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Singapore | 3672 | Not Applicable | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
One Marina Boulevard, #28-00 Singapore 018989 (65) 6890 7188 | Michael M. McNamara Chief Executive Officer Flextronics International Ltd. One Marina Boulevard, #28-00 Singapore 018989 (65) 6890-7188 | |
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices) | (Name, address, including zip code, and telephone number, including area code, of agent for service) |
Jeffrey N. Ostrager, Esq. John D. Nielsen, Esq. Curtis, Mallet-Prevost, Colt & Mosle LLP 101 Park Avenue New York, New York 10178 (212) 696-6000 | Steven E. Bochner, Esq. Michael S. Ringler, Esq. Wilson Sonsini Goodrich & Rosati, Professional Corporation 650 Page Mill Road Palo Alto, CA 94304 (650) 493-9300 |
Proposed Maximum | Proposed Maximum | |||||||||||||||||||
Title of Each Class of | Amount to Be | Offering Price | Aggregate | Amount of | ||||||||||||||||
Securities to Be Registered | Registered(1) | per Share | Offering Price(2) | Registration Fee | ||||||||||||||||
Ordinary Shares, no par value | 225,403,837 | N/A | $ | 2,420,174,538 | $ | 74,300 | ||||||||||||||
(1) | This Registration Statement relates to the ordinary shares, no par value, of the Registrant issuable to holders of common stock, $0.001 par value per share, of Solectron Corporation, or Solectron, in the Registrant’s proposed acquisition by merger of Solectron. The number of ordinary shares of the Registrant to be registered pursuant to this Registration Statement is the product of (a) 653,344,456, the estimated maximum number of shares of Solectron common stock that could be exchanged for ordinary shares of the Registrant pursuant to the merger described herein, and (b) 0.3450, the exchange ratio under the merger agreement described herein. | |
(2) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f) under the Securities Act of 1933, as amended. The proposed maximum aggregate offering price is (a) the product of (i) $3.76, the average of the high and low sales price of Solectron common stock as reported on the New York Stock Exchange on July 6, 2007, and (ii) 933,349,224, the estimated maximum number of shares of Solectron common stock to be exchanged pursuant to the merger described herein, minus (b) the minimum cash consideration to be paid by the Registrant to holders of Solectron common stock pursuant to the merger described herein. |
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The information in this joint proxy statement/prospectus is not complete and may be changed. Flextronics may not sell the securities offered by this joint proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This joint proxy statement/prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any jurisdiction where the offer, solicitation or sale is not permitted. |
For Flextronics Shareholders: | For Solectron Stockholders: | |
, 2007, a.m., California Time 2090 Fortune Drive San Jose, California, 95131 | , 2007, a.m., California Time 847 Gibraltar Drive, Building 5, Milpitas, California 95035 |
Michael M. McNamara Chief Executive Officer Flextronics International Ltd. | Paul Tufano Interim Chief Executive Officer and Executive Vice President Solectron Corporation |
Flextronics and Solectron on or about , 2007.
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(Incorporated in the Republic of Singapore)
(Company Registration Number 199002645H)
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
To Be Held on , 2007
• | To authorize the directors of Flextronics International Ltd., which is referred to in this notice as Flextronics, to allot and issue ordinary shares pursuant to the Agreement and Plan of Merger, dated as of June 4, 2007, entered into among Flextronics, Saturn Merger Corp., a wholly-owned subsidiary of Flextronics, and Solectron Corporation (Proposal 1); | |
• | To re-elect the following directors: James A. Davidson and Lip-Bu Tan (Proposal 2); | |
• | To re-appoint Mr. Rockwell A. Schnabel as a director of Flextronics (Proposal 3); | |
• | To approve the re-appointment of Deloitte & Touche LLP as Flextronics’s independent registered public accounting firm for the 2008 fiscal year (Proposal 4); | |
• | To approve a general authorization for the directors of Flextronics to allot and issue ordinary shares (Proposal 5); | |
• | To approve the cash compensation payable to Flextronics’s non-employee directors (Proposal 6); | |
• | To approve the renewal of the Share Purchase Mandate relating to acquisitions by Flextronics of its own issued ordinary shares (Proposal 7); and | |
• | To approve amendments to Flextronics’s 2001 Equity Incentive Plan relating to: (a) a 5,000,000-share increase in the sub-limit on the maximum number of ordinary shares which may be issued as stock bonus awards and (b) a 10,000,000-share increase in the share reserve (Proposals 8 and 9). |
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Bernard Liew Jin Yang | Yap Lune Teng | |||
Joint Secretary | Joint Secretary |
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TO BE HELD ON , 2007
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Consent of Citigroup Global Markets Inc. | ||||||||
Consent of Goldman, Sachs & Co. |
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Flextronics International Ltd. 2090 Fortune Drive San Jose, California 95131 Attention: Investor Relations Telephone: (408) 576-7722 | Solectron Corporation 847 Gibraltar Drive Milpitas, California 95035 Attention: Investor Relations Telephone:(408) 956-6542 |
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• | a prospectus of Flextronics under Section 5 of the Securities Act of 1933, as amended, or the Securities Act, with respect to the Flextronics ordinary shares to be issued to the holders of Solectron common stock in the merger; | |
• | a proxy statement of Flextronics under Section 14(a) of the Exchange Act relating to the 2007 annual general meeting of Flextronics shareholders, at which Flextronics shareholders will, among other things, consider and vote upon the issuance of Flextronics ordinary shares pursuant to the merger agreement; and | |
• | a proxy statement of Solectron under Section 14(a) of the Exchange Act relating to the special meeting of Solectron stockholders at which Solectron stockholders will consider and vote upon the adoption of the merger agreement. |
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Q: | Why am I receiving this joint proxy statement/prospectus? | |
A: | Flextronics and Solectron have agreed to combine their businesses under the terms of an Agreement and Plan of Merger, dated June 4, 2007, by and among Flextronics, Saturn Merger Corp. and Solectron, which we refer to in this joint proxy statement/prospectus as the merger agreement. A copy of the merger agreement is attached to this joint proxy statement/prospectus asAnnex A-1. Upon completion of the merger provided for under the merger agreement, Solectron will become a wholly-owned subsidiary of Flextronics and, depending on the cash and stock elections made by Solectron stockholders, former Solectron stockholders are expected to own between 21% to 27% of the outstanding shares of the combined company (based on the number of Flextronics ordinary shares and Solectron common shares outstanding as of June 1, 2007). Unless we expressly specify otherwise, all references to the outstanding shares of Solectron common stock in this joint proxy statement/prospectus include: (i) all outstanding Solectron restricted shares, and (ii) the Solectron common stock for which outstanding exchangeable shares of Solectron Global Services Canada Inc. will be exchanged in connection with the merger, as described in Annex F — Treatment of Solectron Series B Preferred Stock and Solectron Global Services Canada Inc. Exchangeable Shares. | |
In order to complete the merger, Flextronics shareholders must approve the issuance of Flextronics ordinary shares in connection with the merger at the 2007 Flextronics annual general meeting and Solectron stockholders must adopt the merger agreement at a special meeting of its stockholders held for this purpose. Flextronics will also ask its shareholders to approve other matters in connection with its annual general meeting that are described in this joint proxy statement/prospectus. You should carefully read this joint proxy statement/prospectus, as it contains important information about the merger, the Flextronics annual general meeting and the Solectron special meeting. For Flextronics shareholders, the enclosed voting materials for the Flextronics annual general meeting allow Flextronics shareholders to vote Flextronics ordinary shares without attending the Flextronics annual general meeting. For Solectron stockholders, the enclosed voting materials for the Solectron special meeting allow Solectron stockholders to vote shares of Solectron common stock without attending the Solectron special meeting. | ||
Q: | What will happen upon effectiveness of the merger? | |
A: | The merger is structured as an integrated two-step transaction. In the first step, Saturn Merger Corp., a wholly-owned subsidiary of Flextronics, will merge with and into Solectron, with Solectron continuing as the surviving corporation and a wholly-owned subsidiary of Flextronics. In the second step, which will occur immediately following the first step and as part of a single integrated plan, Solectron, as the surviving corporation of the first merger, will merge with and into Saturn Merger II Corp., a second wholly-owned subsidiary of Flextronics, with Saturn Merger II Corp. continuing as the surviving corporation and as a wholly-owned subsidiary of Flextronics. | |
If, however, Flextronics or Solectron is unable to obtain an opinion of counsel to the effect that, for U.S. federal income tax purposes, the two-step merger will qualify generally as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, referred to in this joint proxy statement/prospectus as the Code, the merger may be structured as a single step merger of Saturn Merger Corp. with and into Solectron, with Solectron continuing as the surviving corporation and a wholly-owned subsidiary of Flextronics. For more information, see the sections entitled “The Merger Agreement — The Merger” beginning on page 85 of this joint proxy statement/prospectus and “The Merger — Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 75 of this joint proxy statement/prospectus. | ||
Unless we expressly specify otherwise, when we refer to the merger in this joint proxy statement/prospectus, we mean both steps of the two-step merger (or if the merger is effected as a single step merger of Saturn Merger Corp. into Solectron, that single step merger), and when we refer to the surviving corporation we mean |
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Saturn Merger II Corp. as the surviving corporation of the two-step merger (or Solectron, if the merger is effected as a single step merger of Saturn Merger Corp. with and into Solectron). | ||
Q: | Have the executive officers and directors of Flextronics and Solectron agreed to vote their shares in favor of the merger-related proposals? | |
A: | Yes, the directors and certain executive officers of Flextronics have agreed to vote their Flextronics ordinary shares at the Flextronics annual general meeting in favor of the proposal to authorize the issuance of Flextronics ordinary shares in the merger and the directors and executive officers of Solectron have agreed to vote their Solectron shares at the Solectron special meeting in favor of the proposal to adopt the merger agreement. For more information, see the section entitled “The Voting Agreements” beginning on page 109 of this joint proxy statement/prospectus. | |
Q: | Are there risks I should consider in deciding whether to vote for the merger? | |
A: | Yes. For example, the combined company might not realize the expected benefits of the merger. In evaluating the merger, you should carefully consider the factors discussed in the section entitled “Risk Factors” beginning on page 26 of this joint proxy statement/prospectus. | |
Q: | When do Flextronics and Solectron expect to complete the merger? | |
A: | If the stockholders of Solectron adopt the merger agreement and the shareholders of Flextronics approve the issuance of Flextronics ordinary shares in connection with the merger, the merger is expected to be completed following the satisfaction of the other conditions to the merger, including the receipt of all governmental and regulatory consents and termination or expiration of any related waiting period. There may be a substantial period of time between the approval of the proposals at the respective meetings of Flextronics shareholders and Solectron stockholders and the effective date of the merger. The merger is currently expected to be completed by the end of calendar year 2007. |
Q: | What will Flextronics shareholders receive in the merger? | |
A: | Flextronics shareholders will not receive any new Flextronics ordinary shares as a result of the merger. Flextronics shareholders will continue to own the Flextronics ordinary shares they owned before the merger, which will represent stock ownership in the combined company after the merger. | |
Q: | What matters related to the merger will Flextronics shareholders vote on at the 2007 annual general meeting? | |
A: | Flextronics shareholders will vote on a proposal to approve the issuance of Flextronics ordinary shares in connection with the merger. Flextronics will also ask its shareholders to approve other matters in connection with its annual general meeting that are described in this joint proxy statement/prospectus. See the section entitled “Other Flextronics Proposals” beginning on page 133 of this joint proxy statement/prospectus. | |
Q: | How does the Flextronics board of directors recommend that Flextronics shareholders vote? | |
A: | The Flextronics board of directors unanimously recommends that Flextronics shareholders vote “FOR” the proposal to approve the issuance of Flextronics ordinary shares in connection with the merger. For a description of factors considered by the Flextronics board of directors in making its recommendation, see the section entitled “The Merger — Flextronics’s Reasons for the Merger and Board Recommendation” beginning on page 49 of this joint proxy statement/prospectus. | |
The Flextronics board of directors also recommends that Flextronics shareholders vote “FOR” the other proposals being considered at the Flextronics annual general meeting. For more information on those proposals, see the section entitled “Other Flextronics Proposals” beginning on page 133 of this joint proxy statement/prospectus. |
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Q: | When and where is the Flextronics annual general meeting of shareholders? | |
A: | The annual general meeting of Flextronics shareholders will be held at :00 a.m., California Time, on , 2007, at Flextronics’s principal U.S. offices located at 2090 Fortune Drive, San Jose, California. | |
Q: | Who is entitled to vote at the Flextronics annual general meeting? | |
A: | The Flextronics Board of Directors has fixed the close of business on , 2007 as the record date for determining those shareholders of Flextronics who will be entitled to receive notice of the annual general meeting and this joint proxy statement/prospectus. However, each shareholder of record on will be entitled to attend and vote at the annual general meeting and will, on a poll, have one vote for each ordinary share held on the matters to be voted upon. As of July 10, 2007, Flextronics had 608,940,696 ordinary shares issued and outstanding. | |
Q: | How can I vote at the Flextronics annual general meeting? | |
A: | Each shareholder of record on the date of the annual general meeting may vote in person by attending the meeting, by completing and returning a proxy card or, if you hold your ordinary shares in street name, by instructing your broker how to vote. | |
Any Flextronics shareholder that is entitled to attend and vote at the Flextronics annual general meeting may also appoint a proxy to attend and vote on his or her behalf. A proxy need not also be a shareholder. The enclosed proxy card must be completed, dated and signed and returned in the enclosed envelope for receipt by Flextronicsc/o Computershare Investor Services, PO Box 43101, Providence, RI02940-5067, not less than 48 hours before the time appointed for holding the 2007 annual general meeting. Ordinary shares represented by proxies in the accompanying form which are properly executed and timely returned to Flextronics will be voted at the annual general meeting in accordance with the shareholders’ instructions. If a properly executed proxy card does not indicate how the Flextronics ordinary shares represented by the proxy should be voted, the ordinary shares will be voted in the manner recommended by the Flextronics board of directors and therefore “FOR” the issuance of shares in connection with the merger. | ||
Q: | As a Flextronics shareholder, can I change my vote after I have delivered my proxy? | |
A: | Yes, a proxy may be revoked prior to the time it is voted by timely delivery of a properly executed, later-dated proxy or by voting in person. | |
Q: | What is the vote of Flextronics shareholders required to approve the issuance of Flextronics ordinary shares in connection with the merger? | |
A: | The affirmative vote by a show of hands of at least a majority of the shareholders present and voting at the Flextronics annual general meeting, or, if a poll is demanded by the chair or by holders of at least 10% of the total number of paid up Flextronics ordinary shares in accordance with Flextronics’s Articles of Association, a simple majority of the shares voting at the annual general meeting, is required to approve the issuance of Flextronics ordinary shares in connection with the merger. | |
Q: | Who can answer my questions? | |
A: | Flextronics shareholders with questions about the merger, the matters to be voted on at the Flextronics annual general meeting or who desire additional copies of this joint proxy statement/prospectus or additional proxy cards should contact: |
17 State Street — 10th Floor
New York, NY 10004
Banks and Brokers call:(212) 440-9800
All others call:(888) 605-7554
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Q: | What will Solectron stockholders receive in the merger? | |
A: | Solectron stockholders will have the right to elect to receive upon completion of the merger, for each share of Solectron common stock they hold, either 0.3450 of a Flextronics ordinary share or a cash payment of $3.89, without interest. However, under the terms of the merger agreement, Flextronics and Solectron have agreed that, regardless of the elections made by Solectron stockholders, no more than 70% of Solectron’s shares of common stock outstanding immediately prior to the closing of the merger can be converted into Flextronics ordinary shares, and no more than 50% of Solectron’s shares of common stock outstanding immediately prior to the closing of the merger can be converted into cash. Therefore, the cash and stock elections made by Solectron stockholders will be subject to proration based on these limits. As a result, Solectron stockholders that have elected to receive either cash or Flextronics ordinary shares could in certain circumstances receive a combination of both cash and Flextronics ordinary shares. Solectron stockholders that fail to make an election will receive either cash, Flextronics ordinary shares or a combination of the two, depending on the results of the elections made by electing Solectron stockholders and the limits on the aggregate number of Solectron shares that can be converted to stock consideration and cash consideration in the merger. The consideration payable to Solectron stockholders in connection with the merger, and the related election and proration procedures, are described in more detail in the section entitled “The Merger Agreement — Merger Consideration” beginning on page 86 of this joint proxy statement/prospectus. | |
Based on the number of Flextronics ordinary shares and shares of Solectron common stock outstanding on June 1, 2007, Solectron’s former stockholders are expected to hold approximately 21% to 27% of Flextronics’s outstanding ordinary shares following the completion of the merger. Flextronics’s shareholders will continue to own their Flextronics ordinary shares, which will represent share ownership in the combined company after the merger. | ||
The fraction of a Flextronics ordinary share to be issued for each share of Solectron common stock is fixed and will not be adjusted based upon changes in the values of Flextronics ordinary shares or Solectron common stock. As a result, the value of the shares Solectron stockholders will receive in the merger will not be known before the effectiveness of the merger and will go up or down as the market price of Flextronics ordinary shares goes up or down. | ||
Q: | Will holders of exchangeable shares of Solectron Global Services Canada Inc., a wholly-owned indirect subsidiary of Solectron, participate in the merger? | |
A: | Solectron has agreed to take all action necessary such that each exchangeable share of Solectron Global Services Canada Inc., referred to in this joint proxy statement/prospectus as the exchangeable shares, will, prior to the closing of the merger, be exchanged for one share of Solectron common stock. In advance of this exchange of exchangeable shares for Solectron common stock, holders of the exchangeable shares will receive election forms at the same time that holders of Solectron common stock receive their election forms. Holders of exchangeable shares will, therefore, be entitled to make the same elections (as if such holders beneficially owned shares of Solectron common stock at the time of election, notwithstanding that the exchange will not occur until after such election is made) for cash or stock consideration as holders of Solectron common stock and will receive cash or stock consideration in the same manner and under the same circumstances as holders of Solectron common stock, as further described below. | |
For more information about the treatment of the exchangeable shares, see Annex F — Treatment of Solectron Series B Preferred Stock and Solectron Global Services Canada Inc. Exchangeable Shares. | ||
Q: | How and when can Solectron stockholders make elections for cash consideration or stock consideration? | |
A: | Concurrently with the mailing of this joint proxy statement/prospectus to Solectron stockholders, a form of election is being separately mailed to Solectron stockholders that will permit them to make an election for cash or stock consideration. To be effective, the form of election must be properly completed and signed and received by the exchange agent no later than 5:00 p.m., New York City Time, on the later of (i) the date of the |
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Solectron stockholders’ meeting and (ii) a date mutually agreed to by Flextronics and Solectron that is as near as practicable to 10 business days prior to the expected closing date of the merger agreement (which is referred to in this joint proxy statement/prospectus as the election deadline). Flextronics and Solectron will issue a press release announcing the date of the election deadline not more than 15, but at least 10, business days prior to the election deadline. If a properly completed and signed form of election with respect to shares of Solectron common stock is not received by the exchange agent by the election deadline, then the holder of those shares of Solectron common stock will be deemed not to have made an election and will be treated as a “non-electing” Solectron stockholder, as described below. Solectron stockholders that hold their shares in “street name” will receive directions from their brokers regarding how to make elections. Brokers will only make elections with respect to shares for which they have received proper election instructions in accordance with their directions. The beneficial owners of all other shares held in street name will be treated as non-electing Solectron stockholders, as described below. | ||
Q: | Will Solectron stockholders receive the specific amount of cash or stock consideration that they elect to receive? | |
A: | Not necessarily. Elections for cash consideration and stock consideration will be subject to the proration procedures set forth in the merger agreement. See the section entitled “The Merger Agreement — Merger Consideration” beginning on page 86 of this joint proxy statement/prospectus. | |
Q: | What happens if I do not make an election to receive cash consideration or stock consideration? | |
A: | If you do not make an election, you will have no control over the type of consideration you receive and may receive only cash, only Flextronics ordinary shares, or a combination of cash and Flextronics ordinary shares. The type of consideration you receive will depend on the outcome of the elections that the other Solectron stockholders make. If holders of more than 70% of the shares of Solectron common stock outstanding immediately prior to completion of the merger have elected to receive Flextronics ordinary shares, then all non-electing Solectron stockholders will receive cash for their Solectron shares. If holders of more than 50% of the shares of Solectron common stock outstanding immediately prior to completion of the merger have elected to receive cash, then all non-electing Solectron stockholders will receive Flextronics ordinary shares for their Solectron shares. | |
If holders of fewer than 70% of the shares of Solectron common stock outstanding immediately prior to completion of the merger have elected to receive Flextronics ordinary shares, and holders of fewer than 50% of the shares of Solectron common stock outstanding immediately prior to completion of the merger have elected to receive cash, then non-electing Solectron stockholders will receive cash consideration for their Solectron shares until the aggregate number of Solectron shares being exchanged for cash consideration equals 50% of the shares of Solectron common stock outstanding immediately prior to completion of the merger, and thereafter, non-electing stockholders will receive Flextronics ordinary shares for their remaining shares of Solectron common stock. | ||
Q: | Can Solectron stockholders change or revoke their elections for cash consideration and/or stock consideration? | |
A: | Yes. Any electing Solectron stockholder (including holders of exchangeable shares) may revoke a previously submitted form of election by submitting written notice of revocation that is received by the exchange agent prior to the election deadline, at the following addresses: | |
By Mail: By Overnight Courier: | ||
The written notice of revocation must specify the account name and such other information as the exchange agent may request in the election form. Revocations may not be in part. Upon revoking your previous election, you may submit another election in accordance with the election procedures described in this joint proxy statement/prospectus. |
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If your Solectron shares are held in “street name,” you should follow any instructions for revoking or changing your election provided by your broker. | ||
Q: | What if I have Solectron stock options? | |
A: | Each outstanding option to purchase shares of Solectron common stock with an exercise price equal to or less than $5.00, whether or not exercisable, will be assumed by Flextronics and converted into an option to purchase Flextronics ordinary shares, on the same terms and conditions as were applicable to such Solectron stock option prior to the effective time of the merger, except that the number of shares for which such option is or may become exercisable and the exercise price of the option will be adjusted to reflect the exchange ratio. All other outstanding options to purchase shares of Solectron common stock will accelerate and become immediately exercisable for a period of at least 30 days prior to the effective time, in accordance with the applicable Solectron stock option plan pursuant to which such options were granted, but subject to and conditioned on completion of the merger, and will terminate as of the effective time to the extent not exercised prior thereto, as further described under the section entitled “The Merger Agreement — Treatment of Solectron Equity Plans” on page 100 of this joint proxy statement/prospectus. | |
Q: | What if I have Solectron restricted stock? | |
A: | Holders of shares of Solectron common stock that are unvested or subject to a repurchase option, risk of forfeiture or other similar condition under a restricted stock purchase agreement or other similar arrangement will have the same right to elect to receive cash or Flextronics ordinary shares as other Solectron stockholders. As a result, such shares of Solectron restricted stock will be converted into the right to receive Flextronics ordinary shares (adjusted to reflect the exchange ratio) or cash (in an amount equal to $3.89 per share of Solectron restricted stock), as applicable, which ordinary shares or cash will be subject to the same vesting requirements or other terms and conditions that were applicable to the Solectron restricted stock prior to the effective time of the merger. | |
Q: | What are the material U.S. federal income tax consequences of the merger to Solectron stockholders? | |
A: | Flextronics and Solectron intend that the merger will qualify as a tax-free reorganization within the meaning of Section 368(a) of the Code. If the merger qualifies as such, the U.S. federal income tax consequences of the merger to each Solectron stockholder will vary depending on whether that stockholder receives Flextronics ordinary shares, cash, or a combination of cash and Flextronics ordinary shares in exchange for that stockholder’s Solectron common stock. | |
If you are a Solectron stockholder receiving only Flextronics ordinary shares in exchange for your Solectron common stock, you generally will not recognize gain or loss on the Solectron common stock that you surrender pursuant to the merger. If you are a Solectron stockholder receiving only cash in exchange for your Solectron common stock, you generally will recognize gain or loss equal to the difference between the amount of cash you receive and your tax basis in the Solectron common stock surrendered. If you are a Solectron stockholder receiving a combination of cash and Flextronics ordinary shares in exchange for your Solectron common stock, you generally will recognize gain (but will not be permitted to recognize loss) for U.S. federal income tax purposes equal to the lesser of (i) the amount of cash that you receive and (ii) the amount of gain that you realize. | ||
In certain circumstances, the transaction will not qualify as a tax-free reorganization under Section 368(a) of the Code. In that event, you generally would recognize gain or loss on the shares of Solectron common stock surrendered in the transaction in the amount of the difference between your basis in such shares and the sum of the amount of cash and the fair market value of the Flextronics ordinary shares you receive in exchange for the shares of Solectron common stock. | ||
You should read the section entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 75 of this joint proxy statement/prospectus. In addition, you are urged to consult your own tax advisors as to the U.S. federal income tax consequences of the merger, as well as the effect of state, local andnon-U.S. tax laws. |
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Q: | Are Solectron stockholders entitled to appraisal rights? | |
A: | Yes, subject to and in accordance with applicable Delaware law, holders of Solectron common stock will be entitled to appraisal rights if they comply with the applicable provisions of Delaware law. | |
In addition, the holder of the one outstanding share of Solectron’s Series B Preferred Stock may have appraisal rights under certain circumstances. For more information, see the section entitled “The Merger — Appraisal Rights” beginning on page 81 of this joint proxy statement/prospectus and Annex G — Delaware Appraisal Statute. | ||
Q: | What matters will Solectron stockholders vote on at the special meeting? | |
A: | Solectron stockholders will vote on the proposal to adopt the merger agreement. | |
Q: | How does the Solectron board of directors recommend that Solectron stockholders vote? | |
A: | The Solectron board of directors, by the unanimous vote of the directors present, has determined that the merger agreement and the transactions contemplated by the merger agreement are advisable and fair to and in the best interests of the Solectron stockholders and recommends that Solectron stockholders vote “FOR” the proposal to adopt the merger agreement. For a more complete description of the recommendation of the Solectron board of directors, see the section entitled “The Merger — Solectron’s Reasons for the Merger and Board Recommendation” beginning on page 56 of this joint proxy statement/prospectus. | |
Q: | When and where will the Solectron special meeting be held? | |
A: | The special meeting is scheduled to be held at Solectron’s headquarters at 847 Gibraltar Drive, Building 5, Milpitas, California 95035, on , 2007, at :00 a.m., California Time. | |
Q: | What vote is needed to adopt the merger agreement at the special meeting? | |
A: | The proposal to adopt the merger agreement requires the affirmative vote of the holders of at least a majority of the aggregate voting power represented by the Solectron common stock and the one share of Series B Preferred Stock outstanding on the record date, voting together as a single class. | |
Each stockholder of Solectron common stock is entitled to one vote for each share of common stock owned as of the record date, and Computershare Trust Company of Canada, the holder of Solectron’s one share of Series B Preferred Stock, is entitled to one vote for each exchangeable share of Solectron Global Services Canada Inc., an indirect subsidiary of Solectron, outstanding as of the record date (other than exchangeable shares owned by Solectron, its subsidiaries and other affiliates). Holders of Solectron common stock and holders of exchangeable shares are collectively referred to in this joint proxy statement/prospectus as the Solectron stockholders. | ||
Q: | How do Solectron stockholders vote? | |
A: | If you were a Solectron stockholder on the record date for the Solectron special meeting, you may vote at the meeting. Most stockholders can vote over the Internet or by telephone. If Internet and telephone voting are available to you, you can find voting instructions in the materials accompanying this joint proxy statement/prospectus. You can also vote by completing and returning a proxy card or, if you hold your shares in street name, a voting instruction card provided by your broker or nominee. | |
The Internet and telephone voting facilities will close at 11:59 p.m., New York City Time, on , 2007. Please be aware that Solectron stockholders who vote over the Internet may incur costs such as telephone and Internet access charges for which they will be responsible. | ||
The method by which Solectron stockholders vote will in no way limit their right to vote at the meeting if such stockholders later decide to attend in person. If shares are held in street name, Solectron stockholders must obtain a proxy, executed in their favor, from a broker or other holder of record, to be able to vote at the meeting. | ||
If Solectron shares are held through a broker or nominee, those shares may be voted even if the Solectron stockholder does not vote or attend the special meeting, if the beneficial owner provides the broker or nominee with voting instructions using the voting instruction card provided by your broker or nominee. Under the rules |
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of the New York Stock Exchange, member brokers who do not receive instructions from beneficial owners will not be allowed to vote those shares at this special meeting. Therefore, broker “non-votes,” if any, will have the same effect as votes cast against the proposal to adopt the merger agreement. | ||
All shares entitled to vote and represented by properly completed proxies received prior to the Solectron special meeting and not revoked will be voted at the meeting in accordance with stockholder instructions. If a signed proxy card is returned without indicating how shares should be voted on a matter and the proxy is not revoked, the shares represented by the proxy will be voted as the Solectron board of directors recommends and therefore “FOR” the adoption of the merger agreement. | ||
If you hold exchangeable shares, see “Annex F — Treatment of Solectron Series B Preferred Stock and Solectron Global Services Canada Inc. Exchangeable Shares” for information on the procedures for voting your exchangeable shares through Computershare Trust Company of Canada. | ||
Q: | As a Solectron stockholder, can I change my vote after I have delivered my proxy? | |
A: | Yes. Solectron stockholders may revoke a proxy (including an Internet or telephone vote) at any time before it is exercised by timely delivery of a properly executed, later-dated proxy or by voting in person at the meeting. | |
Q: | What will happen if Solectron stockholders abstain from voting or do not vote? | |
A: | If a Solectron stockholder abstains from voting or does not vote, it will have the same effect as a vote against the proposal to adopt the merger agreement. If a Solectron stockholder returns a proxy and does not indicate how it should be voted, all shares represented by such proxy will be voted in favor of the proposal to adopt the merger agreement. | |
Q: | Should Solectron stock certificates be sent in now? | |
A: | No. If the merger is completed, Solectron stockholders will receive written instructions for sending in any stock certificates they may have. | |
Q: | What do Solectron stockholders need to do now? | |
A: | Carefully read and consider the information contained in and incorporated by reference in this joint proxy statement/prospectus, including its annexes. In order for shares to be represented at the Solectron special meeting, Solectron stockholders can (1) vote over the Internet or by telephone by following the instructions included on the proxy card, (2) indicate on the enclosed proxy card how they would like to vote and return the proxy card in the accompanying pre-addressed postage paid envelope, or (3) attend the Solectron special meeting in person. Also, you should send in your completed and signed election form, as described above. | |
Q: | Who can answer my questions? | |
A: | Solectron stockholders with questions about the merger, the Solectron special meeting or who desire additional copies of this joint proxy statement/prospectus or additional proxy cards should contact: |
Holders of exchangeable shares with questions about the merger, the Solectron special meeting or who desire additional copies of this joint proxy statement/prospectus or additional exchangeable share voting information forms or election forms should contact: |
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By Mail: | By Overnight Courier: | |||
• | To authorize the directors of Flextronics International Ltd., which is referred to in this notice as Flextronics, to allot and issue ordinary shares pursuant to the Agreement and Plan of Merger, dated as of June 4, 2007, entered into among Flextronics, Saturn Merger Corp., a wholly-owned subsidiary of Flextronics, and Solectron Corporation (Proposal 1); | |
• | To re-elect the following directors: James A. Davidson and Lip-Bu Tan (Proposal 2); | |
• | To re-appoint Mr. Rockwell A. Schnabel as a director of Flextronics (Proposal 3); | |
• | To approve the re-appointment of Deloitte & Touche LLP as Flextronics’s independent registered public accounting firm for the 2008 fiscal year (Proposal 4); | |
• | To approve a general authorization for the directors of Flextronics to allot and issue ordinary shares (Proposal 5); | |
• | To approve the cash compensation payable to Flextronics’s non-employee directors (Proposal 6); | |
• | To approve the renewal of the Share Purchase Mandate relating to acquisitions by Flextronics of its own issued ordinary shares (Proposal 7); and | |
• | To approve amendments to Flextronics’s 2001 Equity Incentive Plan relating to: (a) a 5,000,000-share increase in the sub-limit on the maximum number of ordinary shares which may be issued as stock bonus awards and (b) a 10,000,000-share increase in the share reserve (Proposals 8 and 9). |
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• | Enhanced Competitive Position. Combining Flextronics and Solectron would create the most diversified and premier global provider of advanced design and vertically integrated electronics manufacturing services, or EMS, with the broadest worldwide EMS capabilities, from design resources to end-to-end vertically integrated global supply chain services. The combined company would be able to use its increased scale to realize significant cost savings and further extend its reach within established market segments. | |
• | Improved Customer Offering. By adding Solectron’s resources and unique skill sets, Flextronics would be able to provide more value innovation to its customers by leveraging the combined global economies of scale in manufacturing, logistics, procurement, design, engineering, and ODM services. A larger company would be more competitive and therefore better positioned to deliver supply chain solutions that fulfill its customers’ increasingly complex requirements. The combined company could help improve the competitive position of its customers by simplifying their global product development process while also delivering improved product quality with enhanced performance and faster time to market. | |
• | Complementary Businesses. Solectron’s strengths in high-end computing, communications, and networking infrastructure market segments complement Flextronics’s strengths in vertical integration and ODM capabilities and its expertise in cell phones and consumer electronics. The combined company would be a leading EMS supplier of high-end products, enhancing and leveraging Flextronics’s global leadership position in high-volume, low-cost products. In addition, Solectron’s after-market sales support, repair service, and build to order/configure to order capabilities would be a valuable addition to Flextronics’s existing end-to-end vertically-integrated service capabilities. |
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• | Operating Synergies. Over the last 18 months, Flextronics has reorganized its management structure, creating the infrastructure required to effectively and efficiently add scale to its operations and enable it to achieve the synergies expected from the successful integration of Solectron’s operations. The combined company would be expected to realize cost savings from manufacturing and operating expense reductions, which will result from global footprint rationalization and the elimination of redundant assets or unnecessary functions. Additional costs savings would be expected from leveraging increased scale and purchasing power, and the expansion of vertical integration will drive higher combined profitability. In addition, combined capital expenditures would be reduced by the redeployment of equipment and rationalized manufacturing locations. | |
• | Diversification. Flextronics’s current product portfolio is highly concentrated in the mobile segment, which represented approximately 31% of Flextronics’s revenues for the quarter ended March 31, 2007, followed by consumer digital at 24%, infrastructure at 23%, industrial, auto, medical and other at 12%, and computing at 10% of revenues. By comparison, infrastructure represented 42% of Solectron’s revenues for the quarter ended March 2, 2007, followed by computing at 34%, industrial, auto, medical and other at 12%, and consumer digital at 12%. Following the merger, the combined company will have a more diversified and balanced customer and product mix, especially with regard to the mobile and infrastructure market segments, which may better position the combined company to withstand end market, customer and product volatility in the future. |
• | Complementary Businesses. The development, manufacturing and logistics capabilities of the two companies are complementary and should enable the combined company to compete more effectively in the general EMS market. The combined company should be stronger than either company on its own, with greater breadth and depth of service offerings and with the scale and anticipated operational efficiencies that should allow it to profitably compete. In addition, Flextronics’s ODM capabilities, its vertical integration model, and its continued targeting of non-traditional EMS market segments (e.g., automotive, military/aerospace, industrial and medical) should allow the combined company to compete effectively in these market segments, which offer greater growth potential and higher margins than the traditional EMS market segments. Lastly, the integration of the Solectron and Flextronics logistics networks with these manufacturing facilities should create a more flexible and |
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responsive organization that can more quickly react to and address regional and local changes in market demand and customer expectations and preferences in the various markets throughout the world. |
• | Customers. The combined company should be able to deepen relationships with many of its existing customers by leveraging Flextronics’s vertical integration capabilities. Solectron expects the combined company to improve its ability to expand its current customer relationships and expects to increase its penetration of new customer accounts. Solectron believes that the combination of the two companies’ design, engineering, manufacturing and logistics capabilities should enable the combined company to meet customer needs more effectively and, particularly with the vertical integration model that Flextronics has been pursuing, to deliver more complete solutions to customers at a lower cost to those customers while realizing improved margins for the combined company. In addition, Solectron believes the larger sales organization, greater marketing resources and financial strength of the combined company may lead to improved opportunities for marketing the combined company’s offerings. | |
• | Reduction in Operating Costs. The combined company is expected to realize substantial cost savings as a result of increased efficiencies in manufacturing, logistics and operating expenses. Flextronics and Solectron expect the combined company to achieve benefits from cost savings from manufacturing and operating expense reductions resulting from global footprint rationalization and the elimination of redundant assets or unnecessary functions; leveraging increased scale and purchasing power; and the expansion of vertical integration capabilities within the Solectron customer base. | |
• | Stronger Financial Position. The combined company will have greater scale and financial resources, including total cash and cash equivalents. Flextronics and Solectron expect that this stronger financial position will improve the combined company’s ability to support the combined company’s strategy; to respond more quickly and effectively to customer needs, technological change, increased competition and shifting market demand; and to pursue strategic growth opportunities in the future, including acquisitions. | |
• | Stock-for-Stock with Fixed Exchange Ratio for Stockholders that Elect Stock. Solectron’s stockholders who receive Flextronics ordinary shares in the merger will share in the benefits from the growth opportunities, synergies and cost savings that are expected to be realized by the combined company as a result of the merger. The fact that the stock consideration is based on a fixed exchange ratio provides certainty as to the number of Flextronics ordinary shares that will be issued to Solectron stockholders who receive Flextronics ordinary shares in the merger. |
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• | Flextronics and Solectron mutually agree to terminate the merger agreement; | |
• | if the merger is not completed by December 31, 2007, provided that either party may extend such date to March 31, 2008, if the condition requiring approvals and consents (including the termination of any waiting period) under merger notification and control laws shall not have been satisfied; | |
• | if any governmental entity issues any order or takes any other action having the effect of permanently restraining, enjoining or prohibiting the completion of the merger; | |
• | if Solectron stockholders fail to adopt the merger agreement or Flextronics shareholders fail to authorize the issuance of Flextronics ordinary shares in the merger; | |
• | if any party breaches its representations, warranties or covenants in the merger agreement such that the conditions to completion of the merger regarding its representations, warranties or covenants would not be satisfied, subject to a30-day cure period; |
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• | if there has been, or any event has occurred since the date of the merger agreement that would reasonably be expected to have, a material adverse effect on Solectron, and (i) the material adverse effect is not reasonably capable of being cured prior to the termination date of the merger agreement, or (ii) the material adverse effect is not cured prior to the earlier of the termination date and 30 days following the receipt of written notice from Flextronics to Solectron of the material adverse effect (which right to terminate may only be exercised by Flextronics), provided that Flextronics may not exercise this termination right if it is in material breach of the merger agreement; or | |
• | there has been, or any event has occurred since the date of the merger agreement that would reasonably be expected to have, a material adverse effect on Flextronics, and (i) the material adverse effect is not reasonably capable of being cured prior to the termination date of the merger agreement, or (ii) the material adverse effect is not cured prior to the earlier of the termination date and 30 days following the receipt of written notice from Solectron to Flextronics of the material adverse effect (which right to terminate may only be exercised by Solectron), provided that Solectron may not exercise this termination right if it is in material breach of the merger agreement. |
• | the adoption of the merger agreement by Solectron’s stockholders and the authorization of the issuance of Flextronics ordinary shares in the merger by Flextronics’s shareholders; | |
• | the effectiveness of the registration statement of which this joint proxy statement/prospectus forms a part; | |
• | the absence of any law, regulation or order making the merger illegal or otherwise prohibiting the merger; | |
• | the expiration or termination of any applicable waiting periods and the receipt of any consents, waivers or approvals required under applicable U.S. and foreign merger control regulations; | |
• | the accuracy of each company’s representations and warranties in the merger agreement in all respects as of the date of the merger agreement and as of the closing date, except those representations and warranties which address matters only as of a particular date, which must be true and correct as of that date, and except for representations and warranties where failure to be true and correct did not and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the company; | |
• | material compliance by each party with its agreements and covenants in the merger agreement; and | |
• | the absence of any change, circumstance or effect which, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on either party. |
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Fiscal Year Ended March 31, | ||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||
CONSOLIDATED STATEMENT OF OPERATIONS DATA: | ||||||||||||||||||||
Net sales | $ | 18,853,688 | $ | 15,287,976 | $ | 15,730,717 | $ | 14,479,262 | $ | 13,329,197 | ||||||||||
Cost of sales | 17,777,859 | 14,354,461 | 14,720,532 | 13,676,855 | 12,626,105 | |||||||||||||||
Restructuring charges(1) | 146,831 | 185,631 | 78,381 | 474,068 | 266,244 | |||||||||||||||
Gross profit | 928,998 | 747,884 | 931,804 | 328,339 | 436,848 | |||||||||||||||
Selling, general and administrative expenses | 547,538 | 463,946 | 525,607 | 469,229 | 434,615 | |||||||||||||||
Intangible amortization | 37,089 | 37,160 | 33,541 | 34,543 | 20,058 | |||||||||||||||
Restructuring charges(1) | 5,026 | 30,110 | 16,978 | 54,785 | 30,711 | |||||||||||||||
Other (income) charges, net(2) | (77,594 | ) | (17,200 | ) | (13,491 | ) | — | 7,456 | ||||||||||||
Interest and other expense, net | 91,986 | 92,951 | 89,996 | 77,241 | 92,774 | |||||||||||||||
Gain on divestiture of operations | — | (23,819 | ) | — | — | — | ||||||||||||||
Loss on early extinguishment of debt | — | — | 16,328 | 103,909 | — | |||||||||||||||
Income (loss) from continuing operations before income taxes | 324,953 | 164,736 | 262,845 | (411,368 | ) | (148,766 | ) | |||||||||||||
Provision for (benefit from) income taxes | 4,053 | 54,218 | (68,652 | ) | (64,958 | ) | (64,987 | ) | ||||||||||||
Income (loss) from continuing operations | 320,900 | 110,518 | 331,497 | (346,410 | ) | (83,779 | ) | |||||||||||||
Income (loss) from discontinued operations, net of tax | 187,738 | 30,644 | 8,374 | (5,968 | ) | 326 | ||||||||||||||
Net income (loss) | $ | 508,638 | $ | 141,162 | $ | 339,871 | $ | (352,378 | ) | $ | (83,453 | ) | ||||||||
Diluted earnings (loss) per share: | ||||||||||||||||||||
Continuing operations | $ | 0.54 | $ | 0.18 | $ | 0.57 | $ | (0.66 | ) | $ | (0.16 | ) | ||||||||
Discontinued operations | $ | 0.31 | $ | 0.05 | $ | 0.01 | $ | (0.01 | ) | $ | — | |||||||||
Total | $ | 0.85 | $ | 0.24 | $ | 0.58 | $ | (0.67 | ) | $ | (0.16 | ) | ||||||||
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As of March 31, | ||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
CONSOLIDATED BALANCE SHEET DATA(3): | ||||||||||||||||||||
Working capital | $ | 1,102,979 | $ | 938,632 | $ | 906,971 | $ | 884,816 | $ | 897,741 | ||||||||||
Total assets | 12,341,374 | 10,958,407 | 11,009,766 | 9,583,937 | 8,394,104 | |||||||||||||||
Total long-term debt and capital lease obligations, excluding current portion | 1,493,805 | 1,489,366 | 1,709,570 | 1,624,261 | 1,049,853 | |||||||||||||||
Shareholders’ equity | 6,176,659 | 5,354,647 | 5,224,048 | 4,367,213 | 4,542,020 |
(1) | Flextronics recognized restructuring charges of $151.9 million, $215.7 million, $95.4 million, $540.3 million (including $11.5 million attributable to discontinued operations) and $297.0 million in fiscal years 2007, 2006, 2005, 2004 and 2003, respectively, associated with the consolidation and closure of several manufacturing facilities. | |
(2) | Flextronics recognized $79.8 million, $20.6 million and $29.3 million of net foreign exchange gains from the liquidation of certain international entities in fiscal years 2007, 2006 and 2005, respectively. Flextronics also recognized $7.7 million and $7.6 million in executive separation costs in fiscal years 2006 and 2005, respectively. Flextronics recognized charges of $8.2 million and $7.4 million in fiscal years 2005 and 2003, respectively, for the other-than-temporary impairment of its investments in certain non-publicly traded companies. In fiscal year 2006, Flextronics recognized a net gain of $4.3 million related to its investments in certain non-publicly traded companies. | |
(3) | Includes continuing and discontinued operations for the fiscal years ended on and prior to March 31, 2006. |
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Six Months Ended | For Twelve Months Ended | |||||||||||||||||||||||||||
March 2, | February 24, | August 25, | August 26, | August 27, | August 29, | August 30, | ||||||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||||||||
(In millions, except per share data) | ||||||||||||||||||||||||||||
CONSOLIDATED STATEMENT OF OPERATIONS DATA: | ||||||||||||||||||||||||||||
Net sales | $ | 5,901.0 | $ | 4,956.0 | $ | 10,560.7 | $ | 10,441.1 | $ | 11,638.3 | $ | 9,828.3 | $ | 10,738.7 | ||||||||||||||
Cost of sales | 5,598.8 | 4,701.4 | 10,013.1 | 9,868.8 | 11,068.6 | 9,388.4 | 10,234.8 | |||||||||||||||||||||
Gross profit | 302.2 | 254.6 | 547.6 | 572.3 | 569.7 | 439.9 | 503.9 | |||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Selling, general and administrative | 226.5 | 211.7 | 433.3 | 412.8 | 446.7 | 566.9 | 661.4 | |||||||||||||||||||||
Restructuring and impairment costs(1) | 51.1 | 6.5 | 14.0 | 91.1 | 177.9 | 604.8 | 787.7 | |||||||||||||||||||||
Goodwill impairment costs(2) | — | — | — | — | — | 1,620.1 | 2,500.0 | |||||||||||||||||||||
Operating income (loss) | 24.6 | 36.4 | 100.3 | 68.4 | (54.9 | ) | (2,351.9 | ) | (3,445.2 | ) | ||||||||||||||||||
Interest and other income (expense) | 2.4 | 10.8 | 16.8 | (63.2 | ) | (210.8 | ) | (131.5 | ) | (74.1 | ) | |||||||||||||||||
Income (loss) from continuing operations before income taxes | 27.0 | 47.2 | 117.1 | 5.2 | (265.7 | ) | (2,483.4 | ) | (3,519.3 | ) | ||||||||||||||||||
Income tax expense (benefit) | 4.8 | 9.9 | (1.3 | ) | 15.7 | (3.3 | ) | 525.5 | (450.0 | ) | ||||||||||||||||||
Income (loss) from continuing operations | $ | 22.2 | $ | 37.3 | $ | 118.4 | $ | (10.5 | ) | $ | (262.4 | ) | $ | (3,008.9 | ) | $ | (3,069.3 | ) | ||||||||||
Discontinued operations: | ||||||||||||||||||||||||||||
Income (loss) from discontinued operations | $ | (0.9 | ) | $ | 17.1 | $ | 15.6 | $ | 16.8 | $ | 93.7 | $ | (331.7 | ) | $ | (59.1 | ) | |||||||||||
Income tax expense (benefit) | — | — | — | 2.9 | 8.7 | 112.0 | (18.7 | ) | ||||||||||||||||||||
Income (loss) on discontinued operations | (0.9 | ) | 17.1 | 15.6 | 13.9 | 85.0 | (443.7 | ) | (40.4 | ) | ||||||||||||||||||
Income (loss) before cumulative effect of change in accounting principle | 21.3 | 54.4 | 134.0 | 3.4 | (177.4 | ) | (3,452.6 | ) | (3,109.7 | ) | ||||||||||||||||||
Cumulative effect of change in accounting principle, net | — | — | (0.8 | ) | — | — | — | — | ||||||||||||||||||||
Net income (loss) | $ | 21.3 | $ | 54.4 | $ | 133.2 | $ | 3.4 | $ | (177.4 | ) | $ | (3,452.6 | ) | $ | (3,109.7 | ) | |||||||||||
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Six Months Ended | For Twelve Months Ended | |||||||||||||||||||||||||||
March 2, | February 24, | August 25, | August 26, | August 27, | August 29, | August 30, | ||||||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||||||||
(In millions, except per share data) | ||||||||||||||||||||||||||||
Basic net income (loss) per share: | ||||||||||||||||||||||||||||
Continuing operations | $ | 0.02 | $ | 0.04 | $ | 0.13 | $ | (0.01 | ) | $ | (0.30 | ) | $ | (3.63 | ) | $ | (3.93 | ) | ||||||||||
Discontinued operations | — | 0.02 | 0.02 | 0.01 | 0.10 | (0.54 | ) | (0.05 | ) | |||||||||||||||||||
Basic net income (loss) per share | $ | 0.02 | $ | 0.06 | $ | 0.15 | $ | 0.00 | $ | (0.20 | ) | $ | (4.17 | ) | $ | (3.98 | ) | |||||||||||
Diluted net income (loss) per share: | ||||||||||||||||||||||||||||
Continuing operations | $ | 0.02 | $ | 0.04 | $ | 0.13 | $ | (0.01 | ) | $ | (0.30 | ) | $ | (3.63 | ) | $ | (3.93 | ) | ||||||||||
Discontinued operations | — | 0.02 | 0.02 | 0.01 | 0.10 | (0.54 | ) | (0.05 | ) | |||||||||||||||||||
Diluted net income (loss) per share | $ | 0.02 | $ | 0.06 | $ | 0.15 | $ | (0.00 | ) | $ | (0.20 | ) | $ | (4.17 | ) | $ | (3.98 | ) | ||||||||||
As of | ||||||||||||||||||||||||||||
March 2, | February 24, | August 25, | August 26, | August 27, | August 29, | August 30, | ||||||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
CONSOLIDATED BALANCE SHEET DATA*: | ||||||||||||||||||||||||||||
Working capital | $ | 2,078.8 | $ | 2,009.6 | $ | 2,047.5 | $ | 2,009.4 | $ | 2,476.8 | $ | 1,696.6 | $ | 3,652.8 | ||||||||||||||
Total assets | 5,641.2 | 5,334.9 | 5,373.6 | 5,257.8 | 5,864.0 | 6,570.3 | 10,990.0 | |||||||||||||||||||||
Long-term debt | 616.0 | 628.0 | 619.4 | 540.9 | 1,221.4 | 1,816.9 | 3,180.2 | |||||||||||||||||||||
Stockholders’ equity | 2,448.2 | 2,353.1 | 2,413.7 | 2,444.2 | 2,418.9 | 1,471.7 | 4,771.4 |
* | Continuing and discontinued operations | |
(1) | Restructuring and impairment costs consist of the following: | |
• For the six months ended March 2, 2007, $43.8 million primarily related to severance, leased facilities, impairment charges and other exit costs. | ||
• For the six months ended February 24, 2006, represents fixed asset and intangible impairment and severance charges. | ||
• For the twelve months ended August 25, 2006: (a) $12.9 million of impairment charges resulting from the impairment of certain long-lived assets, (b) $1.9 million of charges related to intangible assets, (c) $10.8 million reversal of restructuring charges resulting from a reduction in severance provision, and (d) a $10.0 million restructuring charge for facilities and other exit costs. | ||
• For the twelve months ended August 26, 2005: (a) $55.2 million of restructuring charges, principally arising from the Fiscal Year 2005 Restructuring Plan to consolidate facilities, reduce the workforce in Europe and North America, and impair certain long-lived assets, and (b) a $35.9 million impairment due to non-cash charges in connection with the sale of a facility in Japan. | ||
• For the twelve months ended August 27, 2004: (a) $130.4 million of restructuring charges and (b) a $47.5 million impairment of an intangible asset arising from the disengagement from certain product lines. | ||
• For the twelve months ended August 29, 2003: (a) $433.1 million of restructuring charges and (b) $171.7 million of impairment charges as the result of reduced expectations of sales to be realized under certain supply agreements. | ||
• For the twelve months ended August 30, 2002: (a) $596.5 million of restructuring charges and (b) $191.2 million of impairment charges as the result of reduced expectations of sales to be realized under certain supply agreements. | ||
(2) | Goodwill impairments of approximately $1.6 billion and $2.5 billion were recorded in fiscal year 2003 and fiscal year 2002, respectively, as a result of significant negative industry and economic trends impacting Solectron’s operations and stock price. |
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Fiscal Year Ended | ||||
March 31, 2007 | ||||
(In thousands, except | ||||
per share amounts) | ||||
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS DATA(1): | ||||
Net sales | $ | 30,094,061 | ||
Cost of sales | 28,416,872 | |||
Restructuring charges | 203,492 | |||
Gross profit | 1,473,697 | |||
Selling, general and administrative expenses | 990,248 | |||
Intangible amortization | 69,890 | |||
Restructuring charges | 6,965 | |||
Other income, net | (77,594 | ) | ||
Interest and other expense, net | 223,502 | |||
Income from continuing operations before income taxes | 260,686 | |||
Benefit from income taxes | (15,139 | ) | ||
Income from continuing operations | $ | 275,825 | ||
Diluted earnings per share: | $ | 0.36 |
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As of March 31, 2007 | ||||
(In thousands) | ||||
PRO FORMA CONDENSED COMBINED BALANCE SHEET DATA(1): | ||||
Working capital | $ | 3,156,468 | ||
Total assets | 19,365,973 | |||
Total long-term debt and capital lease obligations, excluding current portion | 3,993,439 | |||
Shareholders’ equity | 8,001,934 |
(1) | In preparing the unaudited pro forma condensed combined financial statements, Flextronics has assumed that holders of 50% of Solectron’s common stock outstanding immediately prior to the closing of the merger will elect to receive new Flextronics ordinary shares at the exchange ratio of 0.3450 of a Flextronics ordinary share for each share of Solectron common stock, and holders of 50% of Solectron’s common stock outstanding immediately prior to the closing of the merger will elect to receive cash consideration in the amount of $3.89 per share of Solectron common stock as stated in the merger agreement. Flextronics is continuing to evaluate its existing cash positions and financing agreements, and alternative long-term financing arrangements to fund the cash requirements for this transaction (including the refinancing of Solectron’s debt if required). For the purposes of preparing the unaudited pro forma condensed combined financial statements, Flextronics estimates that it will borrow approximately $1.9 billion in connection with financing the cash consideration attributable to the acquisition (including costs associated with the transaction). Depending on the actual number of Solectron shares outstanding as of the acquisition date and the percentage of Solectron stockholders that elect to receive Flextronics ordinary shares, the cash paid, amount borrowed and Flextronics ordinary shares issued may differ significantly from the information in the unaudited pro forma condensed combined financial statements. For example, had Flextronics assumed that 70% of the holders of Solectron common stock outstanding immediately prior to the closing of the merger would elect to receive Flextronics ordinary shares and 30% of the holders of Solectron common stock outstanding immediately prior to the closing of the merger would elect to receive cash consideration, Flextronics estimates that it would borrow approximately $700 million less at an estimated interest rate of 7.3% resulting in less interest expense, a corresponding increase in the combined company’s equity on a pro forma basis, and basic and diluted weighted average shares outstanding would be approximately 64 million shares higher on a pro forma basis. The impact on total purchase price and pro forma assets of the combined company is not material. |
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Historical Flextronics Per Share Data | ||||
Income per diluted share from continuing operations: | ||||
For the twelve months ended March 31, 2007 | $ | 0.54 | ||
Book value per share(1): | ||||
As of March 31, 2007 | $ | 10.17 | ||
Historical Solectron Per Share Data | ||||
Income per diluted share from continuing operations: | ||||
For the twelve months ended August 25, 2006 | $ | 0.13 | ||
For the six months ended March 2, 2007 | $ | 0.02 | ||
Book value per share(1): | ||||
As of August 25, 2006 | $ | 2.66 | ||
As of March 2, 2007 | $ | 2.70 | ||
Unaudited Pro Forma Condensed Combined Comparative Per Share Data | ||||
Income per diluted share from continuing operations: | ||||
For the twelve months ended March 31, 2007 | $ | 0.36 | ||
Book value per share(1): | ||||
As of March 31, 2007 | $ | 10.44 | ||
Unaudited Pro Forma Equivalent Per Share Data for Solectron(2) | ||||
Income per diluted share from continuing operations: | ||||
For the twelve months ended March 31, 2007 | $ | 0.12 | ||
Book value per share(1): | ||||
As of March 31, 2007 | $ | 3.60 |
(1) | Historical book value per share is computed by dividing total stockholders’ equity by the number of shares outstanding at the end of each period. The unaudited pro forma book value per share is computed by dividing total pro forma stockholders’ equity by the sum of the number of Flextronics ordinary shares outstanding at the end of the period and the number of Flextronics ordinary shares expected to be issued in the merger assuming 50% of the holders of Solectron common stock (including restricted shares and exchangeable shares) will elect to receive new Flextronics shares at the exchange ratio of 0.3450. | |
(2) | The unaudited pro forma equivalent per share data was calculated by multiplying the share exchange ratio of 0.3450 to the pro forma income per diluted share from continuing operations and pro forma book value per share, respectively. |
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• | the acquisition may not be completed as planned or at all; | |
• | Solectron may not be successfully integrated into Flextronics’s operations; | |
• | the revenues, cost savings, growth prospects and any other synergies expected from the proposed transaction may not be fully realized or may take longer to realize than expected; | |
• | growth in the EMS business may not occur as expected or at all; | |
• | production difficulties may be encountered with Solectron’s or Flextronics’s products; | |
• | Flextronics and Solectron depend on industries that continually produce technologically advanced products with short life cycles, which results in short-term customer commitments and fluctuations in demand for customers’ products; and | |
• | the increased indebtedness resulting from the proposed transaction could limit the flexibility of the combined company, and possibly limit the combined company’s business strategy or its ability to access additional capital. |
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• | Flextronics and Solectron will remain liable for significant transaction costs, including legal, accounting, financial advisory and other costs relating to the merger; | |
• | under specified circumstances, Solectron may have to pay a termination fee in the amount of $100.0 million to Flextronics or Flextronics may have to pay a termination fee in the amount of $100.0 million to Solectron (see the section entitled “The Merger Agreement — Termination of the Merger Agreement and Termination Fees” beginning on page 106 of this joint proxy statement/prospectus); | |
• | any operational investments that Flextronics and Solectron may delay due to the pending transaction would need to be made, potentially on an accelerated timeframe, which could then prove costly and more difficult to implement; and | |
• | the market price of Solectron common stock may decline to the extent that the current market price reflects a belief by investors that the merger will be completed. |
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• | the attention of Flextronics’s and Solectron’s management and employees may be diverted from day-to-day operations; | |
• | Flextronics’s and Solectron’s customers and suppliers may seek to modify or terminate existing agreements, or prospective customers may delay entering into new agreements or purchasing Solectron’s products as a result of the announcement of the merger; and | |
• | Flextronics’s and Solectron’s ability to attract new employees and retain existing employees may be harmed by uncertainties associated with the merger. |
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• | failure to demonstrate to Flextronics’s and Solectron’s customers and suppliers that the merger will not result in adverse changes in client service standards or business focus; | |
• | difficulties integrating IT and financial reporting systems; | |
• | failure to rationalize and integrate facilities quickly and effectively; | |
• | loss of key employees during the transition and integration periods; | |
• | revenue attrition in excess of anticipated levels; and | |
• | failure to leverage the increased scale of the combined company quickly and effectively. |
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• | cancellation of orders; | |
• | product returns, repairs or replacements; | |
• | diversion of resources of the combined company; | |
• | legal actions by customers or customers’ end users; | |
• | increased insurance costs; and | |
• | other losses to the combined company or to customers or end users. |
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• | computing, which includes products such as desktop, handheld and notebook computers, electronic games and servers; | |
• | mobile communication devices, which includes handsets operating on a number of different platforms such as GSM, CDMA, TDMA and WCDMA; | |
• | consumer digital devices, which includes products such as set top boxes, home entertainment equipment, printers, copiers and cameras; | |
• | industrial, semiconductor and white goods, which includes products such as home appliances, industrial meters, bar code readers and test equipment; | |
• | automotive, marine and aerospace, which includes products such as navigation instruments, radar components and instrument panel and radio components; | |
• | telecommunications infrastructure, which includes products such as cable modems, cellular base stations, hubs and switches; and | |
• | medical devices, which includes products such as drug delivery, diagnostic and telemedicine devices. |
• | printed circuit board and flexible circuit fabrication; | |
• | systems assembly and manufacturing; | |
• | logistics; | |
• | after-sales services; | |
• | design and engineering services; |
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• | original design manufacturing (ODM) services; and | |
• | components design and manufacturing. |
• | computing and storage equipment, including servers, storage systems, workstations, notebooks and peripherals; | |
• | networking equipment such as routers and switches that move traffic across the Internet; | |
• | communications equipment, including wireless and wireline infrastructure products; | |
• | consumer products such as set-top boxes and personal/handheld communications devices; | |
• | automotive electronics systems, such as audio and navigation systems, system control modules and body electronics; | |
• | industrial products, including semiconductor manufacturing and test equipment, wafer fabrication equipment controls, process automation equipment, interactive and self-service kiosks, appliance electronics controls, instrumentation and industrial controls; | |
• | medical products such as X-ray equipment, ultrasound fetal monitors, MRI scanners, blood analyzers, insulin delivery devices, ECG patient monitors, surgical robotic systems, HPLCs, spectrometers and laser surgery equipment; and | |
• | other electronics equipment and products. |
• | product design; | |
• | collaborative design; | |
• | product launch/NPI (new product introduction); | |
• | DFX (design for manufacturability) services; | |
• | PCBA (printed circuit board assembly) and subsystem manufacturing; |
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• | systems integration and test; | |
• | parts management; | |
• | inventory management; | |
• | forward/reverse logistics; | |
• | repair; | |
• | recovery/remarketing; and | |
• | feedback to design and manufacturing for quality/serviceability. |
• | To authorize the directors of Flextronics to allot and issue ordinary shares pursuant to the Agreement and Plan of Merger, dated as of June 4, 2007, entered into among Flextronics, Saturn Merger Corp., a wholly-owned subsidiary of Flextronics, and Solectron Corporation (Proposal 1); | |
• | To re-elect the following directors: James A. Davidson and Lip-Bu Tan (Proposal 2); |
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• | To re-appoint Mr. Rockwell A. Schnabel as a director of Flextronics (Proposal 3); | |
• | To approve the re-appointment of Deloitte & Touche LLP as Flextronics’s independent registered public accounting firm for the 2008 fiscal year (Proposal 4); | |
• | To approve a general authorization for the directors of Flextronics to allot and issue ordinary shares (Proposal 5); | |
• | To approve the cash compensation payable to Flextronics’s non-employee directors (Proposal 6); | |
• | To approve the renewal of the Share Purchase Mandate relating to acquisitions by Flextronics of its own issued ordinary shares (Proposal 7); and | |
• | To approve amendments to Flextronics’s 2001 Equity Incentive Plan relating to: (a) a 5,000,000-share increase in the sub-limit on the maximum number of ordinary shares which may be issued as stock bonus awards and (b) a 10,000,000-share increase in the share reserve (Proposals 8 and 9). |
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• | Flextronics’s consolidated financial statements (which are identical to those included in the Annual Report onForm 10-K, described above); | |
• | supplementary financial statements (which reflect solely Flextronics’s standalone financial results, with the company’s subsidiaries accounted for under the equity method rather than consolidated); | |
• | a Directors’ Report; and | |
• | the Auditors’ Report of Deloitte & Touche, Flextronics’s Singapore statutory auditors for the fiscal year ended March 31, 2007. |
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501 Madison Avenue, 20th Floor
New York, New York, 10022
United States and Canada:(877) 825-8971
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• | the strategic benefits of the merger, as identified in the section entitled “Flextronics’s Reasons for the Merger and Board Recommendation” beginning on page 49 of this joint proxy statement/prospectus; | |
• | management’s assessment of the financial condition, results of operations and businesses of Flextronics and Solectron before and after giving effect to the merger; | |
• | reports from Flextronics’s management and legal and financial advisors as to the results of the due diligence investigation of Solectron; | |
• | financial market conditions, historical share prices, and other trading data relating to Flextronics ordinary shares and the common stock of Solectron; | |
• | the opinion of Citigroup, as described below in the section entitled “Opinion of Flextronics’s Financial Advisor” beginning on page 51 of this joint proxy statement/prospectus, that as of June 3, 2007, and subject to the factors, assumptions, procedures, limitations and qualifications set forth in Citigroup’s written opinion, a copy of which is attached to this joint proxy statement/prospectus as Annex D, the consideration to be paid by Flextronics in the merger is fair, from a financial point of view, to Flextronics; | |
• | the structure of the merger, including the fixed exchange ratio of 0.3450 and the right of Solectron stockholders to elect to receive either Flextronics shares or cash, subject to the limitation that not more than 70% in the aggregate and no less than 50% in the aggregate of Solectron shares will be converted into shares of Flextronics; | |
• | the belief that the terms of the merger agreement, including the parties’ representations, warranties and covenants, and the conditions to their respective obligations, are reasonable; | |
• | the various alternatives for funding the cash requirements of the transaction, including the terms and conditions of the $2.5 billion, seven-year, senior unsecured term loan facility that Citigroup has committed to provide in connection with the merger; | |
• | management’s projections of Flextronics as an independent company; and | |
• | other strategic alternatives for Flextronics. |
• | the risk that the potential benefits sought in the merger, including anticipated synergies, might not be fully realized; | |
• | the possibility that the merger may not be completed, or that completion of the merger may be delayed; |
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• | the challenges and substantial costs of combining the two businesses and the expenses to be incurred in connection with the merger, including the risk that delays or difficulties in completing the integration, could adversely affect the combined company’s operating results and delay or prevent the realization of anticipated synergies, cost savings or other anticipated benefits from the merger; | |
• | the risk that despite the efforts of the combined company, key technical and management personnel may depart as a result of the merger; and | |
• | various other risks associated with the merger and the businesses of Flextronics and the combined company described in the section entitled “Risk Factors” beginning on page 26 of this joint proxy statement/prospectus. |
• | Enhanced Competitive Position. Combining Flextronics and Solectron would create the most diversified and premier global provider of advanced design and vertically integrated EMS with the broadest worldwide EMS capabilities, from design resources to end-to-end vertically integrated global supply chain services. The combined company would be able to use its increased scale to realize significant cost savings and further extend its reach within established market segments. | |
• | Improved Customer Offering. By adding Solectron’s resources and unique skill sets, Flextronics would be able to provide more value innovation to its customers by leveraging the combined global economies of scale in manufacturing, logistics, procurement, design, engineering, and ODM services. A larger company would be more competitive and therefore better-positioned to deliver supply chain solutions that fulfill its customers’ increasingly complex requirements. The combined company would be expected to improve the competitive position of its customers by simplifying their global product development process while also delivering improved product quality with enhanced performance and faster time to market. | |
• | Complementary Businesses. Solectron’s strengths in high-end computing, communications, and networking infrastructure market segments complement Flextronics’s strengths in vertical integration and ODM capabilities and its expertise in cell phones and consumer electronics. The combined company would be a leading EMS supplier of high-end products, enhancing and leveraging Flextronics’s global leadership position in high-volume, low-cost products. In addition, Solectron’s after-market sales support, repair service, and build to order/configure to order capabilities would be a valuable addition to Flextronics’s existing end-to-end vertically integrated service capabilities. | |
• | Operating Synergies. Over the last 18 months, Flextronics has reorganized its management structure, creating the infrastructure required to effectively and efficiently add scale to its operations and enable it to achieve the synergies expected from the successful integration of Solectron’s operations. The combined company would be expected to realize cost savings from manufacturing and operating expense reductions, which will result from global footprint rationalization and the elimination of redundant assets or unnecessary functions. Additional costs savings would be expected from leveraging increased scale and purchasing power, and the expansion of vertical integration would be expected to drive higher combined profitability. In addition, combined capital expenditures would be reduced by the redeployment of equipment and rationalized manufacturing locations. |
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• | Diversification. Flextronics’s current product portfolio is highly concentrated in the mobile segment, which represented approximately 31% of Flextronics’s revenues for the quarter ended March 31, 2007, followed by consumer digital at 24%, infrastructure at 23%, industrial, auto, medical and other at 12%, and computing at 10% of revenues. By comparison, infrastructure represented 42% of Solectron’s revenues for the quarter ended March 2, 2007, followed by computing at 34%, industrial, auto, medical and other at 12%, and consumer digital at 12%. Following the merger, the combined company will have a more diversified and balanced customer and product mix, especially with regard to the mobile and infrastructure market segments, which may better position the combined company to withstand end market, customer and product volatility in the future. |
• | held discussions with certain senior officers, directors and other representatives and advisors of Flextronics and certain senior officers and other representatives and advisors of Solectron concerning the business, operations and prospects of Flextronics and Solectron; | |
• | examined certain publicly available business and financial information relating to Flextronics and Solectron; | |
• | examined certain financial forecasts and other information and data relating to Flextronics and Solectron, which were provided to or discussed with Citigroup by the management of Flextronics and Solectron, including adjustments prepared by management of Flextronics to the forecasts and other information and data relating to Solectron, and including information relating to the potential strategic implications and operational benefits (including the amount, timing and achievability thereof) anticipated by the management of each of Flextronics and Solectron to result from the acquisition; |
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• | reviewed the financial terms of the acquisition as set forth in the merger agreement in relation to, among other things: current and historical market prices and trading volumes of Flextronics ordinary shares and Solectron common stock; the historical and projected earnings and other operating data of Flextronics and Solectron; and the capitalization and financial condition of Flextronics and Solectron; | |
• | considered, to the extent publicly available, the financial terms of certain other transactions and analyzed certain financial, stock market and other publicly available information relating to the businesses of other companies whose operations Citigroup considered relevant or potentially relevant in evaluating those of Flextronics and Solectron; | |
• | evaluated certain potential pro forma financial effects of the acquisition on Flextronics; and | |
• | conducted such other analyses and examinations and considered such other information and financial, economic and market criteria as Citigroup deemed appropriate in arriving at its opinion. |
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• | consideration per share of Solectron common stock to consist of $3.89 in cash or 0.345 Flextronics ordinary shares; | |
• | cash conversion range of 30% to 50% of outstanding shares of Solectron and stock conversion range of 50% to 70% of outstanding shares of Solectron; and | |
• | pro forma synergies of the combined company. |
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High | Low | Average | Current | |||||||||||||
Last 30 days | 0.3135 | x | 0.2896 | x | 0.3013 | x | 0.2944 | x | ||||||||
Last 90 days | 0.3135 | x | 0.2775 | x | 0.2915 | x | 0.2944 | x | ||||||||
Last 180 days | 0.3135 | x | 0.2436 | x | 0.2864 | x | 0.2944 | x | ||||||||
Last 12 months | 0.3389 | x | 0.2436 | x | 0.2879 | x | 0.2944 | x | ||||||||
Last 2 years | 0.3985 | x | 0.2436 | x | 0.3086 | x | 0.2944 | x |
• | Firm value as multiple of estimated EBITDA for each of calendar years 2007 and 2008; and | |
• | Stock price per share as multiple of estimated earnings per share, for each of calendar years 2007 and 2008. |
Firm Value / EBITDA | Price / EPS | |||||||||||||||
CY2007E | CY2008E | CY2007E | CY2008E | |||||||||||||
Tier I EMS — Median | 8.1 | x | 7.1 | x | 21.9 | x | 12.8 | x | ||||||||
Tier I EMS — Mean | 8.3 | x | 6.7 | x | 19.9 | x | 13.5 | x | ||||||||
Solectron @ Market ($3.40) | 6.2 | x | 5.4 | x | 15.3 | x | 12.7 | x | ||||||||
Solectron @ Transaction ($3.89) | 7.3 | x | 6.3 | x | 17.5 | x | 14.6 | x |
Premium | ||||||||||||
1-Day | 10-Day | 30-Day | ||||||||||
High | 79.1 | % | 74.1 | % | 59.9 | % | ||||||
Average | 19.4 | % | 20.9 | % | 21.3 | % | ||||||
Median | 16.6 | % | 18.1 | % | 20.2 | % | ||||||
Low | (7.2 | )% | (5.0 | )% | (8.4 | )% | ||||||
Flextronics-Solectron | 14.4 | % | 15.3 | % | 13.8 | % |
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Implied Per Share Equity Value | Solectron Stock Closing Price | |
Reference Range for Solectron | on May 31, 2007 | |
$3.66 - $4.33 | $3.40 |
• | the pro forma business mix of Flextronics and Solectron, based on company presentations, Flextronics last quarter annualized as of March 31, 2007 and Solectron’s last quarter annualized as of March 2, 2007; | |
• | Wall Street analyst price targets and projections for Solectron found in publicly available equity research; and | |
• | operating metrics, including revenue growth, of Solectron and selected Tier I EMS firms. Estimates for the Tier I EMS firms were based on company filings, press releases, Wall Street releases and Factset market data. |
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• | determined that the merger agreement and the transactions contemplated by the merger agreement are advisable and fair to and in the best interests of the Solectron stockholders and approved and adopted the merger agreement and the transactions contemplated thereby; and | |
• | resolved to recommend that the Solectron stockholders adopt the merger agreement. |
• | historical information concerning Flextronics’s and Solectron’s respective businesses, prospects, financial performance and condition, operations, technology, management and competitive position, including public reports concerning results of operations for each company, as filed with the SEC; | |
• | Solectron management’s view of the financial condition, results of operations and businesses of Flextronics and Solectron before and after giving effect to the merger (including Solectron’s prospects continuing as an independent company); and | |
• | reports from Solectron management and outside legal, financial and accounting advisers as to the results of the due diligence investigation of Flextronics. |
• | its expectation that the merger would result in a larger, more competitive organization, and that the opportunities for strategic investment and customer expansion following the merger would be significantly greater for the combined company than what Solectron could achieve as an independent company; | |
• | its expectation that the complementary capabilities of Solectron and Flextronics would enhance the range of the services and solutions currently offered by Solectron to its customers and would allow the combined company to pursue new growth opportunities; and | |
• | the strategic benefits of the merger, as described in the sections entitled “Flextronics’s Reasons for the Merger and Board Recommendation” beginning on page 49 and “Solectron’s Reasons for the Merger and Board Recommendation” beginning on page 56 of this joint proxy statement/prospectus. |
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• | the fact that the implied value of the merger consideration, based on the closing price of Flextronics ordinary shares on June 1, 2007 (the last trading day prior to announcement of the merger) represented a premium of 15.0% (for cash elections) and 20.0% (for stock elections) to the closing price of Solectron common stock on such date, a 14.2% (for cash elections) and 18.6% (for stock elections) premium to the20-day average closing price of Solectron common stock and a substantial premium over other recent historical periods; | |
• | the stock election feature of the transaction offers Solectron stockholders the opportunity to participate in the growth and success of the combined company through the stock component of the merger consideration, subject to the aggregate stock consideration cap; | |
• | the cash election feature of the transaction allows Solectron stockholders to realize an immediate return on their investment in Solectron common stock through the cash component of the merger consideration, subject to the aggregate cash cap; | |
• | the significant synergies that could result from the transaction, including substantial cost savings for the combined company from increased efficiencies in manufacturing, logistics and operating expenses; | |
• | the expectation that, immediately after closing and depending on the aggregate amount of cash consideration that Solectron stockholders elect to receive pursuant to the merger and based on the number of Flextronics ordinary shares and shares of Solectron common stock outstanding on June 1, 2007, including Solectron restricted shares and the exchangeable shares, Solectron stockholders would beneficially own approximately 21% to 27% of the ordinary shares of the combined company, and would have the opportunity to share in the future growth and expected synergies of the combined company while retaining the flexibility to sell all or a portion of those shares at any time. |
• | the belief that the terms of the merger agreement, including the parties’ mutual representations, warranties, covenants and closing conditions, are reasonable and that the prospects for successful consummation of the transaction are high; | |
• | the limited ability of Flextronics to terminate the merger agreement, and the fees payable by Flextronics with respect to certain events of termination, namely the payment of a $100.0 million termination fee to Solectron in certain circumstances where the merger agreement is terminated, although the Solectron board of directors understood that such limitations and similar fees would also apply to Solectron; |
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• | the fact that while the merger agreement contains a covenant prohibiting Solectron from soliciting third party acquisition proposals, it allows a reasonable opportunity to respond to unsolicited superior third party acquisition proposals if the Solectron board of directors determines that the failure to do so would reasonably be expected to be a breach of its fiduciary duties under applicable law, subject to the payment of a termination fee upon termination under certain circumstances; | |
• | its view that the terms of the merger agreement, including the termination fee, would not preclude a proposal for an alternative acquisition transaction involving Solectron; | |
• | the fact that the merger agreement allows the Solectron board of directors to withhold, withdraw, amend or modify its recommendation of the merger agreement if a superior proposal is received from a third party or if the Solectron board of directors determines that the failure to withhold, withdraw, amend or modify its recommendation would reasonably be expected to be a breach of its fiduciary duties under applicable law, subject to the payment of a termination fee upon termination under certain circumstances; | |
• | the governance arrangements of the combined company under which the board of directors of the combined company would include two directors designated by Solectron, subject to the approval of Flextronics; | |
• | the fact that, as of and following the closing date, the surviving corporation will either (a) maintain Solectron’s benefit plans (other than Solectron’s 401(k) plans, unless Flextronics otherwise notifies Solectron that such plans will not be terminated immediately prior to the closing date), or (b) permit each continuing employee of Solectron and its subsidiaries employed immediately prior to the effective time (and, as applicable, their eligible dependents) to participate in the Flextronics benefit plans (on terms no less favorable than those provided to similarly situated Flextronics employees), in which case, such employees will receive credit for prior service with Solectron and its subsidiaries, including predecessor employers, for certain purposes, or (c) a combination of (a) and (b). |
• | the price of Flextronics ordinary shares at the time of closing could be lower than the price as of the time of signing, and accordingly, the value of the stock consideration received by Solectron stockholders in the merger could be materially less than the value as of the date of the merger agreement; | |
• | the difficulties and challenges inherent in completing a merger and integrating the management teams, strategies, cultures and organizations of the two companies; | |
• | the risk that the expected synergies and other benefits of the merger might not be fully achieved or may not be achieved within the timeframes expected; | |
• | the risks of the type and nature described above under “Risk Factors”; | |
• | if Solectron stockholders collectively elect to receive cash consideration in excess of the aggregate cash cap, the cash consideration that the Solectron stockholders will receive will be proportionally reduced and substituted with Flextronics ordinary shares pursuant to the terms of the merger agreement, which will result in those stockholders who elect cash not receiving the exact form of merger consideration they elected; | |
• | if Solectron stockholders collectively elect to receive stock consideration in excess of the aggregate stock cap, the stock consideration that the Solectron stockholders will receive will be proportionally reduced and substituted with cash pursuant to the terms of the merger agreement, which will result in those stockholders who elect stock not receiving the exact form of merger consideration they elected; | |
• | the possibility that the merger ultimately may not be completed, whether as a result of material adverse developments, regulatory objections or other unsatisfied closing conditions; | |
• | the potential adverse effects of the announcement and pendency of the merger on Solectron’s customer, supplier and employee relationships, including the potential decrease or loss of customer business; | |
• | the decision of Solectron’s board of directors to pursue the proposed strategic merger without soliciting competing proposals from other parties (though the structure of the merger agreement allows Solectron’s |
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board of directors to consider alternative third party acquisition proposals if Solectron’s board of directors determines in good faith that an alternative third party acquisition proposal is or is reasonably likely to result in an acquisition proposal that is more favorable to the Solectron stockholders); |
• | certain provisions of the merger agreement may have the effect of discouraging proposals for alternative acquisition transactions involving Solectron, including: |
• | the restriction on Solectron’s ability to solicit proposals for alternative transactions; | |
• | the requirement that the Solectron board of directors submit the merger agreement to the Solectron stockholders for approval and adoption in certain circumstances, even if the Solectron board of directors withholds, withdraws, amends or modifies its recommendation for the merger; and | |
• | the requirement that Solectron pay a termination fee of $100.0 million to Flextronics in certain circumstances following the termination of the merger agreement; |
• | certain of Solectron’s directors and officers may have interests in the merger as individuals that are in addition to, or that may be different from, the interests of the Solectron stockholders, as further described in the section entitled “The Merger — Interests of Solectron’s Officers and Directors in the Merger” beginning on page 67 of this joint proxy statement/prospectus; | |
• | the fees and expenses associated with completing the merger; | |
• | the risk that certain members of Solectron senior management or Flextronics senior management might choose not to remain employed with the combined company; | |
• | the risk that either the Solectron stockholders may fail to adopt the merger agreement or the Flextronics shareholders may fail to approve the issuance of the Flextronics ordinary shares in the merger; | |
• | the potential impact of the restrictions under the merger agreement on Solectron’s ability to take certain actions during the period prior to the closing of the merger (which may delay or prevent Solectron from undertaking business opportunities that may arise pending completion of the merger); and | |
• | the potential for diversion of management and employee attention and for increased employee attrition during the period prior to the closing of the merger agreement, and the potential effect that these may have on Solectron’s business and relations with customers and suppliers. |
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• | Complementary Businesses. The development, manufacturing and logistics capabilities of the two companies are complementary and should enable the combined company to compete more effectively in the general EMS market. The combined company should be stronger than either company on its own, with greater breadth and depth of service offerings and with the scale and anticipated operational efficiencies that should allow it to profitably compete. In addition, Flextronics’s ODM capabilities, its vertical integration model, and its continued targeting of non-traditional EMS market segments (e.g., automotive, military/aerospace, industrial and medical) should allow the combined company to compete effectively in these market segments, which offer greater growth potential and higher margins than the traditional EMS market segments that comprise Solectron’s core business. Lastly, the integration of the Solectron and Flextronics logistics networks with these manufacturing facilities should create a more flexible and responsive organization that can more quickly react to and address regional and local changes in market demand and customer expectations and preferences in the various market throughout the world. | |
• | Customers. The combined company should be able to deepen relationships with many of its existing customers. Solectron expects the combined company to improve its ability to expand its current customer relationships and expects to increase its penetration of new customer accounts. Solectron believes that the combination of the two companies’ design, engineering, manufacturing and logistics capabilities should enable the combined company to meet customer needs more effectively and, particularly with the vertical integration model that Flextronics has been pursuing, to deliver more complete solutions to customers at a lower cost to those customers while realizing improved margins for the combined company. In addition, Solectron believes the larger sales organization, greater marketing resources and financial strength of the combined company may lead to improved opportunities for marketing the combined company’s offerings. | |
• | Reduction in Operating Costs. The combined company is expected to realize substantial cost savings as a result of increased efficiencies in manufacturing, logistics and operating expenses. Flextronics and Solectron expect the combined company to achieve benefits from cost savings from manufacturing and operating expense reductions resulting from global footprint rationalization and the elimination of redundant assets or unnecessary functions; leveraging increased scale and purchasing power; and the expansion of vertical integration capabilities within the Solectron customer base. | |
• | Stronger Financial Position. The combined company will have greater scale and financial resources, including total cash and cash equivalents. Flextronics and Solectron expect that this stronger financial position will improve the combined company’s ability to support the combined company’s strategy; to respond more quickly and effectively to customer needs, technological change, increased competition and shifting market demand; and to pursue strategic growth opportunities in the future, including acquisitions. | |
• | Stock-for-Stock with Fixed Exchange Ratio for Stockholders that Elect Stock. Solectron’s stockholders who receive Flextronics ordinary shares in the merger will share in the benefits from the growth opportunities, synergies and cost savings that are expected to be realized by the combined company as a result of the merger. The fact that the stock consideration is based on a fixed exchange ratio provides certainty as to the number of Flextronics ordinary shares that will be issued to Solectron stockholders who receive Flextronics ordinary shares in the merger. |
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• | the merger agreement; | |
• | annual reports to stockholders and Annual Reports on Form10-K of Solectron for the five fiscal years ended August 31, 2006 and of Flextronics for the five fiscal years ended March 31, 2007; | |
• | certain interim reports to stockholders and Quarterly Reports onForm 10-Q of Solectron and Flextronics; | |
• | certain other communications from Solectron and Flextronics to their respective stockholders; | |
• | certain internal financial analyses and forecasts for Solectron prepared by its management; and | |
• | certain internal financial analyses and forecasts for Flextronics prepared by its management, as reviewed and approved for Goldman Sachs’ use by the management of Solectron, referred to in this joint proxy statement/prospectus as the Forecasts, and certain cost savings and operating synergies projected by the management of Solectron to result from the transaction, referred to in this joint proxy statement/prospectus as the Synergies. |
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• | a premium of 15.4% based on the closing market price of $3.37 per share as of June 1, 2007; | |
• | a premium of 15.1% based on the10-day average market price of $3.38 per share; | |
• | a premium of 14.2% based on the20-day average market price of $3.40 per share; | |
• | a premium of 18.6% based on the three-month average market price of $3.28 per share; | |
• | a premium of 17.7% based on the six-month average market price of $3.30 per share; and | |
• | a premium of 18.4% based on the one-year average market price of $3.28 per share. |
• | a premium of 19.8% based on the exchange ratio of 0.2880x calculated as of June 1, 2007; | |
• | a premium of 15.7% based on the10-day average exchange ratio of 0.2981x; | |
• | a premium of 15.5% based on the20-day average exchange ratio of 0.2987x; | |
• | a premium of 17.8% based on the three-month average exchange ratio of 0.2930x; |
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• | a premium of 18.9% based on the six-month average exchange ratio of 0.2901x; and | |
• | a premium of 19.9% based on the one-year average exchange ratio of 0.2877x. |
Selected Large Cap | Selected Small and Mid Cap | |
Electronic Manufacturing | Electronic Manufacturing | |
Services Companies | Services Companies | |
• Celestica Inc. | • Benchmark Electronics, Inc. | |
• Flextronics | • LaBarge, Inc. | |
• Hon Hai Precision Industry Co., Ltd. | • Plexus Corp. | |
• Jabil Circuit, Inc. | • Sypris Solutions, Inc. | |
• Sanmina-SCI Corporation | ||
• Solectron |
PE/ | ||||||||||||||||||||
Enterprise Value/ | Growth | |||||||||||||||||||
Sales Multiples | Price/Earnings Multiples | Multiples | ||||||||||||||||||
Estimated | Estimated | Estimated | Estimated | Estimated | ||||||||||||||||
Selected Company | CY2007 | CY2008 | CY2007 | CY2008 | CY2008 | |||||||||||||||
Celestica Inc. | 0.2 | x | 0.2 | x | 51.1 | x | 13.3 | x | 0.9 | x | ||||||||||
Flextronics | 0.4 | x | 0.3 | x | 12.9 | x | 11.0 | x | 0.5 | x | ||||||||||
Hon Hai Precision Industry Co., Ltd. | 0.6 | x | 0.5 | x | 14.5 | x | 11.1 | x | 0.6 | x | ||||||||||
Jabil Circuit, Inc. | 0.4 | x | 0.4 | x | 19.9 | x | 13.1 | x | 0.6 | x | ||||||||||
Sanmina-SCI Corporation | 0.3 | x | 0.3 | x | 22.0 | x | 13.5 | x | 1.3 | x | ||||||||||
Solectron | 0.2 | x | 0.2 | x | 14.5 | x | 12.1 | x | 0.8 | x | ||||||||||
Mean | 0.4 | x | 0.3 | x | 22.5 | x | 12.3 | x | 0.8 | x | ||||||||||
Median | 0.3 | x | 0.3 | x | 17.2 | x | 12.6 | x | 0.7 | x |
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PE/ | ||||||||||||||||||||
Enterprise Value/ | Price/Earnings | Growth | ||||||||||||||||||
Sales Multiples | Multiples | Multiples | ||||||||||||||||||
Estimated | Estimated | Estimated | Estimated | Estimated | ||||||||||||||||
Selected Company | CY2007 | CY2008 | CY2007 | CY2008 | CY2008 | |||||||||||||||
Benchmark Electronics, Inc. | 0.4 | x | 0.4 | x | 13.3 | x | 11.5 | x | 0.7 | x | ||||||||||
LaBarge, Inc. | 1.0 | x | 1.0 | x | 17.4 | x | 16.4 | x | NA | |||||||||||
Plexus Corp. | 0.6 | x | 0.5 | x | 17.1 | x | 15.0 | x | 0.8 | x | ||||||||||
Sypris Solutions, Inc. | 0.4 | x | 0.4 | x | NM(1 | ) | 28.4 | x | NA | |||||||||||
Mean | 0.6 | x | 0.6 | x | 15.9 | x | 17.9 | x | 0.8 | x | ||||||||||
Median | 0.5 | x | 0.5 | x | 17.1 | x | 15.7 | x | 0.8 | x |
(1) | Not meaningful |
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Aggregate | ||||||||||||||||||||||
Aggregate | Aggregate | Aggregate | Value of | |||||||||||||||||||
Shares of | Shares of | Value of | Outstanding | |||||||||||||||||||
Solectron | Solectron | Outstanding | Restricted | |||||||||||||||||||
Common | Common | Options | Aggregate | Stock | ||||||||||||||||||
Stock | Stock | that may | Shares of | that may | ||||||||||||||||||
Subject to | Subject to | Accelerate | Outstanding | Accelerate | ||||||||||||||||||
Outstanding | Unvested | in Connection | Restricted | in Connection | ||||||||||||||||||
Options | Options | with the | Stock | with the | ||||||||||||||||||
Name | Relationship to Solectron | (1) | (1) | Merger(1)(2) | (3) | Merger(4) | ||||||||||||||||
Paul Tufano | Executive Vice | 750,000 | 520,834 | $ | 134,063 | 1,611,993 | $ | 6,270,653 | ||||||||||||||
President and Interim President and Chief Executive Officer | ||||||||||||||||||||||
Douglas Britt | Executive Vice | 466,000 | 289,584 | $ | 91,084 | 954,750 | $ | 3,713,978 | ||||||||||||||
President, Sales and Account Management | ||||||||||||||||||||||
Todd DuChene | Executive Vice | 430,000 | 287,917 | $ | 90,867 | 1,016,843 | $ | 3,955,519 | ||||||||||||||
President, General Counsel and Secretary | ||||||||||||||||||||||
Roop Lakkaraju | Senior Vice | 152,500 | 106,585 | $ | 35,359 | 431,200 | $ | 1,677,368 | ||||||||||||||
President and Interim Chief Financial Officer | ||||||||||||||||||||||
Craig London | Executive Vice | 750,000 | 197,917 | $ | 79,167 | 1,138,500 | $ | 4,428,765 | ||||||||||||||
President, Solectron Global Services | ||||||||||||||||||||||
Marty Neese | Executive Vice | 500,000 | 197,917 | $ | 79,167 | 1,002,500 | $ | 3,899,725 | ||||||||||||||
President, Operations | ||||||||||||||||||||||
Kevin O’Connor | Executive Vice | 550,000 | 197,917 | $ | 79,167 | 1,024,750 | $ | 3,986,278 | ||||||||||||||
President and Chief Administrative Officer | ||||||||||||||||||||||
David Purvis | Executive Vice | 250,000 | 197,917 | $ | 79,167 | 1,278,500 | $ | 4,973,365 | ||||||||||||||
President and Chief Technical Officer | ||||||||||||||||||||||
Perry G. Hayes | Senior Vice | 405,800 | 227,234 | $ | 50,218 | 197,425 | $ | 767,983 | ||||||||||||||
President, Treasurer and Investor Relations | ||||||||||||||||||||||
Warren J. Ligan | Senior Vice | 234,500 | 124,584 | $ | 34,309 | 160,450 | $ | 624,151 | ||||||||||||||
President and Chief Accounting Officer | ||||||||||||||||||||||
All Directors and executive officers as a group (18 individuals) | 5,166,800 | 2,481,742 | $ | 816,567 | 8,816,911 | $ | 34,297,785 |
(1) | Reflects options with a per share exercise price equal to or less than $5.00. | |
(2) | Reflects the aggregate market value of unexercised options based on an assumed Solectron stock price of $3.89 per share. For option grants, the value was computed by multiplying (1) the difference between $3.89 and the exercise price of the option, by (2) the number of unexercised options. | |
(3) | Includes the shares of restricted stock to be granted September 3, 2007. | |
(4) | Reflects the aggregate market value of restricted stock (including the value of restricted stock to be granted September 3, 2007) assuming that each holder of restricted stock will elect to receive $3.89 in cash for each share of Solectron common stock. For restricted stock awards, value is computed by multiplying (i) $3.89, by (ii) the number of outstanding shares of restricted stock. |
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• | For a period of 24 months, continuing severance payments of his average base salary and average annual target bonus for the two years prior to termination (or such shorter period if Mr. Tufano was employed for less than two years), to be paid in equal installments in accordance with Solectron’s (or its successor’s) normal payroll practices; | |
• | All options granted to Mr. Tufano will fully vest and become exercisable for a period of three months following his termination (or, if earlier, until the date the options expire); | |
• | All shares of restricted stock granted to Mr. Tufano will fully vest; | |
• | Mr. Tufano and his eligible dependents will continue to receive company-paid coverage for medical, dental, visionand/or financial counseling benefits for a period of 36 months; | |
• | All amounts contributed by Solectron to Mr. Tufano’s account in the Solectron Executive Deferred Compensation Plan will vest and no longer be subject to forfeiture; | |
• | Mr. Tufano will receive other compensation or benefits as may be required by law (such as, for example, COBRA coverage); and | |
• | Agross-up payment to reimburse Mr. Tufano for any taxes payable under Section 4999 of the Code, including taxes payable on suchgross-up payment. |
• | For a period of 12 months plus one additional month for every full year that Mr. Tufano has been employed (up to a maximum of 24 months) (the “Severance Payment Period”), continuing severance payments of his base salary and annual target bonus for the year of termination, to be paid periodically in accordance with Solectron’s (or its successor’s) normal payroll practices; | |
• | All options granted to Mr. Tufano will fully vest and become exercisable and all shares of restricted stock granted to Mr. Tufano will fully vest; | |
• | Mr. Tufano and his eligible dependents will continue to receive company-paid coverage for medical, dental, visionand/or financial counseling benefits for the Severance Payment Period; | |
• | All amounts contributed by Solectron to Mr. Tufano’s account in the Solectron Executive Deferred Compensation Plan will vest and no longer be subject to forfeiture; and | |
• | Mr. Tufano will receive other compensation or benefits as may be required by law (such as, for example, COBRA coverage). |
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• | For a period of 24 months, continuing severance payments of the executive’s average base salary and average annual target bonus for the two years prior to the termination (or such shorter period if the executive was employed for less than two years), to be paid in equal installments in accordance with Solectron’s normal payroll practices; | |
• | All options granted to the executive will fully vest and become exercisable for a period of three months following his termination (or, if earlier, until the date the options expire); | |
• | All shares of restricted stock granted to the executive will fully vest; | |
• | The executive and his eligible dependents will continue to receive company-paid coverage for medical, dental, visionand/or financial counseling benefits for a period of 36 months; | |
• | The executive will receive other compensation or benefits as may be required by law (for example, COBRA coverage); and | |
• | Agross-up payment to reimburse the executive for any taxes payable under Section 4999 of the Code, including taxes payable on suchgross-up payment. |
• | For a period of 12 months plus one additional month for every full year that the executive has been employed (up to a maximum of 24 months) (the “Severance Payment Period”), continuing severance payments of his base salary and annual target bonus for the year of termination, to be paid periodically in accordance with Solectron’s (or its successor’s) normal payroll practices; | |
• | The executive and his eligible dependents will continue to receive company-paid coverage for medical, dental, visionand/or financial counseling benefits for the Severance Payment Period; | |
• | The executive will receive other compensation or benefits as may be required by law (such as, for example, COBRA coverage); and | |
• | Agross-up payment to reimburse the executive for any taxes payable under Section 4999 of the Code, including taxes payable on suchgross-up payment. |
• | For a period of 24 months, continuing severance payments of his average base salary and average annual target bonus for the two years prior to termination (or such shorter period if Mr. Lakkaraju was employed for less than two years), to be paid in equal installments in accordance with Solectron’s (or its successor’s) normal payroll practices; | |
• | All options granted to Mr. Lakkaraju will fully vest and become exercisable for a period of three months following his termination (or, if earlier, until the date the options expire); | |
• | All shares of restricted stock granted to Mr. Lakkaraju will fully vest; |
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• | Mr. Lakkaraju and his eligible dependents will continue to receive company-paid coverage for medical, dental, visionand/or financial counseling benefits for a period of 36 months; | |
• | All amounts contributed by Solectron to Mr. Lakkaraju’s account in the Solectron Executive Deferred Compensation Plan will vest and no longer be subject to forfeiture; | |
• | Mr. Lakkaraju will receive other compensation or benefits as may be required by law (such as, for example, COBRA coverage); and | |
• | Agross-up payment to reimburse Mr. Lakkaraju for any taxes payable under Section 4999 of the Code, including taxes payable on suchgross-up payment. |
• | For a period of 12 months plus one additional month for every full year that Mr. Lakkaraju has been employed (up to a maximum of 24 months) (the “Severance Payment Period”), continuing severance payments of his base salary and annual target bonus for the year of termination, to be paid periodically in accordance with Solectron’s (or its successor’s) normal payroll practices; | |
• | Mr. Lakkaraju and his eligible dependents will continue to receive company-paid coverage for medical, dental, visionand/or financial counseling benefits for the Severance Payment Period; | |
• | Mr. Lakkaraju will receive other compensation or benefits as may be required by law (such as, for example, COBRA coverage); and | |
• | Agross-up payment to reimburse the executive for any taxes payable under Section 4999 of the Code, including taxes payable on suchgross-up payment. |
• | For a period of 18 months, continuing severance payments of the executive’s average base salary and average annual target bonus for the two years prior to the termination (or such shorter period if the executive was employed for less than two years), to be paid in equal installments in accordance with Solectron’s normal payroll practices; | |
• | All options granted to the executive will fully vest and become exercisable for a period of three months following his termination (or, if earlier, until the date the options expire); | |
• | All shares of restricted stock granted to the executive will fully vest; | |
• | The executive and his eligible dependents will continue to receive company-paid coverage for medical, dental, visionand/or financial counseling benefits for a period of 36 months; | |
• | The executive will receive other compensation or benefits as may be required by law (such as, for example, COBRA coverage); and | |
• | Agross-up payment to reimburse the executive for any taxes payable under Section 4999 of the Code, including taxes payable on suchgross-up payment. |
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• | For a period of 12 months plus one additional month for every full year that Mr. Hayes has been employed (up to a maximum of 24 months) (the “Severance Payment Period”), continuing severance payments of his base salary and annual target bonus for the year of termination, to be paid periodically in accordance with Solectron’s (or its successor’s) normal payroll practices; | |
• | Mr. Hayes and his eligible dependents will continue to receive company-paid coverage for medical, dental, visionand/or financial counseling benefits for the Severance Payment Period; | |
• | Mr. Hayes will receive other compensation or benefits as may be required by law (such as, for example, COBRA coverage); and | |
• | Agross-up payment to reimburse the executive for any taxes payable under Section 4999 of the Code, including taxes payable on suchgross-up payment. |
Estimated | Estimated Value of | |||||||
Cash Severance | Continued Benefit | |||||||
Name | Payments(1) | Coverage | ||||||
Paul Tufano | $ | 2,500,004 | $ | 27,882 | ||||
Douglas Britt | $ | 1,496,027 | $ | 41,823 | ||||
Todd DuChene | $ | 1,425,000 | $ | 41,823 | ||||
Roop Lakkaraju | $ | 1,540,032 | $ | 41,823 | ||||
Craig London | $ | 1,848,000 | $ | 27,882 | ||||
Marty Neese | $ | 1,429,316 | $ | 13,708 | ||||
Kevin O’Connor | $ | 1,498,000 | $ | 41,591 | ||||
David Purvis | $ | 1,848,000 | $ | 41,823 | ||||
Perry Hayes | $ | 821,553 | $ | 27,882 | ||||
Warren Ligan | $ | 936,000 | $ | 27,882 |
(1) | Reflects the terms of severance payments to be made to executives, but does not reflect any dollar value associated with the accelerated vesting of executives’ deferred compensation account or any gross-up payments to reimburse the executives for any taxes payable under Section 4999 of the Code. |
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• | the amount of cash that it receives pursuant to the merger; and | |
• | the amount of gain that it realizes pursuant to the merger. |
• | the cash that it receives; plus | |
• | the fair market value of Flextronics ordinary shares that it receives, over its tax basis in the Solectron common stock that such stockholder surrenders pursuant to the merger. |
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• | an effective registration statement under the Securities Act covering the resale of those shares; | |
• | an exemption under paragraph (d) of Rule 145 under the Securities Act; or | |
• | any other applicable exemption under the Securities Act. |
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• | Written Demand for Appraisal Prior to the Vote at the Special Meeting.A stockholder must deliver to Solectron a written demand for appraisal, meeting the requirements of Section 262 of the DGCL, before the taking of the stockholders’ vote on the adoption of the merger agreement at the special meeting. Voting against or abstaining with respect to the adoption of the merger agreement, failing to return a proxy or returning a proxy voting against or abstaining with respect to the proposal to adopt the merger agreement will not constitute the making of a written demand for appraisal. The written demand for appraisal must be in addition to and separate from any proxy, abstention from the vote on the merger agreement or vote against the merger agreement. The written demand must reasonably inform Solectron of the identity of the stockholder and of the stockholder’s intent thereby to demand appraisal of such stockholder’s shares. Failure to timely deliver a written demand for appraisal will cause a stockholder to lose his, her or its appraisal rights. | |
• | Refrain from Voting in Favor of Adoption of the Merger Agreement. In addition to making a written demand for appraisal, a stockholder must not vote his, her or its shares of Solectron capital stock in favor of the adoption of the merger agreement. A submitted proxy not marked “AGAINST” or “ABSTAIN” will be voted in favor of the proposal to adopt the merger agreement and will result in the waiver of appraisal rights. A stockholder that has not submitted a proxy will not waive his, her or its appraisal rights solely by failing to vote if the stockholder satisfies all other provisions of Section 262 of the DGCL. | |
• | Continuous Ownership of Solectron Common Stock. A stockholder must also continuously hold his, her or its shares of Solectron stock from the date the stockholder makes the written demand for appraisal through the effective time of the merger. Accordingly, a stockholder who is the record holder of shares of Solectron stock on the date the written demand for appraisal is made but who thereafter transfers the shares prior to the effective time of the merger will lose any right to appraisal with respect to such shares. | |
• | Petition with the Chancery Court. Within 120 days after the effective date of the merger (but not thereafter), either the surviving corporation or any stockholder who has complied with the requirements of Section 262 of the DGCL, which are summarized above, must file a petition in the Delaware Court of |
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Chancery demanding a judicial determination of the fair value of the shares of Solectron stock held by all stockholders who are entitled to appraisal rights. This petition in effect initiates a court proceeding in Delaware. Neither Solectron, if it is the surviving corporation, nor Saturn Merger II Corp., if it is the surviving corporation, has any intention at this time to file such a petition if a demand for appraisal is made, and stockholders seeking to exercise appraisal rights should not assume that Solectron or Saturn Merger II Corp., as the case may be, will file such a petition or that Solectron will initiate any negotiations with respect to the fair value of such shares. Accordingly, because Solectron (or Saturn Merger II Corp., as the case may be) has no obligation to file such a petition, if no stockholder files such a petition with the Delaware Court of Chancery within 120 days after the effective date of the merger, appraisal rights will be lost, even if a stockholder has fulfilled all other requirements to exercise appraisal rights. If such a petition is filed, the Delaware Court of Chancery could determine that the fair value of shares of Solectron common stock is more than, the same as, or less than the merger consideration. |
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Explanatory Note Regarding Summary of Merger Agreement and Representations and Warranties in the Merger Agreement |
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• | Solectron stockholders that elect to receive cash or that make no election or are deemed to have made no election will receive cash; and | |
• | each Solectron stockholder that elects to receive Flextronics ordinary shares will receive (i) a number of Flextronics ordinary shares equal to the product of (A) 0.3450 of the number of shares of Solectron common stock it holds and (B) a fraction, the numerator of which is 70% of the aggregate number of shares of Solectron common stock outstanding immediately prior to the effective time and the denominator of which is the aggregate number of shares of Solectron common stock for which stock elections have been made, plus (ii) cash for its remaining shares of Solectron common stock. |
• | Solectron stockholders who elect to receive Flextronics ordinary shares or that make no election or are deemed to have made no election will receive Flextronics ordinary shares; and | |
• | each Solectron stockholder that elects to receive cash will receive (i) an amount in cash, without interest, equal to the product of (A) $3.89 times the number of shares of Solectron common stock it holds and (B) a fraction, the numerator of which is 50% of the aggregate number of shares of Solectron common stock outstanding immediately prior to the effective time and the denominator of which is the aggregate number of shares of Solectron common stock for which cash elections have been made, plus (ii) Flextronics ordinary shares for its remaining shares of Solectron common stock. |
• | Solectron stockholders who elect to receive Flextronics ordinary shares will receive Flextronics ordinary shares; | |
• | Solectron stockholders who elect to receive cash will receive cash; and | |
• | each Solectron stockholder that does not make an election will receive (i) cash in respect of a pro rata portion of the shares of Solectron common stock it holds, based on (x) the difference between the maximum aggregate number of shares of Solectron common stock that the merger agreement provides will be converted into the right to receive cash and the aggregate number of shares of Solectron common stock that Solectron stockholders elect to convert into the right to receive cash, as a percentage of (y) the aggregate number of shares of Solectron common stock with respect to which no elections have been made, plus (ii) Flextronics ordinary shares for such stockholder’s remaining shares of Solectron common stock. |
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• | corporate organization, power and authority; | |
• | outstanding shares, options, warrants and convertible securities; | |
• | corporate authority to enter into, and complete the transactions under, the merger agreement; and enforceability of the merger agreement; | |
• | the unanimous approval by their respective boards of directors of the merger agreement and the transactions contemplated by the merger agreement; | |
• | absence of any conflict or violation of their respective charter documents, legal requirements or contracts as a result of the merger; | |
• | regulatory approvals required to complete the merger; | |
• | filings with the SEC, financial statements and the absence of undisclosed material liabilities; | |
• | internal controls over financial reporting and disclosure controls and procedures; | |
• | the absence since March 2, 2007 in the case of Solectron and March 31, 2007 in the case of Flextronics through, in each case, the date of the merger agreement of (i) any material adverse effect or any event, change or development reasonably expected to have, individually or in the aggregate, a material adverse effect, and (ii) certain other events and occurrences that would require the consent of the other party if they took place between the signing and the closing of the merger agreement; |
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• | the filing of required tax returns, payment of taxes and certain other tax matters; | |
• | real and personal properties and assets; | |
• | intellectual property matters; | |
• | governmental authorizations; | |
• | litigation and similar legal proceedings; | |
• | compliance with laws; | |
• | environmental matters; | |
• | employee benefit plans; | |
• | certain material contracts to which either Solectron, Flextronics or any of their respective subsidiaries is a party; | |
• | insurance matters; | |
• | compliance with the Foreign Corrupt Practices Act of 1977; | |
• | information supplied for inclusion in this joint proxy statement/prospectus; and | |
• | brokers’ and finders’ fees owed in connection with the merger. |
• | labor matters; | |
• | related party transactions; | |
• | anti-takeover statutes; and | |
• | the opinion received from its financial advisor with respect to the merger. |
• | the operations of Saturn Merger Corp.; and | |
• | the availability of certain financing commitments and the sufficiency of funds to pay the cash consideration in the merger. |
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• | adopt or propose any change to its certificate of incorporation or bylaws; | |
• | declare, set aside or pay dividends or make any other distributions in respect of any capital stock, or effect any stock splits, combinations or reclassifications or issue or authorize the issuance of any other securities in respect of its capital stock; | |
• | purchase, redeem or otherwise acquire any shares of Solectron capital stock or the capital stock of any subsidiary except for unvested shares of Solectron restricted stock; | |
• | issue, sell, transfer, pledge, redeem, accelerate rights under, dispose of or encumber (or authorize any of the preceding) any shares of Solectron capital stock of any class or any options, warrants, convertible securities or other rights of any kind to acquire any shares of Solectron capital stock, or any other ownership interest in Solectron or any of its subsidiaries, other than: |
• | issue Solectron common stock pursuant to the exercise of Solectron stock options outstanding on the date of the merger agreement or otherwise permitted by the merger agreement; | |
• | grant purchase rights in the ordinary course of business consistent with past practices under Solectron’s employee stock purchase plan; and | |
• | grant Solectron options in the ordinary course of business consistent with past practices, provided that: |
• | such grants of options and rights under Solectron’s employee stock purchase plan shall not exceed the equivalent of 20,000 shares of Solectron common stock individually or 500,000 shares of Solectron common stock in the aggregate, in each case, in any 3 month period; | |
• | such options may only be granted to employees of Solectron, or its subsidiaries, who have an annual base salary of no more than $100,000 (or its equivalent in a foreign currency); | |
• | options may only be granted with an exercise price equal to the grant date fair market value of Solectron’s common stock; | |
• | no restricted stock may be granted; and | |
• | no options may contain change of control provisions; |
• | enter into a new line of business; | |
• | acquire or agree to acquire by merging or consolidating with, or by purchasing any equity or voting interest in or all or substantially all the assets of, or by any other manner, any business or other entity or division; | |
• | except for purchases of inventory in the ordinary course of business consistent with past practice, acquire, agree to acquire, solicit or participate in any negotiations with respect to the acquisition of, any assets that are material, individually or in the aggregate, to the business of Solectron and its subsidiaries for consideration in excess of $5,000,000 in any one case or $25,000,000 in the aggregate; | |
• | enter into any agreement with respect to the formation of any joint ventures, strategic partnerships or alliance; |
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• | except for sales and licenses in the ordinary course of business consistent with past practice, sell, lease, license, sell and leaseback, mortgage, encumber or otherwise dispose of any properties or assets that are material, individually or in the aggregate, to the business of Solectron and its subsidiaries taken as a whole; | |
• | effect any material restructuring activities, including any material reductions in force, except for its previously announced restructuring activities; | |
• | make any loans, extensions of credit or financing, advances or capital contributions to, or investments in, or grant extended payment terms to any other person or entity, other than loans or investments by Solectron or a wholly-owned subsidiary to or in Solectron or a wholly-owned subsidiary, employee loans or advances for expenses in the ordinary course of business consistent with past practice and in accordance with applicable law, or extensions of credit or financing to, or extended payment terms for, customers made in the ordinary course of business consistent with past practice; | |
• | except as required by generally accepted accounting principles, as concurred by Solectron’s independent auditors, make any change in accounting methods or principles of accounting or revalue any of its assets; | |
• | amend any material tax returns, make or change any material election relating to taxes, adopt or change any material accounting method relating to taxes (unless required by the Code), or settle, consent or enter into any closing agreement relating to any audit or consent to any waiver of the statutory period of limitations of any audit; | |
• | cancel, terminate (without a reasonable substitute), materially amend or enter into any material insurance policy other than the renewal of existing policies; | |
• | pay, discharge, settle or satisfy any claims, litigation, liabilities or obligations, other than the payment, discharge, settlement or satisfaction in the ordinary course of business of liabilities that are not material, individually or in the aggregate, to Solectron and its subsidiaries and that are incurred in the ordinary course of business; | |
• | except as required by legal requirements or pursuant to contracts binding on Solectron or its subsidiaries on the date of the merger agreement: |
• | increase in any manner the compensation or fringe benefits of, or pay or grant any bonus, change of control, severance or termination pay to, any employees, service providers or directors of Solectron or its subsidiaries, other than increases or payments to non-officer employees in the ordinary course and consistent with past practice; | |
• | adopt or amend any employee benefit plan or make any contributions, other than regularly scheduled contributions, to any employee benefit plan; | |
• | waive any stock repurchase rights, accelerate, amend or change the vesting period or exercisability of options, reprice options or authorize cash payments in exchange for options; | |
• | subject to certain exceptions, enter into, modify or amend any material management, employment, settlement, consulting, contractor, indemnification or other agreement or contract with any employees or service providers pursuant to which Solectron or its subsidiaries has or may have liability; | |
• | enter into any agreement the benefits of which are contingent or the terms of which are materially altered upon the occurrence of a transaction involving Solectron of the nature contemplated by the merger agreement; or | |
• | enter into, adopt or amend any collective bargaining agreement, bonus, profit-sharing, thrift, pension, retirement or other similar benefit plan or arrangement covering any employees or service providers; |
• | enter into employment agreements, offer letters or retention arrangements with non-officer employees in the ordinary course of business consistent with past practices; and |
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• | increase annual compensation of non-officer employees and provide for or amend bonus arrangements for non-officer employees in the ordinary course of compensation reviews consistent with past practice and which does not result in material increases in benefits or compensation expenses; |
• | enter into any agreement that would subject Flextronics or the surviving corporation or their businesses to any non-compete, most-favored nation, unpaid future deliverables rights, exclusivity or other material restrictions; | |
• | provide any material refund, credit or rebate to any customer, reseller or distributor other than in the ordinary course of business consistent with past practice; | |
• | incur, assume or guarantee any indebtedness, issue or sell any debt securities or options, warrants or other rights to acquire debt securities, enter into any “keep well” or other agreement to maintain any financial statement condition of another person, other than: |
• | in connection with the financing of ordinary course trade payables consistent with past practice; | |
• | pursuant to existing credit facilities as in effect on the date of the merger agreement; or | |
• | loans, investments, or guarantees by Solectron or any of its subsidiaries to, in or of its subsidiaries; |
• | create or incur any lien on any material asset of Solectron or any of its subsidiaries other than in the ordinary course of business consistent with past practice; | |
• | enter into, modify or amend or terminate any material contract or waive, release or assign any material rights under any material contracts other than in the ordinary course of business consistent with past practice; | |
• | take any action with the intent or for the purpose of preventing, impairing or delaying the merger or the other transactions contemplated by the merger agreement or that would reasonably be expected to prevent, impair, delay or adversely affect Flextronics’s and Solectron’s ability to obtain the governmental approval for the consummation of the merger or the other transactions contemplated by the merger agreement; or | |
• | take, or commit or agree to, or announce the intention to take, any of the foregoing actions. |
• | keep Flextronics fully informed of the status of its discussions with any tax authority in respect of any audit relating to a material amount of taxes; | |
• | consult with Flextronics in respect of, and provide Flextronics the opportunity to participate in, devising the strategy for dealing with such tax authority in the course of such audit; and | |
• | obtain Flextronics’s prior consent before proposing in writing any settlement or other resolution to any such audit. |
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• | adopt or propose any change to Flextronics’s memorandum and articles of association in any manner that would reasonably be likely to prevent or materially delay or impair the merger or the consummation of the transactions contemplated by the merger agreement; | |
• | declare, set aside or pay any cash dividends on or make any other cash distributions; | |
• | adopt a plan of complete or partial liquidation, dissolution or recapitalization or a plan of reorganization; | |
• | take any action with the intent or for the purpose of preventing, impairing or delaying the merger or the other transactions contemplated by the merger agreement or that would reasonably be expected to prevent, impair, delay or adversely affect Flextronics’s and Solectron’s ability to obtain governmental approval for the consummation of the merger or the other transactions contemplated by the merger agreement; or | |
• | take, or commit, agree or announce the intention to take, any of the foregoing actions. |
• | The merger agreement provides that as promptly as reasonably practicable following its execution, Flextronics and Solectron will prepare and file with the SEC this joint proxy statement/prospectus and Flextronics will prepare and file with the SEC the registration statement in which this joint proxy statement/prospectus will be included as a prospectus. Flextronics and Solectron will provide each other with any information required in order to prepare and file the joint proxy statement/prospectus and the registration statement. | |
• | Each of Flextronics and Solectron will respond to any comments received from the SEC and will use reasonable best efforts to the cause the registration statement to be declared effective as promptly as practicable after it is filed and to keep the registration statement effective for as long as is necessary to consummate the merger and the transactions contemplated by the merger agreement. Flextronics and Solectron have agreed to notify each other promptly upon the receipt of any comments from the SEC in connection with the joint proxy statement/prospectus, the registration statement,and/or any filing required pursuant toRegulation M-A promulgated by the SEC and to consult with each other and to prepare written responses to such comments and provide each other with copies of all related correspondence with the SEC. Flextronics and Solectron have also agreed to promptly inform each other if any event occurs which requires that this joint proxy statement/prospectusand/or the registration statement be amended or supplemented and to cooperate with each other in filing with the SECand/or mailing such amendment or supplement to the stockholders of Solectronand/or the shareholders of Flextronics, as required. Subject to certain exceptions, Flextronics and Solectron have agreed to cooperate and provide the other with a reasonable opportunity to review and comment on any amendment or supplement to this joint proxy statement/prospectus and the registration statement prior to filing such amendment or supplement with the SEC, and to provide each other with a copy of all such filings made with the SEC. | |
• | Solectron and Flextronics have agreed to cause the joint proxy statement/prospectus to be delivered to their stockholders or shareholders, as applicable, at the earliest practicable time after the registration statement is declared effective by the SEC. |
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• | the superior offer has not been withdrawn; | |
• | the board of directors of Solectron has determined in good faith, after consultation with Solectron’s financial advisor and outside legal counsel, that the failure to take the proposed action would reasonably be expected to be a breach of its fiduciary duties to its stockholders under applicable law; | |
• | the stockholders of Solectron have not yet approved the adoption of the merger agreement; | |
• | Solectron has provided Flextronics, at least five business days prior to publicly taking or disclosing the proposed action contemplated by clauses (i) and/or (ii) above, written notice of its receipt of the superior offer, which must state expressly the most recent terms and conditions of the superior offer, the identity of the third party or group making the superior offer, and that Solectron intends to take the proposed action contemplated by clauses (i) and/or (ii) above; and | |
• | during the five business day period described in the preceding bullet, Solectron provides Flextronics with a reasonable opportunity to make adjustments to the terms and conditions of the merger agreement and to negotiate in good faith with respect to such adjustments, so as would enable Solectron to proceed with its recommendation to its stockholders in favor of the adoption of the merger agreement. |
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• | any purchase from Solectron or other acquisition by any person or group (including through a tender offer or an exchange offer) of more than a 90% interest in the total outstanding voting securities of Solectron or any of its subsidiaries; | |
• | any merger, consolidation, business combination or similar transaction involving Solectron or any of its subsidiaries, other than transactions involving only Solectronand/or one or more of its subsidiaries; | |
• | any sale, lease outside the ordinary course of business, exchange, transfer, license outside the ordinary course of business, acquisition or disposition of more than 90% of the assets of Solectron (including its subsidiaries taken as a whole); or | |
• | any liquidation or dissolution of Solectron. |
• | the board of directors of Solectron has determined in good faith, after consultation with Solectron’s financial advisor and outside legal counsel, that the failure to so withhold, withdraw, amend or modify its recommendation would reasonably be expected to be a breach of its fiduciary duties to its stockholders under the Delaware General Corporation Law; | |
• | the stockholders of Solectron have not yet approved the adoption of the merger agreement; | |
• | Solectron has provided Flextronics, at least five business days prior to publicly withholding, withdrawing, amending or modifying its recommendation, written notice of the proposed withholding, withdrawal, amendment or modification, which must state expressly that Solectron is proposing to withhold, withdraw, amend or modify its recommendation, and the reasons for the proposed change; and | |
• | during the five business day period described in the preceding bullet, Solectron negotiates in good faith with Flextronics so as to enable Solectron to proceed with its recommendation to the Solectron stockholders in favor of the adoption of the merger agreement. |
• | solicit, initiate, facilitate or encourage, the making, submission or announcement of, any acquisition proposal; |
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• | enter into or participate in any discussions or negotiations with any third party regarding any acquisition proposal; | |
• | furnish any non-public information relating to Solectron or its subsidiaries or afford access to its business, properties, assets, books or records to, or otherwise cooperate with, or assist, participate in, facilitate or encourage any effort by, any third party, concerning the making of any proposal that constitutes or would reasonably be expected to lead to, any acquisition proposal; | |
• | except under specified circumstances, approve, endorse or recommend any acquisition proposal; or | |
• | execute or enter into, or agree to execute or enter into, any letter of intent or similar document or any contract, agreement or commitment contemplating or otherwise relating to any acquisition proposal or any transaction contemplated by such an acquisition proposal. |
• | any purchase from Solectron or acquisition by any person or group (including through a tender offer or exchange offer) of more than a 20% interest in the total outstanding voting securities of Solectron or any of its subsidiaries; | |
• | any merger, consolidation, business combination or similar transaction involving Solectron or any of its subsidiaries, other than transactions involving only Solectronand/or one or more of its subsidiaries; | |
• | any sale, lease outside the ordinary course of business, exchange, transfer, license outside the ordinary course of business, acquisition or disposition of more than 20% of the assets of Solectron (including its subsidiaries taken as a whole); or | |
• | any liquidation or dissolution of Solectron. |
• | Solectron complies in all material respects with the terms of the merger agreement relating to acquisition proposals; |
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• | prior to furnishing non-public information or entering into any negotiations or discussions with such third party, Solectron enters into a confidentiality agreement with the third party that contains customary limitations on the use and disclosure of such information and Solectron contemporaneously furnishes Flextronics with a copy of the information furnished to the third party to the extent not previously furnished to Flextronics; and | |
• | Solectron’s board of directors determines in good faith, after consultation with outside legal counsel, that failure to provide such information or enter into such discussions or negotiations would reasonably be expected to result in a breach of its fiduciary duties under the Delaware General Corporation Law. |
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• | taking actions necessary to fulfill the conditions to their respective obligations to consummate the merger; | |
• | obtaining the necessary waivers, consents, approvals, orders and authorizations from governmental entities and taking the steps necessary to avoid any suits, claims, actions, investigations or proceedings by governmental entities; | |
• | defending any suits, claims, actions, investigations or proceedings that challenge the merger agreement or the consummation of the merger and seeking to have vacated or otherwise lifted or removed any order, decree or ruling that has the effect of restraining, enjoining or otherwise prohibiting the merger; |
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• | entering into supplemental indentures if and as required pursuant to any contract to which Solectron or its subsidiaries is a party or bound, with effect as of or after the effective time; and | |
• | executing and delivering any additional instruments necessary to consummate the transactions contemplated by the merger agreement. |
• | any license, sale or other disposition or holding separate of any shares of capital stock or of any business, assets or properties of Flextronics, its subsidiaries or affiliates, or Solectron or its subsidiaries; | |
• | the imposition of any limitation on the ability of Flextronics, its subsidiaries or affiliates, or Solectron or its subsidiaries to conduct their respective businesses or own any capital stock or asset or to acquire, hold or exercise full rights of ownership of their respective businesses; or | |
• | the imposition of any impediment on Flextronics, its subsidiaries or affiliates, or Solectron or its subsidiaries under any governmental rule or regulation; |
• | the adoption of the merger agreement by Solectron stockholders; | |
• | the approval of the issuance of the Flextronics ordinary shares by Flextronics shareholders; | |
• | the effectiveness of a registration statement filed in connection with the issuance of Flextronics ordinary shares in the merger and no stop order proceedings suspending the registration statement or this joint proxy statement/prospectus; | |
• | no statute, rule, regulation or other order having been enacted or issued by a governmental entity of competent jurisdiction which is in effect and has the effect of making the merger illegal or otherwise prohibiting completion of the merger; and | |
• | the expiration or termination of any applicable waiting periods under the HSR Act with respect to the merger and the receipt of consents, waivers or approvals required under foreign merger notification and control laws. |
• | Solectron’s representations and warranties being true and correct in all respects as of the date of the merger agreement and as of the closing date (except those representations and warranties which address matters only as of a particular date (which representations and warranties must be true and correct as of that date), |
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and except for representations and warranties where failure to be true and correct did not and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Solectron); |
• | the performance and compliance by Solectron in all material respects with its agreements and covenants required by the merger agreement to be performed or complied with by it before completion of the merger; and | |
• | the absence of any change, event, development, violation, inaccuracy, circumstance or effect which, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on Solectron. |
• | Flextronics and Saturn Merger Corp.’s representations and warranties being true and correct in all respects as of the date of the merger agreement and as of the closing date (except those representations and warranties which address matters only as of a particular date (which representations and warranties must be true and correct as of that date), and except for representations and warranties where failure to be true and correct did not and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Flextronics); | |
• | the performance and compliance by Flextronics and Saturn Merger Corp. in all material respects with its agreements and covenants required by the merger agreement to be performed or complied with by it before completion of the merger; and | |
• | the absence of any change, event, development, violation, inaccuracy, circumstance or effect which, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on Flextronics. |
• | general economic, political or financial market conditions in the United States or any other jurisdiction in which the entity or any of its subsidiaries has substantial business or operations, to the extent that such changes do not have a material disproportionate effect on such entity taken as a whole with its subsidiaries as compared to other similarly situated participants in the industry in which such entity and its subsidiaries operate; | |
• | conditions in the industry in which such entity and its subsidiaries operate, to the extent that such changes do not have a material disproportionate effect on such entity taken as a whole with its subsidiaries as compared to other similarly situated participants in the industry in which such entity and its subsidiaries operate; | |
• | changes in applicable law, United States generally accepted accounting principles or international accounting standards; | |
• | acts of terrorism, war, weather conditions or other similar force majeure events; |
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• | compliance with the express terms of the merger agreement which require that a party and its respective subsidiaries take actions in furtherance of the transactions contemplated by the merger agreement or refrain from taking actions prohibited by the merger agreement; | |
• | any legal claims made or brought by any current or former Solectron stockholders or other legal proceedings arising out of or related to the merger agreement or the proposed merger; | |
• | the announcement or pendency of the merger agreement or the proposed merger including (i) shortfalls or any declines in revenue, margins or profitability, (ii) the loss or departure of officers or other employees, (iii) the termination or potential termination of (or the failure or potential failure to renew) any contracts with customers, suppliers, distributors or other business partners, and (iv) any other negative development in customer, supplier, distributor or other business partner relationships, whether as a direct or indirect result of the loss or departure of officers or employees or otherwise; | |
• | with respect to any party hereto, any actions taken, or failure to take action, or such other effects, in each case, which the other party has approved, consented to or requested in writing; | |
• | changes in the entity’s stock price or the trading volume of the entity’s stock, in and of itself; or | |
• | any failure to meet internal or published analyst estimates or expectations of revenue, earnings or other financial performance or results of operations for any period, in and of itself. |
• | by mutual written consent duly authorized by the boards of directors of Flextronics, Saturn Merger Corp. and Solectron; or | |
• | by Solectron or Flextronics: |
• | if the merger is not completed by December 31, 2007, provided that either party may extend such date to March 31, 2008, if the condition requiring approvals and consents (including the termination of any waiting period) under merger notification and control laws shall not have been satisfied, provided that this right to terminate is not available to any party whose action or failure to act was a principal cause of, or resulted in the failure of, the merger to occur on or before such date and such action or failure to act constitutes a material breach of the merger agreement (we refer to December 31, 2007, or if the termination date is extended to March 31, 2008, March 31, 2008, as the termination date of the merger agreement); | |
• | if any governmental entity issues any order or takes any other action having the effect of permanently restraining, enjoining or prohibiting the completion of the merger; | |
• | if the required vote of Solectron stockholders is not obtained at a duly convened meeting of stockholders; or | |
• | if the required vote of Flextronics shareholders is not obtained at a duly convened meeting of shareholders; or |
• | by Flextronics: |
• | in the event of a breach of any representation, warranty, covenant or agreement in the merger agreement on the part of Solectron or if any representation or warranty of Solectron becomes untrue such that the condition to completion of the merger regarding Solectron’s representations and warranties or covenants would not be met, except that if the breach or inaccuracy is curable by Solectron prior to the termination date of the merger agreement, then Flextronics may not terminate the merger agreement for 30 days after |
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delivery of written notice to Solectron of the breach or thereafter if such breach is cured during those 30 days, and Flextronics may not terminate the merger agreement based on a breach by Solectron if Flextronics is otherwise in material breach of the merger agreement; |
• | if there has been, or any event has occurred since the date of the merger agreement that would reasonably be expected to have, a material adverse effect on Solectron, and (i) the material adverse effect is not reasonably capable of being cured prior to the termination date of the merger agreement, or (ii) the material adverse effect is not cured prior to the earlier of the termination date and 30 days following the receipt of written notice from Flextronics to Solectron of the material adverse effect, provided that Flextronics may not exercise this termination right if it is in material breach of the merger agreement; or | |
• | at any time prior to the adoption of the merger agreement by the required vote of Solectron stockholders, if any of the following triggering events occur with respect to Solectron: |
• | its board of directors withholds, withdraws, amends or modifies, in a manner adverse to Flextronics, its unanimous recommendation in favor of the adoption of the merger agreement and approval of the merger; | |
• | its board of directors approves, endorses or recommends, or authorizes Solectron to enter into a definitive agreement with respect to, a superior offer (as described in the section entitled “Stockholders’ Meetings; Boards of Directors Recommendations — Solectron’s Right to Change its Recommendation” beginning on page 96 of this joint proxy statement/prospectus); | |
• | it enters into any letter of intent or similar document or any agreement, contract or commitment accepting any superior offer; | |
• | a tender or exchange offer relating to its securities is initiated by a third party, and it does not send to its security holders, pursuant toRule 14e-2 promulgated under the Securities and Exchange Act, within 10 business days after the tender or exchange offer is first published, sent or given, a statement disclosing that its board of directors recommends rejection of the tender or exchange offer; or | |
• | its board of directors resolves to do any of the above; |
• | by Solectron: |
• | upon a breach of any representation, warranty, covenant or agreement in the merger agreement on the part of Flextronics or if any representation or warranty of Flextronics becomes untrue such that the condition to completion of the merger regarding Flextronics’s representations and warranties or covenants would not be met, except that if the breach or inaccuracy is curable by Flextronics prior to the termination date of the merger agreement, then Solectron may not terminate the merger agreement for 30 days after delivery of written notice to Flextronics of the breach or thereafter if such breach is cured during those 30 days, and Solectron may not terminate the merger agreement based on a breach by Flextronics if Solectron is otherwise in material breach of the merger agreement; | |
• | if there has been, or any event has occurred since the date of the merger agreement that would reasonably be expected to have, a material adverse effect on Flextronics, and (i) the material adverse effect is not reasonably capable of being cured prior to the termination date of the merger agreement, or (ii) the material adverse effect is not cured prior to the earlier of the termination date and 30 days following the receipt of written notice from Solectron to Flextronics of the material adverse effect, provided that Solectron may not exercise this termination right if it is in material breach of the merger agreement; or | |
• | if Solectron’s board of directors authorizes it to enter into a definitive agreement with respect to a superior offer and Solectron pays to Flextronics the termination fee described below and enters into such definitive agreement. |
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• | by Flextronics as a result of the occurrence of a triggering event (as described under “— Termination Triggers” above); or | |
• | by Solectron because its board of directors has authorized it to enter into a definitive agreement with respect to a superior offer. |
• | at least 3 days prior to the meeting of Solectron’s stockholders, there has been a public disclosure of a proposal to acquire Solectron and such proposal has not been withdrawn; and | |
• | within 12 months following termination of the merger agreement, any acquisition involving Solectron is consummated or Solectron enters into a definitive agreement or letter of intent with respect to any acquisition and it is subsequently consummated. |
• | at least 3 days prior to the meeting of Flextronics’s shareholders, there has been a public disclosure of a proposal to acquire Flextronics and such proposal has not been withdrawn; and | |
• | within 12 months following termination of the merger agreement, the acquisition transaction in such proposal is consummated or Flextronics enters into a definitive agreement or letter of intent with respect to such acquisition and it is subsequently consummated. |
• | a merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving Solectron or Flextronics, as applicable, pursuant to which its shareholders immediately preceding such transaction hold less than 50% of the aggregate equity interests in the surviving or resulting entity of such transaction, or any direct or indirect parent of such entity; |
• | a sale or other disposition by Solectron or Flextronics, as applicable, of assets representing in excess of 50% of the aggregate fair market value of its business immediately prior to such sale; or |
• | the acquisition by any person or group, including by way of a tender offer or an exchange offer, directly or indirectly, of beneficial ownership or the right to acquire beneficial ownership of shares representing in |
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excess of 50% of the voting power of the then outstanding shares of Solectron’s capital stock or Flextronics’s ordinary shares, as applicable. |
• | the filing of all documents related to the HSR Act and all other premerger notification and report forms under similar applicable laws of other jurisdictions; and | |
• | the filing, printing and mailing of this joint proxy statement/prospectus and the registration statement any of their respective amendments or supplements. |
• | in favor of the adoption of the merger agreement, including all other actions and transactions contemplated by the merger agreement or the proxy and any other actions presented to Solectron stockholders that would reasonably be expected to facilitate the merger agreement, the merger and the other actions and transactions contemplated by the merger agreement or the proxy; | |
• | against approval of any proposal made in opposition to, or in competition with, the merger agreement or the consummation of the merger and the other transactions contemplated by the merger agreement or the proxy; and | |
• | against any acquisition proposal or any other action that is intended to impede, interfere with, delay, postpone, discourage or adversely affect the merger or any of the other transactions contemplated by the merger agreement. |
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• | in favor of the issuance of Flextronics ordinary shares required to be issued in the merger, and any other actions presented to Flextronics shareholders that would reasonably be expected to facilitate the merger agreement, the issuance of the Flextronics ordinary shares and the other actions and transactions contemplated by the merger agreement or the proxy; and | |
• | against approval of any proposal made in opposition to, or in competition with, the merger agreement or the consummation of the merger and the other transactions contemplated by the merger agreement or the proxy. |
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• | accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements; | |
• | separate historical financial statements of Flextronics as of and for the fiscal year ended March 31, 2007, included in the Flextronics annual report onForm 10-K for the fiscal year ended March 31, 2007, which is incorporated by reference into this joint proxy statement/prospectus; | |
• | separate unaudited historical financial statements of Solectron as of and for the three- and six-month periods ended March 2, 2007, included in the Solectron quarterly report onForm 10-Q for the six months ended March 2, 2007, which is incorporated by reference into this joint proxy statement/prospectus; and | |
• | separate historical financial statements of Solectron as of and for the fiscal year ended August 25, 2006, included in the Solectron annual report onForm 10-K for the fiscal year ended August 25, 2006, which is incorporated by reference into this joint proxy statement/prospectus. |
• | approximately $200.0 million per year of synergies anticipated after the first 18 to 24 months of integration. These synergies are expected to result from anticipated operating efficiencies and cost savings, including the expected gross margin improvement in future quarters due to scale and leveraging of Flextronics’s and Solectron’s manufacturing platforms, and are net of potential losses in gross margin due to revenue attrition resulting from combining the two companies; and | |
• | costs of restructuring, integration, and retention bonuses associated with the closing of the acquisition, which cannot be reasonably estimated at this time as planning for these activities is in the early stages and their impact cannot be determined at this time (see Note 4 below). |
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• | the audited historical consolidated statement of operations of Flextronics for the year ended March 31, 2007; | |
• | the audited historical consolidated statement of operations of Solectron for the year ended August 26, 2006; and | |
• | the unaudited historical condensed consolidated statements of operations of Solectron for the six month periods ended March 2, 2007 and February 24, 2006. |
• | the audited historical consolidated balance sheet of Flextronics as of March 31, 2007; and | |
• | the unaudited historical condensed consolidated balance sheet of Solectron as of March 2, 2007. |
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Historical | ||||||||||||||||
Solectron | ||||||||||||||||
Flextronics | Twelve Months | |||||||||||||||
Year Ended | Ended | |||||||||||||||
March 31, | March 2, | Pro Forma | Pro Forma | |||||||||||||
2007 | 2007 | Adjustments | Combined | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Net sales | $ | 18,853,688 | $ | 11,505,700 | $ | (265,327 | )(a) | $ | 30,094,061 | |||||||
Cost of sales | 17,777,859 | 10,910,500 | (271,487 | )(b) | 28,416,872 | |||||||||||
Restructuring charges | 146,831 | — | 56,661 | (c) | 203,492 | |||||||||||
Gross profit | 928,998 | 595,200 | (50,501 | ) | 1,473,697 | |||||||||||
Selling, general and administrative expenses | 547,538 | 448,100 | (5,390 | )(d) | 990,248 | |||||||||||
Intangible amortization | 37,089 | — | 32,801 | (e) | 69,890 | |||||||||||
Restructuring charges | 5,026 | 58,600 | (56,661 | )(c) | 6,965 | |||||||||||
Other (income) expense, net | (77,594 | ) | — | — | (77,594 | ) | ||||||||||
Interest and other (income) expense, net(h) | 91,986 | (8,400 | ) | 139,916 | (f) | 223,502 | ||||||||||
Income from continuing operations before income taxes | 324,953 | 96,900 | (161,167 | ) | 260,686 | |||||||||||
Provision for (benefit from) income taxes | 4,053 | (6,400 | ) | (12,792 | )(g) | (15,139 | ) | |||||||||
Income from continuing operations | $ | 320,900 | $ | 103,300 | (148,375 | ) | $ | 275,825 | ||||||||
Earnings per share: | ||||||||||||||||
Income from continuing operations: | ||||||||||||||||
Basic | $ | 0.55 | $ | 0.37 | ||||||||||||
Diluted | $ | 0.54 | $ | 0.36 | ||||||||||||
Weighted-average shares used in computing per share amounts: | ||||||||||||||||
Basic(h) | 588,593 | 159,186 | (i) | 747,779 | ||||||||||||
Diluted(h) | 596,851 | 159,795 | (i) | 756,646 | ||||||||||||
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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
Historical | ||||||||||||||||
Flextronics | Solectron | |||||||||||||||
As of March 31, | As of March 2, | Pro Forma | Pro Forma | |||||||||||||
2007 | 2007 | Adjustments | Combined | |||||||||||||
(In thousands) | ||||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 714,525 | $ | 1,068,800 | $ | 1,783,325 | ||||||||||
Restricted cash | — | 16,800 | 16,800 | |||||||||||||
Accounts receivable, net | 1,754,705 | 1,390,600 | 3,145,305 | |||||||||||||
Inventories | 2,562,303 | 1,799,500 | $ | 11,189 | (j) | 4,372,992 | ||||||||||
Deferred income taxes | 11,105 | — | 21,724 | (k) | 32,829 | |||||||||||
Other current assets | 548,409 | 343,400 | (21,724 | )(k) | 870,085 | |||||||||||
Total current assets | 5,591,047 | 4,619,100 | 11,189 | 10,221,336 | ||||||||||||
Property and equipment, net | 1,998,706 | 741,400 | 2,740,106 | |||||||||||||
Deferred income taxes | 669,898 | — | 13,768 | (k) | 683,666 | |||||||||||
Goodwill | 3,076,400 | 155,900 | 1,163,460 | (l) | 4,395,760 | |||||||||||
Other intangible assets, net | 187,920 | — | 221,000 | (m) | 408,920 | |||||||||||
Other assets | 817,403 | 124,800 | (26,018 | )(n) | 916,185 | |||||||||||
Total assets | $ | 12,341,374 | $ | 5,641,200 | $ | 1,383,399 | $ | 19,365,973 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Bank borrowings, current portion of long-term debt and capital lease obligations | $ | 8,385 | $ | 25,100 | $ | 33,485 | ||||||||||
Accounts payable | 3,440,845 | 1,891,000 | 5,331,845 | |||||||||||||
Accrued payroll | 215,593 | 145,500 | 361,093 | |||||||||||||
Other current liabilities | 823,245 | 478,700 | $ | 36,500 | (o) | 1,338,445 | ||||||||||
Total current liabilities | 4,488,068 | 2,540,300 | 36,500 | 7,064,868 | ||||||||||||
Long-term debt and capital lease obligations, net of current portion(h) | 1,493,805 | 616,000 | 1,883,634 | (p) | 3,993,439 | |||||||||||
Other liabilities | 182,842 | 36,700 | 86,190 | (q) | 305,732 | |||||||||||
Shareholders’ equity(h) | ||||||||||||||||
Ordinary shares, no par value | 5,923,799 | 7,594,300 | (5,769,025 | )(r) | 7,749,074 | |||||||||||
Retained earnings (deficit) | 267,200 | (5,052,000 | ) | 5,052,000 | (r) | 267,200 | ||||||||||
Accumulated other comprehensive income (loss) | (14,340 | ) | (94,100 | ) | 94,100 | (r) | (14,340 | ) | ||||||||
Total shareholders’ equity | 6,176,659 | 2,448,200 | (622,925 | )(r) | 8,001,934 | |||||||||||
Total liabilities and shareholders’ equity | $ | 12,341,374 | $ | 5,641,200 | $ | 1,383,399 | $ | 19,365,973 | ||||||||
1. | Basis of Presentation |
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Fair value of Flextronics ordinary shares to be issued | $ | 1,806,761 | ||
Cash consideration | 1,794,884 | |||
Estimated fair value of vested options assumed | 18,514 | |||
Direct transaction costs | 48,000 | |||
Total estimated purchase price | $ | 3,668,159 | ||
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Tangible assets acquired and liabilities assumed: | ||||
Cash, cash equivalents and restricted cash | $ | 1,085,600 | ||
Other current assets | 3,544,689 | |||
Fixed assets | 741,400 | |||
Other non-current assets | 84,550 | |||
Current liabilities | (2,576,800 | ) | ||
Debt assumed | (628,750 | ) | ||
Other liabilities | (122,890 | ) | ||
Identifiable intangible assets | 221,000 | |||
Goodwill | 1,319,360 | |||
Total estimated purchase price | $ | 3,668,159 | ||
Preliminary | Useful Life | |||||
Fair Value | (in Years) | |||||
Customer relationships | $ | 163,000 | 6 – 8 | |||
Developed technologies | 58,000 | 5 – 7 | ||||
Total acquired identifiable intangible assets | $ | 221,000 | ||||
2. | Long-Term Debt |
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3. | Pro Forma Adjustments |
To eliminate inter-company transactions between Flextronics and Solectron | $ | (265,327 | ) | |
To reverse Solectron’s historical amortization of intangibles | (4,700 | ) | ||
To eliminate share-based compensation expense recognized by Solectron | (5,500 | ) | ||
To record share-based compensation expense related to Solectron unvested share-based awards assumed | 4,040 | |||
$ | (271,487 | ) | ||
To eliminate share-based compensation expense recognized by Solectron | $ | (20,300 | ) | |
To record share-based compensation expense related to Solectron unvested share-based awards assumed | 14,910 | |||
$ | (5,390 | ) | ||
To recognize incremental interest expense on new Flextronics debt financing at an assumed 7.3% borrowing rate | $ | 136,575 | ||
To amortize deferred financing costs associated with new Flextronics financing | 4,000 | |||
To eliminate Solectron’s historical amortization of deferred financing costs | (3,931 | ) | ||
To adjust Solectron’s historical interest expense resulting from the fair value adjustments to the assumed debt | 3,272 | |||
$ | 139,916 | |||
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To record the preliminary purchase price allocation to goodwill as though the acquisition had occurred on March 31, 2007 | $ | 1,319,360 | ||
To eliminate Solectron’s goodwill from previous acquisitions | (155,900 | ) | ||
$ | 1,163,460 | |||
To record estimated deferred financing costs associated with Flextronics’s debt financing of the cash paid for Solectron shares and other costs | $ | 28,000 | ||
To eliminate Solectron’s intangible assets from previous acquisitions | (25,800 | ) | ||
To eliminate Solectron’s deferred financing costs | (14,450 | ) | ||
To reclassify Solectron’s classification of deferred tax assets to conform to Flextronics’s presentation | (13,768 | ) | ||
$ | (26,018 | ) | ||
To reflect Flextronics’s debt financing of the cash paid for Solectron shares and other costs | $ | 1,870,884 | ||
To record fair value adjustments to Solectron’s existing debt assumed in the acquisition | 12,750 | |||
$ | 1,883,634 | |||
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To record the fair value of Flextronics ordinary shares issued | $ | 1,806,761 | ||
To record the fair value of Solectron vested options assumed | 18,514 | |||
To eliminate Solectron’s shareholders’ equity | (2,448,200 | ) | ||
$ | (622,925 | ) | ||
4. | Restructuring costs related to post-acquisition Flextronics activities |
5. | Certain Non-recurring Items |
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Flextronics | Solectron | |||||||||||||||||||||||
Ordinary Shares | Common Stock | Equivalent Solectron Per Share Price | ||||||||||||||||||||||
High | Low | High | Low | High | Low | |||||||||||||||||||
June 1, 2007 | $ | 11.76 | $ | 11.44 | $ | 3.43 | $ | 3.35 | $ | 4.06 | $ | 3.95 | ||||||||||||
July 9, 2007 | $ | 11.11 | $ | 10.86 | $ | 3.81 | $ | 3.74 | $ | 3.83 | $ | 3.75 |
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• | the conclusion of the next annual general meeting; or | |
• | the expiration of the period within which the next annual general meeting is required by law to be held. |
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• | the chairman of the meeting; | |
• | not less than three shareholders who are entitled to vote at the meeting and who are present in person or by proxy or by attorney, or in the case of a corporation, by a representative; | |
• | any shareholder or shareholders present in person or by proxy or by attorney, or in the case of a corporation, by a representative and representing not less than one-tenth of the total voting rights of all shareholders having the right to vote at the meeting; or | |
• | any shareholder or shareholders present in person or by proxy or by attorney, or in the case of a corporation, by a representative, and holding not less than one-tenth of the total number ofpaid-up shares of Flextronics (excluding treasury shares). |
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• | issue bonus shares for which no consideration is payable to Flextronics, to the shareholders in proportion to their shareholdings; and/or | |
• | capitalize any reserves or profits and distribute them as bonus shares to the shareholders in proportion to their shareholdings. |
• | any person acquires whether by a series of transactions over a period of time or not, shares which (taken together with shares held or acquired by persons acting in concert with him) carry 30% or more of the voting rights of a company, or | |
• | any person who, together with persons acting in concert with him, holds not less than 30% but not more than 50% of the voting rights and such person, or any person acting in concert with him, acquires in any period of six months additional shares carrying more than 1% of the voting rights, |
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AND HOLDERS OF FLEXTRONICS ORDINARY SHARES
• | 1,600,000,000 shares of Solectron common stock, $0.001 par value per share, and | |
• | 1,200,000 shares of preferred stock, $0.001 par value per share. |
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• | the conclusion of the next annual general meeting; or | |
• | the expiration of the period within which the next annual general meeting is required by law to be held. |
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• | any person acquires whether by a series of transactions over a period of time or not, shares which (taken together with shares held or acquired by persons acting in concert with him) carry 30% or more of the voting rights of a company, or | |
• | any person who, together with persons acting in concert with him, holds not less than 30% but not more than 50% of the voting rights and such person, or any person acting in concert with him, acquires in any period of six months additional shares carrying more than 1% of the voting rights, |
• | notwithstanding anything in the company’s memorandum or articles of association, directors are not permitted to carry into effect any proposals for disposing of the whole or substantially the whole of the company’s undertaking or property unless those proposals have been approved by shareholders in a general meeting; | |
• | subject to the memorandum of each amalgamating company, an amalgamation proposal must be approved by the shareholders of each amalgamating company via special resolution at a general meeting; and | |
• | notwithstanding anything in the company’s memorandum or articles of association, the directors may not, with the prior approval of shareholders, issue shares. |
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the re-election of Messrs. Davidson and Tan
and the re-appointment of Mr. Schnabel to the Flextronics Board of Directors.
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• | Mr. H. Raymond Bingham, a member of Flextronics’s board of directors, was a non-management director until December 2006, of Freescale Semiconductor, Inc. (of which Mr. Bingham beneficially owns less than 1%), which is a supplier of the Company, and Mellanox Technologies (of which Mr. Bingham beneficially owns less than 1%), which is a customer of Flextronics. Mr. Bingham is a non-management director of STMicroelectronics, which is a supplier of Flextronics, and Oracle Corporation (of which Mr. Bingham beneficially owns less than 1%), which is an IT supplier of Flextronics. In addition, Mr. Bingham is a Managing Director of General Atlantic LLC, a private equity firm. In connection with his position as Managing Director of General Atlantic LLC, Mr. Bingham is a non-management directorand/or indirect beneficial owner of certain portfolio companies of General Atlantic LLC, which are customersand/or suppliers of Flextronics. Sales to or purchases from each of these other organizations were made in the ordinary course of business and amounted to less than the greater of $1,000,000 or 2% of the recipient company’s gross revenues during the most recent fiscal year of that company, except that purchases from STMicroelectronics accounted for approximately 2.1% of the gross revenues for STMicroelectronics during the most recent fiscal year of that company. | |
• | Mr. James A. Davidson, a member of Flextronics’s board of directors, is a co-founder and managing director of Silver Lake, a private equity investment firm, and in connection with his position as managing director, Mr. Davidson is a non-management directorand/or indirect beneficial owner of certain portfolio companies of affiliated funds of Silver Lake, which are customersand/or suppliers of Flextronics. Sales to or purchases from each of these other organizations were made in the ordinary course of business and amounted to less than the greater of $1,000,000 or 2% of the recipient company’s gross revenues during the most recent fiscal year of that company, except that purchases from one portfolio company, Avago Technologies Limited, accounted for approximately 2.3% of the gross revenues of Avago Technologies Limited during the most recent fiscal year of that company. | |
• | Mr. Ajay Shah, a member of Flextronics’s board of directors, is the Managing Partner of Shah Capital Partners, L.P., a technology focused private equity firm, and Manager of Shah Management LLC, a related entity. In connection with his position as Managing Partner of Shah Capital Partners and Manager of Shah Management LLC, Mr. Shah is a non-management directorand/or indirect beneficial owner of certain portfolio companies of Shah Capital Partners and Shah Management LLC, which are customersand/or suppliers of Flextronics. Sales to or purchases from each of these other organizations were made in the |
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ordinary course of business and amounted to less than the greater of $1,000,000 or 2% of the recipient company’s gross revenues during the most recent fiscal year of that company. Mr. Shah is also a Managing Director of Silver Lake Sumeru, a private equity fund within Silver Lake. |
• | Mr. Lip-Bu Tan, a member of Flextronics’s board of directors, is a non-management director and less than 1% beneficial owner of each of Cadence Design Systems, Inc. and Integrated Silicon Solutions, Inc., which are customers or suppliers of Flextronics. In addition, Mr. Tan is the founder and Chairman of Walden International, a venture capital fund. In connection with his position as Chairman of Walden International, Mr. Tan is a non-management director/observerand/or indirect beneficial owner of certain portfolio companies of Walden International, which are customersand/or suppliers of Flextronics. Sales to or purchases from each of these other organizations were made in the ordinary course of business and amounted to less than the greater of $1,000,000 or 2% of the recipient company’s gross revenues during the most recent fiscal year of that company. |
Nominating and | ||||||||||||||||
Corporate | ||||||||||||||||
Audit | Compensation | Governance | Finance | |||||||||||||
Name | Committee | Committee | Committee | Committee | ||||||||||||
H. Raymond Bingham | X | * | ||||||||||||||
James A. Davidson | X | * | ||||||||||||||
Michael E. Marks | X | |||||||||||||||
Michael M. McNamara | X | |||||||||||||||
Rockwell A. Schnabel | X | X | * | |||||||||||||
Ajay B. Shah | X | |||||||||||||||
Richard L. Sharp | ||||||||||||||||
Lip-Bu Tan | X | X |
* | Committee Chair |
• | monitor and evaluate periodic reviews of the adequacy of the accounting and financial reporting processes and systems of internal control that are conducted by Flextronics’s financial and senior management, and the company’s independent registered public accounting firm; | |
• | be directly responsible for the appointment, compensation and oversight of the work of Flextronics’s independent registered public accounting firm (including resolution of any disagreements between Flextronics’s management and the auditors regarding financial reporting); and | |
• | facilitate communication among Flextronics’s independent registered public accounting firm, its financial and senior management and its board. |
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• | annual cash compensation of $40,000, payable quarterly in arrears to each non-employee director, for services rendered as a director; | |
• | additional annual cash compensation of $10,000, payable quarterly in arrears to the Chairman of the Audit Committee (if appointed) of the Board of Directors for services rendered as Chairman of the Audit Committee and for his or her participation on the Audit Committee; and | |
• | additional annual cash compensation of $5,000, payable quarterly in arrears for participation on any standing committee of the board of directors. |
• | annual cash compensation of $15,000 payable to each other non-employee director who serves on the Audit Committee for his or her participation on the Audit Committee; | |
• | annual cash compensation of $25,000 payable to the Chairman of the Compensation Committee (if appointed) for services rendered as Chairman of the Compensation Committee and for his or her participation on the Compensation Committee; and | |
• | annual cash compensation of $10,000 to the Chairman of the Nominating and Corporate Governance Committee (if appointed) and to the Chairman of the Finance Committee (if appointed) for their service as chairmen of the respective committees and for their participation on the respective committees. |
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• | a cash payment of $1,554,286, which was paid in July 2006; | |
• | eligibility to receive all cash compensation paid to non-employee directors from January 2, 2006 until the 2006 Annual General Meeting, at which time Mr. Marks became eligible to receive all cash and equity compensation paid to non-employee directors; | |
• | provision by the company of medical and dental benefits for the remainder of Mr. Marks’s life for Mr. Marks and his spouse (reduced to the extent Mr. Marks receives comparable benefits from another employer); and | |
• | personal use of Flextronics’s corporate jets, subject to availability, and subject to Mr. Marks’s reimbursement of the variable cost as determined by Flextronics USA in its sole discretion. |
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Change | ||||||||||||||||||||||||
in Pension | ||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||
Fees | Deferred | |||||||||||||||||||||||
Earned or | Stock | Option | Compensation | All Other | ||||||||||||||||||||
Paid in Cash | Awards | Awards | Earnings | Compensation | ||||||||||||||||||||
Name | ($)(1) | ($)(2)(4) | ($)(3)(4) | ($)(5) | ($)(6) | Total | ||||||||||||||||||
Michael E. Marks | $ | 45,000 | $ | 100,000 | $ | 2,938,568 | $ | 1,075,726 | $ | 1,579,019 | $ | 5,738,313 | ||||||||||||
H. Raymond Bingham | $ | 47,500 | $ | 100,000 | $ | 34,736 | $ | — | $ | — | $ | 182,236 | ||||||||||||
James A. Davidson | $ | 45,000 | $ | 100,000 | $ | 123,633 | $ | — | $ | — | $ | 268,633 | ||||||||||||
Rockwell A. Schnabel | $ | 41,097 | $ | 100,000 | $ | 33,945 | $ | — | $ | — | $ | 175,042 | ||||||||||||
Ajay B. Shah | $ | 51,403 | $ | 100,000 | $ | 34,736 | $ | — | $ | — | $ | 186,139 | ||||||||||||
Richard Sharp | $ | 45,000 | $ | 100,000 | $ | 112,605 | $ | — | $ | — | $ | 257,605 | ||||||||||||
Lip-Bu Tan | $ | 50,000 | $ | 100,000 | $ | 124,054 | $ | — | $ | — | $ | 274,054 |
(1) | This column reports the amount of cash compensation earned in 2007 for board and committee services. | |
(2) | This column represents the dollar amount recognized for financial statement reporting purposes with respect to the 2007 fiscal year for the fair value of share bonus awards granted in 2007 in accordance with SFAS 123(R). As the share bonus awards were in the form of fully vested and non-forfeitable shares, fair value is the closing price of Flextronics’s ordinary shares on the date of grant. | |
(3) | The amounts in this column do not reflect compensation actually received by the non-employee directors nor do they reflect the actual value that will be recognized by the non-employee directors. Instead, the amounts reflect the compensation cost recognized by Flextronics in fiscal year 2007 for financial statement reporting purposes in accordance with SFAS 123(R) for stock options granted in and prior to fiscal year 2007. The amounts in this column exclude the impact of estimated forfeitures related to service-based vesting conditions. For information regarding the assumptions made in calculating the amounts reflected in this column for grants made in fiscal years 2007, 2006 and 2005, see the section entitled “Stock-Based Compensation” under Note 2 to Flextronics’s audited consolidated financial statements for the fiscal year ended March 31, 2007, included in Flextronics’s Annual Report onForm 10-K for the fiscal year ended March 31, 2007. For information regarding the assumptions made in calculating the amounts reflected in this column for grants made prior to fiscal year 2005, see the section entitled “Accounting for Stock-Based Compensation” under Note 2 to Flextronics’s audited consolidated financial statements for the respective fiscal years included in Flextronics’s Annual Report onForm 10-K for those respective fiscal years. Flextronics’s non-employee directors have the following options outstanding as of the 2007 fiscal year-end: Mr. Bingham (37,500), Mr. Davidson (134,110), Mr. Schnabel (37,500), Mr. Shah (37,500), Mr. Sharp (212,500) and Mr. Tan (133,665). Mr. Marks has 6,987,500 options outstanding as of the 2007 fiscal year-end, including 6,975,000 options that were previously granted to him while he served as Chief Executive Officer of Flextronics. | |
(4) | The grant-date fair value of share bonus awards and stock options granted to each non-employee director in fiscal year 2007 totals $166,268, of which $100,000 relates to share bonus awards and $66,268 relates to stock options. The grant-date fair value is the amount that Flextronics would expense in its financial statements over the award’s vesting schedule. For share bonus awards, fair value is the closing price of Flextronics’s ordinary shares on the date of grant. For stock options, the fair value is calculated using the Black-Scholes-Merton value on the grant date of $5.30 per option. The fair values of share bonus awards and option awards are accounted for in accordance with SFAS 123(R). For additional information on the valuation assumptions, see the section entitled “Stock-Based Compensation” under Note 2 of Flextronics’s audited consolidated financial statements for the fiscal year ended March 31, 2007, included in Flextronics’s Annual Report onForm 10-K for the fiscal year ended March 31, 2007. These amounts reflect Flextronics’s accounting expense, and do not correspond to the actual value that will be recognized by the non-employee directors. |
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(5) | The amount in this column represents above-market earnings on the vested portion of Mr. Marks’ nonqualified deferred compensation account. On January 1, 2006, Mr. Marks retired from his position as Flextronics’s Chief Executive Officer and was appointed to serve as Chairman of Flextronics’s Board of Directors. While Mr. Marks was the Chief Executive Officer, Flextronics had established a supplemental executive retirement plan for Mr. Marks. Upon retirement, all amounts under this plan became fully vested and non-forfeitable. Above-market earnings represent the difference between market interest rates determined pursuant to SEC rules and earnings credited to Mr. Marks’ deferred compensation account. | |
(6) | Upon Mr. Marks’ retirement, Flextronics International USA, Inc., a subsidiary of Flextronics which is which is referred to in this joint proxy statement/prospectus as Flextronics USA, agreed to provide Mr. Marks and his spouse medical and dental benefits for the remainder of their lives, provided however, that these benefits could be reduced to the extent, if any, that Mr. Marks receives comparable benefits from another employer. During fiscal year 2007, Flextronics paid $24,733 related to medical and dental benefits. Flextronics also made a lump-sum payment of $1,554,286 in July 2006 pursuant to the terms of Mr. Marks’ agreement with Flextronics USA dated November 30, 2005. |
Fiscal Year | ||||||||
2007 | 2006 | |||||||
(In millions) | ||||||||
Audit Fees | $ | 7.7 | $ | 7.0 | ||||
Audit-Related Fees | 0.3 | 2.2 | ||||||
Tax Fees | 1.2 | 1.1 | ||||||
All Other Fees | — | — | ||||||
Total | $ | 9.2 | $ | 10.3 | ||||
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Touche LLP, upon the recommendation of the Audit Committee, as the company’s independent
registered public accounting firm for fiscal year 2008 and authorization of the
Board, upon the recommendation of the Audit Committee, to
fix its remuneration.
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Ajay B. Shah
Lip-Bu Tan
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• | in connection with strategic transactions and acquisitions; | |
• | pursuant to public and private offerings of Flextronics’s ordinary shares as well as instruments convertible into its ordinary shares; and | |
• | in connection with Flextronics’s equity compensation plans and arrangements. |
• | 607,544,548 ordinary shares were issued and outstanding; | |
• | 56,154,415 ordinary shares were reserved for issuance upon the exercise of outstanding options and pursuant to other awards under Flextronics’s equity compensation plans; | |
• | 29,055,336 ordinary shares were available for grant under Flextronics’s equity compensation plans; and | |
• | 1,518,951 shares were reserved for issuance upon conversion of Flextronics’s outstanding convertible notes. |
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to authorize ordinary share issuances.
• | annual cash compensation of $60,000, payable quarterly in arrears, to each of Flextronics’s non-employee directors for services rendered as a director; | |
• | additional annual cash compensation of $50,000, payable quarterly in arrears to the Chairman of the Audit Committee (if appointed) of the Board of Directors of Flextronics for services rendered as Chairman of the Audit Committee and for his or her participation on the Audit Committee; | |
• | additional annual cash compensation of $15,000, payable quarterly in arrears to each other non-employee director of Flextronics who serves on the Audit Committee for his or her participation on the Audit Committee; | |
• | additional annual cash compensation of $25,000, payable quarterly in arrears to the Chairman of the Compensation Committee (if appointed) of the Board of Directors of Flextronics for services rendered as Chairman of the Compensation Committee and for his or her participation on the Compensation Committee; | |
• | additional annual cash compensation of $10,000, payable quarterly in arrears to the Chairman of the Nominating and Corporate Governance Committee (if appointed) of the Board of Directors of Flextronics for services rendered as Chairman of the Nominating and Corporate Governance Committee and for his or her participation on the Nominating and Corporate Governance Committee; | |
• | additional annual cash compensation of $10,000, payable quarterly in arrears to the Chairman of the Finance Committee (if appointed) of the Board of Directors of Flextronics for services rendered as Chairman of the Finance Committee and for his or her participation on the Finance Committee; and | |
• | additional annual cash compensation of $5,000, payable quarterly in arrears to each of Flextronics’s non-employee directors for their participation on each standing committee (other than the Audit Committee) of the board of directors of Flextronics on which such director serves. |
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directors’ cash compensation and cash compensation for the
Chairmen of the standing Board committees (if appointed) and for committee participation.
• | the date on which Flextronics’s next Annual General Meeting is held or required by law to be held; or | |
• | the date on which the authority conferred by the Share Purchase Mandate is revoked or varied. |
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• | market purchases on the NASDAQ Global Select Market or any other stock exchange on which Flextronics’s ordinary shares may for the time being be listed and quoted, through one or more duly licensed dealers appointed by the company for that purpose; and/or | |
• | off-market purchases (if effected other than on the NASDAQ Global Select Market or, as the case may be, any other stock exchange on which Flextronics’s ordinary shares may for the time being be listed and quoted), in accordance with an equal access scheme as prescribed by the Companies Act. |
• | offers for the purchase or acquisition of ordinary shares must be made to every person who holds ordinary shares to purchase or acquire the same percentage of their ordinary shares; | |
• | all of those persons must be given a reasonable opportunity to accept the offers made; and | |
• | the terms of all of the offers must be the same (except differences in consideration that result from offers relating to ordinary shares with different accrued dividend entitlements and differences in the offers solely to ensure that each person is left with a whole number of ordinary shares). |
• | in the case of a market purchase, the highest independent bid or the last independent transaction price, whichever is higher, of Flextronics’s ordinary shares quoted or reported on the NASDAQ Global Select Market at the time the purchase is effected; and | |
• | in the case of an off-market purchase pursuant to an equal access scheme, 150% of the “Prior Day Close Price” of Flextronics’s ordinary shares, which means the closing price of an ordinary share as quoted on the NASDAQ Global Select Market or, as the case may be, any other stock exchange on which Flextronics’s ordinary shares may for the time being be listed and quoted, on the day immediately preceding the date on which the company announces its intention to make an offer for the purchase or acquisition of its ordinary shares from holders of its ordinary shares, stating therein the purchase price (which shall not be more than the maximum purchase price calculated on the foregoing basis) for each ordinary share and the relevant terms of the equal access scheme for effecting the off-market purchase. |
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• | sell the treasury shares for cash; | |
• | transfer the treasury shares for the purposes of or pursuant to an employees’ share scheme; | |
• | transfer the treasury shares as consideration for the acquisition of shares in or assets of another company or assets of a person; | |
• | cancel the treasury shares; or | |
• | sell, transfer or otherwise use the treasury shares for such other purposes as may be prescribed by the Minister for Finance of Singapore. |
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to approve the proposed renewal of the Share Purchase Mandate.
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• | amend the 2001 Plan to materially increase the maximum number of ordinary shares issuable under the 2001 Plan, the number of ordinary shares for which options may be granted to newly-elected or continuing non- employee directors, or the maximum number of ordinary shares for which any one individual participating in the 2001 Plan may be granted options; | |
• | materially modify the eligibility requirements for participation in the 2001 Plan; or | |
• | materially increase the benefits accruing to participants in the 2001 Plan. |
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• | Michael McNamara, Flextronics’s Chief Executive Officer; | |
• | Thomas Smach, Flextronics’s Chief Financial Officer; | |
• | each of Flextronics’s three other most highly compensated executive officers; | |
• | all current executive officers as a group; | |
• | all employees, including all current officers who are not executive officers, as a group. |
the approval to amend the 2001 Equity Incentive Plan to increase the
sub-limit on the maximum number of shares which may be issued as stock bonus
awards under the 2001 Plan from 10 million shares to 15 million shares.
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the approval of the increase in the number of ordinary shares authorized
for issuance under the 2001 Equity Incentive Plan.
Name | Age | Position | ||||
Michael M. McNamara | 50 | Chief Executive Officer | ||||
Thomas J. Smach | 47 | Chief Financial Officer | ||||
Christopher Collier | 38 | Senior Vice President, Finance | ||||
Carrie L. Schiff | 41 | Senior Vice President and General Counsel | ||||
Werner Widmann | 55 | President, Multek |
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Name | Title | |
Michael M. McNamara | Chief Executive Officer | |
Thomas J. Smach | Chief Financial Officer | |
Nicholas E. Brathwaite | Chief Technology Officer | |
Werner Widmann | President, Multek | |
Peter Tan | President and Managing Director, Flextronics Asia |
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• | attract superior executive talent; | |
• | retain and motivate its executives; | |
• | reward past performance; | |
• | provide incentives for future performance; and | |
• | align the executives’ interests with those of the company’s shareholders. |
• | annual and long-term cash bonuses and certain share bonus awards are earned only if the company achieves pre-established earnings per share and revenue growth targets (and in the cases of certain executives in charge of business units, if similar business unit performance targets are achieved); | |
• | stock-based compensation directly aligns executives’ interests with those of the company’s shareholders; and | |
• | deferred cash bonus awards and certain stock-based compensation are designed to promote executive retention, as these elements of compensation only vest over a period of years if the executive remains in the company’s employment. |
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• | base salary; | |
• | annual incentive cash bonuses; | |
• | long-term incentive cash bonuses; | |
• | stock-based compensation; | |
• | deferred compensation; and | |
• | other benefits. |
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Aggregate Number | ||||||||
Name | of Options Cancelled | Share Bonus Award | ||||||
Michael M. McNamara | 650,000 | 200,000 | ||||||
Thomas J. Smach | 625,000 | 200,000 | ||||||
Nicholas E. Brathwaite | 750,000 | 350,000 | ||||||
Peter Tan | 100,000 | 100,000 | ||||||
Werner Widmann | 50,000 | 100,000 |
• | 50% of the share bonus awards vest in equal annual installments over three years in the cases of Messrs. McNamara, Smach and Brathwaite and over five years in the cases of Messrs. Widmann and Tan (in the case of Mr. Tan, his award was cancelled for periods following his termination date pursuant to his separation agreement discussed under the section entitled “— Change of Control Arrangements — Peter Tan Separation Agreement” beginning on page 165 of this joint proxy statement/prospectus); and | |
• | 50% of the share bonus awards vest in equal annual installments if the company achieves year-over-year, pre-established EPS growth rates, provided that if one or more of the annual EPS growth targets is not met, the unvested portion may be recouped if the subsequent period’s cumulative target is met. For purposes of determining achievement of these targets, the Committee uses non-GAAP measures on the basis discussed under the section entitled “— Annual Incentive Bonuses” beginning on page 160 of this joint proxy statement/prospectus. The performance period for Messrs. McNamara, Smach and Brathwaite is three years, and is five years for Messrs. Widmann and Tan (in the case of Mr. Tan, his award was cancelled for periods following his termination date pursuant to his separation agreement discussed under the section entitled “— Change of Control Arrangements — Peter Tan Separation Agreement” beginning on page 165 of this joint proxy statement/prospectus). |
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• | Flextronics’s chief executive officer; | |
• | Flextronics’s chief financial officer; and | |
• | the three other most highly compensated executive officers serving as executive officers at the end of the 2007 fiscal year. |
Change in | ||||||||||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||||||||||||||
Non-Equity | Deferred | |||||||||||||||||||||||||||||||||||
Stock | Option | Incentive Plan | Compensation | All Other | ||||||||||||||||||||||||||||||||
Salary | Bonus | Awards | Awards | Compensation | Earnings | Compensation | Total | |||||||||||||||||||||||||||||
Name and Principal Position | Year | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($)(5) | ($)(6) | ($) | ($) | |||||||||||||||||||||||||||
Michael M. McNamara Chief Executive Officer | 2007 | $ | 1,000,000 | $ | 750,000 | $ | — | $ | 2,347,360 | $ | 3,000,000 | $ | 144,444 | $ | 365,304 | (7) | $ | 7,607,108 | ||||||||||||||||||
Thomas J. Smach Chief Financial Officer | 2007 | $ | 650,000 | $ | 450,000 | $ | — | $ | 1,390,831 | $ | 1,300,000 | $ | 111,714 | $ | 246,137 | (8) | $ | 4,148,682 | ||||||||||||||||||
Nicholas E. Brathwaite Chief Technology Officer | 2007 | $ | 650,000 | $ | 600,000 | $ | 324,398 | $ | 836,180 | $ | 856,376 | $ | 92,089 | $ | 169,791 | (9) | $ | 3,528,834 | ||||||||||||||||||
Werner Widmann(10) President, Multek | 2007 | $ | 412,977 | $ | 125,000 | $ | 291,906 | $ | 326,789 | $ | 502,247 | $ | 126,730 | $ | 132,295 | (11) | $ | 1,917,944 | ||||||||||||||||||
Peter Tan(12) President and Managing Director, Flextronics Asia | 2007 | $ | 400,000 | $ | — | $ | 267,409 | $ | 370,571 | $ | 600,000 | $ | 52,766 | $ | 233,363 | (13) | $ | 1,924,109 |
(1) | Messrs. Smach and Brathwaite deferred a portion of their salaries under Flextronics’s senior executive deferred compensation plan, which amounts are included in the Nonqualified Deferred Compensation in Fiscal Year 2007 table on page 173 of this joint proxy statement/prospectus. Messrs. McNamara, Smach and Brathwaite also contributed a portion of their salaries to their 401(k) savings plan accounts. All amounts deferred are included under this column. | |
(2) | For Messrs. McNamara, Smach and Brathwaite, this column shows the portions of such named executive officers’ deferred long-term bonuses which vested on April 1, 2007. For additional information about the deferred long-term bonuses, see the sections entitled “Compensation Discussion and Analysis — Fiscal Year 2007 Executive Compensation Components — Deferred Compensation” beginning on page 163 of this joint proxy statement/prospectus and the discussion under the section entitled “— Nonqualified Deferred Compensation in Fiscal Year 2007” beginning on page 173 of this joint proxy statement/prospectus. | |
(3) | Stock awards consist of service-vested and performance-based share bonus awards. The amounts in this column do not reflect compensation actually received by the named executive officers nor do they reflect the actual value that will be recognized by the named executive officers. Instead, the amounts reflect the compensation cost recognized by Flextronics in fiscal year 2007 for financial statement reporting purposes in accordance with SFAS 123(R) for share bonus awards granted in and prior to fiscal year 2007. The amounts in this column exclude the impact of estimated forfeitures related to service-based vesting conditions. For share bonus awards, fair value is the closing price of Flextronics’s ordinary shares on the date of grant. Such amounts are reduced by the aggregate fair value of stock options surrendered in exchange for the share bonus awards. For additional information about the fiscal year 2007 grant of share bonus awards in exchange for options, see the section entitled “Compensation Discussion and Analysis — Fiscal Year 2007 Executive Compensation Components — Stock-Based Compensation — Option |
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Exchange Program during Fiscal Year 2007” beginning on page 163 of this joint proxy statement/prospectus. The full grant-date fair value of share bonus awards granted in fiscal year 2007 is reflected in the Grants of Plan-Based Awards in 2007 table on page 168 of this joint proxy statement/prospectus. For information regarding the assumptions made in calculating the amounts reflected in this column, see the section entitled “Stock-Based Compensation” under Note 2 to Flextronics’s audited consolidated financial statements for the fiscal year ended March 31, 2007, included in Flextronics’s Annual Report onForm 10-K for the fiscal year ended March 31, 2007. | ||
(4) | The amounts in this column do not reflect compensation actually received by the named executive officers nor do they reflect the actual value that will be recognized by the named executive officers. Instead, the amounts reflect the compensation cost recognized by Flextronics in fiscal year 2007 for financial statement reporting purposes in accordance with SFAS 123(R) for stock options granted in and prior to fiscal year 2007. The amounts in this column exclude the impact of estimated forfeitures related to service-based vesting conditions. The full grant-date fair value of stock options granted in fiscal year 2007 is reflected in the Grants of Plan-Based Awards in 2007 table on page 168 of this joint proxy statement/prospectus. For information regarding the assumptions made in calculating the amounts reflected in this column for grants made in fiscal years 2007, 2006 and 2005, see the section entitled “Stock-Based Compensation” under Note 2 to Flextronics’s audited consolidated financial statements for the fiscal year ended March 31, 2007, included in Flextronics’s Annual Report onForm 10-K for the fiscal year ended March 31, 2007. For information regarding the assumptions made in calculating the amounts reflected in this column for grants made prior to fiscal year 2005, see the section entitled “Accounting for Stock-Based Compensation” under Note 2 to Flextronics’s audited consolidated financial statements for the respective fiscal years included in Flextronics’s Annual Report onForm 10-K for those respective fiscal years. | |
(5) | The amounts in this column represent annual incentive cash bonuses based on fiscal year 2007 performance. Messrs. McNamara, Smach and Brathwaite deferred a portion of their annual incentive bonuses under Flextronics’s senior executive deferred compensation plan, which amounts are included in the Nonqualified Deferred Compensation in Fiscal Year 2007 table on page 173 of this joint proxy statement/prospectus. All amounts deferred are included under this column. | |
(6) | The amounts in this column represent, in the case of Mr. Widmann, the sum of (A) the increase in the actuarial present value of his accrued pension benefits and (B) above-market earnings on his nonqualified deferred compensation account in fiscal year 2007. In the cases of Messrs. McNamara, Smach, Brathwaite and Tan, the amounts in this column represent above-market earnings on their nonqualified deferred compensation accounts in fiscal year 2007. In the case of Mr. Smach, the amount does not include above-market earnings of $262,767 on his account under the Dii Group deferred compensation plan (which had been established by the Dii Group, which was acquired by Flextronics in 2000; no further employer or employee contributions have been made under this plan). As discussed under the section entitled “— Pension Benefits in Fiscal Year 2007” beginning on page 172 of this joint proxy statement/prospectus, Mr. Widmann participates in the Multek Multilayer Technology GmbH & Co. KG Pension Plan. During fiscal year 2007, the actuarial present value of Mr. Widmann’s pension benefits increased by $21,281. None of the other named executive officers participate in any defined benefit or pension plans. The Pension Benefits in Fiscal Year 2007 table on page 173 of this joint proxy statement/prospectus includes the assumptions used to calculate the increase in the actuarial present value of pension benefits. Above-market earnings represent the difference between market interest rates determined pursuant to SEC rules and earnings credited to the named executive officers’ deferred compensation accounts. See the Nonqualified Deferred Compensation in Fiscal Year 2007 table on page 173 of this joint proxy statement/prospectus for additional information. | |
(7) | This amount represents the sum of (A) company matching contributions to Mr. McNamara’s 401(k) saving plan account of $12,550, (B) life insurance premium payments of $564, (C) $7,621 for the reimbursement of taxes with respect to taxes due on Mr. McNamara’s vested deferred compensation amounts for the 2007 fiscal year, and (D) $344,569, representing earnings on the unvested portion of Mr. McNamara’s deferred compensation account. | |
(8) | This amount represents the sum of (A) company matching contributions to Mr. Smach’s 401(k) saving plan account of $9,925, (B) individual disability premium payments of $845, (C) $4,101 for the reimbursement of taxes with respect to taxes due on Mr. Smach’s vested deferred compensation amounts for the 2007 fiscal year, and (D) $231,266, representing earnings on the unvested portion of Mr. Smach’s deferred compensation account. |
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(9) | This amount represents the sum of (A) company matching contributions to Mr. Brathwaite’s 401(k) saving plan account of $7,965, (B) $9,132 for the reimbursement of taxes with respect to taxes due on Mr. Brathwaite’s vested deferred compensation amounts for the 2007 fiscal year, and (C) $152,694, representing earnings on the unvested portion of Mr. Brathwaite’s deferred compensation account. | |
(10) | All compensation paid to and benefits for Mr. Widmann, other than stock awards and option awards were paid in Euros. The amounts have been converted into dollars based on the prevailing exchange rate at the end of the fiscal year. | |
(11) | This amount represents the sum of (A) a vehicle allowance in the amount of $20,480 and (B) $111,815 representing earnings on the unvested portion of Mr. Widmann’s deferred compensation account. This amount excludes an unvested deferred long-term bonus of $2,412,733 contributed to Mr. Widmann’s deferred compensation account during fiscal year 2007. As the deferred long-term bonus vests, the vested amount will be reported as a bonus in the Summary Compensation Table for Fiscal Year 2007 in future years. Such amount is reflected in the “Flextronics Contributions in Last Fiscal Year” column under the Nonqualified Deferred Compensation in Fiscal Year 2007 table on page 173 of this joint proxy statement/prospectus. | |
(12) | On March 31, 2007, Mr. Tan, a named executive officer, retired as President and Managing Director, Flextronics Asia. | |
(13) | This amount represents the sum of (A) life insurance premium payments of $1,141, (B) a vehicle allowance in the amount of $25,250, (C) vehicle-related expenses of $1,984 and (D) $204,988 representing earnings on the unvested portion of Mr. Tan’s deferred compensation account. This amount excludes termination benefits of $2,634,099, representing the acceleration of a previously-awarded deferred bonus, plus accumulated earnings through June 30, 2007, which was not payable until June 30, 2007. For additional information about the termination benefits, see the section entitled “— Potential Payments upon Termination or Change of Control” beginning on page 174 of this joint proxy statement/prospectus. |
• | awards under Flextronics’s three-year cash incentive bonus plan; | |
• | awards under Flextronics’s annual incentive cash bonus program; | |
• | awards under Flextronics’s special 2007 incentive cash bonus plan; | |
• | performance-based share bonus awards; | |
• | service-based share bonus awards; and | |
• | stock options. |
All Other | ||||||||||||||||||||||||||||||||||||
All Other | Option | Exercise | ||||||||||||||||||||||||||||||||||
Estimated Future | Stock Awards: | Awards: | or | Grant-Date | ||||||||||||||||||||||||||||||||
Estimated Future Payouts | Payouts Under | Number of | Number of | Base | Fair Value | |||||||||||||||||||||||||||||||
Under Non-Equity | Equity Incentive | Shares of | Securities | Price | of Stock | |||||||||||||||||||||||||||||||
Incentive Plan Awards | Plan Awards(1) | Stock or | Underlying | of Option | and Option | |||||||||||||||||||||||||||||||
Grant | Threshold | Target | Maximum | Target | Units | Options | Awards | Awards | ||||||||||||||||||||||||||||
Name | Date | ($) | ($) | ($) | (#) | (#)(2) | (#)(3) | ($/Sh)(4) | ($)(5) | |||||||||||||||||||||||||||
Michael M. McNamara | — | $ | — | $ | 750,000 | (6) | $ | 1,000,000 | (6) | — | — | — | — | $ | — | |||||||||||||||||||||
— | $ | 375,000 | (7) | $ | 1,500,000 | (7) | $ | 3,000,000 | (7) | — | — | — | — | $ | — | |||||||||||||||||||||
04/17/2006 | $ | — | $ | — | $ | — | 100,000 | — | — | — | $ | — | ||||||||||||||||||||||||
04/17/2006 | $ | — | $ | — | $ | — | — | 100,000 | — | — | $ | — | ||||||||||||||||||||||||
04/17/2006 | $ | — | $ | — | $ | — | — | — | 700,000 | $ | 11.23 | $ | 3,488,380 | |||||||||||||||||||||||
Thomas J. Smach | — | $ | — | $ | 750,000 | (6) | $ | 1,000,000 | (6) | — | — | — | — | $ | — | |||||||||||||||||||||
— | $ | 162,500 | (7) | $ | 650,000 | (7) | $ | 1,300,000 | (7) | — | — | — | — | $ | — | |||||||||||||||||||||
04/17/2006 | $ | — | $ | — | $ | — | 100,000 | — | — | — | $ | — | ||||||||||||||||||||||||
04/17/2006 | $ | — | $ | — | $ | — | — | 100,000 | — | — | $ | — | ||||||||||||||||||||||||
04/17/2006 | $ | — | $ | — | $ | — | — | — | 400,000 | $ | 11.23 | $ | 1,993,360 | |||||||||||||||||||||||
Nicholas E. Brathwaite | — | $ | — | $ | 750,000 | (6) | $ | 1,000,000 | (6) | — | — | — | — | $ | — | |||||||||||||||||||||
— | $ | 162,500 | (7) | $ | 650,000 | (7) | $ | 1,300,000 | (7) | — | — | — | — | $ | — | |||||||||||||||||||||
04/17/2006 | $ | — | $ | — | $ | — | 175,000 | — | — | — | $ | 360,500 | ||||||||||||||||||||||||
04/17/2006 | $ | — | $ | — | $ | — | — | 175,000 | — | — | $ | 360,500 | ||||||||||||||||||||||||
04/17/2006 | $ | — | $ | — | $ | — | — | — | 650,000 | $ | 11.23 | $ | 3,239,210 |
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All Other | ||||||||||||||||||||||||||||||||||||
All Other | Option | Exercise | ||||||||||||||||||||||||||||||||||
Estimated Future | Stock Awards: | Awards: | or | Grant-Date | ||||||||||||||||||||||||||||||||
Estimated Future Payouts | Payouts Under | Number of | Number of | Base | Fair Value | |||||||||||||||||||||||||||||||
Under Non-Equity | Equity Incentive | Shares of | Securities | Price | of Stock | |||||||||||||||||||||||||||||||
Incentive Plan Awards | Plan Awards(1) | Stock or | Underlying | of Option | and Option | |||||||||||||||||||||||||||||||
Grant | Threshold | Target | Maximum | Target | Units | Options | Awards | Awards | ||||||||||||||||||||||||||||
Name | Date | ($) | ($) | ($) | (#) | (#)(2) | (#)(3) | ($/Sh)(4) | ($)(5) | |||||||||||||||||||||||||||
Werner Widmann | — | $ | — | $ | 750,000 | (6) | $ | 1,000,000 | (6) | — | — | — | — | $ | — | |||||||||||||||||||||
— | $ | 77,433 | (7) | $ | 309,733 | (7) | $ | 619,466 | (7) | — | — | — | — | $ | — | |||||||||||||||||||||
— | $ | — | $ | 250,000 | (8) | $ | — | — | — | — | — | $ | — | |||||||||||||||||||||||
04/17/2006 | $ | — | $ | — | $ | — | 50,000 | — | — | — | $ | 466,500 | ||||||||||||||||||||||||
04/17/2006 | $ | — | $ | — | $ | — | — | 50,000 | — | — | $ | 466,500 | ||||||||||||||||||||||||
— | $ | — | $ | — | $ | — | — | — | — | — | $ | — | ||||||||||||||||||||||||
Peter Tan(9) | — | $ | — | $ | 750,000 | (6) | $ | 1,000,000 | (6) | — | — | — | — | $ | — | |||||||||||||||||||||
— | $ | 75,000 | (7) | $ | 300,000 | (7) | $ | 600,000 | (7) | — | — | — | — | $ | — | |||||||||||||||||||||
— | $ | — | $ | 250,000 | (8) | $ | — | — | — | — | — | $ | — | |||||||||||||||||||||||
04/17/2006 | $ | — | $ | — | $ | — | 50,000 | — | — | — | $ | 371,000 | ||||||||||||||||||||||||
04/17/2006 | $ | — | $ | — | $ | — | — | 50,000 | — | — | $ | 371,000 |
(1) | This column reflects the aggregate target payouts for performance-based share bonus awards granted in fiscal year 2007 under Flextronics’s 2001 Equity Incentive Plan. The performance-based share bonus awards vest annually over either three years or five years only if the company achieves pre-determined year-over-year EPS growth rates, provided that if one or more of the annual EPS growth targets is not met, the unvested portion may be recouped if the subsequent period’s cumulative target is met. There is no threshold or maximum payout. Based on fiscal year 2007 performance, the following shares vested for the named executive officers: Michael M. McNamara — 33,334 shares; Thomas J. Smach — 33,334 shares; Nicholas E. Brathwaite — 58,334 shares; Werner Widmann — 10,000 shares; and Peter Tan — 10,000 shares. For additional information, see the section entitled “Compensation Discussion and Analysis — Fiscal Year 2007 Executive Compensation Components — Stock-Based Compensations — Option Exchange Program During Fiscal Year 2007” beginning on page 163 of this joint proxy statement/prospectus. | |
(2) | This column shows the number of service-based share bonus awards granted in fiscal year 2007 under Flextronics’s 2001 Equity Incentive Plan. The share bonus awards vest in equal annual installments over either three years or five years commencing on April 17, 2007, provided that the executive continues to remain employed on the vesting date. For additional information, see the section entitled “Compensation Discussion and Analysis — Fiscal Year 2007 Executive Compensation Components — Stock-Based Compensations — Option Exchange Program During Fiscal Year 2007” beginning on page 163 of this joint proxy statement/prospectus. | |
(3) | This column shows the number of stock options granted in fiscal year 2007 under Flextronics’s 2001 Equity Incentive Plan. These options vest as follows: 25% on the one-year anniversary of the grant date, with the remainder vesting in 36 equal monthly installments thereafter. Vesting is contingent upon the named executive officer continuing to remain employed on the vesting date. | |
(4) | This column shows the exercise price for the stock options granted, which was the closing price of Flextronics’s ordinary shares on April 17, 2006, the date the options were granted. | |
(5) | This column shows the grant-date fair value of share bonus awards and stock options under SFAS 123(R) granted to the named executive officers in fiscal year 2007. The grant-date fair value is the amount that Flextronics will expense in its financial statements over the award’s vesting schedule. For share bonus awards, fair value is the closing price of Flextronics’s ordinary shares on the grant date, which was $11.23. Such amount is reduced by the aggregate fair value of stock options surrendered in exchange for the share bonus awards. For additional information about the fiscal year 2007 grant of share bonus awards in exchange for options, see the section entitled “Compensation Discussion and Analysis — Fiscal Year 2007 Executive Compensation Components — Stock-Based Compensation — Option Exchange Program during Fiscal Year 2007” beginning on page 163 of this joint proxy statement/prospectus. For stock options, the fair value is calculated using the Black-Scholes-Merton value on the grant date, which was $4.98 per option. The fair values shown for stock awards and option awards are accounted for in accordance with SFAS 123(R). For additional information on the valuation assumptions, see the section entitled “Stock-Based Compensation” under Note 2 of Flextronics’s audited consolidated financial statements for the fiscal year ended March 31, 2007, included in Flextronics’s Annual Report onForm 10-K for the fiscal year ended March 31, 2007. These amounts reflect Flextronics’s accounting expense, and do not correspond to the actual value that will be recognized by the named executive officers. |
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(6) | These amounts are the potential payouts under Flextronics’s three-year cash incentive bonus plan. Target or maximum payouts only will be made if the company achieves pre-determined three-year compounded annual revenue and EPS growth rates for the three years ending in fiscal year 2009. There is no threshold payout under this plan. For additional information, see the section entitled “Compensation Discussion and Analysis — Fiscal Year 2007 Executive Compensation Components — Long-Term Incentive Bonuses — Three-Year Performance Plan” beginning on page 161 of this joint proxy statement/prospectus. | |
(7) | These amounts show the range of payouts under Flextronics’s annual incentive cash bonus program for fiscal year 2007. Amounts actually earned in fiscal year 2007 are reported as Non-Equity Incentive Plan Compensation in the Summary Compensation Table for Fiscal Year 2007. For additional information, see the section entitled “Compensation Discussion and Analysis — Fiscal Year 2007 Executive Compensation Components — Annual Incentive Bonuses” beginning on page 160 of this joint proxy statement/prospectus. | |
(8) | These amounts show the possible payouts under Flextronics’s special 2007 incentive cash bonus plan for Messrs. Widmann and Tan. Based on fiscal year 2007 performance, the performance targets were not met and the bonuses were not paid. For additional information, see the section entitled “Compensation Discussion and Analysis — Fiscal Year 2007 Executive Compensation Components — Annual Incentive Bonuses — One-Year Special Performance Bonus Plan for Werner Widmann and Peter Tan” beginning on page 161 of this joint proxy statement/prospectus. | |
(9) | Effective March 31, 2007, Mr. Tan entered into a separation agreement with Flextronics terminating his employment on June 30, 2007. Under the terms of the separation agreement, the share bonus awards awarded to him on April 17, 2006 were cancelled and his eligibility under the three-year cash incentive bonus plan was terminated. |
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||
Equity | Incentive | |||||||||||||||||||||||||||||||
Incentive | Plan Awards: | |||||||||||||||||||||||||||||||
Plan Awards: | Market or | |||||||||||||||||||||||||||||||
Market | Number of | Payout Value | ||||||||||||||||||||||||||||||
Number of | Value of | Unearned | of Unearned | |||||||||||||||||||||||||||||
Number of | Number of | Shares or | Shares or | Shares, Units | Shares, Units | |||||||||||||||||||||||||||
Securities | Securities | Units of | Units of | or Other | or Other | |||||||||||||||||||||||||||
Underlying | Underlying | Option | Stock That | Stock That | Rights That | Rights That | ||||||||||||||||||||||||||
Unexercised | Unexercised | Exercise | Option | Have Not | Have Not | Have Not | Have Not | |||||||||||||||||||||||||
Options | Options | Price | Expiration | Vested | Vested | Vested(1) | Vested | |||||||||||||||||||||||||
Name | (#) | (#) | ($) | Date | (#) | ($) | (#) | ($) | ||||||||||||||||||||||||
Exercisable | Unexercisable | |||||||||||||||||||||||||||||||
Michael M. McNamara | 150,000 | — | $ | 13.98 | 09/21/2011 | — | — | — | — | |||||||||||||||||||||||
1,200,000 | 800,000 | (2) | 7.90 | 07/01/2012 | — | — | — | — | ||||||||||||||||||||||||
600,000 | — | 8.84 | 09/03/2012 | — | — | — | — | |||||||||||||||||||||||||
129,167 | 70,833 | (3) | 11.53 | 08/23/2014 | — | — | — | — | ||||||||||||||||||||||||
3,000,000 | — | 12.37 | 05/13/2015 | — | — | — | — | |||||||||||||||||||||||||
— | 700,000 | (4) | 11.23 | 04/17/2016 | — | — | — | — | ||||||||||||||||||||||||
— | — | — | — | — | — | 100,000 | $ | 1,094,000 | ||||||||||||||||||||||||
— | — | — | — | 100,000 | (5) | $ | 1,094,000 | — | — | |||||||||||||||||||||||
Thomas J. Smach | 100,000 | — | $ | 13.98 | 09/21/2011 | — | — | — | — | |||||||||||||||||||||||
670,000 | — | 7.90 | 07/01/2012 | — | — | — | — | |||||||||||||||||||||||||
322,917 | 177,083 | (6) | 11.53 | 08/23/2014 | — | — | — | — | ||||||||||||||||||||||||
500,000 | — | 12.37 | 05/13/2015 | — | — | — | — | |||||||||||||||||||||||||
— | 400,000 | (7) | 11.23 | 04/17/2016 | — | — | — | — | ||||||||||||||||||||||||
— | — | — | — | — | — | 100,000 | $ | 1,094,000 | ||||||||||||||||||||||||
— | — | — | — | 100,000 | (8) | $ | 1,094,000 | — | — |
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Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||
Equity | Incentive | |||||||||||||||||||||||||||||||
Incentive | Plan Awards: | |||||||||||||||||||||||||||||||
Plan Awards: | Market or | |||||||||||||||||||||||||||||||
Market | Number of | Payout Value | ||||||||||||||||||||||||||||||
Number of | Value of | Unearned | of Unearned | |||||||||||||||||||||||||||||
Number of | Number of | Shares or | Shares or | Shares, Units | Shares, Units | |||||||||||||||||||||||||||
Securities | Securities | Units of | Units of | or Other | or Other | |||||||||||||||||||||||||||
Underlying | Underlying | Option | Stock That | Stock That | Rights That | Rights That | ||||||||||||||||||||||||||
Unexercised | Unexercised | Exercise | Option | Have Not | Have Not | Have Not | Have Not | |||||||||||||||||||||||||
Options | Options | Price | Expiration | Vested | Vested | Vested(1) | Vested | |||||||||||||||||||||||||
Name | (#) | (#) | ($) | Date | (#) | ($) | (#) | ($) | ||||||||||||||||||||||||
Exercisable | Unexercisable | |||||||||||||||||||||||||||||||
Nicholas E. Brathwaite | 83,333 | — | $ | 13.98 | 09/21/2011 | — | — | — | — | |||||||||||||||||||||||
92,924 | — | 15.90 | 10/01/2011 | — | — | — | — | |||||||||||||||||||||||||
99,375 | — | 7.90 | 07/01/2012 | — | — | — | — | |||||||||||||||||||||||||
500,000 | — | 13.18 | 09/28/2014 | — | — | — | — | |||||||||||||||||||||||||
250,000 | — | 17.50 | 01/22/2014 | — | — | — | — | |||||||||||||||||||||||||
— | 650,000 | (9) | 11.23 | 04/17/2016 | — | — | — | — | ||||||||||||||||||||||||
— | — | — | — | — | — | 175,000 | $ | 1,914,500 | ||||||||||||||||||||||||
— | — | — | — | 175,000 | (10) | $ | 1,914,500 | — | — | |||||||||||||||||||||||
Werner Widmann | 3,000 | — | $ | 5.87 | 10/08/2012 | — | — | — | — | |||||||||||||||||||||||
82,500 | 7,500 | (11) | 10.34 | 07/01/2013 | — | — | — | — | ||||||||||||||||||||||||
10,000 | — | 16.57 | 01/09/2014 | — | — | — | — | |||||||||||||||||||||||||
50,000 | — | 13.18 | 09/28/2014 | — | — | — | — | |||||||||||||||||||||||||
60,417 | 39,583 | (12) | 12.05 | 10/29/2014 | — | — | — | — | ||||||||||||||||||||||||
— | — | — | — | — | — | 50,000 | $ | 547,000 | ||||||||||||||||||||||||
— | — | — | — | 50,000 | (13) | $ | 547,000 | — | — | |||||||||||||||||||||||
Peter Tan | 15,000 | — | $ | 23.19 | 12/20/2010 | — | — | — | — | |||||||||||||||||||||||
15,000 | — | 21.76 | 06/15/2011 | — | — | — | — | |||||||||||||||||||||||||
750 | — | 23.02 | 07/06/2011 | — | — | — | — | |||||||||||||||||||||||||
45,833 | 4,167 | (14) | 10.34 | 07/01/2013 | — | — | — | — | ||||||||||||||||||||||||
125,000 | — | 16.57 | 01/09/2014 | — | — | — | — | |||||||||||||||||||||||||
100,000 | — | 13.18 | 09/28/2014 | — | — | — | — | |||||||||||||||||||||||||
90,625 | 59,375 | (15) | 12.05 | 10/29/2014 | — | — | — | — | ||||||||||||||||||||||||
250,000 | — | 12.37 | 05/13/2015 | — | — | — | — | |||||||||||||||||||||||||
— | — | — | — | 6,000 | (16) | $ | 65,640 | — | — | |||||||||||||||||||||||
— | — | — | — | — | — | 50,000 | (16) | $ | 547,000 | |||||||||||||||||||||||
— | — | — | — | 50,000 | (16) | $ | 547,000 | — | — |
(1) | This column shows performance-based share bonus awards that vest annually over either three years or five years if the company achieves pre-determined year-over-year EPS growth rates, provided that if one or more of the annual EPS growth targets is not met, the unvested portion may be recouped if the subsequent period’s cumulative target is met. Awards for Messrs. McNamara, Smach and Brathwaite vest over three years, subject to achievement of performance conditions, and awards for Messrs. Widmann and Tan, vest over five years, subject to achievement of performance conditions. | |
(2) | These stock options vested on July 1, 2007. | |
(3) | These stock options vest monthly from April 23, 2007 through August 23, 2008. | |
(4) | 25% of these stock options vested on April 17, 2007; the remaining 525,000 stock options vest monthly from April 17, 2007 through April 17, 2010. | |
(5) | 33,334 of these performance shares vested on April 17, 2007; 33,333 shares will vest on April 17, 2008; and 33,333 shares will vest on April 17, 2009. | |
(6) | These stock options vest monthly from April 23, 2007 through August 23, 2008. | |
(7) | 25% of these stock options vested on April 17, 2007; the remaining 300,000 stock options vest monthly from April 17, 2007 through April 17, 2010. | |
(8) | 33,334 of these performance shares vested on April 17, 2007; 33,333 shares will vest on April 17, 2008; and 33,333 shares will vest on April 17, 2009. |
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(9) | 25% of these stock options vested on April 17, 2007; the remaining 487,500 stock options vest monthly from April 17, 2007 through April 17, 2010. | |
(10) | 58,334 of these performance shares vested on April 17, 2007; 58,333 shares will vest on April 17, 2008; and 58,333 shares will vest on April 17, 2009. | |
(11) | These stock options vested as of July 1, 2007. | |
(12) | These stock options vest monthly from April 29, 2007 through October 29, 2008. | |
(13) | 10,000 of these performance shares vested on April 17, 2007; and 10,000 shares will vest on each of April 17, 2008, 2009, 2010 and 2011. | |
(14) | 3,125 of these stock options vested prior to July 1, 2007; the remaining 1,042 stock options were cancelled under Mr. Tan’s separation agreement. | |
(15) | 9,375 of these stock options vested prior to July 1, 2007; the remaining 50,000 stock options were cancelled under Mr. Tan’s separation agreement. | |
(16) | These share bonus awards were cancelled under Mr. Tan’s separation agreement. |
Option Awards | Stock Awards | |||||||||||||||
Number of Shares | Value Realized | Number of Shares | Value Realized | |||||||||||||
Acquired on Exercise | on Exercise | Acquired on Vesting | on Vesting | |||||||||||||
Name | (#) | ($) | (#) | ($) | ||||||||||||
Michael M. McNamara | — | $ | — | — | $ | — | ||||||||||
Thomas J. Smach | — | $ | — | — | $ | — | ||||||||||
Nicholas E. Brathwaite | — | $ | — | — | $ | — | ||||||||||
Werner Widmann | — | $ | — | — | $ | — | ||||||||||
Peter Tan(1) | 62,500 | $ | 381,250 | 6,000 | $ | 63,720 |
(1) | Mr. Tan exercised 62,500 stock options on August 16, 2006, with an exercise price of $5.88 per share and a market price of $11.98 per share. Mr. Tan also vested in 6,000 share bonus awards with a market price of $10.62 per share on July 1, 2006. |
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Present Value of | ||||||||||||
Number of Years | Accumulated | |||||||||||
Credited Service | Benefit | |||||||||||
Name | Plan Name | (#) | ($) | |||||||||
Werner Widmann | Multek Multilayer Technology GmbH & Co. KG Pension Plan | 3.5 | (1) | $ | 70,256 | (2) |
(1) | Mr. Widmann’s number of years of credited service under the Multek Plan is 3.5 years, which differs from his actual years of service with Flextronics of 4.5 years, as a result of the eligibility requirements that an employee needs to complete one year of service with Multek before being eligible to participate in the Multek Plan. | |
(2) | The accumulated benefit is based on Mr. Widmann’s service and base salary through March 31, 2007. The present value assumes a discount rate of 5.5% and has been calculated assuming Mr. Widmann will remain in service until age 62, the age at which retirement may occur without any reduction in benefits. As Mr. Widmann has not met the five-year vesting requirement, his accumulated benefit remains unvested as of March 31, 2007. |
Executive | Flextronics | Aggregate | Aggregate | |||||||||||||
Contributions | Contributions | Earnings | Balance | |||||||||||||
in Last | in Last | in Last | at Last Fiscal | |||||||||||||
Fiscal Year | Fiscal Year | Fiscal Year | Year-End | |||||||||||||
Name | ($)(1) | ($) | ($)(3) | ($)(4) | ||||||||||||
Michael M. McNamara | $ | 398,438 | $ | — | $ | 483,349 | $ | 6,061,216 | ||||||||
Thomas J. Smach | $ | 185,859 | $ | — | $ | 316,779 | (5) | $ | 3,653,421 | (5) | ||||||
Nicholas E. Brathwaite | $ | 98,556 | $ | — | $ | 292,306 | $ | 3,517,130 | ||||||||
Werner Widmann | $ | — | $ | 2,412,733 | (2) | $ | 217,264 | $ | 3,169,303 | |||||||
Peter Tan | $ | — | $ | — | $ | 257,754 | $ | 3,528,348 |
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(1) | Reflects participation by the named executive officers to defer a portion of their salary and bonus earned in the 2007 fiscal year. These amounts are included in the Summary Compensation Table for Fiscal Year 2007 under the “Salary” and “Non-Equity Incentive Plan Compensation” columns. | |
(2) | This amount represents a deferred long-term bonus contributed to Mr. Widmann’s deferred compensation account during fiscal year 2007. This amount is not included under the “All Other Compensation” column in the Summary Compensation Table for Fiscal Year 2007 as the entire amount is unvested as of March 31, 2007. As the deferred long-term bonus vests, the vested amount will be reported as a bonus in the Summary Compensation Table for Fiscal Year 2007 in future years. | |
(3) | Reflects earnings for each Named Executive Officer. The above-market portion of these earnings is included under the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column in the Summary Compensation Table for Fiscal Year 2007. | |
(4) | The amounts in this column include the following unvested balances for the named executive officers: Michael M. McNamara — $4,247,084; Thomas J. Smach — $2,609,838; Nicholas E. Brathwaite — $2,060,427; Werner Widmann — $3,169,303; and Peter Tan — $3,528,348. The amounts in this column have previously been reported in the Summary Compensation Table for Fiscal Year 2007 for this and prior fiscal years, except for the following amounts: Michael M. McNamara — $173,765; Thomas J. Smach — $87,915; Nicholas E. Brathwaite — $150,583; Werner Widmann — $19,384; and Peter Tan — $70,594. | |
(5) | Does not include earnings of $585,148 on Mr. Smach’s account under the Dii Group deferred compensation plan (which had been established by the Dii Group, which was acquired by Flextronics in 2000; no further employer or employee contributions have been made under this plan). Also does not include the aggregate balance of this account of $5,745,823. |
• | if the employment of any of Messrs. McNamara, Smach or Brathwaite is terminated as a result of his death or disability, the entire unvested portion of his deferred compensation account will vest; | |
• | if the employment of Mr. Widmann is terminated as a result of his death, the entire unvested portion of his deferred compensation account will vest; | |
• | if there is a change of control, the entire unvested portion of the deferred compensation account of each of Messrs. McNamara, Smach and Brathwaite will vest; | |
• | if there is a change of control, the unvested portion of Mr. Widmann’s deferred compensation account will vest based on the percentage of his completed months of service with the company during the six-year period from July 1, 2005 through July 1, 2011. |
• | 800,000 of Mr. McNamara’s unvested options provide that if Mr. McNamara is terminated without cause or leaves for good reason within the first 12 months following a change of control of the company, the vesting of any unvested portion of the option will accelerate; | |
• | 700,000 of Mr. McNamara’s unvested options, 400,000 of Mr. Smach’s unvested options and 650,000 of Mr. Brathwaite’s unvested options provide that if the executive officer is terminated or the executive’s duties are substantially reduced or changed during the18-month period following a change of control of the company, the vesting of any unvested portion of the option will accelerate. |
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Accelerated Vesting of | ||||||||||||
Deferred | Accelerated Vesting of | |||||||||||
Compensation(1) | Stock Options | Total | ||||||||||
Michael M. McNamara | $ | 4,247,084 | $ | 2,432,000 | $ | 6,679,084 | ||||||
Thomas J. Smach | 2,609,838 | — | 2,609,838 | |||||||||
Nicholas E. Brathwaite | 2,060,427 | — | 2,060,427 | |||||||||
Werner Widmann | 924,380 | — | 924,380 | (2) | ||||||||
Peter Tan(3) | 2,528,348 | — | 2,528,348 |
(1) | The amounts shown for Messrs. McNamara, Smach and Brathwaite represent the entire unvested portions of their deferred compensation accounts which would vest in the event of death, disability or a change of control. The amount shown for Mr. Widmann represents the portion of his unvested deferred compensation account which would vest in the event of a change of control. The entire amount of Mr. Widmann’s deferred compensation account, or $3,169,303, would vest in the event of his death. The amount shown for Mr. Tan represents the actual portion of his deferred compensation account (calculated as of March 30, 2007) which vested in connection with his separation agreement. | |
(2) | An additional $2,244,923 unvested portion of Mr. Widmann’s deferred compensation account would vest in the event of Mr. Widmann’s death. | |
(3) | Pursuant to Mr. Tan’s separation agreement, the vesting of his previously-awarded deferred bonus in the amount of $3.2 million, plus accumulated earnings of $328,348 was accelerated as of June 30, 2007, subject to a holdback of $1.0 million. As consideration for the acceleration of benefits, Mr. Tan has agreed for a period of two years commencing June 30, 2007 not to solicit any key employees or executives of the company or to solicit any customers or suppliers in order to compete with the company or otherwise engage in competitive activities. Subject to compliance with Mr. Tan’s non-solicitation and non-compete obligations, 50% of the holdback amount will be released and vest on June 30, 2008 and the balance will be released and vest on June 30, 2009. Mr. Tan also remains subject to confidentiality agreements for the benefit of the company. Mr. Tan’s deferred bonus was otherwise scheduled to vest 50% on April 1, 2008 and 100% on April 1, 2009, assuming termination of employment as of such dates. |
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(C) | ||||||||||||
(A) | (B) | Number of Ordinary Shares | ||||||||||
Number of Ordinary | Weighted-Average | Remaining Available for | ||||||||||
Shares to be Issued | Exercise Price | Future Issuance Under | ||||||||||
Upon Exercise of Options | of | Equity Compensation Plans | ||||||||||
and Vesting of Share Bonus | Outstanding Options | (Excluding Ordinary Shares | ||||||||||
Plan Category | Awards | (1) | Reflected in Column (A)) | |||||||||
Equity compensation plans approved by shareholders | 31,766,018 | (2) | $ | 12.65 | 24,730,806 | (3) | ||||||
Equity compensation plans not approved by shareholders(4),(5),(6) | 20,142,679 | (7) | $ | 11.17 | 4,324,530 | (8) | ||||||
Total | 51,908,697 | $ | 12.11 | 29,055,336 | ||||||||
(1) | The weighted-average exercise price does not take into account ordinary shares issuable upon vesting of outstanding share bonus awards, which have no exercise price. | |
(2) | Includes 1,697,000 ordinary shares issuable upon vesting of share bonus awards granted under the 2001 Plan. The remaining balance consists of ordinary shares issuable upon exercise of outstanding stock options. | |
(3) | Consists entirely of ordinary shares available for grant under the 2001 Plan, including shares available under prior company plans and assumed plans consolidated into the 2001 Plan. The 2001 Plan provides for grants of up to 32,000,000 shares after Flextronics’s shareholders approved an increase in the shares available under the 2001 Plan by 5.0 million shares on October 4, 2006. | |
(4) | The 2004 Plan was established in October 2004. The purpose of the 2004 Plan is to provide incentives to attract, retain and motivate eligible persons whose potential contributions are important to Flextronics’s success by offering such persons an opportunity to participate in Flextronics’s future performance through stock awards. Grants under the 2004 Plan may be granted only to persons who: (a) were not previously an employee or director of Flextronics or a subsidiary of Flextronics or (b) have either (i) completed a period of bona fide non-employment by Flextronics, and any subsidiary of Flextronics, of at least one year, or (ii) are returning to service as an employee of Flextronics, or any subsidiary of Flextronics, after a period of bona fide non-employment of less than one year due to Flextronics’s acquisition of such person’s employer; and then only as an incentive to such persons entering into employment with Flextronics or any subsidiary of Flextronics. Flextronics may only grant nonqualified stock options or share bonus awards under the 2004 Plan. The 2004 Plan is administered by the Compensation Committee, which is comprised of two independent directors. The 2004 Plan provides for grants of up to 10,000,000 shares. The exercise price of options granted under the 2004 Plan is determined by the Compensation Committee and may not be less than the fair market value of the underlying stock on the date of grant. Options granted under the 2004 Plan generally vest over four years, generally expire 10 years from the date of grant and unvested options are forfeited upon termination of employment. Share bonus awards generally vest in installments over a three- to five-year period and unvested share bonus awards are forfeited upon termination of employment. | |
(5) | Flextronics’s 2002 Plan was adopted by Flextronics’s board in May 2002. The adoption of the 2002 Plan was necessitated by Flextronics’s internal growth, Flextronics’s multiple acquisitions and the requirement to provide equity compensation for employees consistent with competitors and peer companies. The board reserved an aggregate of 20,000,000 ordinary shares for issuance under the 2002 Plan. The 2002 Plan provides for the grant to qualified persons of non-statutory stock options to purchase Flextronics’s ordinary shares and share bonus awards. Shares subject to options granted pursuant to the 2002 Plan that expire or terminate for any |
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reason without being exercised or share bonus awards that do not vest will again become available for grant and issuance pursuant to awards under the 2002 Plan. Options granted under the 2002 Plan generally have an exercise price of not less than the fair market value of the underlying ordinary shares on the date of grant. Options granted under the 2002 Plan generally vest over four years, generally expire 10 years from the date of grant and unvested options are forfeited upon termination of employment. Share bonus awards generally vest in installments over a three- to five-year period and unvested share bonus awards are forfeited upon termination of employment. The other general terms of the 2002 Plan are similar to the 2001 Plan. | ||
(6) | Flextronics has assumed option plans in connection with the acquisition of certain companies, which are referred to in this joint proxy statement/prospectus as the Assumed Plans. Options to purchase a total of 4,245,718 ordinary shares under the Assumed Plans remained outstanding. These options have a weighted-average exercise price of $6.30 per share. These options have been converted into options to purchase Flextronics’s ordinary shares on the terms specified in the applicable acquisition agreement, but are otherwise administered in accordance with terms of the Assumed Plans. Options under the Assumed Plans generally vest over four years and expire 10 years from the date of grant. No further awards may be made under the Assumed Plans. Options outstanding under the Assumed Plans are not included in the above table. | |
(7) | Includes 2,635,500 ordinary shares issuable upon vesting of share bonus awards granted under the 2002 and the 2004 Plans. The remaining balance consists of ordinary shares issuable upon exercise of outstanding stock options. | |
(8) | Of these, 1,910,418 ordinary shares remained available for grant under the 2002 Plan and 2,414,112 ordinary shares remained available for grant under the 2004 Plan. On February 1, 2007 Flextronics’s board of directors approved an increase of 2.5 million ordinary shares available for grant under the 2004 Plan. |
• | each shareholder known to Flextronics to be the beneficial owner of more than 5% of Flextronics’s outstanding ordinary shares; | |
• | each Named Executive Officer; | |
• | each director; and | |
• | all executive officers and directors as a group. |
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Shares Beneficially | ||||||||
Owned | ||||||||
Number of | ||||||||
Name and Address of Beneficial Owner | Shares | Percent | ||||||
5% Shareholders: | ||||||||
Entities associated with AXA Financial, Inc.(1) | 75,457,262 | 12.40 | % | |||||
1290 Avenue of the Americas, New York, NY 10104 | ||||||||
Entities associated with FMR Corp.(2) | 69,793,885 | 11.47 | ||||||
82 Devonshire Street, Boston, MA 02109 | ||||||||
Entities associated with Capital Group International, Inc.(3) | 41,762,950 | 6.86 | ||||||
11100 Santa Monica Boulevard, Los Angeles, CA 90025 | ||||||||
Entities associated with Franklin Resources, Inc.(4) | 36,637,486 | 6.02 | ||||||
One Franklin Parkway, San Mateo, CA 94403 | ||||||||
Wellington Management Company, LLP(5) | 36,430,442 | 5.99 | ||||||
75 State Street, Boston, MA 02109 | ||||||||
Capital Research and Management Company(6) | 36,096,530 | 5.93 | ||||||
333 South Hope Street, Los Angeles, CA 90071 | ||||||||
Named Executive Officers and Directors: | ||||||||
Michael E. Marks(7) | 9,801,675 | 1.59 | ||||||
Michael M. McNamara(8) | 6,923,144 | 1.13 | ||||||
Richard L. Sharp(9) | 3,237,606 | * | ||||||
Thomas J. Smach(10) | 1,869,672 | * | ||||||
Nicholas E. Brathwaite(11) | 1,272,175 | * | ||||||
Peter Tan(12) | 680,875 | * | ||||||
Werner Widmann(13) | 221,750 | * | ||||||
James A. Davidson(14) | 171,949 | * | ||||||
Lip-Bu Tan(15) | 125,559 | * | ||||||
Rockwell A. Schnabel(16) | 58,854 | * | ||||||
Ajay B. Shah(17) | 18,653 | * | ||||||
H. Raymond Bingham(18) | 18,653 | * | ||||||
All executive officers and directors as a group (12 persons)(19) | 23,138,698 | 3.70 | % |
* | Less than 1%. | |
(1) | Based on information supplied by AXA Financial, Inc. in an amended Schedule 13G filed with the SEC on February 13, 2007. AXA Rosenberg Investment Management LLC is deemed to have sole voting power for 1,935,823 of these shares and sole dispositive power for 2,540,477 of these shares. AllianceBernstein is deemed to have sole voting power for 50,648,543 of these shares, shared voting power for 7,841,238 of these shares, sole dispositive power for 72,889,983 of these shares and shared dispositive power for 21,102 of these shares. AXA Equitable Life Insurance Company is deemed to have sole dispositive power for 5,700 of these shares. A majority of these shares are held by unaffiliated third-party client accounts managed by Alliance Capital Management L.P., as investment adviser. Each of Alliance Capital Management L.P., AllianceBernstein and AXA Equitable Life Insurance Company is a subsidiary of AXA Financial, Inc. | |
(2) | Based on information supplied by FMR Corp. in an amended Schedule 13G filed with the SEC on February 14, 2007. FMR Corp., as a result of acting as an investment adviser, is deemed to beneficially own all of these shares. FMR Corp. is deemed to have sole voting power for 2,126,817 of these shares and sole dispositive power for 69,793,885 of these shares. | |
(3) | Based on information supplied by Capital Group International, Inc. in an amended Schedule 13G filed with the SEC on February 12, 2007. Capital Group International, Inc., as a result of being the parent holding |
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company of a group of investment management companies, is deemed to have sole voting power for 31,037,100 of these shares and sole dispositive power for 41,762,950 of these shares. Capital Guardian Trust Company, a wholly owned subsidiary of Capital Group International, Inc., is deemed to have sole voting power for 27,981,000 of these shares and sole dispositive power for 38,285,950 of these shares. | ||
(4) | Based on information supplied by Franklin Resources, Inc. in an amended Schedule 13G filed with the SEC on February 14, 2007. Templeton Global Advisors Limited is deemed to have sole voting and dispositive power for 16,019,987 of these shares and shared dispositive power for 307,710 of these shares. Templeton Investment Counsel, LLC is deemed to have sole voting and dispositive power for 6,839,770 of these shares. Franklin Templeton Investments Corp. is deemed to have sole voting power for 5,448,850 of these shares and sole dispositive power for 6,437,920 of these shares. Franklin Templeton Portfolio Advisors, Inc. is deemed to have sole voting and dispositive power for 2,548,536 of these shares. Franklin Templeton Investment Management Limited is deemed to have sole dispositive power for 2,373,150 of these shares. Templeton Capital Advisors Ltd. is deemed to have sole voting and dispositive power for 1,785,000 of these shares. Franklin Templeton Investments (Asia) Limited is deemed to have sole voting power for 165,830 of these shares and sole dispositive power for 219,400 of these shares. Franklin Templeton Investments Japan Limited is deemed to have sole voting and dispositive power for 57,930 of these shares. Templeton Asset Management Ltd. is deemed to have sole voting and dispositive power for 34,283 of these shares. Fiduciary Trust Company International is deemed to have sole voting and dispositive power for 13,800 of these shares. The securities are beneficially owned by one or more open- or closed-end investment companies or other managed accounts that are investment management clients of investment managers that are direct and indirect subsidiaries of Franklin Resources, Inc., including the Investment Management Subsidiaries, which are listed above. | |
(5) | Based on information supplied by Wellington Management Company, LLP in an amended Schedule 13G filed with the SEC on February 14, 2007. Wellington Management Company, LLP, as a result of acting as an investment adviser, is deemed to have shared voting power for 17,151,120 of these shares and shared dispositive power for 36,344,742 of these shares. | |
(6) | Based on information supplied by Capital Research and Management Company in an amended Schedule 13G filed with the SEC on February 12, 2007. Capital Research and Management Company, as a result of acting as an investment adviser, is deemed to beneficially own all of these shares. Capital Research and Management Company is deemed to have sole voting power for 20,031,530 of these shares and sole dispositive power for 36,096,530 of these shares. | |
(7) | Includes 2,561,626 shares held by Epping Investment Holdings, LLC of which Mr. Marks and his spouse are managing members, 241,049 shares held by the Marks Family Trust, 24,000 shares held by a trust for Mr. Marks’s minor children and 6,975,000 shares subject to options exercisable within 60 days of May 31, 2007. | |
(8) | Includes 6,114,583 shares subject to options exercisable within 60 days of May 31, 2007. | |
(9) | Includes 1,981,279 shares held directly by RLS Trust of which Mr. Sharp is sole trustee. Also includes 480,000 shares beneficially owned by Bethany, LLC of which Mr. Sharp is a manager, and in which Mr. Sharp owns a 1% interest. Mr. Sharp disclaims beneficial ownership in the shares owned by Bethany, LLC except to the extent of his pecuniary interest arising from his partnership interest in Bethany, LLC. Also includes 438,985 shares held directly by RLS 2000 Charitable Remainder Unitrust of which Mr. Sharp is sole trustee, and 155,000 shares held directly by RLS 1998 Charitable Remainder Unitrust, of which Mr. Sharp is a co-trustee. Also includes 182,342 shares subject to options exercisable within 60 days of May 31, 2007. | |
(10) | Includes 1,759,583 shares subject to options exercisable within 60 days of May 31, 2007. | |
(11) | Includes 1,228,757 shares subject to options exercisable within 60 days of May 31, 2007. Mr. Brathwaite ceased to be an executive officer on May 1, 2007. | |
(12) | Includes 658,875 shares subject to options exercisable within 60 days of May 31, 2007. Mr. Tan ceased to be an executive officer on March 31, 2007. | |
(13) | Includes 221,750 shares subject to options exercisable within 60 days of May 31, 2007. | |
(14) | Includes 45,740 shares held by the Davidson Living Trust of which Mr. Davidson is a trustee. Also includes 15,614 shares held by Silver Lake Technology Management, L.L.C. of which Mr. Davidson is Managing |
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Director. Mr. Davidson disclaims beneficial ownership in the shares owned by Silver Lake Technology Management, L.L.C. except to the extent of his pecuniary interest arising from his interest in Silver Lake Technology Management, L.L.C. Also includes 5,000 shares held directly by Mr. Davidson, 94 shares held by The John Alexander Davidson 2000 Irrevocable Trust of which Mr. Davidson is a trustee and 105,501 shares subject to options exercisable within 60 days of May 31, 2007. Mr. Davidson received these options in connection with his service as a member of Flextronics’s Board. Under Mr. Davidson’s arrangements with respect to director compensation, these 105,501 shares issuable upon exercise of options are expected to be assigned by Mr. Davidson to Silver Lake Technology Management, L.L.C. Does not include 18,571,429 shares issuable in connection with $195.0 million in aggregate principal amount of Flextronics’s Zero Coupon Convertible Junior Subordinated Notes due 2009 held by funds affiliated with Silver Lake Partners, of which Mr. Davidson is a co-founder and managing director, for net share settlement equal to the Note’s conversion value in excess of the $195.0 million face amount, which will be settled in cash. Mr. Davidson disclaims beneficial ownership of the Notes and any underlying shares, except to the extent of his pecuniary interest therein. | ||
(15) | Includes 20,614 shares held by the Lip-Bu Tan and Ysa Loo, TTEES of which Mr. Tan is a co-trustee and 104,945 shares subject to options exercisable within 60 days of May 31, 2007. | |
(16) | Includes 8,854 shares subject to options exercisable within 60 days of May 31, 2007. | |
(17) | Includes 10,937 shares subject to options exercisable within 60 days of May 31, 2007. | |
(18) | Includes 10,937 shares subject to options exercisable within 60 days of May 31, 2007. | |
(19) | Includes 16,150,615 shares subject to options exercisable and 9,000 shares subject to share bonus awards that vest within 60 days of May 31, 2007. |
• | transactions involving less than $25,000 for any individual related person; | |
• | compensation arrangements with directors and executive officers resulting solely from their service on the Board or as executive officers, so long as such arrangements are disclosed in Flextronics’s filings with the SEC or, if not required to be disclosed, are approved by the Compensation Committee; and | |
• | indirect interests arising solely from a related person’s service as a directorand/or owning, together with all other related persons, directly or indirectly, less than a 10% beneficial ownership interest in a third party (other than a partnership) which has entered into or proposes to enter into a transaction with Flextronics. |
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• | in which the amount involved exceeded or will exceed $120,000; and | |
• | in which any director, nominee, executive officer, holder of more than 5% of Flextronics’s ordinary shares or any member of their immediate family had or will have a direct or indirect material interest. |
Amount | Interest | |||||||
Date | of Loan | Rate | ||||||
July 2000 | $ | 331,662 | 6.40 | % | ||||
August 2000 | 217,046 | 6.22 | ||||||
November 2000 | 1,063,748 | 6.09 | ||||||
August 2001 | 160,495 | 5.72 | ||||||
November 2001 | 123,623 | 5.05 | ||||||
December 2001 | 35,464 | 5.05 |
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• | Flextronics’s Annual Report onForm 10-K for the fiscal year ended March 31, 2007, filed with the SEC on May 29, 2007; | |
• | Flextronics’s Current Reports onForm 8-K filed on April 5, 2007, May 4, 2007, May 15, 2007 and June 4, 2007; and | |
• | the description of Flextronics’s ordinary shares contained in Flextronics’s registration statement onForm 8-A, declared effective by the SEC on January 31, 1994, including any amendments or reports filed for the purpose of updating such description. |
• | Solectron’s Annual Report onForm 10-K for the fiscal year ended August 25, 2006, filed with the SEC on November 8, 2006; | |
• | Solectron’s Quarterly Reports onForm 10-Q for the quarters ended November 24, 2006 and March 2, 2007, filed with the SEC on December 29, 2006 and April 11, 2007 (later amended on April 20, 2007), respectively; | |
• | Solectron’s Current Reports onForm 8-K filed on November 13, 2006, November 21, 2006, February 14, 2007, March 2, 2007, March 15, 2007, April 19, 2007, May 21, 2007, June 4, 2007 and June 7, 2007; and | |
• | the description of Solectron’s common stock contained in Solectron’s registration statement onForm 8-A, declared effective by the SEC on April 17, 1992, including any amendments or reports filed for the purpose of updating such description. |
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For information relating to Flextronics: | For information relating to Solectron: | |
Flextronics International Ltd. | Solectron Corporation | |
2090 Fortune Drive | 847 Gibraltar Drive | |
San Jose, California 95131 | Milpitas, California 95035 | |
Attention: Investor Relations | Attention: Investor Relations | |
Telephone:(408) 576-7722 | Telephone: (408) 956-6542 |
100 F Street, N.E.
Washington, D.C. 20549
Banks and Brokers call collect:(212) 750-5833
Stockholders call toll free from within the
United States or Canada:(877) 825-8971
Banks and Brokers call:(212) 440-9800
All others call:(888) 605-7554
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Table of Contents
Page No. | ||||||||
Article I THE MERGER | A-1 | |||||||
1.1 | The Merger | A-1 | ||||||
1.2 | Effective Time; Closing | A-2 | ||||||
1.3 | Effect of the First Step Merger | A-2 | ||||||
1.4 | Certificate of Incorporation and Bylaws | A-2 | ||||||
1.5 | Directors and Officers | A-2 | ||||||
1.6 | Effect on Capital Stock | A-3 | ||||||
1.7 | Allocation of the Merger Consideration | A-5 | ||||||
1.8 | Surrender of Certificates; Election of Merger Consideration | A-6 | ||||||
1.9 | No Further Ownership Rights in Company Common Stock | A-9 | ||||||
1.10 | Lost, Stolen or Destroyed Certificates | A-9 | ||||||
1.11 | Alternative Structure | A-9 | ||||||
1.12 | Further Action | A-9 | ||||||
Article II REPRESENTATIONS AND WARRANTIES OF THE COMPANY | A-10 | |||||||
2.1 | Organization; Standing and Power; Charter Documents; Subsidiaries | A-10 | ||||||
2.2 | Capital Structure | A-11 | ||||||
2.3 | Authority; No Conflict; Necessary Consents | A-12 | ||||||
2.4 | SEC Filings; Financial Statements; Internal Controls | A-14 | ||||||
2.5 | Absence of Certain Changes or Events | A-16 | ||||||
2.6 | Taxes | A-16 | ||||||
2.7 | Properties | A-17 | ||||||
2.8 | Intellectual Property | A-18 | ||||||
2.9 | Governmental Authorizations | A-20 | ||||||
2.10 | Litigation | A-20 | ||||||
2.11 | Compliance with Law | A-20 | ||||||
2.12 | Environmental Matters | A-21 | ||||||
2.13 | Employee Benefit Plans and Compensation | A-22 | ||||||
2.14 | Contracts | A-25 | ||||||
2.15 | Insurance | A-26 | ||||||
2.16 | Foreign Corrupt Practices Act | A-26 | ||||||
2.17 | Transactions with Affiliates | A-26 | ||||||
2.18 | Takeover Statutes and Rights Plans | A-26 | ||||||
2.19 | Information in Registration Statement and Joint Proxy Statement/Prospectus | A-26 | ||||||
2.20 | Fairness Opinion | A-27 | ||||||
2.21 | Brokers’ and Finders’ Fees | A-27 | ||||||
Article III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB | A-27 | |||||||
3.1 | Organization; Standing and Power; Charter Documents; Subsidiaries | A-27 | ||||||
3.2 | Capital Structure | A-28 | ||||||
3.3 | Authority; No Conflict; Necessary Consents | A-29 | ||||||
3.4 | SEC Filings; Financial Statements | A-30 | ||||||
3.5 | Absence of Certain Changes or Events | A-32 | ||||||
3.6 | Taxes | A-32 | ||||||
3.7 | Title to Property and Assets | A-33 |
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Page No. | ||||||||
3.8 | Intellectual Property | A-33 | ||||||
3.9 | Governmental Authorizations | A-33 | ||||||
3.10 | Litigation | A-33 | ||||||
3.11 | Compliance with Law | A-34 | ||||||
3.12 | Environmental Matters | A-34 | ||||||
3.13 | Employee Benefit Plans and Compensation | A-34 | ||||||
3.14 | Contracts | A-35 | ||||||
3.15 | Interim Operations of Merger Sub | A-35 | ||||||
3.16 | Insurance | A-35 | ||||||
3.17 | Foreign Corrupt Practices Act | A-35 | ||||||
3.18 | Information in Registration Statement and Joint Proxy Statement/Prospectus | A-36 | ||||||
3.19 | Brokers’ and Finders’ Fees | A-36 | ||||||
3.20 | Financing; Sufficient Funds | A-36 | ||||||
Article IV CONDUCT BY THE PARTIES PRIOR TO THE EFFECTIVE TIME | A-37 | |||||||
4.1 | Conduct of Business by the Company | A-37 | ||||||
4.2 | Conduct of Business by Parent | A-40 | ||||||
Article V ADDITIONAL AGREEMENTS | A-40 | |||||||
5.1 | Joint Proxy Statement/Prospectus; Registration Statement | A-40 | ||||||
5.2 | Meetings of Stockholders; Board Recommendations | A-41 | ||||||
5.3 | Company Acquisition Proposals | A-42 | ||||||
5.4 | Confidentiality; Access to Information; No Modification of Representations, Warranties or Covenants | A-46 | ||||||
5.5 | Public Disclosure | A-47 | ||||||
5.6 | Regulatory Filings; Reasonable Best Efforts | A-47 | ||||||
5.7 | Notification of Certain Matters | A-48 | ||||||
5.8 | Third-Party Consents | A-49 | ||||||
5.9 | Equity Awards and Employee Matters | A-49 | ||||||
5.10 | Indemnification | A-51 | ||||||
5.11 | Section 16 Matters | A-53 | ||||||
5.12 | Certain Tax Matters | A-53 | ||||||
5.13 | 145 Affiliates | A-53 | ||||||
5.14 | Treatment of Exchangeable Shares | A-53 | ||||||
5.15 | Canadian Securities Laws | A-54 | ||||||
5.16 | Company Board Designees | A-54 | ||||||
5.17 | Stockholder Litigation | A-54 | ||||||
5.18 | Control of the Company’s or Parent’s Operations | A-54 | ||||||
5.19 | Nasdaq Notification | A-55 | ||||||
5.20 | Credit Agreement | A-55 | ||||||
Article VI CONDITIONS TO THE MERGER | A-55 | |||||||
6.1 | Conditions to the Obligations of Each Party to Effect the Merger | A-55 | ||||||
6.2 | Additional Conditions to the Obligations of Parent and Merger Sub | A-56 | ||||||
6.3 | Additional Conditions to the Obligations of the Company | A-56 | ||||||
Article VII TERMINATION, AMENDMENT AND WAIVER | A-57 | |||||||
7.1 | Termination | A-57 |
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Page No. | ||||||||
7.2 | Notice of Termination; Effect of Termination | A-59 | ||||||
7.3 | Fees and Expenses | A-59 | ||||||
7.4 | Amendment | A-60 | ||||||
7.5 | Extension; Waiver | A-60 | ||||||
Article VIII GENERAL PROVISIONS | A-61 | |||||||
8.1 | Non-Survival of Representations and Warranties | A-61 | ||||||
8.2 | Notices | A-61 | ||||||
8.3 | Interpretation; Certain Definitions | A-62 | ||||||
8.4 | Counterparts | A-63 | ||||||
8.5 | Entire Agreement; Third-Party Beneficiaries | A-63 | ||||||
8.6 | Severability | A-63 | ||||||
8.7 | Other Remedies; Specific Performance | A-64 | ||||||
8.8 | Governing Law | A-64 | ||||||
8.9 | Submission to Jurisdiction | A-64 | ||||||
8.10 | Rules of Construction | A-64 | ||||||
8.11 | Assignment | A-64 | ||||||
8.12 | Waiver of Jury Trial | A-64 | ||||||
Exhibit A1 Form of Company Voting Agreement | ||||||||
Exhibit A2 Form of Parent Voting Agreement | ||||||||
Exhibit B Form of Agreement and Plan of Merger and Reorganization | ||||||||
Exhibit C Form of Affiliate Agreement |
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Defined Term | Section | |||
401(k) Plan | 5.9(d) | |||
2009 Notes | 3.2(e) | |||
2010 Notes | 3.2(e) | |||
Acquisition | 7.3(d)(i) | |||
Acquisition Proposal | 5.3(h)(i) | |||
Action of Divestiture | 5.6(d) | |||
Agreement | Preamble | |||
Articles of Amendment | 5.14 | |||
Assumed Options | 1.6(e)(i) | |||
Audit | 2.6(a) | |||
Book Entry Shares | 1.8(d) | |||
Business Day | 1.2(b) | |||
Canadian Securities Laws | 5.15 | |||
Cash Consideration | 1.6(a) | |||
Cash Conversion Number | 1.6(a) | |||
Cash Election | 1.6(a) | |||
Cash Election Number | 1.7(b) | |||
Cash Election Shares | 1.6(a) | |||
Cash Shortfall Number | 1.7(c) | |||
Certificate of Merger | 1.2(a) | |||
Certificates | 1.8(d) | |||
Closing | 1.2(b) | |||
Closing Date | 1.2(b) | |||
COBRA | 2.13(a) | |||
Code | Preamble | |||
Commitment Letter | 3.20 | |||
Company | Preamble | |||
Company Balance Sheet | 2.4(b) | |||
Company Change of Recommendation | 5.3(d)(i) | |||
Company Change of Recommendation Notice | 5.3(d)(i)(D) | |||
Company Charter Documents | 2.1(b) | |||
Company Common Stock | 1.6(a) | |||
Company Disclosure Letter | Article II | |||
Company Employee Agreement | 2.13(a) | |||
Company Employee Plan | 2.13(a) | |||
Company Employee/Service Provider | 2.13(a) | |||
Company Environmental Claim | 2.12(a) | |||
Company ERISA Affiliate | 2.13(a) | |||
Company ESPP | 5.9(c)(i) | |||
Company Financials | 2.4(b) | |||
Company Governmental Authorizations | 2.9 | |||
Company Intellectual Property | 2.8 | |||
Company Intellectual Property Contract | 2.8 |
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Defined Term | Section | |||
Company Leased Real Property | 2.7(b) | |||
Company Material Contract | 2.14(a) | |||
Company Options | 2.2(b) | |||
Company Option Plans | 2.2(b) | |||
Company Pension Plan | 2.13(a) | |||
Company Preferred Stock | 2.2(a) | |||
Company Products | 2.8 | |||
Company Real Property Leases | 2.7(b) | |||
Company Restricted Stock | 1.6(b) | |||
Company SEC Reports | 2.4(a)(i) | |||
Company Stockholders’ Meeting | 5.2(a)(i) | |||
Company Voting Agreement | Recitals | |||
Company Voting Proposal | 5.2(a)(i) | |||
Confidentiality Agreement | 5.4(a) | |||
Continuing Employees | 5.9(e) | |||
Contract | 2.1(c)(i) | |||
Credit Agreement | 5.20 | |||
Deferred Compensation Plan | 5.9(g) | |||
Delaware Law | 1.1 | |||
Dissenting Shares | 1.6(c) | |||
DOJ | 2.3(d) | |||
DOL | 2.13(a) | |||
Effect | 8.3(d) | |||
Effective Time | 1.2(a) | |||
Election | 1.6(a) | |||
Election Deadline | 1.8(c)(ii) | |||
Election Form | 1.8(c)(iv) | |||
Environmental Laws | 2.12(a) | |||
End Date | 7.1(b)(i) | |||
ERISA | 2.13(a) | |||
Exchange | 5.14 | |||
Exchange Act | 2.3(d) | |||
Exchange Agent | 1.8(a) | |||
Exchange Fund | 1.8(b)(i) | |||
Exchange Ratio | 1.6(a) | |||
Exchangeable Shares | 5.14 | |||
Exchangeable Share Provisions | 5.14 | |||
Executives | 5.9(h) | |||
FCPA | 2.16 | |||
Financing | 3.20 | |||
First Step Merger | 1.1 | |||
FTC | 2.3(d) | |||
GAAP | 2.4(b) | |||
Goldman | 2.20 |
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Defined Term | Section | |||
Governmental Entity | 2.3(d) | |||
HIPAA | 2.13(a) | |||
HSR Act | 2.3(d) | |||
Indemnified Parties | 5.10 | |||
Intellectual Property | 2.8 | |||
Intellectual Property Rights | 2.8 | |||
IRS | 2.13(a) | |||
Joint Proxy Statement/Prospectus | 2.19 | |||
Knowledge | 8.3(b) | |||
Legal Requirements | 1.8(h) | |||
Lender | 3.20 | |||
Liens | 2.1(c)(ii) | |||
Made Available | 8.3(c) | |||
Mask Works | 2.8 | |||
Material Adverse Effect | 8.3(d) | |||
Materials of Environmental Concern | 2.12(a) | |||
Merger | 1.1 | |||
Merger Consideration | 1.6(a) | |||
Merger Sub | Preamble | |||
Merger Sub 2 | 1.1 | |||
Merger Sub Common Stock | 1.6(h) | |||
Non-Election Shares | 1.6(a) | |||
Parent | Preamble | |||
Parent Balance Sheet | 3.4(b) | |||
Parent Benefit Plan | 5.9(e) | |||
Parent Charter Documents | 3.1(b) | |||
Parent Closing Price | 1.6(e)(i) | |||
Parent Disclosure Letter | Article III | |||
Parent Employee Plan | 3.13(a) | |||
Parent Environmental Claim | 3.12(a) | |||
Parent Governmental Authorizations | 3.8 | |||
Parent Financials | 3.4(b) | |||
Parent Intellectual Property | 3.8(a) | |||
Parent Material Contract | 3.14(a) | |||
Parent Options | 3.2(b) | |||
Parent Products | 3.8(a) | |||
Parent Ordinary Shares | 1.6(a) | |||
Parent SEC Reports | 3.4(a)(i) | |||
Parent Share Awards | 3.2(b) | |||
Parent Shareholders’ Meeting | 5.2(b)(i) | |||
Parent Voting Agreement | Recitals | |||
Parent Voting Proposal | 5.2(b)(i) | |||
Parent’s 401(k) Plan | 5.9(d) | |||
Permitted Borrowings | 5.20 |
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Defined Term | Section | |||
Person | 8.3(e) | |||
Redemption | 5.14 | |||
Registered Intellectual Property | 2.8 | |||
Registration Statement | 2.19 | |||
Regulation M-A | 2.19 | |||
Retention Arrangements | 5.9(h) | |||
Solectron Canada | 5.14 | |||
Second Step Merger | 1.1 | |||
Second Step Merger Agreement | 1.1 | |||
SEC | 2.3(d) | |||
Securities Act | 2.4(a)(i) | |||
Series B Preferred Stock | 2.2(a) | |||
Stock Consideration | 1.6(a) | |||
Stock Conversion Number | 1.6(a) | |||
Stock Election | 1.6(a) | |||
Stock Election Number | 1.7(a) | |||
Stock Election Shares | 1.6(a) | |||
Subsidiary | 2.1(c)(i) | |||
Superior Offer | 5.3(h)(ii) | |||
Surviving Corporation | 1.1 | |||
Tail Policy | 5.10(b) | |||
Tax, Taxes, Taxable | 2.6(a) | |||
Tax Authority | 2.6(a) | |||
Tax Opinions | 5.12 | |||
Tax Return | 2.6(a) | |||
Termination Fee | 7.3(b)(i) | |||
Trade Secret | 2.8 | |||
Triggering Event | 7.1 | |||
Voting Debt | 2.2(c) | |||
Voting Shares | 2.3(a) | |||
WARN | 2.13(a) |
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One Marina Boulevard
#28-00 Singapore 018989
Attention: Chief Financial Officer
Facsimile No.: (65) 6890 7188
305 Interlocken Parkway
Broomfield, CO 80021
Attention: General Counsel
Facsimile No.:(303) 927-4513
101 Park Avenue
New York, NY 10178
Attention: Jeffrey N. Ostrager
Valarie A. Hing
Telephone No.:(212) 696-6000
Facsimile No.:(212) 697-1559
847 Gibraltar Drive,
Milpitas, California 95035
Attention: General Counsel
Telephone No.:(408) 957-8500
Facsimile No.:(408) 957-2717
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Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
Attention: Steven E. Bochner, Esq.
Michael S. Russell, Esq.
Telephone No.:(650) 493-9300
Facsimile No.:(650) 493-6811
Professional Corporation
One Market Street
Spear Street Tower, Suite 3300
San Francisco, CA 94105
Attention: Michael S. Ringler, Esq.
Telephone No.:(415) 947-2000
Facsimile No.:(415) 947-2099
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By: | /s/ Manny Marimuthu |
Title: | Authorized Signatory |
By: | /s/ Carrie Schiff |
Title: | Secretary and Treasurer |
By: | /s/ Paul Tufano |
Title: | Executive VP and Interim Chief |
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Section 2.1(c)(i) | — | Subsidiaries — Non-Wholly-Owned Subsidiaries | ||
Section 2.1(c)(ii) | — | Subsidiaries — Pledges of Securities | ||
Section 2.2(b) | — | Company Options | ||
Section 2.2(b)(i) | — | Company Options | ||
Section 2.2(c) | — | Restricted Stock | ||
Section 2.2(d) | — | Voting Debt | ||
Section 2.2(e) | — | Other Securities | ||
Section 2.2(f) | — | Redemption of Securities | ||
Section 2.2(g) | — | Voting Agreements | ||
Section 2.3(c)(iv) | — | No Conflict | ||
Section 2.3(d) | — | Government Consents | ||
Section 2.4(c) | — | Significant Deficiencies | ||
Section 2.5(b) | — | Absence of Certain Changes or Events | ||
Section 2.6(b)(i) | — | Tax Returns and Audits | ||
Section 2.6(b)(ii) | — | Tax Returns and Audits | ||
Section 2.6(b)(iv) | — | Pending Audits and Assessments | ||
Section 2.6(b)(v) | — | Waivers, Extensions and Power of Attorney | ||
Section 2.6(b)(vi) | — | Tax Sharing Agreements | ||
Section 2.6(b)(ix) | — | Participation in Listed Transactions | ||
Section 2.7(a) | — | Title to Properties and Assets | ||
Section 2.7(c) | — | Condition of Property and Assets | ||
Section 2.8(b) | — | No Infringement | ||
Section 2.8(c) | — | Notice | ||
Section 2.8(d) | — | No Third Party Infringers | ||
Section 2.8(i) | — | Ownership of Intellectual Property | ||
Section 2.10 | — | Litigation | ||
Section 2.12(c) | — | Environmental Liabilities | ||
Section 2.13(b)(i) | — | Company Employee Plans and Employment Agreements | ||
Section 2.13(b)(ii) | — | Base Salaries | ||
Section 2.13(c) | — | Documents | ||
Section 2.13(d) | — | Employee Plan Compliance | ||
Section 2.13(e) | — | Claims | ||
Section 2.13(f) | — | No Pension Plan | ||
Section 2.13(g) | — | Self Insured Health Plan | ||
Section 2.13(h) | — | Executive Compensation | ||
Section 2.13(i) | — | Parachute Payments | ||
Section 2.13(j) | — | Sections 162(m) and 409A of the Code | ||
Section 2.13(l) | — | Retiree Obligations | ||
Section 2.13(m) | — | Labor and Works Councils | ||
Section 2.14(a)(v) | — | Material Contracts | ||
Section 2.14(a)(xi) | — | Material Customer Contracts |
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Section 4.1(b)(iii) | — | Required Consent | ||
Section 4.1(b)(iv) | — | Required Consent | ||
Section 4.1(b)(xix) | — | Required Consent | ||
Section 5.9(h) | — | Retention Arrangements | ||
Parent Disclosure Schedule | ||||
Section 3.2(d) | — | Other Securities | ||
Section 3.3(d) | — | Government Consents | ||
Section 3.6(a)(ii) | — | Tax Returns and Audits — Audits | ||
Section 3.6(a)(iv) | — | Tax Returns and Audits — Listed Transactions |
Exhibit A1 | — | Form of Company Voting Agreement (included as Annex B to this Registration Statement on Form S-4) | ||
Exhibit A2 | — | Form of Parent Voting Agreement (included as Annex C to this Registration Statement on Form S-4) | ||
Exhibit B | — | Form of Agreement and Plan of Merger and Reorganization (included as Annex A-2 to this Registration Statement on Form S-4) | ||
Exhibit C | — | Form of Affiliate Agreement |
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By: |
By: |
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One Marina Boulevard
#28-00 Singapore 018989
Attention: Chief Financial Officer
Facsimile No.: (65) 6890 7188
305 Interlocken Parkway
Broomfield, CO 80021
Attention: General Counsel
Facsimile No.:(303) 927-4513
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Attention: | Jeffrey N. Ostrager |
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Title: |
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Address for Notice: |
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847 Gibraltar Drive,
Milpitas, California 95035
Attention: General Counsel
Telephone No.:(408) 957-8500
Facsimile No.:(408) 957-2717
Attention: | Steven E. Bochner, Esq. |
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Professional Corporation
One Market Street
Spear Street Tower, Suite 3300
San Francisco, CA 94105
Attention: Michael S. Ringler, Esq.
Telephone No.:(415) 947-2000
Facsimile No.:(415) 947-2099
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Title: |
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Item 20. | Indemnification of Directors and Officers. |
Item 21. | Exhibits and Financial Statement Schedules. |
Incorporated by Reference | ||||||||||||||||
Exhibit | Filing | Exhibit | Filed | |||||||||||||
No. | Exhibit | Form | File No. | Date | No. | Herewith | ||||||||||
2 | .01 | Agreement and Plan of Merger, dated as of June 4, 2007, among Flextronics International Ltd., Saturn Merger Corp. and Solectron Corporation (included as Annex A-1 to the joint proxy statement/prospectus forming a part of this registration statement) | X |
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Incorporated by Reference | ||||||||||||||||
Exhibit | Filing | Exhibit | Filed | |||||||||||||
No. | Exhibit | Form | File No. | Date | No. | Herewith | ||||||||||
2 | .02 | Form of Agreement and Plan of Merger and Reorganization, by and between Solectron Corporation, Flextronics International Ltd., and Saturn Merger II Corp. (included as Annex A-2 to the joint proxy statement/prospectus forming a part of this registration statement. | X | |||||||||||||
2 | .03 | Form of Company Voting Agreement, dated as of June 4, 2007, among Solectron Corporation and certain shareholders of Flextronics International Ltd. (included as Annex B to the joint proxy statement/prospectus forming a part of this registration statement) | X | |||||||||||||
2 | .04 | Form of Parent Voting Agreement, dated as of June 4, 2007, among Flextronics International Ltd. and certain stockholders of Solectron Corporation (included as Annex C to the joint proxy statement/prospectus forming a part of this registration statement) | X | |||||||||||||
3 | .01 | Memorandum and New Articles of Association of the Registrant | 10-Q | 000-23354 | 02-09-01 | 3 | .01 | |||||||||
3 | .02 | Summary of amendments to Memorandum and Articles of Association of the Registrant | 8-K | 000-23354 | 02-03-06 | 3 | .01 | |||||||||
5 | .01 | Opinion of Allen & Gledhill | X | |||||||||||||
8 | .01* | Form of Opinion of Curtis, Mallet-Prevost, Colt & Mosle LLP regarding tax matters | ||||||||||||||
8 | .02* | Form of Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, regarding tax matters | ||||||||||||||
23 | .01 | Consent of Deloitte & Touche LLP, independent registered public accounting firm of Flextronics International Ltd. | X | |||||||||||||
23 | .02 | Consent of KPMG LLP, independent registered public accounting firm of Solectron Corporation | X | |||||||||||||
23 | .03 | Consent of Allen & Gledhill (included in Exhibit 5.01) | X | |||||||||||||
23 | .04* | Consent of Curtis, Mallet-Prevost, Colt & Mosle LLP (included in Exhibit 8.01) | ||||||||||||||
23 | .05* | Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 8.02) | ||||||||||||||
24 | .01 | Power of Attorney (included on the signature page to this registration statement onForm S-4) | X | |||||||||||||
99 | .01 | Opinion of Citigroup Global Markets Inc. (included as Annex D to the joint proxy statement/prospectus forming a part of this registration statement) | X |
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Incorporated by Reference | ||||||||||||||||
Exhibit | Filing | Exhibit | Filed | |||||||||||||
No. | Exhibit | Form | File No. | Date | No. | Herewith | ||||||||||
99 | .02 | Consent of Citigroup Global Markets Inc. | X | |||||||||||||
99 | .03 | Opinion of Goldman, Sachs & Co. (included as Annex E to the joint proxy statement/prospectus forming a part of this registration statement) | X | |||||||||||||
99 | .04 | Consent of Goldman, Sachs & Co. | X | |||||||||||||
99 | .05* | Form of Flextronics Proxy Card | ||||||||||||||
99 | .06* | Form of Solectron Proxy Card | ||||||||||||||
99 | .07* | Election Form and Related Documents | ||||||||||||||
99 | .08* | Form of Voting Instruction Form for Exchangeable Shares |
* | To be filed by amendment. |
Item 22. | Undertakings. |
(a) | The undersigned registrant hereby undertakes: |
(1) | to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) | to include any prospectus required by section 10(a)(3) of the Securities Act of 1933; |
(ii) | to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
(iii) | to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
(2) | The undersigned Registrant hereby undertakes that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. | |
(3) | The undersigned Registrant hereby undertakes to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(b) | The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
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(c) (1) | The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form. |
(2) | The undersigned registrant undertakes that every prospectus (i) that is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(d) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant 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, the registrant 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 Act and will be governed by the final adjudication of such issue. |
(e) | The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of thisForm S-4, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. |
(f) | The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. |
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By: | /s/ Thomas J. Smach |
Title: | Chief Financial Officer |
Signature | Title | Date | ||||
/s/ Michael M. McNamara Michael M. McNamara | Chief Executive Officer and Director (Principal Executive Officer) and Authorized U.S. Representative | July 11, 2007 | ||||
/s/ Thomas J. Smach Thomas J. Smach | Chief Financial Officer (Principal Financial Officer) | July 11, 2007 | ||||
/s/ Christopher Collier Christopher Collier | Senior Vice President, Finance (Principal Accounting Officer) | July 11, 2007 | ||||
/s/ Michael E. Marks Michael E. Marks | Chairman of the Board | July 11, 2007 | ||||
/s/ H. Raymond Bingham H. Raymond Bingham | Director | July 11, 2007 | ||||
/s/ James A. Davidson James A. Davidson | Director | July 11, 2007 |
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Signature | Title | Date | ||||
/s/ Rockwell A. Schnabel Rockwell A. Schnabel | Director | July 11, 2007 | ||||
/s/ Ajay B. Shah Ajay B. Shah | Director | July 11, 2007 | ||||
/s/ Richard L. Sharp Richard L. Sharp | Director | July 11, 2007 | ||||
/s/ Lip-Bu Tan Lip-Bu Tan | Director | July 11, 2007 |
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Incorporated by Reference | ||||||||||||||||
Exhibit | Filing | Exhibit | Filed | |||||||||||||
No. | Exhibit | Form | File No. | Date | No. | Herewith | ||||||||||
2 | .01 | Agreement and Plan of Merger, dated as of June 4, 2007, among Flextronics International Ltd., Saturn Merger Corp. and Solectron Corporation (included as Annex A-1 to the joint proxy statement/prospectus forming a part of this registration statement) | X | |||||||||||||
2 | .02 | Form of Agreement and Plan of Merger and Reorganization, by and between Solectron Corporation, Flextronics International Ltd., and Saturn Merger II Corp. (included asAnnex A-2 to the joint proxy statement/prospectus forming a part of this registration statement) | X | |||||||||||||
2 | .03 | Form of Company Voting Agreement, dated as of June 4, 2007, among Solectron Corporation and certain shareholders of Flextronics International Ltd. (included as Annex B to the joint proxy statement/prospectus forming a part of this registration statement) | X | |||||||||||||
2 | .04 | Form of Parent Voting Agreement, dated as of June 4, 2007, among Flextronics International Ltd. and certain stockholders of Solectron Corporation (included as Annex C to the joint proxy statement/prospectus forming a part of this registration statement) | X | |||||||||||||
3 | .01 | Memorandum and New Articles of Association of the Registrant | 10-Q | 000-23354 | 02-09-01 | 3 | .01 | |||||||||
3 | .02 | Summary of amendments to Memorandum and Articles of Association of the Registrant | 8-K | 000-23354 | 02-03-06 | 3 | .01 | |||||||||
5 | .01 | Opinion of Allen & Gledhill | X | |||||||||||||
8 | .01* | Form of Opinion of Curtis, Mallet-Prevost, Colt & Mosle LLP regarding tax matters | ||||||||||||||
8 | .02* | Form of Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, regarding tax matters | ||||||||||||||
23 | .01 | Consent of Deloitte & Touche LLP, independent registered public accounting firm of Flextronics International Ltd. | X | |||||||||||||
23 | .02 | Consent of KPMG LLP, independent registered public accounting firm of Solectron Corporation | X | |||||||||||||
23 | .03 | Consent of Allen & Gledhill (included in Exhibit 5.01) | X | |||||||||||||
23 | .04* | Consent of Curtis, Mallet-Prevost, Colt & Mosle LLP (included in Exhibit 8.01) | ||||||||||||||
23 | .05* | Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 8.02) |
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Incorporated by Reference | ||||||||||||||||
Exhibit | Filing | Exhibit | Filed | |||||||||||||
No. | Exhibit | Form | File No. | Date | No. | Herewith | ||||||||||
24 | .01 | Power of Attorney (included on the signature page to this registration statement onForm S-4) | X | |||||||||||||
99 | .01 | Opinion of Citigroup Global Markets Inc. (included as Annex D to the joint proxy statement/prospectus forming a part of this registration statement) | X | |||||||||||||
99 | .02 | Consent of Citigroup Global Markets Inc. | X | |||||||||||||
99 | .03 | Opinion of Goldman, Sachs & Co. (included as Annex E to the joint proxy statement/prospectus forming a part of this registration statement) | X | |||||||||||||
99 | .04 | Consent of Goldman, Sachs & Co. | X | |||||||||||||
99 | .05* | Form of Flextronics Proxy Card | ||||||||||||||
99 | .06* | Form of Solectron Proxy Card | ||||||||||||||
99 | .07* | Election Form and Related Documents | ||||||||||||||
99 | .08* | Form of Voting Instruction Form for Exchangeable Shares |
* | To be filed by amendment. |
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