8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 22, 2005

SOLECTRON CORPORATION

(Exact name of registrant as specified in charter)

Delaware	1-11098	94-2447045
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

847 Gibraltar Drive, Milpitas, California	95035
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (408) 957-8500                                                            

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

TABLE OF CONTENTS

	ITEM 2.02 Results of Operations and Financial Condition
	ITEM 9.01 Financial Statements and Exhibits
SIGNATURES
	EXHIBIT INDEX
EXHIBIT 99.1

ITEM 2.02 Results of Operations and Financial Condition

     On December 22, 2005, Solectron Corporation (“Solectron”) announced its results of operations for its fiscal quarter ended November 30, 2005. A copy of the Company’s press release announcing such results dated December 22, 2005 is attached hereto as Exhibit 99.1. This Form 8-K and the attached exhibit are filed with the Securities and Exchange Commission (“SEC”).

     Solectron includes the use of a non-GAAP financial measure in the attached exhibit. In accordance with Item 10(e)(i) of Regulation S-K, Solectron is required to provide a statement disclosing the reasons why management believes that presentation of non-GAAP financial measures provides useful information to investors regarding the Company’s results of operations.

     Solectron management evaluates and makes certain operating decisions (e.g. inventory management, site locations, personnel decisions) using various operating measures. These measures are generally based on the revenues and certain costs of its operations, such as cost of goods sold and selling, general and administrative expenses. One such measure is non-GAAP net income (loss), which is a non-GAAP financial measure under Section 101 of Regulation G under the Securities Exchange Act of 1934, as amended. This measure consists of GAAP net income (loss) from continuing operations excluding as applicable, restructuring charges (severance and benefits, excess facilities and asset-related charges), an offset to revenue related to a premium for a customer contract, amortization of intangible assets, stock compensation expense, investment related losses (gains), impairment charges for goodwill, intangible assets and other long-lived assets, and losses (gains) on the extinguishment of debt and other debt-related charges. Non-GAAP net income (loss) is adjusted by the amount of additional taxes or tax benefit that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the company’s tax liability.

     Management believes it is useful to exclude restructuring charges in measuring Solectron’s operations. Solectron has dramatically reduced headcount and facilities over the past three years. As a result, in 2003, 2004 and 2005, Solectron’s GAAP statements of operations have included significant charges related to such restructurings. Furthermore, management believes an offset to revenue related to a premium for a customer contract, amortization of intangible assets, stock compensation expense, investment related losses (gains), impairment charges for goodwill, intangible assets and other long-lived assets, certain tax adjustments, and losses (gains) on the extinguishment of debt and other debt-related charges, are infrequent events, which make the results less comparable between reporting periods.

     Management believes that non-GAAP net income (loss) provides useful supplemental information to management and investors regarding the performance of the company’s business operations and facilitates comparisons to our historical operating results. Management also uses this information internally for forecasting and budgeting. Non-GAAP financial measures should not be considered as a substitute for measures of financial performance prepared in accordance with GAAP. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within the attached press release with their most directly comparable GAAP financial results.

ITEM 9.01 Financial Statements and Exhibits

(c) Exhibits

Exhibit		Description
	99.1	Press release dated December 22, 2005 announcing Solectron’s earnings for the fiscal quarter ended November 30, 2005.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: December 22, 2005	Solectron Corporation
	/s/ Warren Ligan
	Warren Ligan
	Interim Chief Financial Officer

EXHIBIT INDEX

Exhibit		Description
	99.1	Press release dated December 22, 2005 announcing Solectron’s earnings for the fiscal quarter ended November 30, 2005.

EX-99.1

EXHIBIT 99.1

Solectron Announces First Quarter Financial Results

- Company delivered sequential growth in revenue in Q1 -

For Immediate Release: Dec. 22, 2005

MILPITAS, Calif. — Solectron Corporation (NYSE:SLR), a leading provider of electronics manufacturing and integrated supply chain services, today reported sales of $2.46 billion in the first quarter of fiscal 2006, an increase of 2.4% over fourth quarter revenues of $2.40 billion. Sales in the first quarter of fiscal 2005 were $2.69 billion.

The company reported a GAAP profit after tax from continuing operations in the first quarter of $20.2 million, or two cents per share, compared with GAAP profit after tax from continuing operations of $11.8 million, or one cent per share, in the fourth quarter of fiscal 2005. GAAP profit after tax from continuing operations in the first quarter of fiscal 2005 was $47.5 million, or 5 cents per share.

Non-GAAP profit after tax for the first quarter was $28.1 million, or $0.03 per share, compared to non-GAAP profit after tax of $41.4 million, or $0.04 per share, for the fourth quarter of fiscal 2005, and non-GAAP profit after tax of $51.4 million, or $0.05 per share in the first quarter of fiscal 2005. Non-GAAP financial results do not include restructuring costs, impairment charges, amortization of intangibles, stock based compensation expenses, or other infrequent or unusual items. The financial results of prior periods have been adjusted to reflect the impact of stock compensation charges and amortization of intangibles. Please refer to “Non-GAAP Information” below for further information.

“We are pleased to deliver sequential revenue growth in the first quarter,” said Mike Cannon, president and chief executive officer of Solectron. “We are continuing to make investments to expand our global capabilities and to position Solectron for continued revenue growth in the second half of this year.”

- more -

 - 2 - 

First Quarter 2006 Highlights

Improved Asset Velocity Metrics

The company made further improvements in working capital during the quarter. Days sales outstanding improved to 45 days and inventory turns in the quarter were 8. The company’s cash conversion cycle improved to 37 days.

Company Invests to Expand Global Capabilities

In the first quarter, Solectron opened new design engineering facilities in Guadalajara, Mexico, and Timisoara, Romania, and expanded existing facilities in Singapore and Shanghai, China. In featuring design services in conjunction with the Solectron Production System^TM, Solectron is expanding its competitive offerings to help customers accelerate time-to-market with lower costs, improved quality and increased flexibility.

The Guadalajara site was also recently expanded to add an Enclosure Center, adding this critical vertical integration capability to the Guadalajara campus. The Company also recently announced the opening of a medical manufacturing Center of Excellence in Singapore, to provide medical device manufacturers access to a lower-cost manufacturing region.

Stock Repurchase Program

On November 1, 2005, Solectron announced that the company has successfully completed the $250 million stock repurchase program commenced in July 2005. Under this program, the company repurchased 63.6 million shares of its common stock. On November 1, Solectron announced that its Board of Directors has authorized a new stock repurchase program, commencing in the second quarter, under which up to $250 million of the company’s outstanding common stock may be repurchased over the next 12 months.

Second Quarter 2006 Guidance

Fiscal second quarter guidance is for sales of $2.3 billion to $2.5 billion, and for non-GAAP EPS from continuing operations in a range from 2 cents to 4 cents, on a fully diluted basis.

- more -

-3-

Non-GAAP Information

In addition to disclosing results determined in accordance with generally accepted accounting principles (GAAP), Solectron also discloses non-GAAP results of operations that exclude certain items. By disclosing this non-GAAP information, management intends to provide investors with additional information to further analyze the company’s performance, core results and underlying trends. Management utilizes a measure of net income and earnings per share on a non-GAAP basis that excludes certain charges to better assess operating performance. Earnings guidance is provided only on a non-GAAP basis due to the inherent difficulty in forecasting such charges. Consistent with industry practice, management has historically applied these non-GAAP measures when discussing earnings or earnings guidance and intends to continue doing so.

Non-GAAP information is not determined using GAAP; therefore, the information is not necessarily comparable to other companies and should not be used to compare the company’s performance over different periods. Non-GAAP information should not be viewed as a substitute for, or superior to, net income or other data prepared in accordance with GAAP as measures of our profitability or liquidity. Users of this financial information should consider the types of events and transactions for which adjustments have been made. See the tables in the press release for a reconciliation of non-GAAP amounts to amounts reported under GAAP. A reconciliation from non-GAAP to GAAP results is contained in the attached financial summary and is available in the Investor Relations section of our website at www.solectron.com.

Webcast To Be Held Today

At 4:30 p.m. ET today, Solectron will hold a conference call to discuss the first quarter financial results. A live webcast can be accessed at www.solectron.com. Supplemental financial information related to the conference call will also be available at this website location. Following the live broadcast, the archived webcast will be available at www.solectron.com/investor/events.htm.

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-4-

An audio replay will also be available December 22, 2005, two hours after the conclusion of the call. To access the replay, call (800) 642-1687 from within the United States, or (706) 645-9291 from outside the United States, and specify passcode 2678372.

Safe Harbor

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended regarding our financial outlook for the first quarter of fiscal 2006 and beyond, and new business opportunities. These forward-looking statements involve a number of risks and uncertainties, and are based on current expectations, forecasts and assumptions.

Actual outcomes and results could differ materially. These risks and uncertainties include: our ability to continue to win and satisfy customers; reliance on major customers; the present and future strength of the worldwide economy overall, and in the telecommunications and other electronics technology sectors in particular; our ability to continue to improve our operating metrics; the accuracy of our projections of cash flows and capital requirements; incurring more restructuring-related charges than currently anticipated; our ability to complete our previously announced restructuring plan within the stated timeframe; the risk of price fluctuation; fluctuations in operating results; changes in technology; competition; variations in demand forecasts and orders that may give rise to operational challenges such as excess plant, equipment and materials; risks associated with international sales and operations; our ability to properly manage acquisitions; any unidentified weaknesses or deficiencies in our internal controls over financial reporting; interest rate risk; existing and new environmental regulations; market and segment risk; our ability to retain key personnel; and the impact of our outstanding litigation and other contingent liabilities.

For a further list and description of risks and uncertainties, see the reports filed by Solectron with the Securities and Exchange Commission, specifically Forms 8-K, 10-K, and 10-Q. Solectron disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Supplemental information, condensed consolidated balance sheets and statements of operations follow. All monetary amounts are stated in U.S. dollars.

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-5-

Q1’06
Income from Continuing Operations Reconciliation	Quarter Ended
($ in millions)	Nov. 30, 2005
|
Income from continuing operations on a GAAP basis	$	20.2
Restructuring and impairment charges	$	0.9
Amortization of intangibles	$	2.3
Stock compensation expense	$	4.7
Non-GAAP income from continuing operations	$	28.1

Earnings Per-Share Reconciliation	Quarter Ended
(in millions, except per-share data)	Nov. 30, 2005
|
Diluted net income per share from continuing operations on a GAAP basis	$	0.02
Restructuring and impairment charges		—
Amortization of intangibles		—
Stock compensation expense	$	0.01
Non-GAAP net income per share from continuing operations	$	0.03
Shares used to compute diluted net income per share — GAAP and non-GAAP		925.9

Q1’05
Income from Continuing Operations Reconciliation	Quarter Ended
($ in millions)	Nov. 30, 2004
Income from continuing operations on a GAAP basis	$	47.5
Restructuring and impairment charges	$	0.7
Amortization of intangibles	$	2.3
Stock compensation expense	$	0.9
Non-GAAP income from continuing operations	$	51.4

Earnings Per-Share Reconciliation	Quarter Ended
(in millions, except per-share data)	Nov. 30, 2004
|
Diluted net income per share from continuing operations on a GAAP basis	$	0.05
Restructuring and impairment charges		—
Amortization of intangibles		—
Stock compensation expense		—
Non-GAAP net income per share from continuing operations	$	0.05
Shares used to compute diluted net income per share — GAAP and non-GAAP		967.4

- more -

-6-

Q4’05
Income from Continuing Operations Reconciliation	Quarter Ended
($ in millions)	Aug. 31, 2005
|
Income from continuing operations on a GAAP basis	$	11.8
Restructuring and impairment charges	$	6.7
Amortization of intangibles	$	2.2
Stock compensation expense	$	0.7
Premium related to customer contract	$	20.0
Non-GAAP income from continuing operations	$	41.4

Earnings Per Share Reconciliation	Quarter Ended
(in millions, except per-share data)	Aug. 31, 2005
|
Diluted net income per share from continuing operations on a GAAP basis	$	0.01
Restructuring and impairment charges	$	0.01
Amortization of intangibles		—
Stock compensation expense	$	0.02
Non-GAAP net income per share from continuing operations	$	0.04
Shares used to compute diluted net income per share — GAAP and non-GAAP		969.2

About Solectron
Solectron Corporation (www.solectron.com) provides a full range of electronics manufacturing and supply-chain management services to the world’s leading networking, telecommunications, computing, consumer, automotive, industrial and medical device firms. The company’s industry-leading Lean Six Sigma methodology (Solectron Production System™) provides OEMs with low cost, flexibility and quality that improves competitive advantage. Solectron’s service offerings include new product introduction, collaborative design, materials management, product manufacturing, and product warranty and repair and end-of-life support. Based in Milpitas, Calif., Solectron operates in more than 20 countries on five continents and had sales from continuing operations of $10.4 billion in fiscal 2005.

###

Analyst Contact:
Perry G. Hayes, Solectron Corporation (408) 956-7543 (U.S.) perryhayes@solectron.com
Ed Lockwood, Solectron Corporation, (408) 956-6959 (U.S.), edlockwood@solectron.com

Media Contact:
Corey Olfert, Solectron Corporation, (408) 956-7552 (U.S.), coreyolfert@solectron.com

SOLECTRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions)

	November 30			August 31
	2005			2005
	(Unaudited)
ASSETS
Current assets:
Cash, cash equivalents and short-term investments*	$	1,370.8		$	1,722.3
Accounts receivable, net		1,287.0			1,180.7
Inventories		1,232.9			1,108.5
Prepaid expenses and other current assets		214.4			211.4
Total current assets		4,105.1			4,222.9
Property and equipment, net		681.6			666.3
Goodwill		147.4			148.8
Other assets		222.6			219.8
Total assets	$	5,156.7		$	5,257.8
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	226.9		$	165.7
Accounts payable		1,388.8			1,371.2
Accrued employee compensation		167.0			167.0
Accrued expenses and other current liabilities		515.0			509.6
Total current liabilities		2,297.7			2,213.5
Long-term debt		478.0			540.9
Other long-term liabilities		76.2			59.2
Total liabilities	$	2,851.9		$	2,813.6
Commitments and contingencies
Stockholders’ equity:
Common stock		1.0			1.0
Additional paid-in capital		7,610.3			7,774.1
Accumulated deficit		(5,182.5	)		(5,206.5	)
Accumulated other comprehensive loss		(124.0	)		(124.4	)
Total stockholders’ equity		2,304.8			2,444.2
Total liabilities and stockholders’ equity	$	5,156.7		$	5,257.8

* Includes $30.9 million and $13.2 million of restricted cash balances as of November 30, 2005 and August 31, 2005, respectively, and $16.8 million and $26.3 million of short-term investments as of November 30, 2005 and August 31, 2005, respectively.

SOLECTRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per-share data)
Unaudited

	Three Months Ended November 30
	2005			2004
Net sales	$	2,456.4		$	2,690.6
Cost of sales		2,330.8			2,535.1
Gross profit		125.6			155.5
Operating expenses:
Selling, general and administrative		107.4			95.6
Restructuring and impairment costs		0.9			0.7
Operating income		17.3			59.2
Interest income		12.1			5.8
Interest expense		(6.7	)		(16.3	)
Other income — net		1.9			4.7
Operating income from continuing operations before income taxes		24.6			53.4
Income tax expense		4.4			5.9
Income from continuing operations	$	20.2		$	47.5
Discontinued operations:
Income from discontinued operations	$	3.8		$	12.4
Income tax expense		—			1.7
Income from discontinued operations		3.8			10.7
Net income	$	24.0		$	58.2
Basic net income per share
Continuing operations	$	0.02		$	0.05
Discontinued operations		0.01			0.01
Basic net income per share	$	0.03		$	0.06
Diluted net income per share
Continuing operations	$	0.02		$	0.05
Discontinued operations		0.01			0.01
Diluted net income per share	$	0.03		$	0.06
Shares used to compute basic net income per share		925.2			963.2
Shares used to compute diluted net income per share		925.9			967.4