurance that violations will
9
11 not occur in the future as a
result of human error, equipment failure or other causes. In the event of a
future violation of environmental laws, we could be held liable for damages and
for the costs of remedial actions and could be also subject to revocation of
effluent discharge permits. Any such revocation could require us to cease or
limit production at one or more of our facilities, which would harm our
operating results. We are also subject to environmental laws relating to the
storage, use and disposal of chemicals, solid waste and other hazardous
materials as well as air quality regulations. Furthermore, environmental laws
could become more stringent over time, and the costs of compliance with and
penalties associated with violation of more stringent laws could be substantial.
WE ARE SUBJECT TO ENVIRONMENTAL CONTINGENCIES AT SITES OPERATED BY ACQUIRED
COMPANIES AND COULD INCUR SUBSTANTIAL COSTS FOR ENVIRONMENTAL REMEDIATION AND
RELATED ACTIVITIES AT THESE SITES.
In November 1997, we acquired Elexsys International, Inc. which became
our wholly-owned subsidiary. Several facilities owned or occupied by Elexsys at
the time of the merger, or formerly owned or occupied by Elexsys or companies
acquired by Elexsys, had either soil contamination or contamination of
groundwater underneath or near the facility including the following:
contamination was discovered at Elexsys' Irvine, California facility in 1989 and
Elexsys voluntarily installed a groundwater remediation system at the facility
in 1994. Additional investigation is being undertaken by other parties in the
area at the request of the California Regional Water Quality Control Board. It
is unknown whether any additional remediation activities will be required as a
result of such investigations or whether any third party claims will be brought
against us alleging that they have been damaged in any way by the existence of
the contamination at the Irvine facility. We have been required by the
California Department of Toxic Substances Control to undertake investigation of
soil and/or groundwater at certain facilities formerly owned or occupied by a
predecessor company to Elexsys in Mountain View, California. Depending upon the
results of this soil sampling and groundwater testing, we could be ordered to
undertake soil and/or groundwater cleanup. To date, we have not been ordered to
undertake any soil or groundwater cleanup activities at the Mountain View
facilities, and we do not believe any such activities should be required. Test
results received to date are not sufficient to enable us to determine whether or
not such cleanup activities are likely to be mandated.
Contamination has also been discovered at other current and former
Elexsys facilities and has been reported to the relevant regulatory agencies. No
remediation or further investigation of such contamination has been required by
regulatory agencies. To date, the cost of the various investigations and the
cost of operating the remediation system at the Irvine facility have not been
material to our financial condition. However, in the event we are required to
undertake additional groundwater or soil cleanup, the costs of such cleanup are
likely to be substantial. We are currently unable to estimate the amount of such
soil and groundwater cleanup costs because no soil or groundwater cleanup has
been ordered and we cannot determine from available test results what
remediation activities, if any, are likely to be required. We believe, based on
the limited information currently available, that the cost of any groundwater or
soil clean-up that may be required would not harm our business, financial
condition and results of operations. Nevertheless, the process of remediating
contaminated soil and groundwater is costly, and if we are required to undertake
substantial remediation activities at one or more of the former Elexsys
facilities, there can be no assurance that the costs of such activities would
not harm our business, financial condition and results of operations.
In November 1998, we acquired Altron Incorporated which became a wholly
owned subsidiary of ours. Altron was advised in 1993 by Olin Corporation that
contamination resulting from activities of prior owners of property owned by
Olin Corporation and
9
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located close to the Altron manufacturing plant in Wilmington, Massachusetts,
had migrated under the Altron plant. Olin has assumed full responsibility for
any remediation activities that may be required and has agreed to indemnify and
hold Altron harmless from any and all costs, liabilities, fines, penalties,
charges and expenses arising from and relating to any action or requirement,
whether imposed by statute, ordinance, rule, regulation, order,
10
12 decree or by
general principles of law to remediate, clean up or abate contamination
emanating from the Olin site. Although we believe that Olin's assumption of
responsibility will result in no remediation cost to Altron from the
contamination, there can be no assurance that Altron will not be subject to some
costs regarding this matter, but we do not anticipate that such costs, if any,
will be material to its financial condition or results of operations.
We have been notified by the County of Santa Clara, California that the
county in conjunction with the Environmental Protection Agency is seeking
approximately $1,600,000 million in fines for waste water discharge and other
related violations that have allegedly occurred during the past two years at one
of our plants in Santa Clara. No remediation or further investigation of such
contamination has been required by regulatory agencies.
We have been named as a potentially responsible party at several
contaminated disposal sites as a result of the past disposal of hazardous waste
by companies acquired by us or their corporate predecessors. While liabilities
for such historic disposal activities have not been material to our financial
condition to date, there can be no guarantee that past disposal activities will
not result in material liability to us in the future.
HADCO IS SUBJECT TO ENVIRONMENTAL CONTINGENCIES AT SITES CURRENTLY OR FORMERLY
OPERATED BY IT AND COULD INCUR SUBSTANTIAL COSTS FOR ENVIRONMENTAL REMEDIATION
AND RELATED ACTIVITIES AT THESE SITES.
In April 2000, we entered into an agreement to acquire Hadco Corporation.
Hadco is aware of certain chemicals that exist in the ground at certain of its
facilities. Hadco has notified various governmental agencies and continues to
work with them to monitor and resolve these matters. During March 1995, Hadco
received a Record Of Decision (ROD) from the New York State Department of
Environmental Conservation (NYSDEC), regarding soil and groundwater
contamination at its Owego, New York facility. Based on a Remedial Investigation
and Feasibility Study (RIFS) for apparent on-site contamination at that facility
and a Focused Feasibility Study (FFS), each prepared by environmental
consultants of Hadco, the NYSDEC has approved a remediation program of
groundwater withdrawal and treatment and iterative soil flushing. Hadco has
executed a Modification of the Order on Consent to implement the approved ROD.
Capital equipment for this remediation has already been acquired by Hadco, and
future operation and maintenance costs, which will be incurred and expended over
the estimated life of the program of the next 28 years, are estimated at between
$40,000 and $100,000 per year. In the summer of 1998, NYSDEC took additional
samples from a wetland area near Hadco's Owego facility. Analytical reports of
earlier sediment samples indicated the presence of certain inorganics. The new
samples showed elevated levels of certain metals, but NYSDEC has not made a
determination as to the potential source of such metals, the remedial action to
be taken, or the persons to undertake and/or pay for any remediation. Hadco
and/or other third parties may be required to conduct additional investigations
and remediation at that location, the costs of which are currently
indeterminable.
Hadco commenced the operation of a groundwater extraction system at its
Derry, New Hampshire facility to address certain groundwater contamination and
groundwater migration control issues. Further investigation is underway to
determine the areal extent of the groundwater contaminant plume. Because of the
uncertainty regarding both the quantity of contaminants beneath the building at
the site and the long-term effectiveness of the groundwater migration control
system Hadco has installed, it is not possible to make a reliable estimate of
the length of time remedial activity will have to be performed. However, it is
anticipated that the groundwater extraction system will be operated for at least
30 years. Hadco may be required to conduct additional investigations and
remediation relating to the Derry facility. The total costs of such groundwater
extraction system and of conducting any additional investigations and
remediation relating to the Derry facility are not fully determinable.
Hadco is one of 33 entities which have been named as potentially
responsible parties in a lawsuit pending in the federal district court of New
Hampshire concerning environmental conditions at the Auburn Road, Londonderry,
New Hampshire landfill site. Local, state and federal entities and certain other
parties to the litigation seek contribution for past costs, totaling
approximately $20 million, allegedly incurred to assess and remediate the Auburn
Road site. In December 1996, following publication and comment period, the EPA
amended the ROD to change the remedy at the Auburn Road site from active
groundwater remediation to future monitoring. In June 1999, Hadco entered into a
Consent Decree with 30 of the defendants and third-party defendants. The Consent
Decree was approved by the Court in March 2000. Under the terms of the Consent
Decree, Hadco is a cash-out party and does not have responsibility for
performance of ongoing remedial or monitoring work at the site.
From 1974 to 1980, Hadco operated a printed circuit manufacturing facility
in Florida as a lessee. This property is the subject of a pending lawsuit in the
circuit court for Broward County, Florida (the "Florida Lawsuit") and an
investigation by the Florida Department of Environmental Protection a("FDEP").
In connection with the investigation, Hadco and others have participated in
alternative dispute resolution regarding the site with an independent mediator.
Mediation sessions began in 1992 and continued over the next several years
through May 1998. In June 1995, Hadco and Gould, Inc., another prior lessee of
the site, were joined as third-party defendants in the pending Florida lawsuit
by a party who had previously been named as a defendant when the Florida lawsuit
was commenced in 1993 by the FDEP. As a result of the mediation, a Settlement
Agreement was entered into among Hadco, Gould and the FDEP in March 1999. The
third-party complaints against Hadco and Gould in the pending Florida lawsuit
were dismissed. The Settlement Agreement provides that Hadco and Gould will
undertake remedial action based on a Supplemental Contamination Assessment
Report and a later Feasibility Study, which has been prepared by a consultant to
Hadco and Gould and approved by FDEP. The estimated cost of the recommended
source removal described in the Feasibility Study is approximately $165,000, and
for ongoing monitoring and remediation is approximately $2.1 million. Actual
remedial activities have not yet commenced but are expected to begin in the near
future.
In March 1993, the EPA notified Hadco Santa Clara of its potential
liability for maintenance and remediation costs in connection with a hazardous
waste disposal facility operated by Casmalia Resources, a California Limited
Partnership, in Santa Barbara County, California. The EPA identified Hadco Santa
Clara as one of the 65 generators which had disposed of the greatest amounts of
materials at the site. Based on the total tonnage contributed by all generators,
Hadco Santa Clara's share is estimated at approximately 0.2% of the total
weight.
The Casmalia site was regulated by the EPA during the period when the
material was accepted. There is no allegation that Hadco Santa Clara violated
any law in the disposal of material at the sites. Rather the EPA's actions
stemmed from the fact that Casmalia Resources may not have the financial means
to implement a closure plan for the site and because of Hadco Santa Clara's
status as a generator of hazardous waste.
In June 1997, the United States District Court in Los Angeles, California
approved and entered a Consent Decree among the EPA and 49 entities (including
Hadco Santa Clara) acting through the Casmalia Steering Committee (CSC). The
Consent Decree sets forth the terms and conditions under which the CSC will
carry out work aimed at final closure of the site. Certain closure activities
will be performed by the CSC. Later work will be performed by the CSC, if funded
by other parties. Under the Consent Decree, the settling parties will work with
the EPA to pursue the non-settling parties to ensure they participate in
contributing to the closure and long-term operation and maintenance of the
facility.
The EPA will continue as the lead regulatory agency during the final
closure work. Because long-term maintenance plans for the site will not be
determined for a number of years, it has not yet been decided which regulatory
agency will oversee this phase of the work plan or how the long-term costs will
be funded. However, the Consent Decree provides a mechanism for ensuring that an
appropriate federal, state or local agency will assume regulatory responsibility
for long-term maintenance.
FAILURE TO MANAGE OUR GROWTH MAY SERIOUSLY HARM OUR BUSINESS.
Our business has grown in recent years through both internal expansion
and acquisitions, and continued growth may cause a significant strain on our
infrastructure and internal systems. To manage our growth effectively, we must
continue to improve and expand our management information systems. We will face
additional growth management challenges, particularly if we expand in Asia and
Latin America and if we undertake additional new acquisition and OEM divestiture
transactions. If we are unable to manage growth effectively, our results of
operations will be harmed.
OUR EXISTING INTERNATIONAL OPERATIONS AND OUR PLANS TO EXPAND INTERNATIONAL
OPERATIONS INVOLVE ADDITIONAL RISKS, AND FAILURE TO EFFECTIVELY EXPAND
INTERNATIONALLY COULD HARM OUR OPERATING RESULTS.
We opened our first overseas facility, located in Dublin, Ireland, in
June 1997. In addition, we operate electronic assembly operations in Chateaudun,
France, Sundsvall, Sweden and Aanekoski, Tikkakoski, Finland. If the acquisition
of Hadco is completed, we will acquire a manufacturing facility for printed
circuits in Malaysia. A number of risks are inherent in international operations
and transactions. International sales and operations may be limited or disrupted
by the imposition of government controls, export license requirements, political
instability, trade restrictions, changes in tariffs, and difficulties in
staffing, coordinating communications among and managing international
operations. Additionally, our business and operating results may be harmed by
fluctuations in international currency exchange rates as well as increases in
duty rates, difficulties in obtaining export licenses, constraints on our
ability to maintain or increase prices, and competition. We cannot assure you
that we will realize the anticipated strategic benefits of our expansion in
Ireland or that our international operations will contribute positively to our
business and operating results.
In addition, to respond to competitive pressures and customer
requirements, we plan to expand internationally in lower cost locations,
particularly Asia and Latin America. As a result of this proposed expansion, we
could encounter difficulties in scaling up production at overseas facilities or
in coordinating our United States and international operations. In addition, we
may not realize anticipated revenue growth at new international operations. We
may elect to establish start-up operations rather than acquiring existing
businesses, which would require us to recruit management and other personnel and
build a customer base at a completely new operation. Accordingly, unanticipated
problems we encounter in establishing new international operations could harm
our business and operating results and cause our stock price to decline.
THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE, AND THE VALUE OF YOUR INVESTMENT
COULD DECLINE.
The trading price of our common stock has been and could in the future
be subject to significant fluctuations in response to variations in quarterly
operating results, developments in the electronics industry, general economic
conditions, changes in securities analysts' recommendations regarding our
securities and other factors. In addition, the stock market in recent years has
experienced significant price and volume fluctuations which have affected the
market prices of technology companies and which have been
10
11
unrelated to or disproportionately impacted by the operating performance of such
companies. These
11
13 broad market fluctuations may cause the market price of our
common stock to decline, which would diminish the value of your investment.
WE DEPEND ON CERTAIN KEY PERSONNEL, AND THE LOSS OF KEY PERSONNEL MAY HARM OUR
BUSINESS.
Our future success depends in large part on the continued service of our
key technical and management personnel and on our ability to continue to attract
and retain qualified employees, particularly those highly skilled design,
process and test engineers involved in the manufacture of existing products and
the development of new products and processes. The competition for such
personnel is intense, and the loss of key employees, none of whom is subject to
an employment agreement for a specified term or a post-employment
non-competition agreement, could harm our business.
IF WE HAVE NOT ADEQUATELY PREPARED FOR THE TRANSITION TO YEAR 2000, OUR BUSINESS
COULD BE HARMED.
We have executed a plan designed to make our computer systems,
applications, computer and manufacturing equipment and facilities year 2000
ready. To date, none of our systems, applications, equipment or facilities have
experienced material difficulties from the transition to year 2000. However, it
is possible that material difficulties could be discovered or could arise. We
cannot guarantee that our year 2000 readiness plan has been successfully
implemented, and actual results could still differ materially from our plan. In
addition, we have communicated with our critical suppliers to determine the
extent to which we may be vulnerable to such parties' failure to resolve their
own year 2000 issues. Where practicable, we have attempted to mitigate our risks
with respect to the failure of these entities to be year 2000 ready. The effect,
if any, on our results of operations from any failure of such parties to be year
2000 ready cannot yet be determined.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business," and
elsewhere in this prospectus constitute forward-looking statements. These
statements involve known and unknown risks, uncertainties an other factors that
may cause our or our industry's actual results, levels of activity, performance
or achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by such
forward-looking statements. Such factors include those listed under "Risk
Factors" and elsewhere in this prospectus.
This prospectus contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may," "will,"
"should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," or "continue" or the negative of such terms or other
comparable terminology. These statements are only predictions. Actual events or
results may differ materially. In evaluating these statements, you should
specifically consider various factors, including the risks outlined under "Risk
Factors." These factors may cause our actual results to differ materially from
any forward-looking statement.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Moreover, neither we nor any
other person assumes responsibility for the accuracy and completeness of such
statements. We are under no duty to update any of the forward-looking statements
after the date of this prospectus to conform to such statements to actual
results.
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USE OF PROCEEDS
We estimate that the netwill not receive any proceeds from the sale of 4,500,000the shares of
common stock that we areby the
selling stockholders in this offeringthe offering. We will be approximately $454.6
million (or $522.8 million ifpay for costs relative to the
underwriters' over-allotment option is
exercised in full), based on an assumed price to public of $105.375 per share
and after deducting estimated underwriting discounts and commissions and
estimated offering expenses.
We anticipate using the net proceeds from the offering for general
corporate purposes, including working capital and capital expenditures. We
expect to use an unspecified portionregistration of the net proceeds to acquire or invest in
complementary businesses, products and technologies. Pending such uses, we will
invest the proceeds in short-term, interest bearing, investment grade
securities.
PRICE RANGE OF COMMON STOCK
Our common stock is quoted on the Nasdaq National Market under the symbol
"SANM". The following table shows the high and low sale prices per share of the
common stock as reported on the Nasdaq National Market for the periods
indicated:
COMMON STOCK PRICE
-------------------
HIGH LOW
-------- -------
FISCAL YEAR ENDED SEPTEMBER 30, 1998
First quarter............................................... $ 44.00 $28.72
Second quarter............................................ 40.19 26.69
Third quarter............................................. 46.88 33.88
Fourth quarter............................................ 47.56 23.50
FISCAL YEAR ENDED OCTOBER 2, 1999
First quarter............................................. 62.50 23.88
Second quarter............................................ 75.56 49.50
Third quarter............................................. 81.22 57.31
Fourth quarter............................................ 83.24 64.13
FISCAL YEAR ENDED OCTOBER 2, 2000
First quarter............................................. 101.75 74.28
Second quarter (through January 26, 2000)................. 113.13 90.00
On January 26, 2000, the last reported sale price of our common stock on
the Nasdaq National Market was $105.375 per share. The foregoing information has
been adjusted to reflect a stock split effected by Sanmina in April 1998. As of
January 1, 2000, there were 847 stockholders of record of our common stock.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock. We
currently expect to retain future earnings, if any, for use in the operation and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future.
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CAPITALIZATION
The following table shows our cash and equivalents and capitalization as of
January 1, 2000 on an actual basis and on an as adjusted basis. The as adjusted
column gives effect to our receipt of the estimated net proceeds from the sale
of 4,500,000 shares of common stock we are offering at an assumed price to
public of $105.375 per share, after deducting estimated underwriting discounts
and commissions and estimated offering expenses. The outstanding share
information in the table below excludes:
- 12,268,590 shares of common stock reserved for issuance under our stock
option and stock purchase plans, of which 6,900,233 shares were issuable
upon exercise of outstanding options; and
- 4,034,427 shares of common stock issuable upon conversion of outstanding
convertible subordinated notes.
AS OF JANUARY 1, 2000
------------------------
ACTUAL AS ADJUSTED
---------- -----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT
SHARE DATA)
Cash, cash equivalents and short-term investments........... $ 354,315 $ 808,942
========== ==========
Long-term obligations:
Long-term obligations..................................... $ 2,676 $ 2,676
4 1/4% convertible subordinated notes due May 2004........ 355,214 355,214
---------- ----------
Total long-term obligations....................... 357,890 357,890
---------- ----------
Stockholders' equity:
Preferred Stock, $.01 par value; 5,000,000 shares
authorized; none issued and outstanding, actual and as
adjusted............................................... $ -- $ --
Common Stock, $.01 par value; 500,000,000 shares
authorized;
59,139,587 issued and outstanding, actual and
63,639,587 issued and outstanding, as adjusted......... 591 636
Additional paid-in capital................................ 296,505 751,087
Accumulated other comprehensive loss...................... (1,965) (1,965)
Retained earnings......................................... 371,560 371,560
---------- ----------
Total stockholders' equity............................. 666,691 1,121,318
---------- ----------
Total capitalization.............................. $1,024,581 $1,479,208
========== ==========
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SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and the
notes to those statements incorporated by reference. The statements of
operations data set forth below for the fiscal years ended September 30, 1995,
1996, 1997 and 1998 and October 2, 1999 and the balance sheet data at September
30, 1995, 1996, 1997, 1998 and October 2, 1999 have been derived from our
audited consolidated financial statements, which have been audited by Arthur
Andersen LLP, independent public accountants. The statements of operations data
for the three months ended January 2, 1999 and January 1, 2000 and the balance
sheet data at January 1, 2000 are derived from our unaudited consolidated
financial statements incorporated by reference and include all adjustments,
consisting only of normal, recurring adjustments, which we consider necessary
for a fair presentation of that data. Effective October 1, 1998, we changed our
fiscal year end from September 30 to a 52 or 53 week year ending on the Saturday
nearest September 30. The historical results are not necessarily indicative of
results to be expected for any future period.
FISCAL YEAR ENDED THREE MONTHS
------------------------------------------------------ ENDED
SEPTEMBER 30, -------------------
----------------------------------------- OCTOBER 2, JAN. 2, JAN. 1,
1995 1996 1997 1998 1999 1999 2000
-------- -------- -------- -------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
STATEMENT OF OPERATIONS DATA:
Net sales..................................... $469,394 $617,487 $803,064 $991,821 $1,214,744 $275,533 $459,685
Cost of sales................................. 375,238 484,687 640,644 783,949 962,595 223,249 381,722
-------- -------- -------- -------- ---------- -------- --------
Gross profit................................ 94,156 132,800 162,420 207,872 252,149 52,284 77,963
Selling, general and administrative
expenses.................................... 36,278 45,483 63,856 67,165 74,796 20,079 20,907
Amortization of goodwill...................... 568 2,000 2,283 3,127 3,269 751 1,902
Provision for plant closing and relocation
costs....................................... -- -- 8,876 -- 16,875 16,875 --
Write down of long-lived assets............... -- -- -- -- 11,400 11,400 --
Merger costs.................................. -- -- -- 3,945 5,479 5,479 --
-------- -------- -------- -------- ---------- -------- --------
Operating income (loss)....................... 57,310 85,317 87,405 133,635 140,330 (2,300) 55,154
Other income (expense), net................... (681) (760) (1,691) (272) 7,549 1,738 1,390
Income (loss) before provision for income
taxes and extraordinary item................ 56,629 84,557 85,714 133,363 147,879 (562) 56,544
Provision for income taxes.................... 20,965 29,543 36,358 47,734 54,182 -- 20,356
Gain from exchange of convertible subordinated
debentures for common stock, net of
expenses.................................... 1,833 -- -- -- -- -- --
-------- -------- -------- -------- ---------- -------- --------
Net income (loss)............................. $ 37,497 $ 55,014 $ 49,356 $ 85,629 $ 93,697 $ (562) $ 36,188
======== ======== ======== ======== ========== ======== ========
Diluted earnings per share:
Income before extraordinary item............ $ .76 $ 1.04 $ .91 $ 1.52 $ 1.52 $ (.01) $ .58
Extraordinary item.......................... .04 -- -- -- -- -- --
Net income (loss) per share................. $ .80 $ 1.04 $ .91 $ 1.52 $ 1.52 $ (.01) $ .58
Shares used in computing diluted per share
amounts..................................... 47,972 55,666 57,616 58,597 61,662 57,380 62,722
AS OF
--------------------------------------------------------------------
SEPTEMBER 30,
----------------------------------------- OCTOBER 2, JAN. 1,
1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- ---------- -----------
(IN THOUSANDS)
(UNAUDITED)
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments.... $150,439 $155,069 $152,520 $181,504 $ 454,602 $ 354,315
Working capital...................................... 200,703 228,620 251,350 300,337 667,784 671,777
Total assets......................................... 368,858 450,134 553,478 658,367 1,201,713 1,298,939
Long-term debt....................................... 113,997 117,726 120,307 19,408 357,980 357,890
Stockholders' equity................................. 166,493 233,959 297,870 481,985 626,347 666,691
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except for historical information, the discussion inshares.
SELLING STOCKHOLDERS
In this prospectus, contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from those anticipated in the
forward-looking statements as a result of a number of factors, including the
risks described in the section titled "Risk Factors" and elsewhere in this
prospectus.
OVERVIEW
We are a leading independent provider of customized integrated electronic
manufacturing services, known as EMS, including turnkey electronic assembly and
manufacturing management services, to original equipment manufacturers, or OEMs,
in the electronics industry. Our electronics manufacturing services consist
primarily of the manufacture of complex printed circuit board assemblies using
surface mount and pin-through-hole interconnection technologies, the manufacture
of custom designed backplane assemblies, fabrication of complex multi-layered
printed circuit boards, electronic enclosure systems and testing and assembly of
completed systems. In addition to assembly, turnkey manufacturing management
also involves procurement and materials management, as well as consultation on
printed circuit board design and manufacturing. Through Sanmina Cable Systems,
we also manufacture custom cable and wire harness assemblies for electronic
industry OEMs. In addition, we have recently developed an enclosure systems
business which manufactures and assembles metal enclosures that house large
electronic systems and subsystems.
We locate our manufacturing facilities near our customers and,
increasingly, our customers' end users. Our assembly plants are located in
Northern California, Richardson, Texas, the greater Boston, Massachusetts area,
Manchester, New Hampshire, Durham, North Carolina, Guntersville, Alabama,
Calgary, Alberta, Canada and Dublin, Ireland. Our printed circuit board
fabrication facilities are located in Northern California, Southern California,
the greater Boston, Massachusetts area and Nashua, New Hampshire. Sanmina Cable
Systems' principal manufacturing facility is located in Carrollton, Texas.
Sanmina's principal enclosure manufacturing facilities are located in the
Toronto, Canada area.
We have pursued and intend to continue to pursue, business acquisition
opportunities, particularly when these opportunities have the potential to
enable us to increase our net sales while controlling our operating expenses, to
access new customers, technologies or geographic markets, to implement our
vertical integration strategy and to obtain facilities and equipment on terms
more favorable than those generally available in the market. In particular, we
expect that we will continue to pursue opportunities to acquire assembly
operations being divested by electronics industry OEMs, particularly those in
the communications sector.
In October and November 1999, we completed the acquisition of two former
Nortel Networks electronics assembly operations located in Calgary, Alberta,
Canada and Chateaudun, France for a cash purchase price of approximately $61.4
million. In October 1999, we completed the acquisition of the electronics
enclosure systems business of Devtek Electronics for a purchase price of
approximately $26.5 million. In January 2000, we signed an agreement with Harris
Corporation to acquire a printed circuit board assembly operation located
principally in San Antonio, Texas. In January 2000, we also reached an agreement
in principle with Alcatel USA to acquire an electromechanical assembly operation
located in Clinton, North Carolina. In connection with the Nortel transactions,
we entered into a supply agreement to provide assemblies to Nortel that were
previously manufactured by the acquired operations. We intend to enter into
similar agreements in connection with the Harris and Alcatel transactions. We
expect that these transactions will provide an opportunity to build significant,
long-term relationships with these customers. Completion of the Harris
transaction is subject to several closing conditions, including expiration of
the waiting period under federal antitrust laws. We are currently negotiating
the definitive agreements relatingrefer to the Alcatel transaction,entities or individuals listed below
and completion of
the transaction is subjectany family member, trust or trust instrument to 16
18
entering into definitive agreements and satisfaction of closing conditions under
those agreements. We expect the Alcatel and Harris transactions to be completed
in March 2000 and April 2000, respectively.
RESULTS OF OPERATIONSwhom they may rightfully
transfer their shares as "selling stockholders." The following table sets forth
for the periods indicated, certain statementsinformation as of operations data expressed as a percentage of net sales.June 30, 2000 with respect to each selling
stockholder:
11
12
YEAR ENDED THREE MONTHS ENDEDSHARES
OFFERED SHARES BENEFICIALLY
NAME OF SELLING STOCKHOLDER HEREBY(1) OWNED AFTER OFFERING(1)(2)
---------- ----------------------------
---------------------------------
SEPTEMBER 30,
-------------- OCTOBER 2, JANUARY 2, JANUARY 1,
1997 1998 1999 1999 2000
----- ----- ---------- --------------- ---------------Number Percent
----------------------------
Net sales........................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.................... 79.8 79.0 79.2 81.0 83.0
----- ----- ----- ----- -----
Gross profit..................... 20.2 21.0 20.8 19.0 17.0
----- ----- ----- ----- -----
Operating expenses:
Selling, general and
administrative.............. 7.9 6.8 6.2 7.3 4.5
Amortization of goodwill....... .3 .3 .3 .3 .5
Provision for plant closing and
relocation costs............ 1.1 -- 1.4 6.1 --
Write down of long-lived
assets...................... -- -- .9 4.1 --
Merger costs................... -- .4 .4 2.0 --
----- ----- ----- ----- -----
Operating income (loss).......... 10.9 13.5 11.6 (.8) 12.0
Other income (expense), net...... (.2) (.1) .6 .6 .3
Provision for income taxes....... (4.5) (4.8) (4.5) -- 4.4
----- ----- ----- ----- -----
Net income (loss)................ 6.2% 8.6% 7.7% (.2)% 7.9%
===== ===== ===== ===== =====Rune Glavare.......................... 325,173 - *
Kjell Hogstrom........................ 325,173 - *
Lennart Svantesson.................... 38,000 - *
Ulf Lundkvist......................... 10,201 - *
Lars Bergqvist........................ 10,201 - *
Per Myrstrom.......................... 10,201 - *
Claudia Haggstrom..................... 6,376 - *
Orjan Soderberg....................... 6,376 - *
Marita Sjodin......................... 6,376 - *
Tord Berggren......................... 6,376 - *
Veli-Matti Helenius................... 27,585 - *
Ilkka Keskinen........................ 23,004 - *
Oiva Peltokangas...................... 20,158 - *
Hannu Siltanen........................ 19,566 - *
Eero Hernesmaa........................ 9,763 - *
Bernt Andersson....................... 6,619 - *
Christer Hermansson................... 6,619 - *
Juha Koskinen......................... 6,619 - *
Antti Jokkitalo....................... 1,653 - *
Goran Lundbom......................... 5,100 - *
NC III Ltd............................ 3,724 - *
Nordic Capital III Alpha LP........... 295,986 - *
Nordic Capital III Beta LP............ 216,741 - *
Handelsbanken Liv Forsakringsaktiebola 46,611 - *
Atle AB............................... 34,961 - *
Allmanna Pensionsfonden, sjatte
fondstyrelsen....................... 69,911 - *
Investment AB Bure.................... 69,911 - *
Kommunernas Pensionsforsakring........ 11,650 - *
Allmanna Pensionsfonden, sjatte
fondstyrelsen....................... 384,597 - *
THREE MONTHS ENDED JANUARY 2, 1999 AND JANUARY 1,- ---------------------
* Less than 1%.
(1) The rules and regulations of the Commission determine beneficial ownership.
Such beneficial ownership generally includes voting or investment power with
respect to securities. Beneficial ownership is based on information as of
June 30, 2000 Sales forand assumes that there is outstanding an aggregate of
131,223,773 shares of Common Stock. As of June 30, 2000, no options had been
issued to the first quarter of fiscal 2000 increasedselling stockholders named in this prospectus. Except as
subject to community property laws where applicable, we believe, based on
information furnished by 66.8% to $459.7
million from $275.5 millionthe selling stockholders, that the person named in
the corresponding quarterabove table above has sole voting and investment power with respect to
all shares of Common Stock shown as beneficially owned by him.
(2) Assumes the prior year. The
increase in netsale of all shares offered by this Prospectus and no other
purchases or sales for the first quarter of fiscal 2000 was due primarily to
increased shipments of EMS assemblies to both existing and new customers
obtained both through acquisitions and internal growth. Sales to Nortel Networks
increased substantially in the first quarter of fiscal 2000 due to our recently
completed OEM divestiture transaction. Growth in EMS assembly revenues during
these periods was influenced by expansion of our operations, both through
acquisitions and internally-originated expansions, and a generally positive
economic environment inCommon Stock. See "Plan Of Distribution."
PLAN OF DISTRIBUTION
The selling stockholders may sell the communications, medical and industrial
instrumentation, and high-speed computer segments of the electronics industry.
Revenue growth was also influenced by the electronics industry trend towards
outsourcing.
Gross margin decreasedshares separately or together,
from 19.0% in the first quarter of fiscal 1999time to 17.0% in the first quarter of fiscal 2000. We expect gross margins to continue
to fluctuate basedtime on the mixover-the-counter market at prices and on terms
prevailing at the time of products ordered byany such sale. Any such sale may be made:
- in broker's transactions through broker-dealers acting as agents;
- in transactions directly with market makers; or
- in privately negotiated transactions where no broker or other
third party (other than the purchaser) is involved.
The selling stockholders will pay:
- selling commissions or brokerage fees, if any;
- all applicable transfer taxes; and
shipped to major
customers. The decrease in gross margins for the first quarter was primarily
attributable to pricing terms negotiated as part- all fees and costs of OEM divestiture
transactions, specifically the Nortel Networks transaction, and product and
customer mix. Due to increased competition, changes in product and customer mix,
and pricing terms negotiated as part of OEM divestiture transactions, we may
continue to experience decreases in gross margins.
In absolute dollars, operating expenses decreased from $54.6 million in the
first quarter of fiscal 1999 to $22.8 million in the first quarter of fiscal
2000. The decrease in operating expenses for the first three months of fiscal
2000 was mainly attributable to certain charges recorded in the first three
months of fiscal 1999. These charges of $36.1 million related to plant closing
and relocation costs, write down of
17
19
long-lived assets, merger and other costs. As a percentage of sales, operating
expenses decreased from 19.8% in the first quarter of 1999 to 5.0% in the first
quarter of the current year. Excluding the charges from the first quarter of
fiscal 1999, operating expenses as a percentage of sales decreased from 6.7% in
the first quarter of fiscal 1999 to 5.0% in the first quarter of fiscal 2000.
The quarter-over-quarter increase in operating margin reflects higher sales
volume and our strategy of focusing on growth in revenues and operating income
while maintaining control over expenses.
Selling, general and administrative expenses increased slightly from $20.1
million in the first quarter of fiscal 1999 to $20.9 million in the first
quarter of fiscal 2000. The dollar increase in selling, general and
administrative expenses was primarily the result of increased expenditures to
support higher sales volume. We anticipate that operating expenses will continue
to increase in absolute dollars due to projected additions to the sales force
and other administrative expenditures to support higher sales volume. However,
operating expenses as a percentage of sales are anticipated to remain relatively
constant or decrease depending upon sales volume and our ability to achieve
expected operating efficiencies as a result of the integration of acquired
businesses.
For the first quarter of fiscal 2000, we reported net other income of $1.4
million compared to net other income of $1.7 million for the corresponding
quarter of last year. The decrease was a result of lower interest expense in the
first quarter of fiscal 1999. For the first three months of fiscal 2000, the
interest income from the higher cash balances available following the $350
million ($341.1 million net of issuance costs) issuance of convertible
subordinated notes was slightly offset by the interest expense associated with
the convertible subordinated notes. In the first quarter of fiscal 1998, we
repaid approximately $12.8 million of outstanding debt assumedcounsel incurred in connection with the
acquisition of Elexsys. In addition,sale.
During such time as the selling stockholders may be attempting to sell shares
registered hereunder, they will:
(1) not engage in August 1998, $86.3 millionany stabilization activity in connection
with any of our outstanding convertible subordinated notes were converted into Common Stocksecurities;
(2) furnish copies of this prospectus, as a result of a redemption call. The decrease in outstanding debt resulted in
the reduction of interest expensesupplemented or
amended to each person to whom shares may be offered; and
(3) not bid for the first three months of fiscal 1999.
Our provision for income taxes for the three month period ended January 2,
2000 is based upon our estimate of the effective tax rate for fiscal 2000 of
36.0%. As there was a net loss for the three months ended January 2, 1999, we
did not record an income tax provision.
FISCAL YEARS ENDED SEPTEMBER 30, 1997 AND 1998 AND OCTOBER 2, 1999
Net Sales. Net sales in fiscal 1999 increased 22.5% to $1,214.7 million
from $991.8 million in fiscal 1998, which was an increase of 23.5% from fiscal
1997 sales of $803.1 million. The increase in net sales for fiscal 1999 was due
primarily to increased shipments of EMS assemblies to both existing and new
customers obtained both through acquisitions and internal growth. The increase
in net sales for fiscal 1998 was the result of increased volumes of business
from established customers, the addition of several new major customers during
the year and the addition of customers resulting from acquisitions completed
during the year. Our printed circuit board fabrication operations focused
increasingly on manufacturing printed circuit boards used in our EMS assemblies,
rather than manufacturing "bare" boards for sale to third parties. Growth in EMS
assembly revenues during these periods was influenced by the electronics
industry trend towards outsourcing, expansionor purchase any of our operations, both through
acquisitionssecurities other than
as permitted under the Exchange Act.
The selling stockholders, and Sanmina-originated expansions, and a generally positive
economic environmentany other persons who participate in the communications, medical and industrial
instrumentation, and computer segments of the electronics industry. These
segments continued to experience overall growth during these periods.
Gross Margin. Gross margin was 20.8%, 21.0%, and 20.2% in fiscal 1999,
1998, and 1997, respectively. We expect gross margins to continue to fluctuate
based on product and customer mix. The decrease in gross margin for fiscal 1999
was primarily attributable to charges recorded in the first quarter of fiscal
1999 related to the write down of obsolete inventory and other manufacturing
related assets from acquired companies. In the fourth quarter of fiscal 1999, we
experienced increased competition, different
18
20
product and customer mix which resulted in decreases in gross margins. The
increase in gross margin for fiscal 1998 was due to our ability to realize
synergies associated with the Elexsys acquisition.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for fiscal 1999, 1998, and 1997 were $74.8 million,
$67.2 million, and $63.9 million, respectively. The percentage decreases in
selling, general and administrative expenses for fiscal 1999 were due to our
ability to grow sales while controlling operating expenses. The absolute dollar
increases in selling, general and administrative expenses were primarily the
result of increased expenditures to support higher sales volume.
Amortization of Goodwill. We incurred $3.3 million, $3.1 million, and $2.3
million in amortization expense for fiscal years 1999, 1998, and 1997,
respectively. These amortization expenses reflect the amortization of goodwill
related to acquisitions, which were accounted for as purchase transactions.
Plant Closing and Relocation Costs. Plant closing and other non-recurring
charges of $16.9 million are a result of our acquisitions in the first quarter
of fiscal 1999 and our planned relocation to a new campus facility. We closed
certain manufacturing plants in Fremont, California and Woburn, Massachusetts
and merged the operations from these facilities into existing manufacturing
facilities within the same regions. These closures were made to eliminate
duplicate facilities and other costs resulting from the merger with Altron.
Concurrent with the plant closures, we reduced our workforce in the same regions
by approximately 50 people. Plant closing, relocation and severance costs
totaled $12.8 million, of which $2.0 million was unpaid as of fiscal year end
1999. In conjunction with the closure of manufacturing facilities and our
planned relocation to its new campus facility in fiscal 2000, other non-
recurring costs include payments required under lease contracts (less any
applicable sublease income) after the properties are abandoned, any applicable
lease buyout costs, restoration costs associated with certain lease arrangements
and the costs to maintain facilities during the period after abandonment. Asset
related write-offs consist of excess equipment and leasehold improvements to
facilities that were abandoned and whose estimated fair market value is zero.
Our move to the new campus facility commenced in fiscal 1999 and is expected to
be completed in the second quarter of fiscal 2000. Noncancelable lease payments
on vacated facilities will be paid out through most of fiscal 2000. We also
discontinued the use of enterprise-wide software and hardware used internally by
the acquired companies, as these were no longer required post acquisition. The
closing of the plants discussed above, and the costs related to the integration
of information systems and hardware, were all incurred in fiscal 1999. Total
other non-recurring charges totaled $4.1 million.
Write Down of Long-Lived Assets. We continually evaluate 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. In the first quarter of fiscal 1999,
such evaluation with respect to the acquisition of Pragmatech, Incorporated,
indicated the fair value of assets related to Pragmatech were less than the
carrying value of the Pragmatech assets. Accordingly, in the first quarter of
fiscal 1999, we recorded an adjustment to write down the remaining $11.4 million
of unamortized goodwill arising from the acquisition. The fair value of
Pragmatech at the acquisition date was based on the estimated future cash flows
to be generated from the assets based on reasonable and supportable assumptions.
Financial projections prepared at the time of the acquisition of Pragmatech
reflected our belief that we would continue to provide electronics manufacturing
services to existing Pragmatech customers and would grow the Pragmatech business
at Pragmatech's existing facilities. However, the existing Pragmatech customer
relationships could not be restructured to conform to our pricing and revenue
models, and as a result, the relationships with the former Pragmatech customers
have terminated. In addition, we closed several of the former Pragmatech
facilities in fiscal 1998. As a result of these operational factors, our
analysis of projected revenues, results of operations, and cash flows
19
21
attributable to the few remaining Pragmatech customers did not support the
carrying value of Pragmatech assets, including the unamortized goodwill.
Merger costs of $5.5 million consisted of fees for investment bankers,
attorneys, accountants, and other direct merger related expenses, all of which
have been paid in fiscal 1999 and relate to those mergers that were accounted
for using the pooling-of-interests method. In 1998, we recorded a charge of $3.9
million related to the merger with Elexsys.
Other Income and Expense. In fiscal 1999, net other income was $7.5 million
as compared to net other expense of $272,000 and $1.7 million in fiscal 1998 and
1997, respectively. For fiscal 1999, the increase in net other income was the
result of a decrease in outstanding debt. In addition, there was interest income
from the higher cash balances available following the $350 million ($341.1 net
of issuance costs) issuance of convertible subordinated notes. The interest
income was slightly offset by the interest expense associated with the
convertible subordinated notes. In the first quarter of fiscal 1998, we repaid
approximately $12.8 million of outstanding Elexsys debt. In addition, in August
1998, $86.3 million of outstanding convertible subordinated notes, issued by us
in August 1995, were converted into Common Stock as a result of a redemption
call.
Provision for Income Taxes. For fiscal 1999, 1998, and 1997, our effective
tax rate was 36.6%, 35.8%, and 42.4%, respectively. The provision for income
taxes for fiscal year 1999 is based upon our estimate of an effective tax rate
of 36.5%. In the first quarter of fiscal 1999, we did not record a provision for
income taxes due to a net loss. For fiscal 1998, the rate decreased as
utilization of net operating loss carryforwards of Elexsys were recognized.
Also, the lower rate in fiscal 1998 represents the benefit of foreign operations
and merged companies taxed at a reduced rate.
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents, and short-term investments as of January 1, 2000
were $354.3 million as compared to $454.6 million at October 2, 1999. For the
three months ending January 1, 2000, cash used by operations was $34.2 million
which was primarily due to increases in receivables resulting from increased
sales and higher levels of inventories resulting in part from component
shortages. Working capital increased to $671.8 million as of January 1, 2000
compared to $667.8 million at October 2, 1999. This increase was primarily due
to increases in receivables and inventories.
We generated cash from operating activities of $115.1 million, $106.2
million, and $77.4 million in fiscal years 1999, 1998, 1997, respectively. These
increases in cash generated from operations each year were primarily due to our
increase in profitability.
For the first three months of fiscal 2000, cash used for investing
activities primarily related to the purchase of property, plant, and equipment
of $26.0 million. In addition, we paid approximately $44.7 million in cash for
acquisitions. Cash used for investing activities included net purchases of
short-term investments during fiscal 1999, 1998, and 1997 of $418.1 million,
$52.9 million, and $78.0 million, respectively. For fiscal 1999, we paid
approximately $537.2 million for short-term and long-term investments as well as
equipment. Additionally, we paid approximately $75.1 million in cash for
acquired business. These payments were offset by $194.2 million in maturities of
short-term investments. Investing activities during 1998 included $55.3 million
in property, plant and equipment.
During fiscal 1997, investing activities included the November 1996
acquisition of the assets of the former Comptronix Corporation for which we paid
cash of approximately $17.6 million, as well as investments in property, plant
and equipment of $70.7 million.
Net cash provided by financing activities for the first three months of
fiscal year 2000 primarily related to the proceeds from the
sale of common stock
upon exercise of stock options. Net cash provided by financing activities for
fiscal 1999 consisted primarily of $341.1 million in net proceeds from the issuance of convertible subordinated notes. The issuance proceeds were partly
offset by $22.3 million in
20
22
payments for long-term notes and liabilities. Proceeds from the exercise of
stock options and stock purchase rights also contributedshares, may be deemed to cash provided by
financing activities during fiscal 1999.
Cash used for financing activities was $19.5 million in fiscal 1998. In
fiscal 1998, we paid approximately $7.5 million in outstanding debt. The
payments for other long-term liabilities of $25.4 million, which included the
$12.8 million of outstanding debt assumedbe "Underwriters" as defined in the
acquisition of Elexsys, were
offset by the proceeds from exercise of stock optionsSecurities Act. Any commissions paid or any discounts or concessions allowed to
any such persons, and stock purchase rights
of $11.1 million. In August 1998, we called for redemption an aggregate
principal amount of $86.3 million in convertible subordinated notes which were
originally issued in August 1995. The notes were converted to our common stock
at a price of $14.09 per share, or 70.94 shares of our common stock per $1,000
principal amount of notes. Cash was paid in lieu of fractional shares.
Cash provided by financing activities was $9.3 million in fiscal 1997.
Financing activities in fiscal 1997 consisted primarily of receipt of proceeds
from exercise of stock options and stock purchase rights.
We have entered into an operating lease agreement for new facilities in San
Jose, California which house its corporate headquarters and certain assembly
operations. In connection with these transactions, we pledged $52.9 million as
collateral for certain obligationsany profits received on resale of the leases. In addition, as of October 2,
1999,shares, may be
deemed to be underwriting discounts and commissions under the Securities Act.
12
13
With regard to the shares, we have future minimum lease payments under other operating leases of
approximately $38.9 million, including $10.4 million in fiscal 2000.
We expectagreed to make additional capital expenditures relating to facility and
equipment enhancements as well as information systems upgrades in existing
facilities. Future liquidity needs will be dependent upon, among other factors,maintain the extent of our capital investments in plant and equipment, working capital
needs of acquired businesses, levels of our shipments and changes in volumes of
business and other factors. We believe that our existing cash resources,
together with the estimated net proceedseffectiveness
of this offering and cash generated
from operations, will be sufficient to meet our liquidity and working capital
requirements through at leastregistration statement until two years after the next twelve months. In addition, we may seek
to raise additional capital througheffective date of this
registration statement or less if the future issuance of either debt or equity
securities. Debt financing may require us to pledge assets as collateral and
comply with financial ratios and covenants. Equity financing may result in
dilution to stockholders.
YEAR 2000
We are subject to potential risks related to year 2000 problems. Many
computer systems and software products were unable to distinguish years
beginning with "19" from those beginning with "20." As a result, computer
systems and/or software products used by many companies were upgraded to comply
with such year 2000 requirements.
We completed formal communications with each of our significant suppliers
and customers to determine the extent to which we are vulnerable to those third
parties' failure to remediate their own year 2000 issues. Based on these
inquiries, we believe satisfactory progress was made by our major vendors and
customers on year 2000 readiness. We updated much of our existing software for
year 2000 compliance by acquiring new or upgraded third party software packages,
and by modifying existing internally developed software.
We did not experience any interruption to our business activities or incur
any impairment to our financial condition or results of operations as a result
of passing into calendar year 2000.distribution described herein has become
effective.
We will continue to monitor our own internal
systemsbear all costs, expenses and products to determine the impact, if any, of problems associated
with the year 2000.
To date, we do not consider year 2000 costs to be material to our financial
condition nor have we incurred any significant unplanned expenditures to address
or remediate year 2000 problems. We estimate the cost of our year 2000 project
at approximately $1.7 million. Through January 1, 2000, approximately $1.6
million of this amount was expended.
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EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS No. 133). SFAS No. 133 establishes
accounting and reporting standards requiring every derivative instrument be
recorded in the balance sheet as either an asset or liability measured at its
fair value. SFAS No. 133 also requires changes in the derivative's fair value be
recognized currently in results of operations unless specific hedge accounting
criteria are met. SFAS No. 133, as amended by SFAS No. 137, is effective for
fiscal years beginning after June 15, 2000. The Company does not expect SFAS No.
133 to have a material impact on its financial statements.
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 October 2, 1999.
Interest Rate Risk
Our exposure to market risk for changes in interest rates relate primarily
to our investment portfolio. Currently, we do not use derivative financial
instruments in our investment portfolio. We invest in high credit quality
issuers and, by policy, limit the amount of principal exposure to any one
issuer. As stated in our policy, we seek to ensure the safety and preservation
of our invested principal funds by limiting default and market risk.
We seek to mitigate default risk by investing in high-credit quality
securities and by positioning our investment portfolio to respond to a
significant reduction in a credit rating of any investment issuer, guarantor or
depository. We seek to mitigate market risk by limiting the principal and
investment term of funds held with any one issuer and by investing funds in
marketable securities with active secondary or resale markets.
Foreign Currency Exchange Risk
We transact business in foreign countries. Our primary foreign currency
cash flows are in certain European countries. Currently, we do not employ a
foreign currency hedge program with respect to transactions and expenditures
originating in these or any other foreign countries. We believe that our foreign
currency exchange risk is immaterial.
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24
QUARTERLY RESULTS
The following table contains selected unaudited quarterly financial data
for the nine fiscal quarters in the period ended January 1, 2000. In
management's opinion, the unaudited data has been prepared on the same basis as
the audited information and includes all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the data for the
periods presented. Our results of operations have varied and may continue to
fluctuate significantly from quarter to quarter. Results of operations in any
period should not be considered indicative of the results to be expected from
any future period. In April 1998, we effected a two-for-one stock split in the
form of a stock dividend. Accordingly, all share and per share data has been
adjusted to retroactively reflect the stock split. Common stock prices reflect
high and low reported sales prices, as reported by the Nasdaq National Market.
The acquisitions of Elexsys, Altron and Manu-Tronics were accounted for as a
pooling of interests, and therefore, all prior periods presented were restated
to combine the results of the companies.
THREE MONTHS ENDED
---------------------------------------------------------------------------------------------------
DECEMBER 27, MARCH 28, JUNE 27, SEPTEMBER 30, JANUARY 2, APRIL 3, JULY 3, OCTOBER 2,
QUARTER 1997 1998 1998 1998 1999 1999 1999 1999
------- ------------ --------- -------- ------------- ---------- -------- -------- ----------
(IN THOUSANDS, EXCEPT PERCENTAGES AND PER SHARE DATA)
Net sales............... $220,671 $240,886 $267,617 $262,647 $275,533 $281,140 $309,496 $348,575
Gross profit............ 46,030 51,178 56,941 53,723 52,284 61,615 66,374 71,876
Gross margin.......... 20.9% 21.2% 21.3% 20.5% 19.0% 21.9% 21.4% 20.6%
Operating
income/(loss)......... 25,891 34,247 38,454 35,043 (2,300) 43,503 47,595 51,532
Net income/(loss)....... 16,266 22,564 24,761 22,038 (562) 28,772 31,358 34,129
Net income/(loss) per
share (diluted)....... $ .29 $ .40 $ .43 $ .40 $ (.01) $ .47 $ .51 $ .55
Shares used in computing
per share amounts..... 58,437 58,327 58,921 58,783 57,380 61,754 61,847 62,306
THREE MONTHS ENDED
----------
JANUARY 1,
QUARTER 2000
------- ----------
Net sales............... $459,685
Gross profit............ 77,963
Gross margin.......... 17.0%
Operating
income/(loss)......... 55,154
Net income/(loss)....... 36,188
Net income/(loss) per
share (diluted)....... $ .58
Shares used in computing
per share amounts..... 62,722
23
25
BUSINESS
We are a leading independent provider of customized integrated electronic
manufacturing services, known as EMS, including turnkey electronic assembly and
manufacturing management services, to original equipment manufacturers, or OEMs,
in the electronics industry. Our electronics manufacturing services consist
primarily of the manufacture of complex printed circuit board assemblies using
surface mount and pin-through-hole interconnection technologies, the manufacture
of custom designed backplane assemblies, fabrication of complex multi-layered
printed circuit boards, electronic enclosure systems and testing and assembly of
completed systems. In addition to assembly, turnkey manufacturing management
also involves procurement and materials management, as well as consultation on
printed circuit board design and manufacturing. Through Sanmina Cable Systems,
we also manufacture custom cable and wire harness assemblies for electronic
industry OEMs. In addition, we have recently developed an enclosure systems
business which manufactures and assembles metal enclosures that house large
electronic systems and subsystems.
Surface mount and pin-through-hole printed circuit board assemblies are
printed circuit boards on which various electronic components, such as
integrated circuits, capacitors, microprocessors and resistors, have been
mounted. These assemblies are key functional elements of many types of
electronic products. Backplane assemblies are large printed circuit boards on
which connectors are mounted to interconnect printed circuit boards, integrated
circuits and other electronic components. Interconnect products manufactured by
us generally require greater manufacturing expertise and have shorter delivery
cycles than mass produced interconnect products, and therefore, typically have
higher profit margins.
Our customers include leading OEMs in the communications, medical and
industrial instrumentation and high-speed computer sectors. Our principal
customers include Alcatel, Cisco Systems, Motorola, Nortel Networks and Tellabs.
We locate our manufacturing facilities near our customers and,
increasingly, our customers' end users. Our assembly plants are located in
Northern California, Richardson, Texas, the greater Boston, Massachusetts area,
Manchester, New Hampshire, Durham, North Carolina, Guntersville, Alabama,
Calgary, Alberta, Canada and Dublin, Ireland. Our printed circuit board
fabrication facilities are located in Northern California, Southern California,
the greater Boston, Massachusetts area and Nashua, New Hampshire. Sanmina Cable
Systems' principal manufacturing facility is located in Carrollton, Texas. Our
principal enclosure manufacturing facilities are located in the Toronto, Canada
area.
We have pursued and intend to continue to pursue business acquisition
opportunities, particularly when these opportunities have the potential to
enable us to increase our net sales while maintaining operating margins, to
access new customers, technologies or geographic markets, to implement our
vertical integration strategy and to obtain facilities and equipment on terms
more favorable than those generally available in the market. In particular, we
expect that we will continue to pursue opportunities to acquire assembly
operations being divested by electronics industry OEMs, particularly those in
the communications sector.
RECENT DEVELOPMENTS
In October and November 1999, we completed the acquisition of two former
Nortel Networks electronics assembly operations located in Calgary, Alberta,
Canada and Chateaudun, France for a cash purchase price of approximately $61.4
million. In October 1999, we completed the acquisition of the electronics
enclosure systems business of Devtek Electronics for a purchase price of
approximately $26.5 million. In January 2000, we signed an agreement with Harris
Corporation to acquire a printed circuit board assembly operation located
principally in San Antonio, Texas. In January 2000, we also reached an agreement
in principle with Alcatel USA to acquire an electromechanical assembly operation
located in Clinton, North Carolina. In connection with the Nortel transactions,
we entered into a supply
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agreement to provide assemblies to Nortel that were previously manufactured by
the acquired operations. We intend to enter into similar agreementsfees in connection with the
Alcatel and Harris transactions. We expect that these
transactions will provide an opportunity to build significant, long-term
relationships with these customers. Completionregistration of the Harris transaction is
subjectshares. The selling stockholders will bear all commissions
and discounts, if any, attributable to several closing conditions, including expirationthe sale of the waiting
period under federal antitrust laws.shares. We are currently negotiating the definitive
agreements relating to the Alcatel transaction, and completion of the
transaction is subject to entering into definitive agreements and satisfaction
of closing conditions under those agreements. We expect the Alcatel and Harris
transactions to be completed in March 2000 and April 2000, respectively.
INDUSTRY OVERVIEW
We are benefiting from increased market acceptance of the use of
manufacturing specialists in the electronics industry. Many electronics OEMs
have adopted, and are becoming increasingly reliant upon, manufacturing
outsourcing strategies, and we believe the trend towards outsourcing
manufacturing will continue. Electronics industry OEMs use EMS specialists for
many reasons including the following:
- Reduce Time to Market. Due to intense competitive pressures in the
electronics industry, OEMs are faced with increasingly shorter product
life cycles and therefore have a growing need to reduce the time required
to bring a product to market. OEMs can reduce their time to market by
using a manufacturing specialist's established manufacturing expertise
and infrastructure.
- Reduce Capital Investment. As electronic products have become more
technologically advanced, the manufacturing process has become
increasingly automated, requiring a greater level of investment in
capital equipment. Manufacturing specialists enable OEMs to gain access
to advanced manufacturing facilities, thereby reducing the OEMs' overall
capital equipment requirements.
- Focus Resources. Because the electronics industry is experiencing greater
levels of competition and more rapid technological change, many OEMs are
increasingly seeking to focus their resources on activities and
technologies in which they add the greatest value. By offering
comprehensive electronic assembly and turnkey manufacturing services,
manufacturing specialists allow OEMs to focus on core technologies and
activities such as product development, marketing and distribution.
- Access Leading Manufacturing Technology. Electronic products and
electronics manufacturing technology have become increasingly
sophisticated and complex, making it difficult for OEMs to maintain the
necessary technological expertise in process development and control.
OEMs are motivated to work with a manufacturing specialist in order to
gain access to the specialist's process expertise and manufacturing
knowledge.
- Improve Inventory Management and Purchasing Power. Electronics industry
OEMs are faced with increasing difficulties in planning, procuring and
managing their inventories efficiently due to frequent design changes,
short product lifecycles, large investments in electronic components,
component price fluctuations and the need to achieve economies of scale
in materials procurement. By using a manufacturing specialist's volume
procurement capabilities and expertise in inventory management, OEMs can
reduce production and inventory costs.
- Access Worldwide Manufacturing Capabilities. OEMs are increasing their
international activities in an effort to lower costs and access foreign
markets. Manufacturing specialists with worldwide capabilities are able to
offer such OEMs a variety of options on manufacturing locations to better
address their objectives regarding cost, shipment location, frequency of
interaction with manufacturing specialists and local content requirements
of end-market countries.
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SANMINA BUSINESS STRATEGY
Our objective is to provide OEMs with a total EMS solution. Our strategy
encompasses several key elements:
- Concentrate on high value added products and services for leading
OEMs. We focus on leading manufacturers of advanced electronic products
that generally require custom designed, more complex interconnect
products and short lead-time manufacturing services. By focusing on
complex interconnect products and manufacturing services for leading
OEMs, we are able to realize higher margins than many other participants
in the interconnect and EMS industries.
- Leverage vertical integration. Building on our integrated manufacturing
capabilities, we can provide our customers with a broad range of high
value added manufacturing services from fabrication of bare boards, to
final system assembly and test. The cable assembly capabilities of
Sanmina Cable Systems provide us with further opportunities to leverage
our vertical integration. By manufacturing printed circuit boards,
electronic enclosure systems, and custom cable assemblies used in our EMS
assemblies, we, through our vertical integration, are able to add greater
value and realize additional manufacturing margin. In addition, our
vertical integration provides greater control over quality, delivery and
cost, and enables us to offer our customers a complete EMS solution.
- Focus on high growth customer sectors. We have focused our marketing
efforts on key, fast growing industry sectors. Our customers include
leading OEM companies in communications, industrial and medical
instrumentation and computer sectors. Sales efforts will focus on
increasing penetration of our existing customer base as well as
attracting new customers, thus diversifying our revenue across a wider
base.
- Geographic expansion of manufacturing facilities. Since 1993, we have
significantly expanded and upgraded our operations through the opening of
and acquisition of new facilities and operations in various locations
throughout the United States, including Northern California, Southern
California, the Dallas-Fort Worth area, the greater Boston area, the
greater Chicago area and other locations. These facilities provide us
with operations in key geographic markets for the electronics industry.
We will continue to aggressively and opportunistically pursue future
expansion opportunities in other markets. In particular, we are currently
pursuing expansion opportunities in Asia and Latin America.
- Aggressive pursuit of acquisition opportunities. Our strategy involves
the pursuit of business acquisition opportunities, particularly when
these opportunities have the potential to enable us to increase our net
sales while maintaining operating margin, access new customers,
technologies and geographic markets, implement our vertical integration
strategy and obtain facilities and equipment on terms more favorable than
those generally available in the market. These acquisitions have involved
both acquisitions of entire companies as well as acquisitions of selected
assets, principally equipment, inventory and customer contracts and, in
certain cases, facilities or facility leases. We intend to continue to
evaluate and pursue acquisition opportunities on an ongoing basis.
- Develop long-term customer relationships. We seek to establish
"partnerships" with our customers by focusing on early stage involvement
in product design, state-of-the-art technology, quick-turnaround
manufacturing and comprehensive management support for materials and
inventory. We also work closely with our customers to help them manage
their manufacturing cycle and reduce their time to market. While we will
continue to emphasize growth with our current customers, we have been
successful in attracting new clients. To further these efforts, we intend
to continue to expand our direct sales staff. We believe our direct sales
force is one of our key competitive advantages.
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- Extend technology leadership. Today we can provide services ranging from
design services to fabrication of circuit boards and complete system
assemblies. In providing these services, we use a variety of processes
and technologies. We strive for continuous improvement of our processes
and have adopted a number of quality improvement and measurement
techniques to monitor our performance. We have also recently made
significant capital expenditures to upgrade plant and equipment at our
facilities. We intend to stay on the leading edge of technology
development and will evaluate new interconnect and packaging technologies
as they emerge.
CUSTOMERS, MARKETING AND SALES
Our customers include a diversified base of OEMs in the communications,
medical and industrial instrumentation and high-speed computer systems segments
of the electronics industry. Our principal customers include Alcatel, Cisco
Systems, Motorola, Nortel Networks and Tellabs. The following table shows the
estimated percentage of our fiscal 1999 sales in each of these segments.
Communications.............................................. 70%
Medical and Industrial Instrumentation...................... 16%
High-Speed Computer Systems................................. 14%
We develop relationships with our customers and market our manufacturing
services through a direct sales force augmented by a network of manufacturers'
representative firms and a staff of in-house customer support specialists. Our
sales resources are directed at multiple management and staff levels within
target accounts. Our direct sales personnel work closely with the customers'
engineering and technical personnel to better understand their requirements. Our
manufacturers' representatives are managed by our direct sales personnel, rather
than from corporate headquarters, in order to provide for greater accountability
and responsiveness. We also conduct advertising and public relations activities,
as well as receiving referrals from current customers.
Historically, we have had substantial recurring sales from existing
customers. We have also expanded our customer base through acquisitions. In
particular, the acquisition of the Comptronix Guntersville, Alabama operations
and certain assets of the former custom manufacturing services division of
Lucent Technologies provided us with several new key customer accounts with
significant growth potential. In addition, the November 1997 merger with
Elexsys, the November 1998 merger with Altron, the December 1998 merger with
Telo, and the March 1999 merger with Manu-Tronics provided us with several major
new customer accounts. Our October and November 1999 acquisitions of certain
Nortel Networks assembly operations has expanded our customer relationship with
Nortel. Our pending transactions with Harris and Alcatel will provide us with
the opportunity to significantly expand our relationship with these customers.
Although we seek to diversify our customer base, a small number of
customers are responsible for a significant portion of our net sales. During the
first quarter of fiscal 2000, fiscal 1999 and fiscal year 1998, sales to our ten
largest customers accounted for 62%, 54% and 53%, respectively, of our net
sales. For the first quarter of fiscal 2000, sales to Nortel Networks and Cisco
Systems represented more than 10% of our net sales. For fiscal 1999, sales to
Cisco Systems each represented more than 10% of our net sales. For fiscal 1998,
sales to Cisco Systems and DSC Communications (now a subsidiary of Alcatel USA)
each represented more than 10% of our net sales. Although we cannot assure you
that our principal customers will continue to purchase products and services
from us at current levels, if at all, we expect to continue to depend upon our
principal customers for a significant portion of our net sales. Ourcustomer
concentration could increase or decrease, depending on future customer
requirements, which will be dependent in large part on market conditions in the
electronics industry segments in which our customers participate. The loss of
one or more major customers, or declines in sales to major customers, could harm
our business and operating results.
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MANUFACTURING SERVICES
We specialize in manufacturing complex printed circuit board assemblies,
backplane assemblies and printed circuit boards that are used in the manufacture
of sophisticated electronic equipment. We have been manufacturing backplane
assemblies since 1981 and began providing electronic assembly and turnkey
manufacturing management services, including the assembly and testing of
sophisticated electronic systems, in October 1993.
We seek to establish "partnerships" with our customers by providing a
responsive, flexible total manufacturing services solution. These services
include computer integrated manufacturing, known as CIM, and design and
engineering services, quick-turnaround manufacturing of prototype and
preproduction assemblies, and materials procurement and management. CIM services
provided by us consist of developing manufacturing processes, tooling and test
sequences for new products from product designs received from customers. We also
evaluate customer designs for manufacturability and test, and, when appropriate,
recommend design changes to reduce manufacturing cost or lead times or to
increase manufacturing yields and the quality of the finished product. Once
engineering is completed, we manufacture prototype or preproduction versions of
that product on a quick-turnaround basis. We expect that the demand for
engineering and quick-turnaround prototype and preproduction manufacturing
services will increase as OEMs' products become more complex and as product life
cycles shorten. Materials procurement and handling services provided by us
include planning, purchasing, warehousing and financing of electronic components
and enclosures used in the assemblies and systems.
MANUFACTURING AND ENGINEERING
Manufacturing Processes. We produce complex, technologically advanced
surface mount and pin-through-hole assemblies, backplane assemblies and
multilayer printed circuit boards, custom cable assemblies and full systems that
meet increasingly tight tolerances and specifications demanded by OEMs.
Multilayering, which involves placing multiple layers of electrical circuitry on
a single printed circuit board or backplane, expands the number of circuits and
components that can be contained on the interconnect product and increases the
operating speed of the system by reducing the distance that electrical signals
must travel. Increasing the density of the circuitry in each layer is
accomplished by reducing the width of the circuit tracks and placing them closer
together on the printed circuit board or backplane. Today, we are capable of
efficiently producing commercial quantities of printed circuit boards with up to
52 layers and circuit track widths as narrow as three mils. The manufacture of
complex multilayer interconnect products often requires the use of sophisticated
circuit interconnections between certain layers (called "blind or buried vias")
and adherence to strict electrical characteristics to maintain consistent
circuit transmission speeds (referred to as "controlled impedance"). These
technologies require very tight lamination and etching tolerances and are
especially critical for printed circuit boards with ten or more layers.
The manufacture of printed circuit boards involves several steps: etching
the circuit image on copper-clad epoxy laminate, pressing the laminates together
to form a panel, drilling holes and depositing copper or other conductive
material to form the inter-layer electrical connections and, lastly, cutting the
panels to shape. Certain advanced interconnect products require additional
critical steps, including dry film imaging, photoimageable soldermask
processing, computer controlled drilling and routing, automated plating and
process controls and achievement of controlled impedance. Manufacture of printed
circuit boards used in backplane assemblies requires specialized expertise and
equipment because of the larger size of the backplane relative to other printed
circuit boards and the increased number of holes for component mounting.
The manufacture of surface mount and pin-through-hole assemblies involves
the attachment of various electronic components, such as integrated circuits,
capacitors, microprocessors and resistors to printed circuit boards. The
manufacture of backplane assemblies involves attachment of electronic
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components, including printed circuit boards, integrated circuits and other
components, to the backplane, which is a large printed circuit board that we
also manufacture. We use surface mount, pin-through-hole and press-fit
technologies in backplane assembly.
All of our manufacturing facilities are certified under ISO 9002, a set of
standards published by the International Organization of Standardization and
used to document, implement and demonstrate quality management and assurance
systems in design and manufacturing. As part of the ISO 9002 certification
process, we have developed a quality systems manual and an internal system of
quality controls and audits. Although ISO 9002 certification is of particular
importance to the companies doing business in the European Community, we believe
that United States electronics manufacturers are increasing their use of ISO
9002 registration as a criteria for suppliers.
In addition to ISO 9002 certification, we are BellCore, British Approval
Board for Telecommunications, or BABT, and Underwriters Laboratories, or UL,
compliant. These qualifications establish standards for quality, manufacturing
process control and manufacturing documentation and are required by many OEMs in
the electronics industry, including suppliers to AT&T and the Regional Bell
Operating Companies.
We order materials and components based on purchase orders received and
accepted and seek to minimize our inventory of materials or components that are
not identified for use in filling specific orders. Materials used in
manufacturing printed circuit boards are readily available in the open market
and we have not to date experienced any significant shortages of such materials.
We purchase electronic components that we use in producing surface mount,
pin-through-hole assemblies and backplane assemblies and, in certain
circumstances, we may be required to bear the risk of component shortages and
price fluctuations.
Facilities. We manufacture our products in 34 decentralized plants,
consisting of 23 electronics assembly facilities, 7 printed circuit board
fabrication facilities, 2 cable assembly facilities and 2 enclosure assembly
facilities. Generally, each of our decentralized plants has its own production,
purchasing, and materials management and quality capabilities located on site.
The production expertise of some plants overlaps, which enables us to allocate
production based on product type and available capacity at one or more plants.
With assembly facilities located in major electronics industry centers
throughout the country, including Silicon Valley, Southern California, the
Dallas-Forth Worth area, the Research Triangle Park area, New England, the
greater Chicago area and Northern Alabama, we are also able to allocate
production based on geographic proximity to the customer, process capabilities
and available capacity. Decentralized plants can focus on particular product
types and respond quickly to customers' specific requirements. We believe that
decentralized facilities also allow us to achieve improved accountability,
quality control and cost control. Each plant is managed as a separate profit
center, and each plant manager's compensation depends, in part, upon that plant
meeting quality, shipment and gross profit targets.
In November 1998, we entered into a lease with an option to purchase a
330,000 square foot campus facility located in San Jose, California. The
facility consists of four buildings on a single site. We intend to consolidate
our corporate headquarters and some of our San Jose area assembly operations at
this facility. As of October 2, 1999, approximately 75% of the buildings were
occupied. The remaining buildings will be occupied in fiscal year 2000. Our San
Jose area printed circuit board fabrication facilities will not be consolidated
at the campus facility and will remain at their current locations.
TECHNOLOGY DEVELOPMENT
Our close involvement with our customers at the early stages of their
product development positions us at the leading edge of technical innovation in
the manufacturing of SMT and PTH assemblies, backplane assemblies, and printed
circuit boards. We selectively seek orders that require the use of state-
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of-the-art materials or manufacturing techniques in order to further develop our
manufacturing expertise. Current areas of manufacturing process development
include reducing circuit widths and hole sizes, establishing new standards for
particle contamination and developing new manufacturing processes for the use
with new materials and new surface mount connector and component designs.
Recent developments in the electronics industry have necessitated
improvements in the types of laminate used in the manufacture of interconnect
products. New laminate materials may contain new chemical formulations to
achieve better control of flow, resin systems with high glass transition
temperatures, reduced surface imperfections and greatly improved dimensional
stability. Future generations of interconnect products will require ultra fine
lines, multilayers of much greater complexity and thickness, and extremely small
holes in the 4 to 10 mil range. The materials designed to meet these
requirements, such as BT epoxy, cyanate esters, polyamide quartz, and Kevlar
epoxy, are beginning to appear in the marketplace. Widespread commercial use of
these materials will depend upon statistical process control and improved
manufacturing procedures to achieve the required yields and quality.
We have developed expertise and techniques which we use in the manufacture
of circuit boards, backpanels and subsystems. Generally, we rely on common law
trade secret protection and on confidentiality agreements with our employees to
protect our expertise and techniques. Although we hold five patents, we believe
that patents and other intellectual property rights are not of fundamental
importance to our business.
ENVIRONMENTAL CONTROLS
Proper waste disposal is a major consideration for printed circuit board
manufacturers because metals and chemicals are used in the manufacturing
process. Water used in the printed circuit board manufacturing process must be
treated to remove metal particles and other contaminants before it can be
discharged into the municipal sanitary sewer system. In addition, although the
electronics assembly process generates significantly less waste water than
printed circuit board fabrication, maintenance of environmental controls is also
important in the electronics assembly process. Each of our printed circuit board
and electronics assembly plants have personnel responsible for monitoring
environmental compliance. These individuals report to our director of
environmental compliance, who has overall responsibility for environmental
matters.
Each plant operates under effluent discharge permits issued by the
appropriate governmental authority. These permits must be renewed periodically
and are subject to revocation in the event of violations of environmental laws.
There can be no assurance that violations will not occur in the future as a
result of human error, equipment failure or other causes. In the event of a
future violation of environmental laws, we could be held liable for damages and
for the costs of remedial actions and could be also subject to revocation of
effluent discharge permits. Any such revocation could require us to cease or
limit production at one or more of its facilities, thereby having an adverse
impact on our results of operations. We are also subject to environmental laws
relating to the storage, use and disposal of chemicals, solid waste and other
hazardous materials as well as air quality regulations. Furthermore,
environmental laws could become more stringent over time, and the costs of
compliance with and penalties associated with violation of more stringent laws
could be substantial.
In November 1997, we merged with Elexsys, which, by virtue of such merger,
became our wholly owned subsidiary. Several facilities owned or occupied by
Elexsys at the time of the merger, or formerly owned or occupied by Elexsys or
companies acquired by Elexsys, had either soil contamination or contamination of
groundwater underneath or near the facility. Contamination was discovered at
Elexsys' Irvine, California facility in 1989 and Elexsys voluntarily installed a
groundwater remediation system at the facility in 1994. Additional investigation
is being undertaken by other parties in the area at the request of the
California Regional Water Quality Control Board. It is unknown whether any
additional remediation activities will be required as a result of such
investigations or whether any third party will
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bring claims against us alleging that they have been damaged in any way by the
existence of the contamination at the Irvine facility.
We have been required by the California Department of Toxic Substances
Control to undertake investigation of soil and/or groundwater at certain
facilities formerly owned or occupied by a predecessor company to Elexsys in
Mountain View, California. Depending upon the results of this soil sampling and
groundwater testing, we could be ordered to undertake soil and/or groundwater
cleanup. To date, we have not been ordered to undertake any soil or groundwater
cleanup activities at the Mountain View facilities, and do not believe any such
activities should be required. Test results received to date are not sufficient
to enable us to determine whether or not such cleanup activities are likely to
be mandated. Contamination has also been discovered at other current and former
Elexsys facilities and has been reported to the relevant regulatory agencies. No
remediation or further investigation of such contamination has been required by
regulatory agencies.
To date, the cost of the various investigations and the cost of operating
the remediation system at the Irvine facility have not been material to our
financial condition. However, in the event we are required to undertake
additional groundwater or soil cleanup, the costs of such cleanup are likely to
be substantial. We are currently unable to estimate the amount of such soil and
groundwater cleanup costs because no soil or groundwater cleanup has been
ordered and we cannot determine from available test results what remediation
activities, if any, are likely to be required. We believe, based on the limited
information currently available, that the cost of any groundwater or soil
clean-up that may be required would not harm our business, financial condition
and results of operations. Nevertheless, the process of remediating contaminated
soil and groundwater is costly, and if we are required to undertake substantial
remediation activities at one or more of the former Elexsys facilities, there
can be no assurance that the costs of such activities would not harm our
business, financial condition and results of operations.
Altron was advised in 1993 by Olin Corporation that contamination resulting
from activities of prior owners of property owned by Olin Corporation and
located close to the Altron manufacturing plant in Wilmington, Massachusetts,
had migrated under the Altron plant. Olin has assumed full responsibility for
any remediation activities that may be required and has agreed to
indemnify and
hold Altron harmless from any and all costs, liabilities, fines, penalties,
charges and expenses arising from and relating to any action or requirement,
whether imposed by statute, ordinance, rule, regulation, order, decree or by
general principles of law to remediate, clean up or abate contamination
emanating from the Olin site. Although we believe that Olin's assumption of
responsibility will result in no remediation cost to Altron from the
contamination, there can be no assurance that Altron will not be subject to some
costs regarding this matter. We do not anticipate that such costs, if any, will
be material to its financial condition or results of operations.
We have been named as a potentially responsible party at several
contaminated disposal sites as a result of the past disposal of hazardous waste
by companies we acquired or their corporate predecessors. While liabilities for
such historic disposal activities has not been material to our financial
condition to date, there can be no guarantee that past disposal activities will
not result in material liability to us in the future.
BACKLOG
Our backlog was approximately $539 million at October 2, 1999, and
approximately $295 million at September 30, 1998. Backlog consists of purchase
orders we received, including, in certain instances, forecast requirements
released for production under customer contracts. Cancellation and postponement
charges generally vary depending upon the time of cancellation or postponement,
and a certain portion of our backlog may be subject to cancellation or
postponement without significant penalty. Typically, a substantial portion of
our backlog is scheduled for delivery within the next six months.
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COMPETITION
Significant competitive factors in the market for advanced backplane
assemblies and printed circuit boards include product quality, responsiveness to
customers, manufacturing and engineering skills, and price. We believe that
competition in the market segments we serve is based more on product quality and
responsive customer service and support than on price, in part because the cost
of interconnect products we manufacture is usually low relative to the total
cost of the equipment for which they are components, and in part because of the
greater importance of product reliability and prompt delivery to our customers.
We believe that our primary competitive strengths are our ability to provide
responsive, flexible, short lead-time manufacturing services, its engineering
and manufacturing expertise and its customer service support.
We face intense competition from a number of established competitors in our
various product markets. Certain of our competitors have greater financial and
manufacturing resources than we do, including significantly greater surface
mount assembly capacity. During periods of recession in the electronic industry,
our competitive advantages in the areas of quick-turnaround manufacturing and
responsive customer service may be of reduced importance to electronics OEMs,
who may become more price sensitive. In addition, captive interconnect product
manufacturers may seek orders in the open market to fill excess capacity,
thereby increasing price competition. Although we generally do not pursue
high-volume, highly price sensitive interconnect product business, we may be at
a competitive disadvantage with respect to price when compared to manufacturers
with lower cost structures, particularly those manufacturers with offshore
facilities where labor and other costs are lower.
EMPLOYEES
As of October 2, 1999, we had approximately 7,220 full-time employees,
including approximately 6,800 in manufacturing and engineering, approximately
220 in marketing and sales, and approximately 200 in general administration and
finance. None of our employees is represented by a labor union and we have never
experienced a work stoppage or strike. We believe our relationship with our
employees is good.
FACILITIES
Our principal facilities comprise an aggregate of approximately 2.5 million
square feet. Except for our 72,000 square foot Manchester, New Hampshire
facility, the 160,000 square foot facility occupied by Sanmina Cable Systems in
Carrollton, Texas, a 70,000 square foot facility located in Nashua, New
Hampshire, a 200,000 square foot facility located in Wilmington, Massachusetts,
a 104,000 square foot facility located in Woburn, Massachusetts, a 44,200 square
foot facility located in Irvine, California, a 197,600 square foot facility
located in Kenosha, Wisconsin, a 105,000 square foot facility located in
Guntersville, Alabama, and our 52,000 square foot facility located in Dublin,
Ireland, all of the facilities are leased, and the leases for these facilities
expire between 1999 and 2006. The leases generally may be extended at our
option. We have fourteen principal facilities located in the greater San Jose,
California area, with other facilities located in Southern California, Plano,
Texas, Richardson, Texas, Manchester, New Hampshire, Guntersville, Alabama,
Durham, North Carolina, Wilmington and Woburn, Massachusetts, the greater
Chicago area, Calgary, Canada, and Dublin, Ireland.
In November 1998, we entered into a lease with an option to purchase a
330,000 square foot campus facility located in San Jose, California. The
facility consists of four buildings on a single site. We intend to consolidate
its corporate headquarters and some of its San Jose area assembly operations at
this facility. As of October 2, 1999, approximately 75% of the buildings were
occupied. The remaining buildings will be occupied in fiscal year 2000. Our San
Jose area printed circuit board fabrication facilities will not be consolidated
at the campus facility and will remain at their current locations. We believe
that our facilities are adequate to meet our reasonably foreseeable requirements
for at least the next two years. We continually evaluate our expected future
facilities requirements.
LEGAL PROCEEDINGS
We are not currently a party to any material pending legal proceedings.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table shows information about the executive officers and
directors of Sanmina as of December 31, 1999:
NAME AGE POSITION
---- --- --------
Jure Sola......................... 48 Chairman, Chief Executive Officer and Director(1)
John Bolger....................... 53 Director(2)
Neil Bonke........................ 58 Director(1)(2)(3)
Randy W. Furr..................... 45 President, Chief Operating Officer and Director
Elizabeth D. Jordan............... 36 Executive Vice President and Chief Financial Officer
Michael J. Landy.................. 45 Vice President of Sales and Marketing
Mario M. Rosati................... 53 Director
Joseph Schell..................... 53 Director(2)
Bernard Vonderschmitt............. 76 Director(1)(3)
- -------------------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
(3) Member of the Officer Stock Committee
Mr. Sola co-founded Sanmina in 1980 and initially held the position of Vice
President of Sales and Marketing and was responsible for the development and
growth of Sanmina's sales organization. He became Vice President and General
Manager in October 1987 with responsibility for all manufacturing operations as
well as sales and marketing. Mr. Sola was elected President in October 1989 and
has served as Chairman of the Board and Chief Executive Officer since April
1991. Mr. Sola relinquished the title of President when Mr. Furr was appointed
to such position in March 1996.
Mr. Bolger has been a director of Sanmina since 1994. From June 1989
through April 1992, he served as Vice President of Finance and Administration of
Cisco Systems, Inc., a manufacturer of computer networking systems. Mr. Bolger
is currently an independent business consultant and serves as a director of
Integrated Device Technology, Inc., Integrated Systems, Inc., JNI Corporation,
TCSI, Inc. and Mission West Properties, Inc.
Mr. Bonke has been a director of Sanmina since 1995. He also serves on the
Board of Directors of Electroglas, Inc., FSI International and SpeedFam
International, all semiconductor equipment companies. Mr. Bonke previously
served as the Chairman of the Board of Electroglas, Inc. From April 1993 to
April 1996, he served as Chief Executive Officer of Electroglas. From September
1990 to April 1993, Mr. Bonke was a Group V.P. and President of Semiconductor
Operations of General Signal Corp.
Mr. Furr joined Sanmina as Vice President and Chief Financial Officer in
August 1992. In March 1996, Mr. Furr was appointed President and Chief Operating
Officer. In December 1999, Mr. Furr was appointed to Sanmina's board of
directors. From April to August 1992, Mr. Furr was Vice President and Chief
Financial Officer of Aquarius Systems Inc. North America, known as "ASINA", a
manufacturer of personal computers. Prior to working at ASINA, he held numerous
positions in both financial and general management for General Signal
Corporation during a 13-year period, serving most recently as Vice President and
General Manager of General Signal Thinfilm Company. Mr. Furr is a Certified
Public Accountant.
Ms. Jordan became Chief Financial Officer and Executive Vice President of
Sanmina in June 1999. Ms. Jordan joined Sanmina in October 1997 as Corporate
Controller and was named Vice President of Finance in October 1998. From August
1992 to October 1997, Ms. Jordan worked for Network General
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Corporation, a network fault and performance management solutions company,
serving most recently as Director of Corporate Accounting. Prior to Network
General, she served in a variety positions in the banking industry and in public
accounting.
Mr. Landy became Executive Vice President of Sales and Marketing at Sanmina
in October 1997. He was named an Executive Vice President of Sanmina in October
1998. He joined Sanmina in August 1993 as General Manager of Sanmina's
Richardson, Texas operations and in 1995 was promoted to Vice President Assembly
Operations for the Central Region of the United States. Prior to his employment
with Sanmina, Mr. Landy held a senior management position with a
telecommunications corporation.
Mr. Rosati has been a director of Sanmina since 1997. He has been a member
of the law firm Wilson Sonsini Goodrich & Rosati, Professional Corporation since
1971. Mr. Rosati is a director of Aehr Test Systems, a manufacturer of computer
hardware testing systems, Genus, Inc., a semiconductor equipment manufacturer,
Ross Systems, Inc., a software company, C-ATS Software, Inc., a financial
database software company, MyPoints.com, Inc., a web and email-based direct
marketing company, Symyx Technologies, Inc., a combinatorial materials science
company and The Management Network Group, Inc., a management consulting firm
focused on the telecommunications industry, all publicly-held companies. He is
also a director of several privately-held companies.
Mr. Schell was appointed to the board of directors in December 1999. From
1985 to 1999, he served as Senior Managing Director of Montgomery Securities
(recently renamed Banc of America Securities). Mr. Schell also serves on the
board of directors of Dycom Industries, Inc. and the Good Guys, Inc., both
publicly traded companies.
Mr. Vonderschmitt has been a director of Sanmina since October 1990. He
co-founded Xilinx, Inc., a manufacturer of field programmable gate array
semiconductor products and related system software, served as its Chief
Executive Officer and as a director from its inception in February 1984 through
February 1996, and has served as the Chairman of its Board of Directors since
February 1996. He is also a director of International Microelectronic Products,
Inc., and Credence Systems Corporation.
34
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DESCRIPTION OF CAPITAL STOCK
GENERAL
As of January 1, 2000, we were authorized to issue 200,000,000 shares of
common stock, $0.01 par value, and 5,000,000 shares of undesignated preferred
stock, $0.01 par value. The following description of our capital stock does not
purport to be complete and is subject to and qualified in its entirety by our
Certificate of Incorporation and Bylaws and by the provisions of applicable
Delaware law.
COMMON STOCK
As of January 1, 2000, there were 59,139,587 shares of common stock
outstanding which were held of record by 847 stockholders.
The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding preferred stock, the holders of common stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors out of funds legally available for that
purpose. In the event of a liquidation, dissolution or winding up of Sanmina,
the holders of common stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to prior distribution rights of
preferred stock, if any, then outstanding. The common stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the common stock. All outstanding shares
of common stock are fully paid and nonassessable, and the shares of common stock
to be issued upon the closing of this offering will be fully paid and
nonassessable.
PREFERRED STOCK
The Board of Directors has the authority, without action by theselling stockholders to designate and issue preferred stock in one or more series and
to designate the rights, preferences and privileges of each series, any or all
of which may be greater than the rights of the common stock. It is not possible
to state the actual effect of the issuance of any shares of preferred stock upon
the rights of holders of the common stock until the Board of Directors
determines the specific rights of the holders of such preferred stock. However,
the effects might include, among other things, restricting dividends on the
common stock, diluting the voting power of the common stock, impairing the
liquidation rights of the common stock and delaying or preventing a change in
control of Sanmina without further action by the stockholders. We have no
present plans to issue any shares of preferred stock.
35
37
UNDERWRITERS
Under the terms and subject to the conditions contained in an underwriting
agreement dated the date of this prospectus, the underwriters named below, for
whom Morgan Stanley & Co. Incorporated, Banc of America Securities LLC and
Donaldson, Lufkin & Jenrette Securities Corporation are acting as
representatives, have severally agreed to purchase, and we have agreed to sell
to them, severally, the number of shares indicated below:
NUMBER OF
NAME SHARES
---- ---------
Morgan Stanley & Co. Incorporated...........................
Banc of America Securities LLC..............................
Donaldson, Lufkin & Jenrette Securities Corporation.........
---------
Total..................................................... 4,500,000
=========
The underwriters are offering the shares subject to their acceptance of the
shares from us. The underwriting agreement provides that the obligations of the
several underwriters to pay for and accept delivery of the shares of common
stock offered by this prospectus are subject to the approval of certain legal
matters by their counsel and to certain other conditions. The underwriters are
obligated to take and pay for all of the shares of common stock offered by this
prospectus, other than those covered by the underwriters' over-allotment option
described below, if any such shares are taken.
The underwriters initially propose to offer part of the shares of common
stock directly to the public at the public offering price set forth on the cover
page of this prospectus and part to certain dealers at a price that represents a
concession not in excess of $ a share under the public offering price.
Any underwriter may allow, and the dealers may reallow, a concession not in
excess of $ a share to other underwriters or to certain other dealers.
After the public offering of the shares of common stock, the offering price and
other selling terms may from time to time be varied by the representatives of
the underwriters.
Pursuant to the underwriting agreement, we have granted to the underwriters
an option, exercisable for 30 days from the date of this prospectus, to purchase
up to an aggregate of 675,000 additional shares of common stock at the public
offering price set forth on the cover page hereof, less underwriting discounts
and commissions. The underwriters may exercise this option solely for the
purpose of covering over-allotments, if any, made in connection with the
offering of common stock made hereby. To the extent this over-allotment option
is exercised, each underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of additional shares
of common stock as the number set forth next to each underwriter's name in the
preceding table bears to the total number of shares of common stock set forth
next to the names of all underwriters in the preceding table.
We and our executive officers and directors have agreed that we will not
(a) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any shares of common stock or any securities convertible into or
exercisable or exchangeable for common stock, or (b) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the common stock, whether any such
transaction described in clause (a) or (b) above is to be settled by delivery of
common stock or such other securities, in cash or otherwise for a 90-day period
after the date of this prospectus without the prior written consent of Morgan
36
38
Stanley & Co. Incorporated, except that we may, without such consent, (i) issue
and sell the shares of common stock offered hereby, (ii) grant options or issue
and sell stock upon the exercise of outstanding stock options or otherwise
pursuant to our stock option or employee stock purchase plans and (iii) issue
shares of common stock upon exchange of convertible notes outstanding on the
date of this prospectus.
In order to facilitate the offering of the common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the common stock. Specifically, the underwriters may over-allot in
connection with the offering, creating a short position in the common stock for
their own account. In addition, to cover over-allotments or to stabilize the
price of the common stock, the underwriters may bid for, and purchase, shares of
common stock in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the
common stock in the offering if the syndicate repurchases previously distributed
shares of common stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the common stock above independent market
levels. The underwriters are not required to engage in these activities and may
end any of these activities at any time.
The underwriting agreement provides that we and the underwriters will
indemnify each other against certain liabilities, including
liabilities under the Securities Act. Morgan Stanley & Co. Incorporated, Banc of America Securities LLC and
Donaldson, Lufkin & Jenrette Securities Corporation were the initial purchasers
of $350,000,000 aggregate principal amount of our Convertible Subordinated Notes
due 2004. These notes were purchased in April 1999 and resoldThe selling stockholders have agreed to
"qualified
institutional buyers" pursuant to Rule 144Aindemnify us against certain liabilities, including liabilities under the
Securities Act. Morgan
Stanley & Co. Incorporated, Banc of America Securities LLC and Donaldson, Lufkin
& Jenrette Securities Corporation received a customary fee in connection with
this transaction.
LEGAL MATTERS
The validity of the shares of common stock offered hereby has been
passed upon for Sanmina by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, Palo Alto, California. As of the date of this prospectus,
investment partnerships composed of individuals associated with Wilson Sonsini
Goodrich & Rosati and attorneys who are members of or are employed by
beneficially own an aggregate of approximately 25,750 shares of Sanmina's common
stock. Mario M. Rosati, one of our directors, and Christopher D. Mitchell, our
secretary, are members of Wilson Sonsini Goodrich & Rosati. Certain legal matters in connection with this
offering will be passed upon for the underwriters by Shearman & Sterling, Menlo
Park, California.
EXPERTS
The audited financial statements and schedule incorporated by reference
in this prospectus and elsewhere in the registration statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
This prospectus constitutes a part of a registration statement on Form
S-3 filed by us with the SEC under the Securities Act. This prospectus does not
contain all of the information set forth in the registration statement, parts of
which are omitted in accordance with the rules and regulations of the SEC. For
further information about Sanmina and the shares of common stock offered,
reference is made to the registration statement. Statements contained in this
prospectus concerning the provisions of any
37
39 document are not necessarily
complete, and each such statement is qualified in its entirety by reference to
the copy of such document filed with the SEC.
We file annual, quarterly and special reports, proxy statements, and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference facilities at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the SEC's following Regional Offices: Suite 1400,
Northwest Atrium Center, 500 West Madison Street, Chicago, Illinois 60661; and
13th Floor, Seven World Trade Center, New York, New York 10048. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our
SEC filings are also available to the public at the SEC's web site at
http://www.sec.gov. Additional information about us may be found on our web site
at http://www.sanmina.com. Information contained on our web site does not
constitute part of this prospectus.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus. The most recent information that we
file with the SEC automatically updates and supersedes more dated information.
We incorporate by reference the documents listed below, and any future filings
made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act,
until the offering is completed.
The documents we incorporate by reference are:
1. Our Annual Report on Form 10-K for the fiscal year ended October 2,
1999;
2. Our Quarterly Report on Form 10-Q for the quarter ended January 1,
2000;
3. Our Quarterly Report on Form 10-Q/A for the period ended January 1,
2000;
13
14
4. Our Quarterly Report on Form 10-Q for the quarter ended April 1 ,
2000; and
3.5. The description of our common stock contained in our registration
statement on Form 8-A as filed with the SEC on February 19, 1993.
Any statement contained in a document that is incorporated by reference
will be modified or superceded for all purposes to the extent that a statement
contained in this prospectus (or in any other document that is subsequently
filed with the Commission and incorporated by reference) modifies or is contrary
to that previous statement. Any statement so modified or superceded will not be
deemed a part of this prospectus except as so modified or superceded.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address: Investor Relations, Sanmina
Corporation, 2700 North First Street, San Jose, CA 95134, telephone: (408)
964-3500.
38You should rely only on the information incorporated by reference or
provided in this prospectus or a prospectus supplement or amendment. We have not
authorized anyone to provide you with different information. We are not making
an offer of these securities in any state where the offer is not permitted.
Also, this prospectus does not offer to sell any securities other than the
securities covered by this prospectus. You should not assume that the
information in this prospectus or a prospectus supplement or amendment is
accurate as of any date other than the date on the front of the document.
Shares of our common stock are traded as "National Market Securities" on
the Nasdaq National Market. Documents we file can be inspected at the offices of
the National Association of Securities Dealers, Inc., Reports Section, 1735 K
Street, N.W., Washington, D.C. 20006.
14
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[SANMINA LOGO]
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4116
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table shows the costs and expenses, payable by Sanmina in
connection with the sale of common stock being registered. All amounts are
estimates except the SEC registration fee, the NASD filing fee and the Nasdaq
National Market listing fee.
SEC registration fee........................................ $148,361
NASD filing fee............................................. 30,500
Nasdaq National Market listing fee.......................... 17,500
Printing expenses........................................... 250,000fee ........... $44,352
Legal fees and expenses..................................... 100,000expenses ........ 5,747
Accounting fees and expenses................................ 80,000
Blue Sky fees and expenses.................................. 15,000
Transfer Agent and Registrar fees........................... 10,000expenses ... 5,000
Miscellaneous expenses...................................... 48,639
--------
Total..................................................... $700,000
========expenses ......... 2,501
-------
Total ........................ $57,600
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a
corporation to include in its charter documents and in agreements between the
corporation and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
Article X of Sanmina's Amended and Restated certificate of incorporation
provides for the indemnification of directors to the fullest extent permitted
under Delaware law.
Article VI of Sanmina's bylaws provides for the indemnification of
officers, directors and third parties acting on behalf of the corporation to the
fullest extent permitted under the General Corporation Law of Delaware.
Sanmina has entered into indemnification agreements with its directors
and executive officers, in addition to indemnification provided for in Sanmina's
bylaws, and intends to enter into indemnification agreements with any new
directors and executive officers in the future.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, or persons controlling Sanmina
pursuant to the foregoing provisions, Sanmina has been informed that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
At present, there is no pending litigation or proceeding involving a
director, officer, employee, or other agent of Sanmina in which indemnification
is being sought, nor is Sanmina aware of any threatened litigation that may
result in a claim for indemnification by any director, officer, employee, or
other agent of Sanmina.
II-1
42
ITEM 16. EXHIBITS
1.1* Underwriting2.1 Shareholder Agreement dated May 31, 2000 among Sanmina Corporation
and the signatories listed thereon.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
23.1 Consent of Arthur Andersen LLP Independent Public Accountants
23.2 Consent of Arthur Andersen LLP Independent Public
Accountants
23.2 ConsentCounsel (included in Exhibit 5.1)
24.1 Power of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (See II-3)
27.1 Financial Data Schedules
- -------------------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
Sanmina undertakes:
1. That, for the purpose of determining any liability under the
Securities Act, each filing of Sanmina's annual report pursuant to Section 13(a)
or Section 15(d) of the Exchange Act, (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the registration statement shall be
deemed to be
16
17
a new registration statement relating to the securities offered therein, and the
offering of these securities at that time shall be deemed to be the initial bona
fide offering thereof.
2. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of Sanmina pursuant to the foregoing provisions, or otherwise, Sanmina has been
advised that in the opinion of the SEC this indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by Sanmina of expenses incurred or paid by a director, officer, or
controlling person of Sanmina in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, Sanmina will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
3. For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
4. For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-217
4318
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Sanmina certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Jose, State of California, on the 27th14th day of
January,June, 2000.
SANMINA CORPORATION
By: /s/ ELIZABETH D. JORDAN
------------------------------------
Elizabeth D. Jordan
Executive Vice PresidentMARK LUSTIG
---------------------------------------------------
Mark Lustig
Acting Principal Financial and Chief FinancialAccounting Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each such person whose
signature appears below constitutes and appoints, jointly and severally, Randy
W. Furr and Elizabeth D. JordanMark Lustig their attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to this
registration statement on Form S-3 (including post-effective amendments), to
sign any registration statement for the same offering covered by this
registration statement that is to be effective upon filing pursuant to Rule
462(b) promulgated under the Securities Act of 1933, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, thereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutions, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JURE SOLA Chief Executive Officer and January 27,June 14, 2000
- -------------------------------------------------------------------------------------------- Chairman of the Board of Directors
Jure Sola Directors (Principal Executive Officer)
/s/ RANDY W. FURR Director January 27,June 14, 2000
- --------------------------------------------------------------------------------------------
Randy W. Furr
/s/ ELIZABETH D. JORDAN Executive Vice President and January 27, 2000
- ------------------------------------------------ Chief Financial Officer
Elizabeth D. Jordan (PrincipalMARK LUSTIG Acting Principal Financial and Accounting Officer)June 14, 2000
- -------------------------------------------- Officer
Mark Lustig
/s/ JOHN BOLGER Director January 27,June 14, 2000
- --------------------------------------------------------------------------------------------
John Bolger
II-3
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SIGNATURE TITLE DATE
--------- ----- ----
/s/ NEIL BONKE Director January 27,June 14, 2000
- --------------------------------------------------------------------------------------------
Neil Bonke
/s/ MARIO M. ROSATI Director January 27,June 14, 2000
- --------------------------------------------------------------------------------------------
Mario M. Rosati
/s/ JOSEPH SCHELL Director January 27,June 14, 2000
- --------------------------------------------------------------------------------------------
Joseph Schell
/s/ BERNARD VONDERSCHMITT Director January 27,June 14, 2000
- --------------------------------------------------------------------------------------------
Bernard Vonderschmitt
II-418
4519
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------------- -----------
1.1* Underwriting Agreement......................................2.1 Shareholder Agreement dated May 31, 2000 among Sanmina Corporation
and the signatories listed thereon.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.................................................Corporation
23.1 Consent of Arthur Andersen LLP Independent Public Accountants.................................................Accountants
23.2 Consent of Counsel (included in Exhibit 5.1)................
24.1 Power of Attorney (See II-3)................................
- ------------------------
* To be filed by amendment.19