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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) April 4, 2000
SOLECTRON CORPORATION
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(Exact name of registrant as specified in charter)
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<S> <C> <C>
DELAWARE 1-11098 94-2447045
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
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<S> <C>
777 GIBRALTAR DRIVE, MILPITAS, CALIFORNIA 95035
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code (408) 957-8500
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NOT APPLICABLE
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(Former name or former address, if changed since last report.)
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ITEM 2 ACQUISITION OF ASSETS
On April 4, 2000, Solectron Corporation (the "Registrant" or "Solectron")
announced they have signed a definitive agreement for Solectron to acquire
Nortel Networks' New Product Introduction (NPI), printed circuit board (PCB) and
telephone set ("telset") assembly assets in North America and Asia (the
"Assets"). The companies are also discussing the divestiture or outsourcing of
some manufacturing and repair operations in Europe. Under the terms of the
agreement, and the proposed agreements, Solectron will pay $900 million to
assume the operations contemplated in these agreements. The companies also
agreed to enter into a four-year supply agreement valued in excess of US$10
billion, with the option to renew. Solectron will provide NPI prototyping,
manufacturing and repair services for Nortel Networks' optical, carrier,
enterprise and wireless products.
At the close of the transaction, Solectron will offer employment to all of
the 4,200 full-time associates at the acquired sites and will add approximately
1.2 million square feet (120,774 square meters) of manufacturing capacity as a
result of the transactions. Solectron will offer terms and conditions of
employment that are identical, or the same in the aggregate, as those that the
employees currently maintain at Nortel Networks.
As a result of the agreement for North America and Asia, Solectron will be
gaining NPI prototyping and manufacturing capabilities in Calgary, Canada and
Raleigh, North Carolina; and manufacturing capabilities in Monterrey, Mexico and
Istanbul, Turkey. Under the terms proposed in Europe, Solectron would acquire
NPI prototyping and manufacturing operations in Monkstown, Northern Ireland and
manufacturing and repair capabilities in Cwmcarn, Wales. In addition, Solectron
has submitted an offer to acquire the PCB and telset assets of Matra-Nortel
Communications S.A.S. in Pont de Buis, and Dournenez, France.
In addition to the acquired locations, Solectron will be transferring other
Nortel Networks products to Solectron locations to align the supply chain with
Nortel Network's cost-to-market and time-to-market strategies. All transactions
are subject to customary conditions, regulatory approvals and the employee
consultation process in Europe. It is expected that the transactions will close
in North America by the end of the second quarter of calendar year 2000; in
Europe, by the end of the second quarter or beginning of the third quarter of
calendar year 2000; and in Asia in the third quarter of calendar year 2000.
As part of the agreement, Solectron will be setting up a new operating unit
comprised of the acquired Nortel Networks sites. This business unit will be a
part of the manufacturing and operations business unit and will be focused on
maintaining continuity of supply and enhancing competitive performance to Nortel
Networks while the sites transition to the Solectron business model.
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RISK FACTORS
THE ACQUISITION OF THE ASSETS MAY NOT OCCUR
While a definitive agreement for the acquisition of the Assets has been
signed it does contain certain conditions to closing which if not satisfied or
waived could allow a party not to consummate the acquisition of the assets in
whole or in part, thus there can be no assurance that the acquisition will close
as contemplated.
RISKS ASSOCIATED WITH THE ACQUISITION OF THE ASSETS
The pending acquisition involves a number of special risks, including
Solectron's ability to finance the acquisition and associated costs; the
diversion of management's attention to the integration of assets, operations and
personnel; the introduction of new products and services into Solectron's
business; possible adverse short-term effects on Solectron's result of
operations; the risk of loss of key employees; and adverse conditions that may
be encountered by Nortel Networks.
WE NEED TO MANAGE INTEGRATION OF THE ASSETS TO MAINTAIN PROFITABILITY
This acquisition involves risks, including:
o Integration and management of the operations,
o Retention of key personnel,
o Integration of purchasing operations and information systems,
o Management of an increasingly larger and more geographically disparate
business, and
o Diversion of management's attention from other ongoing business
concerns.
Our profitability will suffer if we are unable to successfully integrate
and manage our acquisition of the Assets, as well as any future acquisition that
we might pursue, or if we do not achieve sufficient revenue to offset the
increased expenses associated with this acquisition.
OUR INTERNATIONAL SALES ARE A SIGNIFICANT AND GROWING PORTION OF OUR
REVENUES; WE ARE INCREASINGLY EXPOSED TO UNIQUE RISKS ASSOCIATED WITH OPERATING
INTERNATIONALLY
As a result of our foreign sales and facilities, our operations are subject
to a variety of risks that are unique to our international operations including
the following:
o Adverse movement of foreign currencies against our U.S. dollar
reporting currency,
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o Import and export duties, and value added taxes that we may have to
absorb,
o Import and export regulations changes that could erode our profit
margins or restrict exports,
o Potential restrictions on the transfer of funds,
o Inflexible employee contracts in the event of business downturns,
o The burden and cost of compliance with foreign laws, and
o Political and economic disruptions in countries in which we have a
presence.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: April 4, 2000 SOLECTRON CORPORATION
/s/ SUSAN S. WANG
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Susan S. Wang
Senior Vice President, Chief Financial Officer
and Secretary
(Principal Financial and Accounting Officer)
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