Solectron announces final results of early settlement offer for 7.25% adjustable conversion-rate equity security units

Solectron Corporation (NYSE:SLR) announced the final results of its previously announced early settlement offer for up to 41.8 million of its 7.25 percent Adjustable Conversion-Rate Equity Security Units (Equity Security Units). The offer expired at midnight EDT May 5, 2004.

Solectron accepted for exchange, at a purchase price per Equity Security Unit of 2.5484 shares of its common stock and cash in the amount of $1.97, all 41,429,202 validly tendered Equity Security Units, or approximately 94 percent of the total that were outstanding. The purchase price applies to all Equity Security Units tendered.

Following the completion of the settlement offer and the recent public offering of approximately 17 million shares of common stock, Solectron will have approximately 962 million shares outstanding.

The settlement offer reduces by approximately $1 billion the company's debt, which was approximately $3.3 billion at Feb. 28, 2004, and is expected to reduce the company's quarterly interest expense by approximately $19 million starting in the fourth quarter of fiscal 2004.

"This is another major step in the strengthening of Solectron's balance sheet," said Mike Cannon, president and chief executive officer.

As a result of the early settlement, Solectron intends to record a one-time transaction expense in the range of $75 million to $85 million, which will be reported in Other Expenses in the fiscal third quarter. Also in the third quarter, Solectron will record interest expense of approximately $17 million, which represents the accrual of the regularly scheduled interest on the equity units exchanged through May 11, 2004.

The company also said the early settlement does not impact the company's previously stated guidance for the third quarter.