SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Sanmina-SCI Corporation
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(Name of Registrant as Specified In Its Charter)
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or the Form or Schedule and the date of its filing.
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SANMINA-SCI CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 28, 2002
The Annual Meeting of Stockholders of Sanmina-SCI Corporation (the
"Company" or "Sanmina-SCI") will be held on Monday, January 28, 2002, at 11:00
a.m., local time, at Sanmina-SCI's corporate offices, located at 30 E. Plumeria
Drive, San Jose, California, 95134 (telephone number 408-964-3500) for the
following purposes (as more fully described in the Proxy Statement accompanying
this Notice):
1. To elect directors of Sanmina-SCI Corporation.
2. To ratify the appointment of Arthur Andersen LLP as the
independent public accountants of Sanmina-SCI for the fiscal year
ending September 28, 2002.
3. To transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on December 10, 2001 are
entitled to vote at the Annual Meeting and are cordially invited to attend the
meeting. However, to ensure your representation at the meeting, you are urged to
mark, sign, date and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. If you attend the meeting,
you may vote in person even if you return a proxy.
For the Board of Directors
/s/ CHRISTOPHER D. MITCHELL
Christopher D. Mitchell
Secretary
San Jose, California
December 28, 2001
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING,
YOU MAY VOTE IN PERSON, EVEN IF YOU RETURN A PROXY.
SANMINA-SCI CORPORATION
PROXY STATEMENT FOR
2002 ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING VOTING AND PROXY SOLICITATION
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Sanmina-SCI Corporation ("the Company" or "Sanmina-SCI") for use at the Annual
Meeting of Stockholders to be held on Monday, January 28, 2002 at 11:00 a.m.,
local time, or at any adjournment thereof. The Annual Meeting will be held at
Sanmina-SCI's corporate offices, located at 30 E. Plumeria Drive, San Jose,
California, 95134. The telephone number at the meeting location is (408)
964-3500.
This Proxy Statement was mailed on or about December 28, 2001, to all
stockholders entitled to vote at the meeting.
RECORD DATE AND STOCK OWNERSHIP
Stockholders of record at the close of business on December 10, 2001 (the
"Record Date") are entitled to vote at the meeting. As of December 10, 2001,
522,658,988 shares of Sanmina-SCI's Common Stock were issued and outstanding and
held of record by approximately 2,828 stockholders.
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of Sanmina-SCI as of December 10, 2001, as to (i)
each person who is known to Sanmina-SCI to beneficially own more than five
percent of the outstanding shares of its Common Stock, (ii) each director and
nominee for election, (iii) each officer named in the Summary Compensation Table
below and (iv) all directors and executive officers as a group.
SHARES APPROXIMATE
BENEFICIALLY PERCENT
NAME OWNED OWNED
---- ------------ -----------
AXA Assurances I.A.R.D. Mutuelle............................ 43,205,935 8.3%
1290 Avenue of the Americas
New York, New York 10104
FMR Corporation............................................. 34,175,397 6.5%
92 Devonshire Street
Boston, MA 02109
Jure Sola(1)................................................ 5,284,388 1.0%
A. Eugene Sapp, Jr.(1)...................................... 1,703,351 *
Randy W. Furr(1)............................................ 2,285,401 *
Rick R. Ackel(1)............................................ 101,762 *
Bernard V. Vonderschmitt(1)................................. 312,966 *
Mario M. Rosati(1).......................................... 224,166 *
John C. Bolger(1)........................................... 97,666 *
Neil R. Bonke(1)............................................ 171,038 *
Joseph M. Schell(1)......................................... 69,722 *
Wayne Shortridge(1)(2)...................................... 38,760 *
Jackie M. Ward(1)(2)........................................ 54,125 *
All directors and executive officers as a group(1)(2)....... 10,343,345 2.0%
---------------
* Less than 1%.
(1) Includes stock issuable upon exercise of options that are exercisable within
60 days after December 10, 2001.
(2) Includes shares owned through SCI's Directors' Deferred Compensation Plan.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of
Sanmina-SCI a written notice of revocation or a duly executed proxy bearing a
later date or by attending the meeting and voting in person. Attending the
Annual Meeting in and of itself may not constitute a revocation of a proxy.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share held as of the
record date. Stockholders will not be entitled to cumulate their votes in the
election of directors.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Inspector of Elections (the "Inspector") with the assistance of
Sanmina-SCI's Transfer Agent. The Inspector will also determine whether or not a
quorum is present. Except in certain specific circumstances, the affirmative
vote of a majority of shares present in person or represented by proxy at a duly
held meeting at which a quorum is present is required under Delaware law for
approval of proposals presented to stockholders. In general, Delaware law also
provides that a quorum consists of a majority of shares entitled to vote and
present or represented by proxy at the meeting. The Inspector will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum but will not be treated as votes in favor
of approving any matter submitted to the stockholders for a vote. Any proxy
which is returned using the form of proxy enclosed and which is not marked as to
a particular item will be voted for the election of directors and for the
confirmation of the appointment of the designated independent public accountants
and, as the proxy holders deem advisable, on other matters that may come before
the meeting, as the case may be with respect to the items not marked. If a
broker indicates on the enclosed proxy or its substitute that it does not have
discretionary authority as to certain shares to vote on a particular matter
("Broker Non-Votes"), those shares will not be considered as present with
respect to that matter. Sanmina-SCI believes that the tabulation procedures to
be followed by the Inspector are consistent with the general statutory
requirements in Delaware concerning voting of shares and determination of a
quorum.
The cost of soliciting proxies will be borne by Sanmina-SCI. Sanmina-SCI
may retain the services of its transfer agent, Wells Fargo Shareholder Services,
or other proxy solicitors to solicit proxies, for which Sanmina-SCI estimates
that it would pay fees not to exceed an aggregate of $20,000. In addition,
Sanmina-SCI expects to reimburse brokerage firms and other persons representing
beneficial owners of shares for their expense in forwarding solicitation
material to such beneficial owners. Proxies may be solicited by certain of
Sanmina-SCI's directors, officers and regular employees, without additional
compensation, in person or by telephone or facsimile.
STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Proposals that are intended to be presented by stockholders of Sanmina-SCI
at the 2003 Annual Meeting must be received by Sanmina-SCI no later than
September 1, 2002 in order that they may be included in the proxy statement and
form of proxy relating to that meeting.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
A board of ten directors will be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the ten nominees named below. Messrs. Sola, Sapp, Bolger,
2
Bonke, Furr, Rosati, Schell, Shortridge, Vonderschmitt, and Ms. Ward are
presently directors of Sanmina-SCI. If any nominee is unable or declines to
serve as a director at the time of the Annual Meeting, the proxies will be voted
for any nominee who shall be designated by the present Board of Directors to
fill the vacancy. It is not expected that any nominee will be unable or will
decline to serve as a director. If stockholders nominate additional persons for
election as directors, the proxy holders will vote all proxies received by them
in accordance to assure the election of as many of the Board's nominees as
possible, with the proxy holder making any required selection of specific
nominees to be voted for. The term of office of each person elected as a
director will continue until the next annual meeting of stockholders or until
that person's successor has been elected.
The Board of Directors recommends a vote FOR the nominees listed below:
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
--------------- --- -------------------- --------------
Jure Sola............................ 50 Co-Chairman and Chief Executive Officer of 1989
Sanmina-SCI Corporation
A. Eugene Sapp, Jr................... 65 Co-Chairman of Sanmina-SCI Corporation 2001
John C. Bolger....................... 55 Private Investor 1994
Neil R. Bonke........................ 59 Chairman of Electroglas, Inc. (Retired), 1995
Private Investor
Randy W. Furr........................ 47 President and Chief Operating Officer of 1999
Sanmina-SCI Corporation
Mario M. Rosati...................... 55 Member, Wilson Sonsini Goodrich & Rosati 1997
Joseph M. Schell..................... 55 Independent Consultant 1999
Bernard V. Vonderschmitt............. 78 Chairman of the Board of Xilinx, Inc. 1990
Wayne Shortridge..................... 63 Partner, Paul, Hastings, Janofsky & Walker 2001
LLP
Jackie M. Ward....................... 63 CEO, Computer Generation Incorporated 2001
Mr. Sola co-founded the Company in 1980 and initially held the position of
Vice President of Sales. He became Vice President and General Manager in October
1987 with responsibility for all manufacturing operations as well as sales and
marketing. Mr. Sola has been a director since July 1989, was elected President
in October 1989 and has served as Chairman of the Board and Chief Executive
Officer since April 1991. Mr. Sola relinquished the title of President when Mr.
Furr was appointed to such position in March 1996. As of the consummation of the
merger, Mr. Sola also assumed the title of Co-Chairman of the Sanmina-SCI Board
of Directors, along with Mr. Sapp and continues as Chief Executive Officer of
Sanmina-SCI.
Mr. Sapp joined SCI Systems, Inc. in 1962, and after holding several
positions, was promoted to President and Chief Operating Officer in 1981. In
July 1999, Mr. Sapp was appointed Chief Executive Officer of SCI Systems, Inc.
and had served as Chairman of the Board and Chief Executive Officer since July
2000. As of the consummation of the merger, Mr. Sapp serves as Co-Chairman of
the Sanmina-SCI Board of Directors.
Mr. Bolger has been a director of the Company since 1994. He is a retired
Vice President of Finance and Administration of Cisco Systems, Inc., a
manufacturer of computer networking systems. Mr. Bolger is a private investor
and serves as a director of Wind River Systems, Inc., JNI Corporation,
Integrated Device Technology, Inc. and Mission West Properties, Inc.
Mr. Bonke has been a director of the Company since 1995. He also serves on
the Board of Directors of Electroglas, Inc., Boxer Cross Inc. and SpeedFam
International, all semiconductor equipment companies. He is also on the board
for San Jose State University Foundation. Mr. Bonke previously served as the
Chairman of the Board and Chief Executive Officer of Electroglas, Inc. from
April 1993 to April 1996.
Mr. Furr joined the Company as Vice President and Chief Financial Officer
in August 1992. In March 1996, Mr. Furr was appointed President and Chief
Operating Officer. Mr. Furr was appointed to the Board of Directors of
Sanmina-SCI in December 1999. Mr. Furr is a Certified Public Accountant. As of
the consummation of the merger, Mr. Furr continues as President and Chief
Operating Officer of Sanmina-SCI.
3
Mr. Rosati has been a director of the Company since 1997. He has been a
member of the law firm Wilson Sonsini Goodrich & Rosati, Professional
Corporation since 1971. Mr. Rosati is a director of Aehr Test Systems, a
manufacturer of computer hardware testing systems, Genus, Inc., a semiconductor
equipment manufacturer, Vivus Inc., a pharmaceutical company, Symyx
Technologies, Inc., a combinatorial materials science company and The Management
Network Group, Inc., a management consulting firm focused on the
telecommunications industry, all publicly-held companies. He is also a director
of several privately held companies.
Mr. Schell has been a director of the Company since December 1999. From
1999 to December 2001, he served as Chairman of Global Technology Investment
Banking of Merrill Lynch & Co. He retired from this position in December 2001.
From 1985 to 1999, he served as Senior Managing Director at Montgomery
Securities. Mr. Schell is an independent consultant and also serves on the board
of directors of Dycom Industries, Inc., a publicly traded company.
Mr. Shortridge was appointed to the Board of Directors of Sanmina-SCI in
December 2001 upon completion of the merger. He served as director of SCI
Systems, Inc. from 1992 until completion of the merger. He is an attorney and a
partner in the law firm of Paul Hastings Janofsky & Walker LLP in Atlanta,
Georgia.
Mr. Vonderschmitt has been a director of the Company since October 1990. He
co-founded Xilinx, Inc., a manufacturer of field programmable gate array
semiconductor products and related system software, served as its Chief
Executive Officer and as a director from its inception in February 1984 through
February 1996, and has served as the Chairman of its Board of Directors since
February 1996. He is also a director of Credence Systems Corporation, a publicly
held company.
Ms. Ward was appointed to the Board of Directors of Sanmina-SCI in December
2001 upon completion of the merger. She served as a director of SCI Systems,
Inc. from 1992 until completion of the merger. Ms. Ward is also a director of
Bank of America Corporation, Equifax, Inc., Flowers Industries, Inc., Matria
Healthcare, Inc., The Profit Recovery Group International, Inc., SYSCO
Corporation and Trigon Blue Cross Blue Shield, all publicly-held companies. Ms.
Ward is the Outside Managing Director of Intec Telecom Systems, USA, a provider
of turn-key telecommunication systems and products.
There are no family relationships among directors or executive officers of
Sanmina-SCI.
BOARD MEETINGS, COMMITTEES AND DIRECTOR COMPENSATION
The Board of Directors held five meetings during the fiscal year ended
September 29, 2001. No nominee who was a director during the entire fiscal year
attended fewer than 75 percent of the meetings of the Board of Directors or of
committees on which such person served.
The Board of Directors has an Officer Stock Committee, an Audit Committee
and a Compensation Committee. It does not have a nominating committee or a
committee performing the functions of a nominating committee. From time to time,
the Board has created various ad hoc committees for special purposes. No such
committee is currently functioning.
The Officer Stock Committee consists of directors Bonke and Vonderschmitt.
The Officer Stock Committee reviews and makes recommendations to the Board
concerning option grants to executive officers of Sanmina-SCI. The Officer Stock
Committee held two meetings during the last fiscal year.
The Audit Committee consists of directors Bonke, Bolger and Schell. The
Audit Committee reviews and monitors the corporate financial reporting and
external audit of Sanmina-SCI, including, among other things, Sanmina-SCI's
control functions, the results and scope of the annual audit and other services
provided by Sanmina-SCI's independent auditors and Sanmina-SCI's compliance with
legal matters that have a significant impact on Sanmina-SCI's financial reports.
The Audit Committee also consults with the Sanmina-SCI's management and
Sanmina-SCI's independent public accountants prior to the presentation of
financial statements to stockholders and, as appropriate, initiates inquiries
into various aspects of Sanmina-SCI's financial affairs. In addition, the Audit
Committee is responsible for considering and recommending the
4
appointment of Sanmina-SCI's independent public accountants. The Audit Committee
held five meetings in the last fiscal year. All members of the Audit Committee
are independent (as independence is defined in Rule 4200(a)(15) of the listing
standards for the Nasdaq Stock Market, the principal trading market for
Sanmina-SCI's common stock). The Board of Directors adopted an Audit Committee
Charter, setting forth the responsibilities and duties of the Audit Committee, a
copy of which is included herein in Appendix A. The Annual Report of the Audit
Committee appears hereafter under "Report of the Audit Committee of the Board of
Directors."
The Compensation Committee consists of directors Bonke, Schell, Sola and
Vonderschmitt. The Compensation Committee reviews and makes recommendations to
the Board concerning salaries and incentive compensation for executive officers
and certain employees of Sanmina-SCI. The Compensation Committee held two
meetings during the last fiscal year. Mr. Sola, Chairman and Chief Executive
Officer of Sanmina-SCI, participates fully with all other committee members in
recommending salaries and incentive compensation to the board of directors,
except that he does not participate in committee proceedings relating to his
salary and compensation.
Directors who are not employees of Sanmina-SCI ("Outside Directors") are
paid an annual retainer of $10,000, a fee of $2,000 for attending each board
meeting and a fee of $1,000 for attending each committee meeting. The directors
are reimbursed for travel and related expenses incurred by them in attending
board and committee meetings. Outside Directors receive initial and annual
grants of options to purchase Sanmina-SCI common stock under Sanmina-SCI's 1995
Director Option Plan.
Under the Director Option Plan, upon first becoming a director, each new
Outside Director will receive an automatic grant of an option to purchase up to
20,000 shares of Common Stock and each continuing Outside Director will receive
(provided that such Outside Director has been a director for at least four
months prior to such grant), on October 1 of each year, an automatic grant of an
option to purchase up to 10,000 shares of Common Stock.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors currently consists of
directors Bonke, Bolger and Schell. The Audit Committee operates under a written
charter adopted by the Board of Directors (see Appendix A). The Audit Committee
recommends to the Board of Directors, subject to stockholder ratification, the
selection of Arthur Andersen LLP ("Arthur Andersen") as Sanmina-SCI's
independent public accountants.
Management is responsible for the internal controls and the financial
reporting process. Arthur Andersen, the independent public accountants are
responsible for performing an independent audit of Sanmina-SCI's financial
statements in accordance with generally accepted auditing standards and
expressing an opinion on the conformity of those audited financial statements in
accordance with generally accepted accounting principles. The Audit Committee's
responsibility is to monitor and oversee these processes.
The Audit Committee has met and held discussions with management regarding
the audited financial statements. Management has represented to the Audit
Committee that Sanmina-SCI's financial statements were prepared in accordance
with generally accepted accounting principles.
The Audit Committee reviewed with Arthur Andersen, the independent public
accountants who are responsible for expressing an opinion on the conformity of
those audited financial statements with generally accepted accounting
principles, their judgments as to the quality, not just the acceptability, of
Sanmina-SCI's accounting principles and such other matters as are required to be
discussed with the Audit Committee by Statement on Auditing Standards No. 61
"Communication with Audit Committees." Arthur Andersen also provided to the
Audit Committee the written disclosures required by Independence Standards Board
No. 1 "Independence Discussions with Audit Committees." The Audit Committee has
also discussed with Arthur Andersen the firm's independence. In addition, the
Audit Committee has considered whether any nonaudit services provided by Arthur
Andersen are compatible with maintaining Arthur Andersen's independence.
The Audit Committee discussed with Arthur Andersen the overall scope and
plans for their respective audits. The Audit Committee met Arthur Andersen, with
and without management present, to discuss the
5
results of their examinations, their evaluations of Sanmina-SCI's internal
controls, and the overall quality of Sanmina-SCI's financial reporting.
Based on the reviews and discussions referred to above, the Audit Committee
recommended to the Board of Directors (and the Board of Directors has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended September 29, 2001 for filing with the Securities and
Exchange Commission. The Audit Committee and the Board of Directors have also
recommended, subject to stockholder approval, the selection of Arthur Andersen
as Sanmina-SCI's independent public accountants.
Respectfully submitted,
Neil Bonke, John Bolger and Joseph
Schell
The following is a breakdown of fees paid to Arthur Andersen for the year
ended September 29, 2001:
AUDIT FEES
The aggregate fees billed for professional services rendered by Arthur
Andersen for the audit of our annual consolidated financial statements for the
year ended September 29, 2001, and the reviews of the condensed financial
statements included in our Quarterly Reports on Forms 10-Q for the year ended
September 29, 2001 were $1,365,000.
AUDIT-RELATED FEES
The aggregate fees billed for non-audit services, exclusive of the fees
disclosed above relating to audit fees, rendered by Arthur Andersen during the
fiscal year ended September 29, 2001, were $1,410,000. These services include
statutory audits, accounting consultation and assistance on proposed
transactions, assistance and consent issuance for various filings with the SEC
and other services.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed by Arthur Andersen for information technology
services during the fiscal year ended September 29, 2001.
ALL OTHER FEES
The aggregate fees billed for all other services, exclusive of the fees
disclosed above relating to audit and non-audit fees, rendered by Arthur
Andersen during the fiscal year ended September 29, 2001, was $4,373,000. These
other services consisted primarily of various tax compliance and consultation
services and business consulting services.
PROPOSAL NO. 2:
CONFIRMATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen as our independent
public accountants to audit the financial statements of Sanmina-SCI for the year
ending September 28, 2002. Arthur Andersen has audited the financial statements
of Sanmina-SCI for each fiscal year since the fiscal year ending September 30,
1992. The affirmative vote of holders of a majority of the shares of Common
Stock represented at the meeting is necessary to appoint Arthur Andersen as
Sanmina-SCI's independent public accountants and the Board of Directors
recommends that the stockholders vote FOR confirmation of such selection. In the
event of a negative vote, the Board of Directors will reconsider its selection.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting, with the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
6
EXECUTIVE COMPENSATION
COMPENSATION TABLES
Summary Compensation Table. The following table sets forth the
compensation paid by Sanmina-SCI to the Chief Executive Officer and all other
executive officers of Sanmina-SCI, prior to the merger of SCI Systems, Inc., for
each of the three fiscal years in the period ending September 29, 2001.
LONG-TERM
ANNUAL COMPENSATION COMPENSATION ALL OTHER
FISCAL -------------------- AWARDS OF OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) (# OF SHARES) ($)(1)
--------------------------- ------ --------- -------- ----------------- ------------
Jure Sola........................... 2001 $546,654 $ -- 380,000 $52,540
Chief Executive Officer 2000 480,000 800,000 500,000 52,474
And Chairman of the Board 1999 425,000 530,000 250,000 50,569
Randy W. Furr....................... 2001 $423,942 $ -- 300,000 $29,567
President, Chief Operating Officer 2000 370,000 600,000 400,000 33,916
1999 325,000 400,000 200,000 27,596
Rick R. Ackel....................... 2001 $300,000 $180,000 30,000 $ 8,206
Executive Vice President of
Finance 2000 71,538 75,000 300,000 2,633
and Chief Financial Officer(2) 1999 -- -- -- --
---------------
(1) Includes car allowance and premium payments for executive life, medical and
dental insurance.
(2) Mr. Ackel joined Sanmina-SCI on June 29, 2000 as Executive Vice President of
Finance and Chief Financial Officer.
Option Grants in Last Fiscal Year. The following table sets forth each
grant of stock options made during the fiscal year ended September 29, 2001 to
each executive officer named in the Summary Compensation Table above.
% OF TOTAL
OPTIONS EXERCISE OR STOCK PRICE APPRECIATION FOR
GRANTED TO BASE OPTION TERM (2)
OPTIONS EMPLOYEES PRICE(1) EXPIRATION ----------------------------
NAME GRANTED(1)(#) IN FY01 ($/SH) DATE 5%($) 10%($)
---- ------------- ---------- ----------- ---------- ------------ -------------
Jure Sola............ 380,000 6.5% $30.97 12/19/10 $7,401,209 $18,756,118
Randy W. Furr........ 300,000 5.2% $30.97 12/19/10 $5,843,060 $14,807,461
Rick R. Ackel........ 30,000 0.5% $30.97 12/19/10 $ 584,306 $ 1,480,746
---------------
(1) The exercise price and tax withholding obligations related to exercise may
in some cases, be paid by delivery of other shares or by offset of the
shares subject to the options.
(2) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the SEC and therefore are not intended to forecast
possible future appreciation, if any, of Sanmina-SCI's stock price.
Sanmina-SCI did not use an alternative formula for a grant date valuation,
as Sanmina-SCI does not believe that any formula will determine with
reasonable accuracy a present value based on future unknown or volatile
factors.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End
Values. The following table sets forth, for each of the executive officers
named in the Summary Compensation Table above, each exercise of stock options
during the fiscal year ended September 29, 2001 and the year-end value of
unexercised options:
VALUE OF UNEXERCISED
SHARES VALUE NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON REALIZED OPTIONS AT YEAR-END AT YEAR-END(2)
NAME EXERCISE(#) (1)($) EXERCISABLE/UNEXERCISABLE(#) EXERCISABLE/UNEXERCISABLE($)
---- ----------- ---------- ---------------------------- ----------------------------
Jure Sola............. -- -- 4,503,855/5,548,384 $57,785,439/$5,611,215
Randy W. Furr......... 80,000 $2,526,000 1,938,354/782,046 $23,629,499/$3,807,533
Rick R. Ackel......... 15,000 $ 767,850 64,500/250,500 $--/$--
7
---------------
(1) Based on the last reported sale price of Sanmina-SCI's common stock on the
date of exercise.
(2) Based on a fair market value of $13.58, which was the last reported sale
price of Sanmina-SCI's common stock on September 29, 2001.
COMPENSATION COMMITTEE AND OFFICER STOCK COMMITTEE REPORTS
The following reports are provided to stockholders by the members of the
Compensation Committee and the Officer Stock Committee of the Board of
Directors.
COMPENSATION COMMITTEE REPORT
Compensation Philosophy. The goals of Sanmina-SCI's executive compensation
program are to attract and retain executive officers who will strive for
excellence, and to motivate those individuals to achieve superior performance by
providing them with rewards for assisting Sanmina-SCI in meeting revenue and
profitability targets.
Compensation for Sanmina-SCI's executive officers consists of base salary
and potential cash bonus, as well as potential long-term incentive compensation
through stock options. The Compensation Committee considers the total current
and potential long-term compensation of each executive officer in establishing
each element of compensation.
Cash-Based Compensation. Each fiscal year, the Compensation Committee
reviews with the Chief Executive Officer and approves, with appropriate
modifications, an annual base salary plan for Sanmina-SCI's executive officers.
This base salary plan is based on industry and peer group surveys and
performance judgements as to the past and expected future contributions of the
individual executive officers. The Compensation Committee reviews and fixes the
base salary of the Chief Executive Officer based on similar competitive
compensation data and the Committee's assessment of his past performance and its
expectation as to his future contributions in leading Sanmina-SCI. For fiscal
2001, no bonuses were paid to the Chief Executive Officer or the Chief Operating
Officer. It was agreed, as described in the officer stock committee report
below, that incentive compensation for this year should be focused primarily
upon stock option grants.
Respectfully submitted,
Neil Bonke, Joseph Schell, Jure Sola
and
Bernard Vonderschmitt
8
OFFICER STOCK COMMITTEE REPORT
Stock Options. During each fiscal year, the Officer Stock Committee
considers the desirability of granting to executive officers awards under
Sanmina-SCI's 1999 Incentive Stock Plan, which allows for the grant of
longer-term incentives in the form of stock options. In fixing the grants of
stock options to executive officers (other than the Chief Executive Officer) in
the last fiscal year, the Committee reviewed with the Chief Executive Officer
the recommended individual award, taking into account the officer's scope of
responsibility and specific assignments, strategic and operational goals
applicable to the officer, anticipated performance requirements and
contributions of the officer, and the number of options previously granted to
the officer. All stock options granted to executive officers in the last fiscal
year provide for vesting over a five-year period. In addition, in October 2001,
in part in recognition of their performance during a challenging economic
environment in fiscal 2001 and in order to provide greater incentives during
fiscal 2002 and to further align the interests of management and stockholders,
the Officer Stock Committee approved grants of options in the amount of 500,000
and 400,000 to the Chief Executive Officer and Chief Operating Officer,
respectively.
Respectfully submitted,
Neil Bonke and Bernard Vonderschmitt
9
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total stockholder
returns for Sanmina-SCI's Common Stock, the Nasdaq Stock Market Index, and an
index based on companies in a peer group (Standard Industrial Classification
3670 -- Electronic Components). The graph assumes the investment of $100 on
September 30, 1996. The performance shown is not necessarily indicative of
future performance.
COMPARISON OF 60 MONTH CUMULATIVE TOTAL RETURN*
AMONG SANMINA-SCI CORPORATION, THE NASDAQ STOCK MARKET
(U.S.) INDEX AND A PEER GROUP
(PERFORMANCE GRAPH)
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Sep-96 Sep-97 Sep-98 Sep-99 Sep-00 Sep-01
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Sanmina-SCI
Corporation 100.00 215.06 139.75 384.47 930.43 269.91
Nasdaq Stock Market
(U.S.) 100.00 137.27 139.44 227.82 302.47 123.64
Peer Group 100.00 149.96 75.44 173.47 281.00 147.97
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---------------
* $100 invested on 9/30/96 in stock or index -- including reinvestment of
dividends. Fiscal year ending September 30.
CERTAIN TRANSACTIONS
Sanmina-SCI's Certificate of Incorporation, as amended, provides that the
personal liability of its directors for monetary damages arising from a breach
of their fiduciary duties in certain circumstances shall be eliminated to the
fullest extent permitted by Delaware law. The Certificate of Incorporation, as
amended, also authorizes Sanmina-SCI to indemnify its directors and officers to
the fullest extent permitted by Delaware law. Sanmina-SCI has entered into
indemnification agreements with its officers and directors providing such
indemnification. The indemnification agreements may require Sanmina-SCI, among
other things, to indemnify such officers and
10
directors against certain liabilities that may arise by reason of their status
or service as directors or officers (other than liabilities arising from willful
misconduct of a culpable nature), to advance their expenses incurred as a result
of any proceeding against them as to which they could be indemnified, and to
obtain directors' and officers' insurance.
During fiscal 2001, Mario M. Rosati, a nominee for election to the Board of
Directors of Sanmina-SCI, and Christopher D. Mitchell, Secretary of Sanmina-SCI,
were also members of the law firm of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, Palo Alto, California ("WSGR"). Sanmina-SCI retained
WSGR as its legal counsel during the fiscal year. Sanmina-SCI plans to retain
WSGR as its legal counsel again during fiscal 2002. The amounts paid by
Sanmina-SCI to WSGR were less than 5% of WSGR's total gross revenues for its
last completed fiscal year.
OTHER MATTERS
Sanmina-SCI knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the accompanying form of proxy to vote the shares they
represent as the Board of Directors may recommend.
SANMINA-SCI WILL MAIL WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN
REQUEST A COPY OF SANMINA-SCI'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE
FINANCIAL STATEMENTS, SCHEDULES AND A LIST OF EXHIBITS. REQUESTS SHOULD BE SENT
TO INVESTOR RELATIONS, SANMINA-SCI CORPORATION, 2700 NORTH FIRST STREET, SAN
JOSE, CALIFORNIA 95134.
11
APPENDIX A
SANMINA-SCI CORPORATION,
A DELAWARE CORPORATION
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
PURPOSES
The purpose of the Audit Committee of the Board of Directors of Sanmina-SCI
Corporation, a Delaware corporation (the "Company"), shall be to make such
examinations as are necessary to monitor the Company's system of internal
controls, to provide the Company's Board of Directors with the results of its
examinations and recommendations derived therefrom, to outline to the Board of
Directors improvements made, or to be made, in internal accounting controls, to
nominate independent auditors and to provide to the Board of Directors such
additional information and materials as it may deem necessary to make the Board
of Directors aware of significant financial matters which require the Board of
Director's attention.
In addition, the Audit Committee will undertake those specific duties and
responsibilities listed below and such other duties as the Board of Directors
may from time to time prescribe.
MEMBERSHIP
The Audit Committee members will be appointed by, and will serve at the
discretion of, the Board of Directors and will consist of at least three members
of the Board of Directors, each of whom:
1. Will be an independent director;
2. Will be able to read and understand fundamental financial
statements, in accordance with the NASDAQ National Market Audit
Committee requirements; and
3. At least one of whom will have past employment experience in
finance or accounting, requisite professional certification in
accounting, or other comparable experience or background,
including a current or past position as a chief executive or
financial officer with financial oversight responsibilities.
RESPONSIBILITIES
The responsibilities of the Audit Committee shall include:
1. Reviewing on a continuing basis the adequacy of the Company's
system of internal controls;
2. Reviewing on a continuing basis the activities, organizational
structure and qualifications of the Company's internal audit
function;
3. Reviewing the independent auditors' proposed audit scope, approach
and independence;
4. Conducting a post-audit review of the financial statements and
audit findings, including any significant suggestions for
improvements provided to management by the independent auditors;
5. Reviewing the performance of the independent auditors, who shall
be accountable to the Board of Directors and the Audit Committee;
6. Recommending the appointment of independent auditors to the Board
of Directors;
7. Reviewing fee arrangements with the independent auditors;
8. Reviewing before release the audited financial statements and
Management's Discussion and Analysis in the Company's annual
report on Form 10-K;
A-1
9. Reviewing before release the unaudited quarterly operating
results in the Company's quarterly earnings release;
10. Overseeing compliance with the requirements of the Securities and
Exchange Commission for disclosure of independent auditor's
services and audit committee members and activities;
11. Overseeing of compliance with the Company's Standards of Business
Conduct and with the Foreign Corrupt Practices Act;
12. Reviewing, in conjunction with counsel, any legal matters that
could have a significant impact on the Company's financial
statements;
13. Providing oversight and review of the Company's asset management
policies, including an annual review of the Company's investment
policies and performance for cash and short-term investments;
14. If necessary, instituting special investigations and, if
appropriate, hiring special counsel or experts to assist;
15. Reviewing related party transactions for potential conflicts of
interest;
16. Providing a report in the Company's proxy statement in accordance
with the requirements of Item 306 of Regulations S-K and S-B and
Item 7(e)(3) of Schedule 14A; and
17. Performing other oversight functions as requested by the full
Board of Directors.
In addition to the above responsibilities, the Audit Committee will
undertake such other duties as the Board of Directors may delegate to it and
will report, at least annually, to the Board of Directors regarding the
Committee's examinations and recommendations.
MEETINGS
The Audit Committee will meet at least two times each year. The Audit
Committee may establish its own schedule and shall provide such schedule to the
Board of Directors in advance.
The Audit Committee will meet separately with the Company's president and
separately with the Company's chief financial officer at least annually to
review the financial controls of the Company. The Audit Committee will meet with
the independent auditors of the Company at such times as it deems appropriate to
review the independent auditor's examination and management report.
MINUTES
The Audit Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the Board of
Directors.
A-2
SANMINA-SCI CORPORATION PROXY
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
2002 ANNUAL MEETING OF STOCKHOLDERS - JANUARY 28, 2002
The undersigned stockholder of SANMINA-SCI CORPORATION, a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated December 28, 2001, and hereby
appoints Jure Sola, Randy W. Furr, or either of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 2002 Annual Meeting
of Stockholders of SANMINA-SCI CORPORATION to be held on January 28, 2002 at
11:00 a.m., local time, at Sanmina-SCI's corporate offices, located at 30 E.
Plumeria Drive, San Jose, California 95134, and at any adjournment or
adjournments thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth below.
See reverse for voting instructions.
Please detach here
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1. ELECTION OF DIRECTORS: [ ] FOR ALL [ ] WITHHOLD FROM
NOMINEES ALL NOMINEES
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, LISTED BELOW
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT. (EXCEPT AS INDICATED.)
01-John C. Bolger 06-Joseph M. Schell
02-Neil R. Bonke 07-Wayne Shortridge
03-Randy W. Furr 08-Jure Sola
04-Mario M. Rosati 09-Bernard V. Vonderschmitt
05-A. Eugene Sapp, Jr. 10-Jackie M. Ward
2. Proposal to ratify the appointment of Arthur Andersen LLP as the
independent public accountants of Sanmina-SCI for its fiscal year [ ] FOR [ ] AGAINST [ ] ABSTAIN
ending September 28, 2002:
and, in their discretion, upon such other matter or matters which may properly
come before the meeting or any adjournment or adjournments thereof.
Address change? Mark Box [ ] Indicate changes below: This Proxy will be voted as directed or, if no
contrary direction is indicated, will be voted
for the election of directors, for the ratifica-
tion of the appointment of Arthur Andersen LLP
as independent public accountants, and as said
proxies deem advisable on such other matters as
may properly come before the meeting.
Date: , 2001
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Signature(s)
(This Proxy should be dated and signed by the
stockholder(s) exactly as his, her or its name
appears hereon, and returned promptly in the
enclosed envelope.
Persons signing in a fiduciary capacity should
so indicate. If shares are held by joint tenants
or as community property, both should sign.)