Item 1.01
Entry into a Material Definitive Agreement
On February 17, 2008, Sanmina-SCI Corporation, a Delaware
corporation (Sanmina-SCI), and its wholly-owned subsidiaries Sanmina-SCI USA
Inc., a Delaware corporation, SCI Technology, Inc., an Alabama
corporation, Sanmina-SCI Systems de Mexico S.A. de C.V., a company organized
under the laws of the United Mexican States, Sanmina-SCI Systems Services de
Mexico S.A. de C.V., a company organized under the laws of the United Mexican
States, Sanmina-SCI Hungary Electronics Manufacturing Limited Liability Company,
a company organized under the laws of the Republic of Hungary and Sanmina-SCI
Australia PTY LTD, a company organized under the laws of the Commonwealth of
Australia (collectively, the Sellers) entered into an Asset Purchase and Sale
Agreement (the Purchase Agreement) with Foxteq Holdings, Inc., a company
organized under the laws of the Cayman Islands and a member of the Foxconn
Technology Group (Foxteq). The Purchase Agreement provides that, upon
the terms and subject to the conditions therein, Foxteq will purchase certain
assets of Sellers personal computing business and associated logistics
services located in Hungary, Mexico and the United States (the Business) for
total consideration equal to the net book value of the assets being sold plus a
specified premium (the Transaction).
In addition, Foxteq has agreed to pay Sellers a contingent payment based on
certain revenues generated by the Business during the 12 months following the
closing date of the Transaction. Sanmina-SCI anticipates that the proceeds from
the Transaction will be between $80 million and $90 million, depending on the
net book value of the assets at the time of the closing.
The Purchase Agreement contains customary representations and
warranties, covenants by Sellers regarding the operation of the Business
between the signing of the Purchase Agreement and the closing of the
Transaction, and indemnification provisions whereby each party agrees to
indemnify the other for breaches of representations and warranties, breaches of
covenants and other matters, with Sellers liability for breaches of
representations and warranties generally limited to $18 million. In addition, subject to certain conditions,
the Purchase Agreement provides that Sellers will reimburse Foxteq for certain
severance obligations relating to employees of the Business terminated by
Foxteq within three months following the closing of the Transaction or if
Foxteq terminates certain other employees of the Business within twelve months
following the closing of the Transaction. The liability is limited to amount
that would have been payable had such employees been terminated as of the
closing date of the Transaction.
In connection with the Transaction, Sellers have agreed to license to
Foxteq certain technologies related to the operation of the Business, and
Sellers have agreed to provide, for specified fees, certain transitional
services to Foxteq for a limited period of time following the closing of the
Transaction.
The Transaction is subject to customary closing conditions, including
those relating to the accuracy of representations and warranties, compliance
with covenants, absence of any material adverse changes and the receipt of
required regulatory and contractual approvals. The Transaction is expected
to close in Sanmina-SCIs third fiscal quarter ending June 28, 2008.
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The press release issued by Sanmina-SCI announcing the signing of the
Purchase Agreement is filed as Exhibit 99.1 hereto. The description of the Purchase Agreement is qualified in its
entirety by the contents of the Purchase Agreement which Sanmina-SCI expects to
file as an exhibit to its Quarterly Report on Form 10-Q for its fiscal
quarter ending March 29, 2008.
This report contains forward-looking statements, including those
related to the anticipated proceeds from and timing of the closing of the
Transaction. These statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those projected in this report, including failure to
obtain regulatory or other consents required to consummate the Transaction or
changes in net the book value of the assets being sold. No assurances are made that these results
will be achieved. The Sellers results
and projections are also subject to the risks and uncertainties discussed in Managements
Discussion and Analysis of Financial Condition and Results of Operations in
Sanmina-SCIs Quarterly Report on Form 10-Q for the fiscal quarter ended December 29,
2007.
Item 9.01
Financial Statements and Exhibits
(d)
Exhibits.
Exhibit No.
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Exhibit Title
or Description
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99.1
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Press
Release Issued by Sanmina-SCI Corporation dated February 19, 2008.
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