Edgar Filing: FLEXTRONICS INTERNATIONAL LTD

===============================================================================

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

________________

AMENDMENT NO. 1 TO FORM 10-K
________________

(MARK ONE)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED MARCH 31, 2001

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ____________ TO ____________ .

COMMISSION FILE NUMBER 000-23354

FLEXTRONICS INTERNATIONAL LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

SINGAPORE NOT APPLICABLE
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

36 ROBINSON ROAD, #18-01
CITY HOUSE
SINGAPORE 06887
(65) 299-888
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
ORDINARY SHARES, S$0.01 PAR VALUE

Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

As of June 21, 2001, 482,431,643 shares of the Registrant's common stock
were outstanding. The aggregate market value of the common stock held by
shareholders other than our executive officers, directors and 10% or greater
shareholders of the Registrant as of June 21, 2001 was approximately $10.8
billion.

===============================================================================

TABLE OF CONTENTS

PAGE
----
PART I

Item 1. Business................................................................... 3

Item 2. Properties................................................................. 15

Item 3. Legal Proceedings.......................................................... 16

Item 4. Submission of Matters to a Vote of Security Holders........................ 16

PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters... 16

Item 6. Selected Financial Data.................................................... 18

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations......................................................... 19

Item 7A. Quantitative and Qualitative Disclosures About Market Risk................. 27

Item 8. Financial Statements and Supplementary Data................................ 29

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure................................................. 55

PART III

Item 10. Directors and Executive Officers of the Registrant......................... 55

Item 11. Executive Compensation..................................................... 58

Item 12. Security Ownership of Certain Beneficial Owners and Management............. 61

Item 13. Certain Relationships and Related Transactions............................. 63

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K........... 64

PART I

ITEM 1. BUSINESS

Except for historical information contained herein, the matters discussed
in this annual report on Form 10-K are forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of
the Securities Act of 1933. The words "will," "may," "designed to," "outlook,"
"believes," "should," "anticipates," "plans," "expects," "intends," "estimates"
and similar expressions identify forward-looking statements, which speak only as
of the date of this annual report. These forward-looking statements are
contained principally under Item 1, "Business," and Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Because these forward-looking statements are subject to certain risks and
uncertainties, actual results could differ materially from the expectations
expressed in the forward-looking statements. Important factors that could cause
actual results to differ materially from the expectations reflected in the
forward-looking statements include those described in this section under "Risk
Factors." We undertake no obligation to update or revise these forward-looking
statements to reflect subsequent events or circumstances.

OVERVIEW

Flextronics International Ltd. ("Flextronics") was incorporated in the
Republic of Singapore in May 1990. We are a leading provider of electronics
manufacturing services to original equipment manufacturers ("OEMs"), primarily
in the telecommunications, networking, consumer electronics and computer
industries. We provide a network of design, engineering and manufacturing
operations in 27 countries across four continents. Our strategy is to provide
customers with end-to-end solutions where we take responsibility for
engineering, new product introduction and implementation, manufacturing, supply
chain management and logistics management, with the goal of delivering a
complete packaged product.

Our manufacturing services include the fabrication and assembly of plastic
and metal enclosures, printed circuit boards or PCBs, backplanes and the
assembly of complete systems and products. In addition, through our photonics
division, we manufacture and assemble photonics components and integrate them
into PCB assemblies and other systems. Throughout the production process, we
offer design and technology services; logistics services, such as materials
procurement, inventory management, vendor management, packaging and
distribution; and automation of key components of the supply chain through
advanced information technologies. In addition, we have added other after-market
services such as network installation.

Through a combination of internal growth and acquisitions, we have become
one of the world's largest electronics manufacturing services ("EMS") providers,
with revenues of $12.1 billion in fiscal 2001. In addition, we have increased
our manufacturing square footage from 1.5 million square feet on April 1, 1998
to over 16.0 million square feet on March 31, 2001. We offer a complete and
flexible manufacturing solution that provides accelerated time-to-market and
time-to-volume production, reduced production costs and advanced engineering and
design capabilities. By working closely with and being highly responsive to
customers throughout the design, manufacturing and distribution process, we
believe that we can be an integral part of their operations. We believe that our
size, global presence, broad service offerings and expertise enable us to win
large programs from leading multinational OEMs for the manufacture of electronic
products.

Our customers include industry leaders such as Alcatel, Cabletron Systems,
Cisco Systems, Inc., Ericsson Telecom AB ("Ericsson"), Hewlett-Packard Company,
Microsoft Corporation, Motorola, Inc. ("Motorola"), Nokia Corporation, Palm,
Inc., Philips Electronics and Siemens AG. Due to our focus on high growth
technology sectors, our prospects are influenced by such major trends as the
upgrade of the communications and Internet infrastructure, the proliferation of
wireless and optical devices, increasing product miniaturization and other
trends in electronics technologies. In addition, our growth is affected by the
pace at which leading OEMs are continuing to adopt outsourcing as a core
business strategy.

We have established an extensive network of manufacturing facilities in the
world's major electronics markets, the Americas, Asia and Europe, in order to
serve the increased outsourcing needs of both multinational and regional OEMs.
Moreover, we strategically locate facilities near our customers and their end
markets. In fiscal 2001, production in the Americas, Asia and Europe,
represented 42%, 21% and 37% of our net sales, respectively. We have also
established fully integrated, high volume industrial parks in low-cost regions
near our customers' end markets. These industrial parks provide total supply
chain management by co-locating our manufacturing and distribution operations
with our suppliers at a single location. This approach to production and
distribution is designed to benefit our customers by reducing logistical
barriers and costs, increasing flexibility, lowering transportation costs and
reducing turnaround times. Our industrial parks are located in Brazil, China,
Hungary, Mexico and Poland. In addition to our industrial parks, we have
established product introduction centers which provide engineering expertise in
developing new products and preparing them for high volume manufacturing.

INDUSTRY OVERVIEW

With electronic products growing in technical complexity and experiencing
shorter product lifecycles in response to customer requirements, the demand for
advanced manufacturing capabilities and related services has grown rapidly. Many
OEMs in the electronics industry are increasingly utilizing EMS providers in
their business and manufacturing strategies. Outsourcing allows OEMs to take
advantage of the manufacturing expertise and capital investments of EMS
providers, thereby enabling OEMs to concentrate on their core competencies, such
as product development, marketing and sales. We believe that by developing
strategic relationships with EMS providers, OEMs can enhance their competitive
position by:

- reducing production costs;

- accelerating time-to-market and time-to-volume production;

- accessing advanced manufacturing, design and engineering capabilities;

- reducing capital investment requirements and fixed overhead costs;

- improving inventory management and purchasing power; and

- accessing worldwide manufacturing capabilities.

We believe that the market for electronics manufacturing services will
continue to grow, driven largely by OEMs' need for increasing flexibility to
respond to rapidly changing markets, technologies and accelerating product life
cycles, in addition to advanced manufacturing and engineering capabilities as a
result of increased complexity and reduced size of electronic products.

STRATEGY

Our objective is to provide customers with the ability to outsource, on a
global basis, a complete product. We intend to achieve this objective by taking
responsibility for the engineering, assembly, integration, test, supply chain
management and logistics management to accelerate their time-to-market and
time-to-volume. To achieve this objective, we will continue to implement the
following strategies:

Enhance Our Customers' Product Development and Manufacturing Strategy. We
believe we can become an integral part of our customers' operations by working
closely with them throughout the design, manufacturing and distribution process,
and by offering flexible, highly responsive services. We believe our customer
relationships are strengthened through a management approach which fosters rapid
decision-making and a customer service orientation that responds quickly to
frequently changing customer design specifications and production requirements.
Our approach allows our customers to focus on their core competencies and thus
enables them to accelerate their time-to-market and time-to-volume production.

Leverage Our Global Presence. We have established an extensive network of
design and manufacturing facilities in the world's major electronics markets,
the Americas, Asia and Europe, to serve the increased outsourcing needs of both
multinational and regional OEMs. Our global network of manufacturing facilities
in 27 countries gives us the flexibility to transition customer projects to any
of our locations. This flexibility allows design, prototyping and initial
production to be located near the customer's own research and development
centers, so that manufacturing can then be moved to locations closer to their
end markets, or transitioned to low-cost regional manufacturing facilities or
industrial parks as volumes increase over the product life-cycle.

Expand Our Industrial Parks Strategy. Our industrial parks are
self-contained facilities that co-locate our manufacturing and distribution
operations with our suppliers in low-cost regions near our customers' end
markets. Our industrial parks provide a total supply chain management. This
approach to production and distribution benefits our customers by reducing
logistical barriers and costs, improving communications, increasing flexibility,
lowering transportation costs and reducing turnaround times. We have
strategically established large industrial parks in Brazil, China, Hungary,
Mexico and Poland.

Offer Comprehensive Solutions. We offer a comprehensive range of
engineering, assembly, integration, test, supply chain management and logistics
management services to our customers that simplify the global product
development process and provide them meaningful cost savings. Our capabilities
help our customers improve product quality and performance, reduce costs and
accelerate time-to-market.

Streamline Business Processes Through Information Technologies. We utilize
new information technologies to streamline business processes for our customers.
For example, we use innovative Internet supply chain solutions to improve order
placement, tracking and fulfillment. We are also able to provide our customers
with online access to product design and manufacturing process information.
Integrating our information systems with those of our customers allows us to
assist our customers in improving their communications and relationships across
their supply chain.

Pursue Strategic Opportunities. We have actively pursued acquisitions and
purchases of manufacturing facilities to expand our worldwide operations,
broaden our service offering, diversify and strengthen our customer
relationships and enhance our management depth. We will continue to review
opportunities and are currently in preliminary discussions to acquire
manufacturing operations and enter into business combinations. We cannot assure
the terms of, or that we will complete, such transactions. We will continue to
selectively pursue strategic transactions that we believe will further our
business objectives.

We cannot assure that our strategies can be successfully implemented, or
will reduce the risks associated with our business.

EXPANSION

We have actively pursued mergers and other business acquisitions to expand
our global reach, manufacturing capacity and service offerings, in addition to
diversifying and strengthening customer relationships. These acquisitions have
enabled us to provide more integrated outsourcing technology solutions with
time-to-market and lower cost advantages. Acquisitions have also played an
important part in expanding our presence in the global electronics marketplace.
We have completed several significant business combinations since the end of
fiscal 2000. In fiscal 2001, we acquired all the outstanding shares of The DII
Group, Inc. ("DII"), Palo Alto Products International Pte. Ltd. ("Palo Alto
Products International"), Chatham Technologies, Inc. ("Chatham"), Lightning
Metal Specialties and related entities ("Lightning") and JIT Holdings Ltd.
("JIT"). Each of these acquisitions were accounted for as pooling of interests.
Additionally, we have completed other immaterial pooling of interests
transactions in fiscal 2001. We have also made a number of business acquisitions
which were accounted for using the purchase method. In addition, we have
purchased a number of manufacturing facilities and related assets from customers
and simultaneously entered into manufacturing agreements to provide electronics
design, assembly and test services to these customers. In fiscal 2001, we
purchased a facility in Italy from Siemens Mobile, a facility in Switzerland
from Ascom, a facility in Denmark from Bosch Telecom GmbH and a facility in
Sweden from Ericsson Radio AB. In the first quarter of fiscal 2002, we commenced
management of the operations of Ericsson's mobile telephone operations using
facilities owned by Ericsson in Brazil, Great Britain, Malaysia and Sweden, as
well as our own facilities. In connection with this relationship, we purchased
certain equipment, inventory and other assets, and assumed certain accrued
expenses, from Ericsson at their net book value of approximately $450.0 million.
Additionally, in the first quarter of fiscal 2002, we announced our intentions
to purchase a manufacturing facility and related assets from Alcatel located in
Laval, France.

By enhancing our capability to provide a wide range of related electronics
design and manufacturing services to a global market that is increasingly
dependent on outsourcing providers, these acquisitions have enabled us to
enhance our competitive position as a leading provider of comprehensive
outsourcing technology solutions. For more information on our acquisitions,
please see Item 7, " Management's Discussion and Analysis of Financial Condition
and Results of Operations--Acquisitions."

CUSTOMERS

Our customers consist of a select group of OEMs primarily in the
telecommunications, networking, consumer electronics and computer industries.
Within these industries, our strategy is to establish relationships with leading
companies that seek to outsource significant production volumes of complex
products. We have focused on building long-term relationships with these
customers and expanding our relationship to include additional product lines and
services. We have increasingly focused on sales to larger companies and to
customers in the telecommunications, networking, consumer electronics and
computer industries. In fiscal 2001, our ten largest customers accounted for
approximately 59% of our net sales. No customer accounted for more than 10% of
net sales in fiscal 2001.

The following table lists in alphabetical order a representative sample of
our largest customers in fiscal 2001 and the products of those customers for
which we provide manufacturing services:

CUSTOMER END PRODUCTS
-------- ------------

Alcatel Cellular phones, accessories and telecommunications infrastructure
Cabletron Systems Data communications products
Cisco Systems, Inc. Data communications products
Ericsson Telecom AB Cellular phones, business telecommunications systems and GSM
infrastructure

Hewlett-Packard Company Inkjet printers and storage devices
Motorola, Inc. Cellular phones, set-top boxes and telecommunications infrastructure
Nokia Corporation Cellular phone accessories, cellular phones, office phones and
telecommunications infrastructure
Palm, Inc. Pilot electronic organizers
Philips Electronics Consumer electronics products
Siemens AG Cellular phones and telecommunications infrastructure

SALES AND MARKETING

We achieve worldwide sales coverage through a direct sales force, which
focuses on generating new accounts, and through program managers, who are
responsible for managing relationships with existing customers and making
follow-on sales. Our Asian sales offices are located in Hong Kong and Singapore.
In North America, we maintain sales offices in California, Florida,
Massachusetts and Texas. In Europe, we maintain sales offices in England,
France, Germany, the Netherlands and Sweden. In addition to our sales force, our
executive staff plays an integral role in our sales efforts.

SERVICES

We offer a broad range of integrated services, providing customers with a
total design and manufacturing solution that takes a product from its initial
design through volume production, test, distribution and into post-sales service
and support. Our manufacturing services include the assembly of complex printed
circuit boards, or PCBs, and complete systems and products ("Flextronics Systems
Assembly"), fabrication and assembly of plastic and metal enclosures
("Flextronics Enclosures"), and fabrication of PCBs ("Multek") and backplanes.
In addition, Flextronics Systems Assembly manufactures and assembles photonics
components and integrates them into PCB assemblies and other systems. Throughout
the production process, we offer design and technology services ("Flextronics
Design Services"); logistics services ("Flextronics Logistics"), such as
materials procurement, inventory management, vendor management, packaging and
distribution; and automation of key components of the supply chain through
advanced information technologies. In addition, we have added other after-market
services such as network installation ("Flextronics Network Services").

We operate and are managed internally by four geographic business segments,
including Asia, the Americas, Western Europe and Central Europe. For additional
information on these geographic business segments, please see Note 12, "Segment
Reporting," of the Notes to Consolidated Financial Statements in Item 8,
"Financial Statements and Supplementary Data."

Our integrated services include the following:

Flextronics Systems Assembly. Our assembly and manufacturing operations,
which reflect the majority of our revenues, include PCB assembly, assembly of
systems, and subsystems that incorporate PCBs and complex electromechanical
components. A substantial portion of our net sales is derived from the
manufacture and assembly of complete products. We employ just-in-time,
ship-to-stock and ship-to-line programs, continuous flow manufacturing, demand
flow processes and statistical process controls. As OEMs seek to provide greater
functionality in smaller products, they increasingly require more sophisticated
manufacturing technologies and processes. Our investment in advanced
manufacturing equipment and our experience and expertise in innovative
miniaturization, packaging and interconnect technologies, such as chip scale
packaging, chip-on-board and ball grid array, enable us to offer a variety of
advanced manufacturing

solutions. In addition, we have recently developed significant expertise in the
manufacture of wireless communications products employing radio frequency
technology.

We offer computer-aided testing of assembled PCBs, systems and subsystems,
which contributes significantly to our ability to deliver high-quality products
on a consistent basis. Our test capabilities include management defect analysis,
in-circuit tests and functional tests. In addition, we also provide
environmental stress tests of board or system assemblies.

We provide materials procurement, information technology solutions and
logistics. Materials procurement and management consist of the planning,
purchasing, expediting and warehousing of components and materials used in the
manufacturing process. Our inventory management expertise and volume procurement
capabilities contribute to cost reductions and reduce total cycle time. Our
industrial parks include providers of many of the custom components that we use
to reduce material and transportation costs, simplify logistics and facilitate
inventory management. We also use sophisticated automated manufacturing
resources planning systems and enhanced electronic data interchange capabilities
to ensure inventory control and optimization. Through our manufacturing
resources planning system, we have real-time visibility on material availability
and real-time tracking of work in process. We also utilize electronic data
interchange with our customers and suppliers to implement a variety of supply
chain management programs. Electronic data interchange allows customers to share
demand and product forecasts and deliver purchase orders while also assisting
suppliers with just-in-time delivery and supplier-managed inventory.

We also offer our customers flexible, just-in-time delivery programs
allowing product shipments to be closely coordinated with customers' inventory
requirements. Increasingly, we ship products directly into customers'
distribution channels or directly to the end-user. We believe that this service
can provide our customers with a more comprehensive solution and enable them to
be more responsive to market demands.

We also provide design, industrialization, supply chain management and
manufacturing services for the optical component and optical networking
industries. We offer a broad range of photonic packaging design and
industrialization services to assist in bringing products from schematics to
shipment while meeting our customers time-to-market objectives. As the world's
largest non-captive photonic component manufacturer, we offer leading edge
process development and volume manufacturing of active and passive photonic
devices

Multek. Multek provides PCB and backplane fabrication services. PCBs and
backplanes are platforms which provide interconnection for integrated circuits
and other electronic components. Backplanes also provide interconnection for
other printed circuit boards. Semiconductor designs are currently so complex
that they often require printed circuit boards with many layers of narrow,
densely spaced wiring. We manufacture high density, complex multilayer printed
circuit boards and backplanes on a low-volume, quick-turn basis, as well as on a
high-volume production basis. Our quick-turn prototype service allows us to
provide small test quantities to customers' product development groups in as
short as 24 hours. Our range of services enables us to respond to our customers'
demands for an accelerated transition from prototype to volume production. We
have PCB and backplane fabrication service capabilities on four major continents
(North America, South America, Europe and Asia).

The manufacture of complex multilayer interconnect products often requires
the use of sophisticated circuit interconnections between layers, referred to as
vias, and adherence to strict electrical characteristics to maintain consistent
circuit transmission speeds. Our production of microvias, by laser ablation and
our surface laminar circuit technology, a photo generated microvia capability,
provides our customers with proven high volume production capacity in both of
the major high density interconnect process solutions.

Flextronics Enclosures. We offer a comprehensive set of custom electronic
enclosures and related products and services worldwide. Our services include
design, manufacturing and integration of electronics packaging systems from
custom enclosure systems, power and thermal subsystems to interconnect
subsystems, cabling and cases. In addition to the typical sheet metal and
plastic fabrication, we assist in the design of electronic packaging systems
that protect sensitive electronics and enhance functionality. Our enclosure
design services focus on functionality, manufacturability and testing. These
services are integrated with our other services to provide our customers with
greater responsiveness, improved logistics and overall improved supply chain
management.

Flextronics Design Services. We offer a comprehensive spectrum of
value-added design services for products we manufacture for our customers from
product design services (hardware, software, mechanical and test) to
semiconductor design. Products designed by this group range from commercial and
military applications, including radio frequency analog, high-speed digital,
multi-chip module and flex circuits to high volume consumer products and small
quantity prototypes. We work with our customers to develop product-specific test
strategies and can custom design test equipment and software ourselves or use
test equipment and software provided by our customers. Additionally, a
significant competitive differentiator we possess is our semiconductor design
group. We provide application specific integrated circuit ("ASIC") design
services to our OEM customers, which include:

- Conversion services from field programmable gate arrays to ASICs. These
services focus on designs that utilize primarily digital signals, with
only a small amount of analog signals.

- Design services for mixed-signal ASICs. These services focus on designs
that utilize primarily analog signals, with only a small amount of
digital signals.

- Silicon integration design services. These services utilize silicon
design modules that are used to accelerate complex ASIC designs,
including system-on-a-chip.

Our semiconductor design group utilizes external foundry suppliers for its
customers' silicon manufacturing requirements, thereby using a "fabless"
manufacturing approach. This enables us to take advantage of the suppliers' high
volume economies of scale and access to advanced process technology.

We believe that our semiconductor design expertise provides us with a
competitive advantage by enabling us to offer our customers reduced costs
through the consolidation of components onto silicon chips. Additionally, by
integrating the combined capabilities of design, engineering and semiconductor
services, we can compress the time from product concept to market introduction
and minimize product development costs.

To assist customers with initial design, we provide computer-aided
engineering and computer-aided design, engineering for manufacturability,
printed circuit board layout and test development. At our product introduction
centers, we employ hundreds of advanced engineers to provide the engineering
expertise in developing new products and preparing them for high volume
manufacturing. These centers coordinate and integrate our worldwide design,
prototype, test development practices and, in some locations, provide dedicated
production lines for prototypes.

Flextronics Network Services. We offer network installation services to
OEMs in the data and telecommunications industries. Our services include project
planning, documentation, engineering, production, installation and commissioning
of equipment. We have expertise in the installation of public and mobile
telecommunications systems, exchanges, corporate networks and peripheral
equipment.

Flextronics Logistics. We provide global logistics services and turnkey
supply chain solutions for our customers. Our worldwide logistics services
include freight forwarding, warehousing/inventory management and
outbound/e-commerce solutions through our global supply chain network. We
leverage new technologies such as XML links to factories, extranet-based
management, vendor managed inventory and build-to-order programs, to
simultaneously connect suppliers, manufacturing operations and OEM customers. By
joining these logistics solutions with worldwide manufacturing operations and
total supply chain management, we can significantly reduce market costs and can
create tightly integrated processes and facilities worldwide. Moreover, the
combination of these capabilities allows us to react quickly to demand signals
from our customers worldwide, creating innovative links to suppliers while
serving the world market.

BACKLOG

Although we obtain firm purchase orders from our customers, OEM customers
typically do not make firm orders for delivery of products more than 30 to 90
days in advance. We do not believe that the backlog of expected product sales
covered by firm purchase orders is a meaningful measure of future sales since
orders may be rescheduled or canceled.

COMPETITION

The EMS industry is extremely competitive and includes hundreds of
companies, several of whom have achieved substantial market share. We compete
with different companies, depending on the type of service or geographic area.
We compete against numerous domestic and foreign EMS providers, and current and
prospective customers also evaluate our capabilities against the merits of
internal production. According to IDC, approximately 50% of the EMS industry's
revenues in 2000 were generated by the top six EMS companies - us, Celestica,
Inc., Jabil Circuit, Inc., Sanmina Corporation, SCI Systems, Inc. (which
recently agreed to be acquired by Sanmina), and Solectron Corporation. Based on
2000 revenue, we were the second largest of these companies and Solectron was
the largest. In addition, in recent years the EMS industry has attracted a
significant number of new entrants, including large OEMs with excess
manufacturing capacity, and many existing participants, including us, have
significantly increased their manufacturing capacity by expanding their
facilities and adding new facilities. In the event of a decrease in overall
demand for electronics manufacturing services, this increased

capacity could result in substantial pricing pressures which could harm our
operating results. Some of our competitors, may have greater manufacturing,
financial or other resources than us. As competitors increase the scale of their
operations, they may increase their ability to realize economies of scale, to
reduce their prices and to more effectively meet the needs of large OEMs. We
believe that the principal competitive factors in the segments of the EMS
industry in which we operate are cost, technological capabilities,
responsiveness and flexibility, delivery cycles, location of facilities, product
quality and range of services available. Failure to satisfy any of the foregoing
requirements could seriously harm our business.

ENVIRONMENTAL REGULATION

Our operations are subject to certain federal, state and local regulatory
requirements relating to the use, storage, discharge and disposal of hazardous
chemicals used during their manufacturing processes. We believe that our
operations are currently in compliance in all material respects with applicable
regulations and do not believe that costs of compliance with these laws and
regulations will have a material effect upon our capital expenditures, operating
results or competitive position. Currently we have no commitments with
environmental authorities regarding any compliance related matters.

As of March 31, 2001, we had accrued a total of approximately $2.2 million
for probable and reasonably estimatable environmental liabilities. We do not
believe that any of our potential or possible liabilities for environmental
matters are material. We determine the amount of our accruals for environmental
matters by analyzing and estimating the range of possible costs in light of
information currently available. The imposition of more stringent standards or
requirements under environmental laws or regulations, the results of future
testing and analysis undertaken by us at our operating facilities, or a
determination that we are potentially responsible for the release of hazardous
substances at other sites could result in expenditures in excess of amounts
currently estimated to be required for such matters. No assurance can be given
that actual costs will not exceed amounts accrued or that costs will not be
incurred with respect to sites as to which no problem is currently known.
Further, there can be no assurance that additional environmental matters will
not arise in the future.

EMPLOYEES

As of March 31, 2001, our global workforce totaled approximately 75,000
employees. We have never experienced a work stoppage or strike and we believe
that our employee relations are good.

Our success depends to a large extent upon the continued services of key
managerial and technical employees. The loss of such personnel could seriously
harm our business, results of operations, prospects and debt service ability. To
date, we have not experienced significant difficulties in attracting or
retaining such personnel. Although we are not aware that any of our key
personnel currently intend to terminate their employment, we cannot assure you
of their future services.

RISK FACTORS

IF WE DO NOT MANAGE EFFECTIVELY THE EXPANSION OF OUR OPERATIONS, OUR BUSINESS
MAY BE HARMED.

We have grown rapidly in recent periods. Our workforce has more than
doubled in size over the last year as a result of internal growth and
acquisitions. This growth is likely to strain considerably our management
control systems and resources, including decision support, accounting
management, information systems and facilities. If we do not continue to improve
our financial and management controls, reporting systems and procedures to
manage our employees effectively and to expand our facilities, our business
could be harmed.

We plan to increase our manufacturing capacity in low-cost regions by
expanding our facilities and adding new equipment. This expansion involves
significant risks, including, but not limited to, the following:

- we may not be able to attract and retain the management personnel and
skilled employees necessary to support expanded operations;

- we may not efficiently and effectively integrate new operations and
information systems, expand our existing operations and manage
geographically dispersed operations;

- we may incur cost overruns;

- we may encounter construction delays, equipment delays or shortages,
labor shortages and disputes and production start-up problems that could
harm our growth and our ability to meet customers' delivery schedules;
and

- we may not be able to obtain funds for this expansion, and we may not be
able to obtain loans or operating leases with attractive terms.

In addition, we expect to incur new fixed operating expenses associated
with our expansion efforts that will increase our cost of sales, including
substantial increases in depreciation expense and rental expense. If our
revenues do not increase sufficiently to offset these expenses, our operating
results would be seriously harmed. Our expansion, both through internal growth
and acquisitions, has contributed to our incurring significant unusual charges.
As a result of acquisitions and rapid changes in our markets, we recorded merger
related charges and related facility closure costs of approximately $534.3
million, net of tax, for the fiscal year ended March 31, 2001.

WE DEPEND ON THE TELECOMMUNICATIONS, NETWORKING, ELECTRONICS AND COMPUTER
INDUSTRIES WHICH CONTINUALLY PRODUCE TECHNOLOGICALLY ADVANCED PRODUCTS WITH
SHORT LIFE CYCLES; OUR INABILITY TO CONTINUALLY MANUFACTURE SUCH PRODUCTS ON A
COST-EFFECTIVE BASIS WOULD HARM OUR BUSINESS.

We depend on sales to customers in the telecommunications, networking,
electronics and computer industries. Factors affecting these industries in
general could seriously harm our customers and, as a result, us. These factors
include:

- the inability of our customers to adapt to rapidly changing technology
and evolving industry standards, which results in short product life
cycles;

- the inability of our customers to develop and market their products, some
of which are new and untested, the potential that our customers' products
may become obsolete or the failure of our customers' products to gain
widespread commercial acceptance; and

- recessionary periods in our customers' markets.

If any of these factors materialize, our business would suffer. Currently,
many sectors of the telecommunications, networking, electronics and computer
industries are experiencing a significant decrease in demand for their products
and services, which has led to reduced demand for the services provided by EMS
companies. These changes in demand and generally uncertain economic conditions
have resulted, and may continue to result, in some customers deferring delivery
schedules for some of the products that we manufacture for them, which could
affect our results of operations. Further, a protracted downturn in these
industries could have a significant negative impact on our business, financial
condition and results of operation.

OUR CUSTOMERS MAY CANCEL THEIR ORDERS, CHANGE PRODUCTION QUANTITIES OR DELAY
PRODUCTION.

EMS providers must provide increasingly rapid product turnaround for their
customers. We generally do not obtain firm, long-term purchase commitments from
our customers and we continue to experience reduced lead-times in customer
orders. Customers may cancel their orders, change production quantities or delay
production for a number of reasons. The generally uncertain economic condition
of several of the industries of our customers has resulted, and may continue to
result, in some of our customers delaying the delivery of some of the products
we manufacture for them. Cancellations, reductions or delays by a significant
customer or by a group of customers would seriously harm our results of
operations.

In addition, we make significant decisions, including determining the
levels of business that we will seek and accept, production schedules, component
procurement commitments, personnel needs and other resource requirements, based
on our estimates of customer requirements. The short-term nature of our
customers' commitments and the possibility of rapid changes in demand for their
products reduce our ability to estimate accurately future customer requirements.
This makes it difficult to schedule production and maximize utilization of our
manufacturing capacity. We often increase staffing, purchase materials and incur
other expenses to meet the anticipated demand of our customers. Anticipated
orders may not materialize, and delivery schedules may be deferred as a result
of changes in demand for our customers' products. On occasion, customers may
require rapid increases in production, which can stress our resources and reduce
margins. Although we have increased our manufacturing capacity, and plan further
increases, we may not have sufficient capacity at any given time to meet our
customers' demands. In addition, because many of our costs and operating
expenses are relatively fixed, a reduction in customer demand could harm our
gross profit and operating income.

OUR OPERATING RESULTS VARY SIGNIFICANTLY.

We experience significant fluctuations in our results of operations. Some
of the principal factors that contribute to these fluctuations are:

- changes in demand for our services;

- our effectiveness in managing manufacturing processes and costs in order
to decrease manufacturing expenses;

- the mix of the types of manufacturing services we provide, as high-volume
and low-complexity manufacturing services typically have lower gross
margins than more complex and lower volume services;

- changes in the cost and availability of labor and components, which often
occur in the electronics manufacturing industry and which affect our
margins and our ability to meet delivery schedules;

- the degree to which we are able to utilize our available manufacturing
capacity;

- our ability to manage the timing of our component purchases so that
components are available when needed for production, while avoiding the
risks of purchasing inventory in excess of immediate production needs;
and

- local conditions and events that may affect our production volumes, such
as labor conditions, political instability and local holidays.

One of our significant end-markets is the consumer electronics market. This
market exhibits particular strength toward the end of the calendar year in
connection with the holiday season. As a result, we have historically
experienced stronger revenues in our third fiscal quarter as compared to our
other fiscal quarters.

We are reconfiguring certain of our operations to further increase our
concentration in low-cost locations. This shift of operations resulted in a
restructuring charge of $275.6 million, net of tax, in the fourth quarter of
fiscal 2001, and may result in additional restructuring charges in fiscal 2002
In addition, many of our customers are currently experiencing increased
volatility in demand, and in many cases reduced demand, for their products. This
increases the difficulty of anticipating the levels and timing of future
revenues from these customers, and could lead them to defer delivery schedules
for products or reduce their volumes of purchases. This would lead to a delay or
reduction in our revenues from these customers. Any of these factors or a
combination of these factors could seriously harm our business and result in
fluctuations in our results of operations.

WE MAY ENCOUNTER DIFFICULTIES WITH ACQUISITIONS, WHICH COULD HARM OUR BUSINESS.

Since the beginning of fiscal 2001, we have completed over 20 acquisitions
of businesses and manufacturing facilities, including our acquisitions of DII,
Palo Alto Products International, Chatham, Lightning and JIT. We expect to
continue to acquire additional businesses and facilities in the future and are
currently in preliminary discussions to acquire additional businesses and
facilities. Any future acquisitions may require additional debt or equity
financing, or the issuance of shares in the transaction. This could increase our
leverage or be dilutive to our existing shareholders. We may not be able to
identify and complete acquisitions in the future to the same extent as the past,
or at all.

To integrate acquired businesses, we must implement our management
information systems and operating systems and assimilate and manage the
personnel of the acquired operations. The difficulties of this integration may
be further complicated by geographic distances. The integration of acquired
businesses may not be successful and could result in disruption to other parts
of our business.

In addition, acquisitions involve a number of other risks and challenges,
including:

- diversion of management's attention;

- potential loss of key employees and customers of the acquired companies;

- lack of experience operating in the geographic market or industry sector
of the acquired business;

- an increase in our expenses and working capital requirements, which
reduces our return on invested capital; and

- exposure to unanticipated contingent liabilities of acquired companies.

Any of these and other factors could harm our ability to achieve
anticipated levels of profitability at acquired operations or realize other
anticipated benefits of an acquisition.

OUR STRATEGIC RELATIONSHIPS WITH ERICSSON AND OTHER MAJOR CUSTOMERS CREATE
RISKS.

In April 2001, we entered into a definitive agreement with Ericsson with
respect to our management of its mobile telephone operations. Our ability to
achieve any of the anticipated benefits of this new relationship with Ericsson
is subject to a number of risks, including our ability to meet Ericsson's
volume, product quality, timeliness and price requirements, and to achieve
anticipated cost reductions. If demand for Ericsson's mobile phone products
declines, Ericsson may purchase a lower quantity of products from us than we
anticipate. If Ericsson's requirements exceed the volume anticipated by us, we
may not be able to meet these requirements on a timely basis. Our inability to
meet Ericsson's volume, quality, timeliness and cost requirements, and to
quickly resolve any issues with Ericsson, could seriously harm our results of
operations. As a result of these and other risks, we may be unable to achieve
anticipated levels of profitability under this arrangement, and it may not
result in any material revenues or contribute positively to our net income per
share. Due to our relationship with Ericsson, other OEMs may not wish to obtain
logistics or operations management services from us.

We have entered into strategic relationships with other customers, have
recently announced our plans to enter into a strategic relationship with
Alcatel, and plan to continue to pursue such relationships. These relationships
generally involve many, or all, of the risks involved in our new relationship
with Ericsson. Similar to our other customer relationships, there are no volume
purchase commitments under these relationships, and the revenues we actually
achieve may not meet our expectations. In anticipation of future activities
under these strategic relationships, we are incurring substantial expenses as we
add personnel and manufacturing capacity and procure materials. Our operating
results will be seriously harmed if sales do not develop to the extent and
within the time frame we anticipate.

WE DEPEND ON THE CONTINUING TREND OF OUTSOURCING BY OEMs.

Future growth in our revenue depends on new outsourcing opportunities in
which we assume additional manufacturing and supply chain management
responsibilities from OEMs. To the extent that these opportunities are not
available, either because OEMs decide to perform these functions internally or
because they use other providers of these services, our future growth would be
limited.

OUR ACQUISITION OF DIVESTED ASSETS AND FACILITIES FROM OEMS CAN RESULT IN
UNFAVORABLE PRICING TERMS AND DIFFICULTIES IN INTEGRATING THE ACQUIRED ASSETS,
WHICH MAY HARM OUR RESULTS OF OPERATIONS.

In the past, we have entered into arrangements to acquire manufacturing
assets and facilities from OEMs, and then to use the assets and facilities to
provide electronics manufacturing services to the OEM. We intend to continue to
pursue these transactions in the future. There is frequently competition among
EMS companies for these transactions, and this competition may increase. These
OEM divestiture transactions have contributed to a significant portion of our
revenue growth, and if we fail to complete similar transactions in the future,
our revenue growth could be harmed. As part of these arrangements, we typically
enter into manufacturing services agreements with these OEMs. These agreements
generally do not require any minimum volumes of purchases by the OEM, and the
actual volume of purchases may be less than anticipated. The arrangements
entered into with divesting OEMs typically involve many risks, including the
following:

- to acquire the facility, we may need to pay a purchase price to the
divesting OEMs that exceeds the value we may realize from the future
business of the OEM;

- the integration into our business of the acquired assets and facilities
may be time-consuming and costly;

- we, rather than the divesting OEM, bear the risk of excess capacity at
the acquired facility;

- we may not achieve anticipated cost reductions and efficiencies at the
acquired facility;

- if the OEM's requirements exceed the volume anticipated by us, we may be
unable to meet the expectations of the OEM as to product quality,
timeliness and cost reductions; and

- if the volume of purchases by the OEM are less than anticipated, we may
not be able to sufficiently reduce the expenses of operating the facility
or use the facility to provide services to other OEMs, and as a result
the transaction may adversely affect our gross margins and profitability.

If we do not successfully manage and integrate the acquired assets and achieve
anticipated cost reductions, our revenues and gross margins may decline and our
results of operations would be harmed.

THE MAJORITY OF OUR SALES COMES FROM A SMALL NUMBER OF CUSTOMERS; IF WE LOSE ANY
OF THESE CUSTOMERS, OUR SALES COULD DECLINE SIGNIFICANTLY.

Sales to our ten largest customers have represented a significant
percentage of our net sales in recent periods. Our ten largest customers in
fiscal 2001 and 2000 accounted for approximately 59% and 57% of net sales in
fiscal 2001 and fiscal 2000, respectively. No customer accounted for more than
10% of net sales in fiscal 2001. Our largest customer during fiscal 2000 was
Ericsson, who accounted for approximately 12% of net sales. No other customer
accounted for more than 10% of net sales in fiscal 2000. We anticipate that our
strategic relationship with Ericsson will substantially increase the percentage
of our sales attributable to Ericsson.

The identity of our principal customers have varied from year to year, and
our principal customers may not continue to purchase services from us at current
levels, if at all. Significant reductions in sales to any of these customers, or
the loss of major customers, would seriously harm our business. If we are not
able to timely replace expired, canceled or reduced contracts with new business,
our revenues could be harmed.

OUR INDUSTRY IS EXTREMELY COMPETITIVE.

The EMS industry is extremely competitive and includes hundreds of
companies, several of which have achieved substantial market share. Current and
prospective customers also evaluate our capabilities against the merits of
internal production. Some of our competitors have substantially greater market
share and manufacturing, financial and marketing resources than us.

In recent years, many participants in the industry, including us, have
substantially expanded their manufacturing capacity. If overall demand for
electronics manufacturing services should decrease, this increased capacity
could result in substantial pricing pressures, which could seriously harm our
operating results.

WE MAY BE ADVERSELY AFFECTED BY SHORTAGES OF REQUIRED ELECTRONIC COMPONENTS.

At various times, there have been shortages of some of the electronic
components that we use, and suppliers of some components have lacked sufficient
capacity to meet the demand for these components. In some cases, supply
shortages and delays in deliveries of particular components have resulted in
curtailed production, or delays in production, of assemblies using that
component, which has contributed to an increase in our inventory levels. If we
are unable to obtain sufficient components on a timely basis, we may experience
manufacturing and shipping delays, which could harm our relationships with
current or prospective customers and reduce our sales.

OUR CUSTOMERS MAY BE ADVERSELY AFFECTED BY RAPID TECHNOLOGICAL CHANGE.

Our customers compete in markets that are characterized by rapidly changing
technology, evolving industry standards and continuous improvement in products
and services. These conditions frequently result in short product life cycles.
Our success will depend largely on the success achieved by our customers in
developing and marketing their products. If technologies or standards supported
by our customers' products become obsolete or fail to gain widespread commercial
acceptance, our business could be adversely affected.

WE ARE SUBJECT TO THE RISK OF INCREASED INCOME TAXES.

We have structured our operations in a manner designed to maximize income
in countries where:

- tax incentives have been extended to encourage foreign investment; or

- income tax rates are low.

We base our tax position upon the anticipated nature and conduct of our
business and upon our understanding of the tax laws of the various countries in
which we have assets or conduct activities. However, our tax position is subject
to review and possible challenge by taxing authorities and to possible changes
in law which may have retroactive effect. We cannot determine in advance the
extent to which some jurisdictions may require us to pay taxes or make payments
in lieu of taxes.

Several countries in which we are located allow for tax holidays or provide
other tax incentives to attract and retain business. We have obtained tax
holidays or other incentives where available, primarily in China, Malaysia and
Hungary. In these three countries, we generated an aggregate of approximately
$2.6 billion of our total revenues for the fiscal year ended March 31, 2001. Our
taxes could increase if certain tax holidays or incentives are not renewed upon
expiration, or tax rates applicable to us in such jurisdictions are otherwise
increased. In addition, further acquisitions of businesses may cause our
effective tax rate to increase.

WE CONDUCT OPERATIONS IN A NUMBER OF COUNTRIES AND ARE SUBJECT TO RISKS OF
INTERNATIONAL OPERATIONS.

The geographical distances between the Americas, Asia and Europe create a
number of logistical and communications challenges. These challenges include
managing operations across multiple time zones, directing the manufacture and
delivery of products across distances, coordinating procurement of components
and raw materials and their delivery to multiple locations, and coordinating the
activities and decisions of the core management team, which is based in a number
of different countries. Facilities in several different locations may be
involved at different stages of the production of a single product, leading to
additional logistical difficulties.

Because our manufacturing operations are located in a number of countries
throughout East Asia, the Americas and Europe, we are subject to the risks of
changes in economic and political conditions in those countries, including:

- fluctuations in the value of local currencies;

- labor unrest and difficulties in staffing;

- longer payment cycles resulting from differences in local customer;

- increases in duties and taxation levied on our products;

- imposition of restrictions on currency conversion or the transfer of
funds;

- limitations on imports or exports of components or assembled products, or
other travel restrictions;

- expropriation of private enterprises; and

- a potential reversal of current favorable policies encouraging foreign
investment or foreign trade by our host countries.

The attractiveness of our services to our U.S. customers can be affected by
changes in U.S. trade policies, such as "most favored nation" status and trade
preferences for some Asian nations. In addition, some countries in which we
operate, such as Brazil, the Czech Republic, Hungary, Mexico, Malaysia and
Poland, have experienced periods of slow or negative growth, high inflation,
significant currency devaluations or limited availability of foreign exchange.
Furthermore, in countries such as China and Mexico, governmental authorities
exercise significant influence over many aspects of the economy, and their
actions could have a significant effect on us. Finally, we could be seriously
harmed by inadequate infrastructure, including lack of adequate power and water
supplies, transportation, raw materials and parts in countries in which we
operate.

WE DEPEND ON OUR EXECUTIVE OFFICERS.

Our success depends to a large extent upon the continued services of our
executive officers. Generally our employees are not bound by employment or
non-competition agreements, and we cannot assure that we will retain our
executive officers and other key employees. We could be seriously harmed by the
loss of any of our executive officers. In addition, in order to manage our
growth, we will need to recruit and retain additional skilled management
personnel and if we are not able to do so, our business and our ability to
continue to grow could be harmed.

WE ARE SUBJECT TO ENVIRONMENTAL COMPLIANCE RISKS.

We are subject to various federal, state, local and foreign environmental
laws and regulations, including those governing the use, storage, discharge and
disposal of hazardous substances in the ordinary course of our manufacturing
process. In addition, we are responsible for cleanup of contamination at some of
our current and former manufacturing facilities and at some third party sites.
If more stringent

compliance or cleanup standards under environmental laws or regulations are
imposed, or the results of future testing and analyses at our current or former
operating facilities indicate that we are responsible for the release of
hazardous substances, we may be subject to additional remediation liability.
Further, additional environmental matters may arise in the future at sites where
no problem is currently known or at sites that we may acquire in the future.
Currently unexpected costs that we may incur with respect to environmental
matters may result in additional loss contingencies, the quantification of which
cannot be determined at this time.

THE MARKET PRICE OF OUR ORDINARY SHARES IS VOLATILE.

The stock market in recent years has experienced significant price and
volume fluctuations that have affected the market prices of technology
companies. These fluctuations have often been unrelated to or disproportionately
impacted by the operating performance of these companies. The market for our
ordinary shares may be subject to similar fluctuations. Factors such as
fluctuations in our operating results, announcements of technological
innovations or events affecting other companies in the electronics industry,
currency fluctuations and general market conditions may have a significant
effect on the market price of our ordinary shares.

ITEM 2. PROPERTIES

Our facilities consist of a global network of industrial parks, regional
manufacturing and technology centers, and design/engineering and product
introduction centers, providing over 16.0 million square feet of capacity as of
March 31, 2001. We own facilities with approximately 1.1 million square feet in
the Americas, 2.5 million square feet in Asia and 4.8 million square feet of
capacity in Europe. We lease facilities with approximately 2.9 million square
feet in the Americas, 1.5 million square feet in Asia and 3.5 million square
feet of capacity in Europe.

Over the past several years, we have actively increased our overall
capacity through internal growth, acquisitions and purchases of manufacturing
facilities. We plan to further expand our facilities in low cost locations,
adding new equipment and further developing our industrial parks. We cannot
assure that we will not encounter unforeseen difficulties, costs or delays in
expanding our facilities or that our expanded facilities will not prove to be in
excess of our requirements.

In connection with the consummated mergers and restructuring activities in
fiscal 2001, we developed formal plans to exit certain activities. Management's
plan to exit an activity included the identification of duplicate manufacturing
and administrative facilities for closure and the identification of
manufacturing and administrative facilities for consolidation into other
facilities. As a result of these integration activities, we identified
approximately 3.2 million of owned and leased square feet of capacity for
closure in the Americas. Approximately 700,000 of owned and leased square feet
of capacity in Asia was identified for closure. In Europe, we identified
approximately 800,000 of owned and leased square feet of capacity for closure.
See Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Unusual Charges."

Our industrial parks, each incorporating from approximately 400,000 to 1.2
million square feet of facilities, are self-contained facilities that co-locate
our manufacturing and distribution operations with our suppliers in low-cost
regions near our customers' end markets. Our industrial parks provide a total
supply chain management. This approach to production and distribution benefits
our customers by reducing logistical barriers and costs, improving
communications, increasing flexibility, lowering transportation costs and
reducing turnaround times. We have strategically established large industrial
parks in China, Hungary, Mexico, Brazil and Poland.

Our regional manufacturing and technology centers are facilities that have
both medium and high volume manufacturing and product introduction centers and,
as a result, are where we focus on launching customers' new products and
transitioning them to volume production. Each center features advanced
technological competency. These regional manufacturing facilities range from
approximately 70,000 to 500,000 square feet and provide production in locations
close to strategic markets. We have established regional manufacturing and
technology centers in Austria, Brazil, China, Denmark, England, Finland, France,
Germany, Hungary, India, Indonesia, Ireland, Israel, Italy, Malaysia, Mexico,
Norway, Scotland, Sweden, Switzerland and in various states throughout the
United States.

Our design/engineering and product introduction centers provide a broad
range of advanced engineering services and prototype and low volume production
capabilities. The locations of our product introduction centers include Austria,
China, Finland, Germany, Italy, Sweden, Switzerland and the United States.

Our facilities are generally well maintained and suitable for the
operations conducted and, in substantially all cases where owned, free and clear
of any encumbrances. The productive capacity of our plants is generally adequate
for current needs. All but two of our

manufacturing facilities are registered to the quality requirements of the
International Organization for Standardization (ISO 9000). The remaining two
facilities are in the process of final certification.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

PRICE RANGE OF ORDINARY SHARES

Our ordinary shares are quoted on the Nasdaq National Market under the
symbol "FLEX". The following table sets forth the high and low per share sales
prices for our ordinary shares since the beginning of fiscal 2000 as reported on
the Nasdaq National Market.

HIGH LOW
---- ---

FISCAL YEAR ENDED MARCH 31, 2000
First Quarter .................................. $ 14.59 $ 9.34
Second Quarter ................................. 17.03 10.63
Third Quarter .................................. 24.69 14.28
Fourth Quarter ................................. 39.88 19.16
FISCAL YEAR ENDED MARCH 31, 2001
First Quarter .................................. $ 38.06 $ 22.38
Second Quarter ................................. 44.91 32.38
Third Quarter .................................. 43.00 21.38
Fourth Quarter ................................. 40.13 14.25

All share prices have been adjusted to give effect to the two-for-one stock
splits effected as bonus issues (the Singapore equivalent of a stock dividend),
distributed to our shareholders on January 11, 1999, December 22, 1999 and
October 16, 2000.

As of June 15, 2001, there were 3,703 holders of record of our ordinary
shares and the closing sale price of the ordinary shares as reported on the
Nasdaq National Market was $21.76 per share.

DIVIDENDS

Since inception, we have not declared or paid any cash dividends on our
ordinary shares (exclusive of dividends paid by pooled entities prior to
acquisition), and our bank credit facility prohibits the payment of cash
dividends without the lenders' prior consent. The terms of our outstanding
senior subordinated notes also restrict our ability to pay cash dividends. See
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Operations--Liquidity and Capital Resources." We anticipate that all earnings
in the foreseeable future will be retained to finance the continuing development
of our business.

TAXATION

This summary of Singapore and U.S. tax considerations is based on current
law and is provided for general information. The discussion does not purport to
deal with all aspects of taxation that may be relevant to particular
shareholders in light of their investment or tax circumstances, or to certain
types of shareholders (including insurance companies, tax-exempt organizations,
regulated investment companies, financial institutions or broker-dealers, and
shareholders that are not U.S. shareholders subject to special treatment under
the U.S. federal income tax laws. Such shareholders should consult their own tax
advisors regarding the particular tax consequences to such shareholders of any
investment in our ordinary shares.

INCOME TAXATION UNDER SINGAPORE LAW

Under current provisions of the Income Tax Act, Chapter 134 of Singapore,
corporate profits are taxed at a rate equal to 24.5%. Under Singapore's taxation
system, the tax paid by a company is deemed paid by its shareholders. Thus, the
shareholders receive dividends net of the tax paid by Flextronics. Dividends
received by either a resident or a nonresident of Singapore are not subject to
withholding tax. Shareholders are taxed on the gross amount of dividends
(meaning the cash amount of the dividend plus the amount of corporate tax paid
by Flextronics). The tax paid by Flextronics will be available to shareholders
as a tax credit to offset the Singapore income tax liability on their overall
income (including the gross amount of dividends). No tax treaty currently exists
between the Republic of Singapore and the U.S.

Under current Singapore tax law there is no tax on capital gains, and,
thus, any profits from the disposal of shares are not taxable in Singapore
unless the vendor is regarded as carrying on a trade in shares in Singapore (in
which case, the disposal profits would be taxable as trade profits rather than
capital gains).

There is no stamp duty payable in respect of the holding and disposition of
shares. No duty is payable on the acquisition of new shares. Where existing
shares are acquired in Singapore, stamp duty is payable on the instrument of
transfer of the shares at the rate of S$2 for every S$1,000 of the market value
of the shares. The stamp duty is borne by the purchaser unless there is an
agreement to the contrary. Where the instrument of transfer is executed outside
of Singapore, stamp duty must be paid if the instrument of transfer is received
in Singapore. Under Article 22 (iii) of our Articles of Association, our
directors are authorized to refuse to register a transfer unless the instrument
of transfer has been duly stamped.

INCOME TAXATION UNDER UNITED STATES LAW

Individual shareholders that are U.S. citizens or resident aliens (as
defined in Section 7701(b) of the Internal Revenue Code of 1986), corporations
or partnerships or other entities created or organized under the laws of the
United States, or any political subdivision thereof, an estate the income of
which is subject to U.S. federal income taxation regardless of its source or a
trust which is subject to the supervision of a court within the United States
and the control of section 7701(b)(30) of the Internal Revenue Code will, upon
the sale or exchange of a share, recognize gain or loss for U.S. income tax
purposes in an amount equal to the difference between the amount realized and
the U.S. shareholder's tax basis in such a share. If paid in currency other than
U.S. dollars, certain currency translation rules will apply to determine the
U.S. dollar amount realized. Such gain or loss will be capital gain or loss if
the share was a capital asset in the hands of the U.S. shareholder and will be
short-term capital gain or loss if the share has been held for not more than one
year, mid-term capital gain or loss if the share has been held for more than one
year but not more than eighteen months and, long-term capital gain or loss if
the share has been held for more than eighteen months. If a U.S. shareholder
receives any currency other than U.S. dollars on the sale of a share, such U.S.
shareholder may recognize ordinary income or loss as a result of currency
fluctuations between the date of such sale and the date such sale proceeds are
converted into U.S. dollars.

U.S. shareholders will be required to report as income for U.S. income tax
purposes the amount of any dividend received from us to the extent paid out of
our current or accumulated earnings and profits, as determined under current
U.S. income tax principles. If over 50% of our stock (by vote or value) were
owned by U.S. shareholders who individually held 10% or more of our voting
stock, such U.S. shareholders potentially would be required to include in income
a portion or all of their pro rata share of our and our non-U.S. subsidiaries'
earnings and profits. Certain attribution rules apply in this regard. If 50% or
more of our assets during a taxable year produced or were held for the
production of passive income, as defined in section 1297(b) of the Code (e.g.,
certain forms of dividends, interest and royalties), or 75% or more of our gross
income for a taxable year was passive income, adverse U.S. tax consequences
could result to U.S. shareholders. As of March 31, 2001, we were not aware of
any U.S. shareholder who individually held 10% or more of our voting stock.

Shareholders that are not U.S. shareholders will not be required to report
for U.S. federal income tax purposes the amount of any dividend received from
us. Non-U.S. shareholders, upon the sale or exchange of a share, would not be
required to recognize gain or loss for U.S. federal income tax purposes.

ESTATE TAXATION

In the case of an individual who is not domiciled in Singapore, a Singapore
estate tax is imposed on the value of all movable and immovable properties
situated in Singapore. Our shares are considered to be situated in Singapore.
Thus, an individual shareholder who is not domiciled in Singapore at the time of
his or her death will be subject to Singapore estate tax on the value of any
such shares held by the individual upon the individual's death. Such a
shareholder will be required to pay Singapore estate tax to the extent that the
value of the shares (or in aggregate with any other assets subject to Singapore
estate tax) exceeds S$600,000. Any such excess will be taxed at a rate equal to
5% on the first S$12,000,000 of the individual's Singapore chargeable assets and
thereafter at a rate equal to 10%. An individual shareholder who is a U.S.
citizen or resident (for U.S. estate tax purposes) also will have the value of
the shares included in the individual's gross estate for U.S. estate tax
purposes. An individual shareholder generally will be entitled to a tax credit
against the shareholder's U.S.

estate tax to the extent the individual shareholder actually pays Singapore
estate tax on the value of the shares; however, such tax credit is generally
limited to the percentage of the U.S. estate tax attributable to the inclusion
of the value of the shares included in the shareholder's gross estate for U.S.
estate tax purposes, adjusted further by a pro rata apportionment of available
exemptions. Individuals who are domiciled in Singapore should consult their own
tax advisors regarding the Singapore estate tax consequences of their
investment.

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data have been prepared to give
retroactive effect to the pooling of interests mergers completed by us in fiscal
2001. In fiscal 2001, we acquired DII in April 2000, Palo Alto Products
International in April 2000, Lightning in August 2000, Chatham in August 2000
and JIT in November 2000.

These historical results are not necessarily indicative of the results to
be expected in the future. The following table is qualified by reference to and
should be read in conjunction with the consolidated financial statements,
related notes thereto and other financial data included elsewhere herein.

FISCAL YEAR ENDED MARCH 31,
------------------------------------------------------------------------
1997 1998 1999 2000 2001
----------- ----------- ------------ ------------ -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

CONSOLIDATED STATEMENTS OF
OPERATIONS DATA:
Net sales .................................. $ 1,498,332 $ 2,577,926 $ 3,952,786 $ 6,959,122 $ 12,109,699
Cost of sales .............................. 1,289,567 2,246,135 3,512,229 6,335,242 11,127,896
Unusual charges(1) ......................... 16,443 8,869 77,286 7,519 510,495
------------ ------------ ------------ ------------ ------------
Gross profit ............................ 192,322 322,922 363,271 616,361 471,308
Selling, general and administrative ........ 113,308 169,586 240,512 319,952 430,109
Goodwill and intangibles amortization ...... 5,979 10,487 29,156 41,326 63,541
Unusual charges(1) ......................... 4,649 12,499 2,000 3,523 462,847
Interest and other expense, net ............ 8,398 21,480 52,234 69,912 67,115
------------ ------------ ------------ ------------ ------------
Income(loss) before income taxes ........ 59,988 108,870 39,369 181,648 (552,304)
Provision for (benefit from) income taxes.. 16,415 22,378 (11,634) 23,080 (106,285)
------------ ------------ ------------ ------------ ------------
Net income (loss) ....................... $ 43,573 $ 86,492 $ 51,003 $ 158,568 $ (446,019)
============ ============ ============ ============ ============
Diluted earnings (loss) per share(2) ........ $ 0.18 $ 0.30 $ 0.17 $ 0.42 $ (1.01)
============ ============ ============ ============ ============
Shares used in computing diluted per
share amounts(2) ......................... 238,770 297,307 329,352 383,119 441,991

AS OF MARCH 31,
--------------------------------------------------------------
1997 1998 1999 2000 2001
---------- ---------- ---------- --------- ----------
(IN THOUSANDS)

CONSOLIDATED BALANCE SHEETS DATA:
Working capital ............... $ 87,855 $ 372,870 $ 384,084 $1,161,535 $1,914,741
Total assets .................. 937,865 1,862,088 2,783,707 5,134,943 7,571,655
Total long-term debt, excluding
current portion ............... 139,383 580,441 789,471 645,267 917,313
Shareholders' equity .......... 331,622 641,667 915,305 2,376,628 4,030,361

__________

(1) In fiscal 1997, we incurred approximately $4.6 million of merger-related
expenses associated with an acquisition and $16.4 million in costs
associated with the closing and sale of several manufacturing facilities.

In fiscal 1998, we incurred approximately $12.5 million of merger-related
expenses and approximately $8.9 million in costs associated with the
closure of a manufacturing operation.

In fiscal 1999, we incurred approximately $77.3 million of expenses
primarily associated with the closure of a semiconductor wafer fabrication
facility and wrote-off approximately $2.0 million of in-process research
and development associated with an acquisition.

In fiscal 2000, we incurred approximately $3.5 million of merger-related
expenses and $7.5 million in costs primarily associated with the closure of
several manufacturing facilities.

In fiscal 2001, we recognized unusual pre-tax charges of $973.3 million. Of
this amount, $286.5 million related to the issuance of an equity instrument
to Motorola. The remaining $686.8 million includes merger-related expenses
of approximately $102.4 million and approximately $584.4 million of costs
associated with the closing of several manufacturing facilities.

(2) We completed a stock split during each of fiscal 1999, 2000 and 2001. Each
of the stock splits was effected as bonus issues (the Singapore equivalent
of a stock dividend). The stock dividend has been reflected in our
financial statements for all periods presented unless otherwise noted. All
share and per share amounts have been retroactively restated to reflect the
stock splits.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

This report on Form 10-K contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933, as amended. The words "expects,"
"anticipates," "believes," "intends," "plans" and similar expressions identify
forward-looking statements. In addition, any statements which refer to
expectations, projections or other characterizations of future events or
circumstances are forward-looking statements. We undertake no obligation to
publicly disclose any revisions to these forward-looking statements to reflect
events or circumstances occurring subsequent to filing this Form 10-K with the
Securities and Exchange Commission. These forward-looking statements are subject
to risks and uncertainties, including, without limitation, those discussed in
this section. Accordingly, our future results could differ materially from
historical results or from those discussed or implied by these forward-looking
statements.

ACQUISITIONS

We have actively pursued mergers and other business acquisitions to expand
our global reach, manufacturing capacity and service offerings and to diversify
and strengthen customer relationships. The significant business combinations
completed in fiscal 2001, include the following:

DATE ACQUIRED COMPANY NATURE OF BUSINESS CONSIDERATION
---- ---------------- ------------------ --------------

November 2000 JIT Holdings Ltd. Provides electronics manufacturing 17,323,531 ordinary shares
and design services

August 2000 Chatham Technologies, Inc. Provides industrial and electronics 15,234,244 ordinary shares
manufacturing and design services

August 2000 Lightning Metal Specialties Provides injection molding, metal 2,573,072 ordinary shares
and related entities stamping and integration services

April 2000 Palo Alto Products Provides industrial and electronics 7,236,748 ordinary shares
International Pte. Ltd. manufacturing and design services

April 2000 The DII Group, Inc. Provides electronics manufacturing 125,536,310 ordinary shares
services

Each of these acquisitions was accounted for as a pooling of interests and
our consolidated financial statements have been restated to reflect the combined
operations of the merged companies for all periods presented. Additionally, we
have completed other immaterial pooling of interests transactions in fiscal
2001. Prior period statements have not been restated for these transactions. We
have also made a number of business acquisitions of other companies. These
transactions were accounted for using the purchase method and, accordingly our
consolidated financial statements include the operating results of each business
from the date of acquisition. Pro forma results of operations have not been
presented because the effects of these acquisitions were not material on either
an individual or an aggregate basis.

OTHER STRATEGIC TRANSACTIONS

On May 30, 2000, we entered into a strategic alliance for product
manufacturing with Motorola. In connection with this strategic alliance,
Motorola paid $100.0 million for an equity instrument that provided it with
incentives to purchase products and services from us by entitling it to acquire
22,000,000 of our ordinary shares at any time by meeting targeted purchase
levels of up to $32.0 billion through December 31, 2005 or by making additional
payments to us. The issuance of this equity instrument on May 30, 2000 resulted
in a one-time non-cash charge equal to the excess of the fair value of the
equity instrument issued over the $100.0 million proceeds received. As a result,
the one-time non-cash charge amounted to approximately $286.5 million offset by
a corresponding credit to additional paid-in capital in the first quarter of
fiscal 2001. In June 2001, we entered into an agreement with Motorola under
which we repurchased this equity instrument for $112.0 million. No current or
planned manufacturing programs are affected by the repurchase, and we anticipate
that Motorola will continue to be a customer following the repurchase, although
our future revenue from Motorola may be less than it would have been had this
instrument remained in effect.

In April 2001, we entered into a definitive agreement with Ericsson with
respect to our management of the operations of Ericsson's mobile telephone
operations. Operations under this arrangement commenced in the first quarter of
fiscal 2002. Under this agreement, we are to provide a substantial portion of
Ericsson's mobile phone requirements. We will assume responsibility for product
assembly, new product prototyping, supply chain management and logistics
management, in which we will process customer orders from Ericsson and configure
and ship products to Ericsson's customers. We expect to provide PCBs and
plastics, primarily from our Asian operations. In connection with this
relationship, we purchased certain equipment, inventory and other assets, and
assumed certain accrued expenses, from Ericsson at their net book value of
approximately $450.0 million. See Item 1, "Business--Risk Factors--Our strategic
relationship with Ericsson creates risks."

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain
statements of operations data expressed as a percentage of net sales.

FISCAL YEAR ENDED
MARCH 31,
------------------------
1999 2000 2001
----- ----- -----

Net sales .................................. 100.0% 100.0% 100.0%
Cost of sales .............................. 88.9 91.0 91.9
Unusual charges ............................ 1.9 0.1 4.2
----- ----- -----
Gross margin .......................... 9.2 8.9 3.9
Selling, general and administrative ........ 6.1 4.6 3.6
Goodwill and intangibles amortization ...... 0.7 0.6 0.5
Unusual charges ............................ 0.1 0.1 3.8
Interest and other expense, net ............ 1.3 1.0 0.6
----- ----- -----
Income (loss) before income taxes ..... 1.0 2.6 (4.6)
Provision for (benefit from) income taxes .. (0.3) 0.3 (0.9)
----- ----- -----
Net income (loss) ..................... 1.3% 2.3% (3.7)%
===== ===== =====

Net Sales

We derive our net sales from the fabrication and assembly of plastic and
metal enclosures, printed circuit boards or PCBs, backplanes and the assembly of
complete systems and products. In addition, through our photonics division, we
manufacture and assemble photonics components and integrate them into PCB
assemblies and other systems. Throughout the production process, we offer design
and technology services; logistics services, such as materials procurement,
inventory management, vendor management, packaging and distribution; and
automation of key components of the supply chain through advanced information
technologies. In addition, we have added other after-market services such as
network installation.

Net sales for fiscal 2001 increased 74% to $12.1 billion from $7.0 billion
in fiscal 2000. The increase in sales for fiscal 2001 was primarily the result
of our ability to continue to expand sales to our existing customers as well as
expanding sales to new customers worldwide and, to a lesser extent, the
incremental revenue associated with the purchases of several manufacturing
facilities and related assets during fiscal 2001. During fiscal 2001, our ten
largest customers accounted for approximately 59% of net sales, with no customer
accounting for more than 10% of net sales. While we experienced significant
growth in net sales in fiscal 2001, this growth was hampered in late fiscal 2001
by a decline in demand due to the downturn experienced by the electronics
industry, which was driven by a combination of weakening end-market demand
(particularly in the telecommunications and networking sectors) and our
customers' inventory imbalances. Along with other providers of electronics
manufacturing services, our fourth quarter net sales were generally adversely
affected by reductions in purchase volumes and delays in purchases by certain
customers, as they continued to experience erosion in demand for their products.
This trend has continued through the first quarter of fiscal 2002 and may
continue, or worsen, in future periods, as the timing of any recovery in our
customers' markets is uncertain.

Net sales for fiscal 2000 increased 76% to $7.0 billion from $4.0 billion
in fiscal 1999. The increase in sales for fiscal 2000 was primarily due to
expanding sales to existing customers and, to a lesser extent, sales to new
customers. In fiscal 2000, our ten largest customers accounted for approximately
57% of net sales, with Ericsson accounting for approximately 12% of net sales.
No other customer accounted for more than 10% of net sales.

Gross Profit

Gross profit varies from period to period and is affected by a number of
factors, including product mix, component costs, product life cycles, unit
volumes, startup, expansion and consolidation of manufacturing facilities,
pricing, competition and new product introductions. See Item 1, "Business--Risk
Factors."

Gross margin decreased to 3.9% for fiscal 2001 from 8.9% in fiscal 2000.
The decrease in gross margin is primarily attributable to unusual pre-tax
charges amounting to $510.5 million, which were associated with the plant
closures, as described in "Unusual Charges," below. Excluding unusual pre-tax
charges of $510.5 million and $7.5 million in fiscal 2001 and fiscal 2000,
respectively, gross margin decreased to 8.1% for fiscal 2001 from 9.0% in fiscal
2000. Gross margin decreased to 8.9% for fiscal 2000 from 9.2% in fiscal 1999.
Excluding unusual pre-tax charges of $7.5 million and $77.3 million in fiscal
2000 and 1999, respectively, gross margin decreased from 11.1% in fiscal 1999 to
9.0% in fiscal 2000. Our gross profit in each fiscal year was adversely affected
by several factors, primarily changes in our product mix to higher volume
projects, which typically have a lower gross margin because of higher material
content, and to a lesser extent, costs associated with expanding our facilities,
and costs associated with the startup of new customers and projects, which
typically carry higher levels of under absorbed manufacturing overhead costs
until the projects reach higher volume production.

Increased mix of products that have relatively high material costs as a
percentage of total unit costs has been the primary factor that has adversely
affected our gross margins. Further, we may enter into supply arrangements in
connection with strategic relationships and OEM divestitures. These
arrangements, which are relatively larger in scale, could adversely affect our
gross margins. We believe that these and other factors may adversely affect our
gross margins, but we do not expect that this will have a material effect on our
income from operations.

Unusual Charges

FISCAL 2001

We recognized unusual pre-tax charges of approximately $973.3 million
during fiscal year 2001. Of this amount, $493.1 million was recorded in the
first quarter and was comprised of approximately $286.5 million related to the
issuance of an equity instrument to Motorola combined with approximately $206.6
million of expenses resulting from the DII and Palo Alto Products International
mergers and related facility closures. In the second quarter, unusual pre-tax
charges amounted to approximately $48.4 million associated with the Chatham and
Lightning mergers and related facility closures. In the third quarter, we
recognized unusual pre-tax charges of approximately $46.3 million, primarily
related to the JIT merger and related facility closures. During the fourth
quarter, we recognized unusual pre-tax charges, amounting to $376.1 million
related to the closures of several manufacturing facilities and $9.5 million for
the impairment of investments in certain technology companies.

On May 30, 2000, we entered into a strategic alliance for product
manufacturing with Motorola. See Note 8, "Shareholders' Equity," and Note 14,
"Subsequent Events," of the Notes to Consolidated Financial Statements in Item
8, "Financial Statements and Supplementary Data" for further information
concerning the strategic alliance. In connection with this strategic alliance,
Motorola paid $100.0 million for an equity instrument that entitled it to
acquire 22,000,000 of our ordinary shares at any time through December 31, 2005,
upon meeting targeted purchase levels or making additional payments to us. The
issuance of this equity instrument resulted in a one-time non-cash charge equal
to the excess of the fair value of the equity instrument issued over the $100.0
million proceeds received. As a result, the one-time non-cash charge amounted to
approximately $286.5 million offset by a corresponding credit to additional
paid-in capital in the first quarter of fiscal 2001.

We recorded aggregate unusual charges of $973.3 million, which included
approximately $574.9 million of facility closure costs, $102.4 million of direct
transaction costs in connection with the mergers we completed in fiscal 2001,
$286.5 million related to the issuance of an equity instrument to Motorola and
$9.5 million for impairment of certain investments. As discussed below, $510.5
million of the charges relating to facility closures have been classified as a
component of Cost of Sales during the fiscal year ended March 31, 2001. We
believe that the cost of goods sold savings achieved through lower depreciation
and reduced employee expense will be offset by reduced revenues at the affected
facilities.

Unusual charges excluding the Motorola equity instrument, by segments, are
as follows: Americas $553.1 million, Asia $86.5 million, Western Europe $32.9
million and Central Europe $14.3 million. Unusual charges related to the
Motorola equity instrument is not specific to a particular segment, and as such,
has not been allocated to a particular geographic segment.

The components of the unusual charges recorded are as follows (in thousands):

FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL NATURE OF
CHARGES CHARGES CHARGES CHARGES CHARGES CHARGES
------- ------- ------- -------- ------- -----------

Facility closure costs:
Severance........................ $62,487 $5,677 $3,606 $60,703 $132,473 cash
Long-lived asset impairment...... 46,646 14,373 16,469 155,046 232,534 non-cash
Exit costs....................... 24,201 5,650 19,703 160,368 209,922 cash/non-cash
-------- ------- ------- -------- --------

Total facility closure costs.... 133,334 25,700 39,778 376,117 574,929
Direct transaction costs:
Professional fees................ 50,851 7,247 6,250 -- 64,348 cash
Other costs...................... 22,382 15,448 248 -- 38,078 cash/non-cash
-------- ------- ------- -------- --------
Total direct transaction costs.. 73,233 22,695 6,498 -- 102,426
-------- ------- ------- -------- --------

Motorola equity instrument......... 286,537 -- -- -- 286,537 non-cash
Other unusual charges.............. -- -- -- 9,450 9,450 non-cash
Total unusual charges........... 493,104 48,395 46,276 385,567 973,342
-------- ------- ------- -------- --------
Income tax benefit................. (30,000) (6,000) (6,500) (110,000) (152,500)
-------- ------- ------- -------- --------
Net unusual charges............. $463,104 $42,395 $39,776 $275,567 $820,842
======== ======= ======= ======== ========

In connection with the facility closures, we developed formal plans to exit
certain activities and involuntarily terminate employees. Management's plan to
exit an activity included the identification of duplicate manufacturing and
administrative facilities for closure and the identification of manufacturing
and administrative facilities for consolidation into other facilities.
Management currently anticipates that the facility closures and activities to
which all of these charges relate will be substantially completed within one
year of the commitment dates of the respective exit plans, except for certain
long-term contractual obligations. The following table summarizes the components
of the facility closure costs and related activities in fiscal 2001:

LONG-LIVED
ASSET EXIT
SEVERANCE IMPAIRMENT COSTS TOTAL
--------- --------- --------- ---------

Balance at March 31, 2000 .......................................... $ -- $ -- $ -- $ --
Activities during the year:
First quarter provision .......................................... 62,487 46,646 24,201 133,334
Cash charges ..................................................... (35,800) -- (1,627) (37,427)
Non-cash charges ................................................. -- (46,646) (7,441) (54,087)
--------- --------- --------- ---------
Balance at June 30, 2000 ........................................... 26,687 -- 15,133 41,820
Activities during the year:
Second quarter provision ......................................... 5,677 14,373 5,650 25,700
Cash charges ..................................................... (4,002) -- (4,231) (8,233)
Non-cash charges ................................................. -- (14,373) (8,074) (22,447)
--------- --------- --------- ---------
Balance at September 30, 2000 ...................................... 28,362 -- 8,478 36,840
Activities during the year:
Third quarter provision .......................................... 3,606 16,469 19,703 39,778
Cash charges ..................................................... (7,332) -- (2,572) (9,904)
Non-cash charges ................................................. -- (16,469) (14,070) (30,539)
--------- --------- --------- ---------
Balance at December 31, 2000 ....................................... 24,636 -- 11,539 36,175
Activities during the year:
Fourth quarter provision ......................................... 60,703 155,046 160,368 376,117
Cash charges ..................................................... (13,605) -- (14,686) (28,291)
Non-cash charges ................................................. -- (155,046) (61,878) (216,924)
--------- --------- --------- ---------
Balance at March 31, 2001 .......................................... $ 71,734 $ -- $ 95,343 $ 167,077
========= ========= ========= =========

Of the total pre-tax facility closure costs, $132.5 million relates to
employee termination costs, of which $68.1 million has been classified as a
component of Cost of Sales. As a result of the various exit plans, we identified
11,269 employees to be involuntarily terminated related to the various mergers
and facility closures. As of March 31, 2001, 4,457 employees have been
terminated, and another 6,812 employees have been notified that they are to be
terminated upon completion of the various facility closures and consolidations.
During fiscal 2001, we paid employee termination costs of approximately $60.7
million. The remaining $71.7 million of employee termination costs is classified
as accrued liabilities as of March 31, 2001 and is expected to be paid out
within one year of the commitment dates of the respective exit plans.

pursuant to the exit plans. Since the assets will remain in service from the
date of the decision to dispose of these assets to the anticipated disposal
date, the assets are being depreciated over this expected period. For the assets
that are being held for use, an impairment loss is recognized if the carrying
amounts of these assets exceed the fair value of the assets. Certain other
assets will be held for disposal as these assets are no longer required in
operations. Assets held for disposal are no longer being depreciated. For the
assets that are being held for disposal, an impairment loss is recognized if the
carrying amounts of these assets exceed the fair value less cost to sell. The
impaired long-lived assets consisted primarily of machinery and equipment of
$153.0 million and building and improvements of $76.1 million. The long-lived
asset impairment also includes the write-off of the remaining goodwill and other
intangibles related to certain closed facilities of $3.4 million.

The unusual pre-tax charges also include approximately $209.9 million for
other exit costs, which have been classified as a component of Cost of Sales.
Other exit costs include contractual obligations totaling $85.4 million, which
were incurred directly as a result of the various exit plans. These contractual
obligations consisted of facility lease terminations amounting to $26.5 million,
equipment lease terminations amounting to $31.4 million and payments to
suppliers and other third parties to terminate contractual agreements amounting
to $27.5 million. We expect to make payments associated with its contractual
obligations with respect to facility and equipment leases through the end of
fiscal 2006 and with respect to the other contractual obligations with suppliers
and other third parties through fiscal 2002. Other exit costs also include
charges of $77.0 million relating to asset impairments resulting from customer
contracts that were breached when they were terminated by us as a result of
various facility closures. These asset impairments were determined based on the
difference between the carrying amount and the realizable value of the impaired
inventory and accounts receivable. We disposed of the impaired assets, primarily
through scrapping and write-offs, by the end of fiscal 2001. Also included in
other exit costs were charges amounting to $16.1 million for the incremental
costs for warranty work incurred by us for products sold prior to the commitment
dates of the various exit plans. Other exit costs also include $11.6 million of
facility refurbishment and abandonment costs related to certain building repair
work necessary to prepared the exited facilities for sale or return the
facilities to the landlord. The remaining $19.8 million of other exit costs
recorded were primarily associated with incremental amounts of legal and
environmental costs, incurred directly as a result of the various exit plans and
facility closures. We paid approximately $23.1 million of other exit costs
during fiscal 2001. Additionally, approximately $91.5 million of other exit
costs were non-cash charges utilized during fiscal 2001. The remaining $95.3
million is classified in accrued liabilities as of March 31, 2001 and are
expected to be substantially paid out within one year from the commitment dates
of the respective exit plans, except for certain long-term contractual
obligations.

The direct transaction costs include approximately $64.3 million of costs
primarily related to investment banking and financial advisory fees as well as
legal and accounting costs associated with the merger transactions. Other direct
transaction costs which totaled approximately $38.1 million were mainly
comprised of accelerated debt prepayment expense, accelerated executive stock
compensation and benefit-related expenses. We paid approximately $70.9 million
of the direct transaction costs during fiscal 2001. Additionally, approximately
$28.2 million of the direct transaction costs were non-cash charges utilized
during fiscal 2001. The remaining $3.3 million is classified in accrued
liabilities as of March 31, 2001 and is expected to be substantially paid out in
the first quarter of fiscal 2002.

FISCAL 2000

In fiscal 2000, we recognized unusual pre-tax charges in the Americas
business segment of $7.5 million related to the operations of Chatham, which
included severance and related charges of approximately $4.4 million and other
facility exit costs of approximately $3.1 million.

Additionally, unusual pre-tax charges in the Western Europe business
segment of $3.5 million were recorded in fiscal 2000, related to the Kyrel EMS
Oyj merger. The unusual charges consisted of a transfer tax of $1.7 million,
approximately $0.4 million of investment banking fees and approximately $1.4
million of legal and accounting fees.

FISCAL 1999

During fiscal 1999, we recognized unusual pre-tax charges in the Americas
business segment of approximately $79.3 million, substantially all of which
related to the operations of our wholly owned subsidiary, Orbit Semiconductor,
Inc. ("Orbit").

We decided to sell Orbit's 6-inch, 0.6 micron wafer fabrication facility
("Fab") and adopt a fabless manufacturing strategy to complement Orbit's design
and engineering services. The charges were primarily due to the impaired
recoverability of inventories, intangible assets and fixed assets, and other
costs associated with the exit of semiconductor manufacturing. The Fab was
ultimately sold in January 1999.

The components of the unusual charges recorded in fiscal 1999 are as
follows:

FIRST FOURTH
QUARTER QUARTER TOTAL NATURE OF
CHARGES CHARGES CHARGES CHARGES
------- ------- ------- ---------

Severance ............................................. $ 498 $ 2,371 $ 2,869 cash
Long-lived asset impairment ........................... 38,257 16,538 54,795 non-cash
Losses on sales contracts ............................. 2,658 3,100 5,758 non-cash
Incremental uncollectible accounts receivable ......... 900 -- 900 non-cash
Incremental sales returns and allowances .............. 1,500 500 2,000 non-cash
Inventory write-downs ................................. 5,500 250 5,750 non-cash
Acquired in-process research and development .......... -- 2,000 2,000 non-cash
Other exit costs ...................................... 1,845 3,369 5,214 cash/non-cash
------- ------- -------
Total Unusual Pre-Tax Charges .................. $51,158 $28,128 $79,286
======= ======= =======

Of the total unusual pre-tax charges, approximately $2.9 million relates
to employee termination costs. As a result of the closure of the fabrication
facility, 460 employees were terminated. The terminations were completed and
related severance costs were fully paid out by the first quarter of fiscal 2000.

The unusual pre-tax charges include approximately $54.8 million for the
write-down of long-lived assets to fair value. Included in the long-lived asset
impairment are charges of $50.7 million related to the Fab which was written
down to its net realizable value based on its sales price. The impaired
long-lived assets consisted primarily of machinery and equipment of $43.4
million and building and improvements of $7.3 million. The long-lived asset
impairment also includes the write-off of the remaining goodwill of $0.6
million. The remaining $3.5 million of asset impairment relates to the
write-down to net realizable value of a facility we exited during fiscal 1999.

We entered into certain non-cancelable sales contracts to provide
semiconductors to customers at fixed prices. Because we were obligated to
fulfill the terms of the agreements at selling prices which were not sufficient
to cover the cost to produce or acquire such products, a liability for losses on
sales contracts was recorded for the estimated future amount of such losses. The
unusual pre-tax charges include approximately $8.7 million for losses on sales
contracts, incremental amounts of uncollectible accounts receivable, and
estimated incremental costs for sales returns and allowances, all of which were
fully utilized by the end of fiscal 2000.

The unusual pre-tax charges also include approximately $10.9 million for
losses on inventory write-downs and other exit costs. We have written off and
disposed of approximately $5.8 million of inventory. The remaining $5.1 million
relates primarily to incremental costs and contractual obligations for items
such as lease termination costs, litigation, environmental clean-up costs, and
other exit costs incurred directly as a result of the exit plan, all of which
were paid out or non-cash charges utilized by the end of fiscal 2000.

The purchase price of Advanced Component Labs ("ACL") included in-process
research and development costs totaling $2.0 million which had not reached
technological feasibility and had no probable alternative future use.
Accordingly, we wrote-off $2.0 million of in-process research and development in
fiscal 1999.

Selling, General and Administrative Expenses

Selling, general and administrative expenses, or SG&A, for fiscal 2001
increased to $430.1 million from $320.0 million in fiscal 2000 but decreased as
a percentage of net sales to 3.6% in fiscal 2001 from 4.6% in fiscal 2000. SG&A
for fiscal 2000 increased to $320.0 million from $240.5 million in fiscal 1999
but decreased as a percentage of net sales to 4.6% in fiscal 2000 from 6.1% in
fiscal 1999. The dollar increase in SG&A for each fiscal year was primarily due
to our continued investment in infrastructure such as sales, marketing,
supply-chain management and other related corporate and administrative expenses
as well as information systems necessary to support the expansion of our
business. The decline in SG&A as a percentage of each fiscal year's net sales
reflects our continued focus on controlling operating expenses relative to sales
growth and gross margin levels.

Goodwill and Intangible Assets Amortization

Goodwill and intangible assets amortization in fiscal 2001 increased to
$63.5 million from $41.3 million in fiscal 2000. This increase was directly the
result of the various acquisitions in fiscal 2001 which were accounted for as
purchase transactions, which primarily include Irish Express Cargo Ltd, Fico,
Inc. (United States), Li Xin Industries, Ltd. and Ojala Yhtyma Oy.

Goodwill and intangible assets amortization in fiscal 2000 increased to
$41.3 million from $29.2 million in fiscal 1999 primarily related to the
acquisition of ACL which was completed in late March 1999, and various business
acquisitions completed during fiscal 2000.

Interest and Other Expense, Net

Interest and other expense, net decreased to $67.1 million in fiscal 2001
from $69.9 million in fiscal 2000. The following table sets forth information
concerning the components of interest and other expense.

1999 2000 2001
--------- --------- ---------

Interest expense ...................................... $ 61,430 $ 84,198 $ 135,243
Interest income ....................................... (11,374) (22,681) (32,219)
Foreign exchange (gain) loss .......................... 3,543 2,128 (4,028)
Other (income) expense, net ........................... (1,365) 6,267 (31,881)
--------- --------- ---------
Total interest and other expense, net ....... $ 52,234 $ 69,912 $ 67,115
========= ========= =========

Net interest expense increased to $103.0 million in fiscal 2001 from
$61.5 million in fiscal 2000. The increase was primarily attributable to the
interest expense associated with the approximately $645.0 million of senior
subordinated notes, consisting of $500.0 million of 9.875% notes and euros 150.0
million of 9.75% notes we issued in June 2000.

Net interest expense increased to $61.5 million in fiscal 2000 from $50.1
million in fiscal 1999. The increase was attributable to the increased bank
borrowings to finance our capital expenditures, expansion of various facilities
and industrial parks and purchases of manufacturing assets offset by increased
interest income from our deployment of equity offering proceeds in money market
funds and corporate debt securities. Fiscal 2000 net interest expense included
accelerated amortization of approximately $1.0 million in bank arrangement fees
associated with the termination of a credit facility.

In fiscal 2001, there was $4.0 million of foreign exchange gain compared
to foreign exchange loss of $2.1 million in fiscal 2000. The foreign exchange
gain generated in fiscal 2001 mainly relates to net non-functional currency
monetary liabilities in Singapore, Germany and Hungary. In fiscal 2000, there
was $2.1 million of foreign exchange loss compared to $3.5 million foreign
exchange loss in fiscal 1999. The foreign exchange loss in fiscal 2000 mainly
relates to net non-functional currency monetary liabilities in Austria, Finland
and Hungary.

Other (income) expense, net changed from $6.3 million of net other
expense in fiscal 2000 to $31.9 million of net other income in fiscal 2001
primarily due to realized gains on sales of marketable equity securities. The
other expense in fiscal 2000 was comprised mainly of a loss on disposal of fixed
assets in Hungary offset by compensation received in a settlement of a claim.

Provision for Income Taxes

Certain of our subsidiaries have, at various times, been granted tax
relief in their respective countries, resulting in lower income taxes than would
otherwise be the case under ordinary tax rates. See Note 7, "Income Taxes," of
the Notes to Consolidated Financial Statements included in Item 8, "Financial
Statements and Supplementary Data."

The consolidated effective tax rate for a particular year will vary
depending on the mix of earnings, operating loss carryforwards, income tax
credits, and changes in previously established valuation allowances for deferred
tax assets based upon management's current analysis of the realizability of
these deferred tax assets. Our consolidated effective tax rate was a 19% benefit
for fiscal year 2001 compared to a 13% provision for fiscal year 2000, however,
excluding the unusual charges in fiscal 2001 the effective tax rate was 11%. The
slight decrease in the effective tax rate was due primarily to the expansion of
operations and increase in profitability in countries with lower tax rates. See
Item 1, "Business--Risk Factors--We are subject to the risk of increased income
taxes."

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2001 we had cash and cash equivalents balances totaling
$631.6 million, total bank and other debts amounting to $1.2 billion and $500.0
million available for borrowing under our credit facilities subject to
compliance with certain financial ratios. Our working capital increased to $1.9
billion at March 31, 2001 from $1.2 billion at March 31, 2000. Additionally, our
debt to equity ratio improved to 31% at March 31, 2001 from 49% at March 31,
2000.

Cash used in operating activities was $469.7 million and $34.4 million in
fiscal 2001 and 2000, respectively. In fiscal 1999, operating activities
provided cash amounting to $160.9 million. Operating activities used cash in
fiscal 2001 primarily as a result of significant increases in accounts
receivable and inventory, partially offset by an increase in accounts payable
combined with the $446.0 million net

loss. Cash provided by operating activities decreased in fiscal 2000 from fiscal
1999 because of increases in accounts receivable, inventories and other current
assets, offset by increases in net income and accounts payable.

Accounts receivable, net of allowance for doubtful accounts, increased to
$1.7 billion at March 31, 2001 from $1.1 billion at March 31, 2000. The increase
in accounts receivable was primarily due to an increase of approximately 74% in
net sales in fiscal 2001.

Inventories increased to $1.8 billion at March 31, 2001 from $1.1 billion
at March 31, 2000. The increase in inventories was primarily the result of
increased purchases of materials to support our growing sales, combined with the
inventory acquired in connection with the manufacturing facility purchased
during the fourth quarter of fiscal 2001. Additionally, many of our customers
have experienced a slowdown in demand for their products since late 2000 which
in some cases has resulted in the deferral of purchases, thereby adversely
affecting our inventory levels at the end of our fiscal year.

Cash used in investing activities was $1.1 billion, $879.4 million and
$572.2 million in fiscal 2001, 2000 and 1999, respectively. Cash used in
investing activities in fiscal 2001 were primarily related to:

- $711.2 million of net capital expenditures to purchase equipment
and the continued expansion of our manufacturing facilities
worldwide, and specifically for our continued expansion of our
industrial park strategy with new parks in Gdansk, Poland, Sao
Paulo, Brazil and Nyiregyhaza, Hungary;

- $239.0 million for purchases of manufacturing facilities and
related asset purchases, comprised primarily of Bosch Telecom
GmbH's Denmark facility, Ascom's Switzerland facility and Siemens
Mobile's Italy and United States facilities;

- $54.4 million primarily for minority investment in the stocks of
various technology companies in software and related industries;
and

- $158.9 million for acquisitions of businesses.

Additionally, we received proceeds of $46.9 million from the sale of
marketable securities of various technology companies.

Cash used in investing activities in fiscal 2000 were primarily related
to:

- $462.4 million of net capital expenditures to purchase equipment
and continued expansion of our manufacturing facilities in Brazil,
China, Hungary, Mexico, Sweden and United States;

- $249.8 million for acquisitions of manufacturing facilities and
assets, comprised primarily of Cabletton Systems Inc.'s New
Hampshire and Ireland facilities, Fujitsu Siemens Computer's
Germany facility, Ericsson Business Network's Sweden facility, ABB
Automation Product's Sweden facility and Ericsson AG's Austria
facility;

- $42.4 million for minority investment in the stocks of various
technology companies in software and related industries;

- $75.0 million of funding for a loan to another company, and;

- $85.7 million for acquisitions of businesses.

Additionally, we received proceeds of $35.9 million from the sale of
certain subsidiaries.

Cash provided by financing activities was $1.5 billion, $1.4 billion and
$501.8 million in fiscal 2001, 2000, and 1999, respectively. Cash provided by
financing activities in fiscal 2001 were primarily related to our completion of
two public stock offerings. In June 2000, we sold a total of 11.0 million
ordinary shares at a price of $35.63 per share resulting in net proceeds to us
of approximately $375.9 million. In July 2000, we sold an additional 1.65
million ordinary shares at a price of $35.63 per share resulting in net proceeds
of $55.7 million, which represented the overallotment option on the public stock
offering completed in June 2000. Also, in February 2001, we completed a public
stock offering of 27.0 million ordinary shares at a price of $37.94 per share
resulting in net proceeds of $990.1 million. Additionally, cash provided by
financing activities in fiscal 2001 resulted from:

- $1.4 billion of bank borrowings and long-term debt, which
primarily resulted from the issuance of approximately $645.0
million of senior subordinated notes, consisting of $500.0 million
of 9.875% notes and euros 150.0 million of 9.75% notes we issued
in June 2000;

- $100.0 million of proceeds from an equity instrument issued to
Motorola;

- $78.5 million in proceeds from ordinary shares issued under our
stock plans.

Additionally, our financing activities used $1.5 billion for the
repayment of bank borrowings and long-term debt and $31.8 million for the
repayment of capital lease obligations. The repayments of our bank borrowings
and long-term debt primarily resulted from the use of the proceeds from our
issuance of the senior notes in June 2000. See Note 4, "Bank Borrowings and
Long-Term Debt," of the Notes to Consolidated Financial Statements in Item 8,
"Financial Statements and Supplementary Data" for a description of our bank
credit facilities and long-term debt.

Cash provided by financing activities in fiscal 2000 was primarily
related to the completion of three public stock offerings. In February 2000, we
sold a total of 17.2 million ordinary shares at a price of $29.50 per share
resulting in net proceeds to us of approximately $494.2 million. In October
1999, we sold a total of 27.6 million ordinary shares at a price of $16.92 per
share resulting in net proceeds to us of approximately $448.9 million. In
addition, in October 1999, DII sold a total of 13.8 million shares of its common
stock in a public offering at a price of $16.50 per share, resulting in net
proceeds of approximately $215.7 million. Cash provided by financing activities
in fiscal 2000 also included:

- $181.5 million of net proceeds from bank borrowings, capital
leases, and long-term debts;

- $26.9 million in proceeds from ordinary shares issued under our
stock plans.

Additionally, we used cash of approximately $26.6 million for the payment
of dividends to former shareholders of acquired companies prior to their
acquisition by us.

In April 2001, we entered into a definitive agreement with Ericsson with
respect to our management of the operations of Ericsson's mobile telephone
operations. Operations under this arrangement commenced in the first quarter of
fiscal 2002. Under this agreement, we are to provide a substantial portion of
Ericsson's mobile phone requirements. In connection with this relationship, we
purchased certain equipment, inventory and other assets, and assumed certain
accrued expenses, from Ericsson at their net book value of approximately $450.0
million. Additionally, in the first quarter of fiscal 2002, we announced our
intentions to purchase the manufacturing facility and related assets from
Alcatel located in Laval, France. The estimated purchase price is subject to
final negotiations, due diligence and working capital levels at the time of
closing, but is not expected to be a material cash requirement.

We anticipate that our working capital requirements and capital
expenditures will continue to increase in order to support the anticipated
continued growth in our operations. In addition to our anticipated manufacturing
facilities and related asset purchases, we also anticipate incurring significant
capital expenditures and operating lease commitments in order to support our
anticipated expansions of our industrial parks in Brazil, China, Hungary, Mexico
and Poland as well as our regional manufacturing facilities in the Czech
Republic and Ireland. We intend to continue our acquisition strategy and it is
possible that future acquisitions may be significant and may require the payment
of cash. Future liquidity needs will also depend on fluctuations in levels of
inventory, the timing of expenditures by us on new equipment, the extent to
which we utilize operating leases for the new facilities and equipment, levels
of shipments and changes in volumes of customer orders.

Historically, we have funded our operations from the proceeds of public
offerings of equity securities and debt offerings, cash and cash equivalents
generated from operations, bank debt, sales of accounts receivable and capital
equipment lease financings. We believe that our existing cash balances, together
with anticipated cash flows from operations and borrowings available under our
credit facility will be sufficient to fund our operations through at least the
next twelve months. We anticipate that we will continue to enter into debt and
equity financings, sales of accounts receivable and lease transactions to fund
our acquisitions and anticipated growth. Such financings and other transactions
may not be available on terms acceptable to us or at all. See Item 1,
"Business--Risk Factors--If we do not manage effectively the expansion of our
operations, our business may be harmed."

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

A portion of our exposure to market risk for changes in interest rates
relates to our investment portfolio. We do not use derivative financial
instruments in our investment portfolio. We place cash and cash equivalents with
various major financial institutions and limit the amount of credit exposure to
the greater of 20% of the total investment portfolio or $10 million in any
single institution. We protect our

invested principal funds by limiting default risk, market risk and reinvestment
risk. We mitigate default risk by investing in investment grade securities and
by constantly positioning the portfolio to respond appropriately to a reduction
in credit rating of any investment issuer, guarantor or depository to levels
below the credit ratings dictated by our investment policy. The portfolio
includes only marketable securities with active secondary or resale markets to
ensure portfolio liquidity. Maturities of short-term investments are timed,
whenever possible, to correspond with debt payments and capital investments. As
of March 31, 2001, the outstanding amount in the investment portfolio was $349.8
million, comprised mainly of money market funds with an average return of 5.26%.

We also have exposure to interest rate risk with certain variable rate lines of
credit. These credit lines are located throughout the world and are based on a
spread over that country's inter-bank offering rate. We primarily enter into
debt obligations to support general corporate purposes including capital
expenditures, acquisitions and working capital needs. As of March 31, 2001, the
outstanding short-term debt, including capitalized leases was $325.7 million.
The following table presents principal cash flows and related weighted average
interest rates by expected maturity dates for debt obligations. The variable
interest rate for future years assumes the same rate as March 31, 2001. The
information is presented in U.S. dollar equivalents, which is our reporting
currency. The instruments' actual cash flows are denominated in both U.S.
dollars ($US) and Euro (E), as indicated in parentheses.

EXPECTED FISCAL YEAR OF MATURITY
--------------------------------------------------------------------------------------------------
Fair
2002 2003 2004 2005 2006 THEREAFTER Total Value
--------- -------- -------- ------- -------- ---------- ----------- ---------
($US EQUIVALENTS IN THOUSANDS)

Long-term Debt
Fixed Rate ($US) $ 280,833 $ 39.831 $ 13,996 $ 9,593 $ 11,727 $ 652,627 $ 1,008,607 $ 998,862
Average interest rate 6.33% 6.40% 6.41% 6.46% 6.54% 9.65%

Fixed Rate (E) -- -- -- -- -- $ 133,202 $ 133,202 $ 131,871
Average interest rate -- -- -- -- -- 9.75%

Variable Rate ($US) $ 17,219 $ 145 $ 145 $ 145 $ 145 $ 17,969 $ 35,768 $ 18,389
Average interest rate 8.12% 7.4% 7.4% 7.4% 7.4% 8.11%

FOREIGN CURRENCY EXCHANGE RISK

We transact business in various foreign countries. We manage our foreign
currency exposure by borrowing in various foreign currencies and by entering
into foreign exchange forward contracts only with respect to transaction
exposure. We try to maintain a fully hedged position for all certain, known
transaction exposures. These exposures are primarily, but not limited to,
revenues, vendor payments, accrued expenses and inter-company balances in
currencies other than the functional currency unit of the operating entity. We
will first evaluate and, to the extent possible, use non-financial techniques,
such as currency of invoice, leading and lagging payments, receivable management
or local borrowing to reduce transaction exposure before taking steps to
minimize remaining exposure with financial instruments. The credit risk of these
forward contracts is minimal since the contracts are with large financial
institutions. We hedge committed exposures and these forward contracts generally
do not subject us to risk of accounting losses. The gains and losses on forward
contracts generally offset the gains and losses on the asset, liabilities and
transactions hedged. Our off-balance sheet financial instruments consist of
$200.4 million of aggregate foreign currency forward contracts outstanding as of
March 31, 2001, of which over 70% will settle in Swedish Kroner. These foreign
exchange contracts expire in less than three months and will settle in Euro,
Swiss Franc, Swedish Kronor, British Pounds and United States dollar.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Flextronics International Ltd.

We have audited the accompanying consolidated balance sheets of
Flextronics International Ltd. (a Singapore Company) and subsidiaries as of
March 31, 2000 and 2001 and the related consolidated statements of operations,
comprehensive income (loss), shareholders' equity and cash flows for each of the
three years in the period ended March 31, 2001. These financial statements and
the schedule referred to below are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and the schedule based on our audits. We did not audit the
consolidated balance sheet of The DII Group, Inc., a company acquired during
fiscal 2001 in a transaction accounted for as a pooling of interests, as of
January 2, 2000, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the two years in the period
ended January 2, 2000, as discussed in Note 11. Such statements are included in
the consolidated financial statements of Flextronics International Ltd. and
reflect total assets of 22% of the related consolidated total as of March 31,
2000, and reflect total revenues of 23% and 19% of the related consolidated
totals for the years ended March 31, 1999 and 2000, respectively. These
statements were audited by other auditors whose report has been furnished to us
and our opinion, insofar as it relates to amounts included for The DII Group,
Inc., is based solely upon the report of the other auditors.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit and the report of other auditors provide a reasonable basis for our
opinion.

In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Flextronics International Ltd. and
subsidiaries as of March 31, 2000 and 2001, and the results of their operations
and their cash flows for each of the three years in the period ended March 31,
2001 in conformity with accounting principles generally accepted in the United
States.

Our audits and the report of other auditors were made for the purpose of
forming an opinion on the basic financial statements taken as a whole. The
schedule listed under Item 14(a) 2 is presented for the purpose of complying
with the Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

ARTHUR ANDERSEN LLP

San Jose, California
April 20, 2001

INDEPENDENT AUDITORS' REPORT

Board of Directors
The DII Group, Inc.

We have audited the consolidated balance sheet of The DII Group, Inc. and
Subsidiaries (the "Company") as of January 2, 2000, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
two years in the period ended January 2, 2000 (none of which are presented
herein). These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of January 2, 2000
and the results of its operations and its cash flows for each of the two years
in the period ended January 2, 2000, in conformity with accounting principles
generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Denver, Colorado
March 28, 2000

FLEXTRONICS INTERNATIONAL LTD.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

MARCH 31,
-----------------------------
2000 2001
----------- -----------

ASSETS

CURRENT ASSETS:
Cash and cash equivalents .................................................... $ 747,049 $ 631,588
Accounts receivable, less allowance for doubtful accounts of $24,957 and
$44,419 as of March 31, 2000 and 2001, respectively ....................... 1,057,949 1,651,252
Inventories, net ............................................................. 1,142,594 1,787,055
Other current assets ......................................................... 275,152 386,152
----------- -----------
Total current assets ................................................. 3,222,744 4,456,047
----------- -----------
Property, plant and equipment, net ............................................. 1,323,732 1,828,441
Goodwill and other intangibles, net ............................................ 390,351 983,384
Other assets ................................................................... 198,116 303,783
----------- -----------
Total assets ......................................................... $ 5,134,943 $ 7,571,655
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Bank borrowings and current portion of long-term debt ........................ $ 487,773 $ 298,052
Current portion of capital lease obligations ................................. 24,037 27,602
Accounts payable ............................................................. 1,227,142 1,480,468
Other current liabilities .................................................... 317,879 730,246
Deferred revenue ............................................................. 4,378 4,938
----------- -----------
Total current liabilities ............................................ 2,061,209 2,541,306
----------- -----------
Long-term debt, net of current portion ......................................... 593,830 879,525
Capital lease obligations, net of current portion .............................. 51,437 37,788
Other liabilities .............................................................. 51,839 82,675
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Ordinary shares, S$.01 par value; authorized -- 1,500,000,000
shares; issued and outstanding - 411,596,229 and 481,531,339 as
of March 31, 2000 and 2001, respectively .................................. 2,467 2,871
Additional paid-in capital ................................................... 1,997,016 4,266,908
Retained earnings (deficit) .................................................. 373,735 (132,892)
Accumulated other comprehensive income (loss) ................................ 8,494 (106,526)
Deferred compensation ........................................................ (5,084) --
----------- -----------
Total shareholders' equity ........................................... 2,376,628 4,030,361
----------- -----------
Total liabilities and shareholders' equity ........................... $ 5,134,943 $ 7,571,655
=========== ===========

The accompanying notes are an integral part of these consolidated financial
statements.

FLEXTRONICS INTERNATIONAL LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

YEARS ENDED MARCH 31,
-------------------------------------------------
1999 2000 2001
------------ ------------ ------------

Net sales ........................................ $ 3,952,786 $ 6,959,122 $ 12,109,699
Cost of sales .................................... 3,512,229 6,335,242 11,127,896
Unusual charges .................................. 77,286 7,519 510,495
------------ ------------ ------------
Gross profit ........................... 363,271 616,361 471,308
Selling, general and administrative .............. 240,512 319,952 430,109
Goodwill and intangibles amortization ............ 29,156 41,326 63,541
Unusual charges .................................. 2,000 3,523 462,847
Interest and other expense, net .................. 52,234 69,912 67,115
------------ ------------ ------------
Income (loss) before income taxes ...... 39,369 181,648 (552,304)
Provision for (benefit from) income taxes ........ (11,634) 23,080 (106,285)
------------ ------------ ------------
Net income (loss) ...................... $ 51,003 $ 158,568 $ (446,019)
============ ============ ============
Earnings (loss) per share:
Basic .......................................... $ 0.17 $ 0.44 $ (1.01)
============ ============ ============
Diluted ........................................ $ 0.17 $ 0.42 $ (1.01)
============ ============ ============
Shares used in computing per share amounts:
Basic .......................................... 299,984 356,338 441,991
============ ============ ============
Diluted ........................................ 329,352 383,119 441,991
============ ============ ============

The accompanying notes are an integral part of these consolidated financial
statements.

FLEXTRONICS INTERNATIONAL LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(IN THOUSANDS)

YEARS ENDED MARCH 31,
-----------------------------------------
1999 2000 2001
--------- --------- ---------

Net income (loss) ......................................................... $ 51,003 $ 158,568 $(446,019)
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax ..................... (12,793) (16,783) (49,844)
Unrealized gain (loss) on available-for-sale securities, net of tax ..... -- 59,704 (55,851)
--------- --------- ---------
Comprehensive income (loss) ............................................... $ 38,210 $ 201,489 $(551,714)
========= ========= =========

The accompanying notes are an integral part of these consolidated financial
statements.

FLEXTRONICS INTERNATIONAL LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1999, 2000 AND 2001
(IN THOUSANDS)

ORDINARY SHARES ADDITIONAL RETAINED
-------------------------- PAID-IN EARNINGS
SHARES AMOUNT CAPITAL (DEFICIT)
----------- ----------- ----------- -----------

BALANCE AT MARCH 31, 1998 ............................................... 288,370 $ 1,753 $ 467,584 $ 202,843
Issuance of ordinary shares for acquisitions .......................... 511 3 4,798 --
Issuance of common stock .............................................. 4,144 24 49,056 --
Exercise of stock options ............................................. 5,482 32 11,370 --
Ordinary shares issued under Employee Stock Purchase Plan ............. 2,957 17 7,304 --
Tax benefit on employee stock plans ................................... -- -- 1,635 --
Sale of ordinary shares in public offering, net of offering costs ..... 21,600 126 193,874 --
Ordinary share repurchase ............................................. (4,684) (27) (24,308) --
Conversion of convertible notes ....................................... 2 -- 15 --
Dividends paid to former shareholders ................................. -- -- -- (9,227)
Deferred stock compensation ........................................... -- -- (938) --
Amortization of deferred stock compensation ........................... -- -- -- --
Net income ............................................................ -- -- -- 51,003
Foreign currency translation ........................................... -- -- -- --
----------- ----------- ----------- -----------
BALANCE AT MARCH 31, 1999 ............................................... 318,382 1,928 710,390 244,619
Adjustment to conform fiscal year of pooled entity .................... -- -- -- (818)
Impact of immaterial pooling of interests acquisitions ................ 1,847 6 1,607 (2,062)
Issuance of common stock .............................................. 2,448 14 9,975 --
Exercise of stock options ............................................. 4,991 29 18,068 --
Ordinary shares issued under Employee Stock Purchase Plan ............. 2,118 13 8,822 --
Tax benefit on employee stock plans ................................... -- -- 4,785 --
Sale of ordinary shares in public offering, net of offering costs ..... 67,018 391 1,158,382 --
Conversion of convertible notes ....................................... 14,792 86 84,988 --
Dividends paid to former shareholders ................................. -- -- -- (26,572)
Deferred stock compensation ........................................... -- -- (1) --
Amortization of deferred stock compensation ........................... -- -- -- --
Net income ............................................................ -- -- -- 158,568
Change in unrealized gain (loss) on available for sale securities ..... -- -- -- --
Foreign currency translation .......................................... -- -- -- --
----------- ----------- ----------- -----------
BALANCE AT MARCH 31, 2000 ............................................... 411,596 2,467 1,997,016 373,735
Adjustment to conform fiscal year of pooled entities .................. 6,882 40 4,056 (58,306)
Impact of immaterial pooling of interests acquisitions ................ 728 4 2,482 (2,112)
Issuance of ordinary shares for acquisitions .......................... 10,825 63 365,422 --
Exercise of stock options ............................................. 11,405 66 69,504 --
Ordinary shares issued under Employee Stock Purchase Plan ............. 445 3 8,911 --
Tax benefit on employee stock plans ................................... -- -- 11,537 --
Sale of ordinary shares in public offering, net of offering costs ..... 39,650 228 1,421,443 --
Dividends paid to former shareholders ................................. -- -- -- (190)
Amortization of deferred stock compensation ........................... -- -- -- --
Issuance of equity instrument (Note 9) ................................ -- -- 386,537 --
Net loss .............................................................. -- -- -- (446,019)
Change in unrealized gain (loss) on available for sale securities ..... -- -- -- --
Foreign currency translation .......................................... -- -- -- --
----------- ----------- ----------- -----------
BALANCE AT MARCH 31, 2001 ............................................... 481,531 $ 2,871 $ 4,266,908 $ (132,892)
=========== =========== =========== ===========

ACCUMULATED
OTHER TOTAL
COMPREHENSIVE DEFERRED SHAREHOLDERS'
INCOME (LOSS) COMPENSATION EQUITY
------------- ------------ -------------

BALANCE AT MARCH 31, 1998 ............................................... $ (17,600) $ (12,913) $ 641,667
Issuance of ordinary shares for acquisitions .......................... -- -- 4,801
Issuance of common stock .............................................. -- -- 49,080
Exercise of stock options ............................................. -- -- 11,402
Ordinary shares issued under Employee Stock Purchase Plan ............. -- -- 7,321
Tax benefit on employee stock plans ................................... -- -- 1,635
Sale of ordinary shares in public offering, net of offering costs ..... -- -- 194,000
Ordinary share repurchase ............................................. -- -- (24,335)
Conversion of convertible notes ....................................... -- -- 15
Dividends paid to former shareholders ................................. -- -- (9,227)
Deferred stock compensation ........................................... -- 1,172 234
Amortization of deferred stock compensation ........................... -- 2,247 2,247
Net income ............................................................ -- -- 51,003
Foreign currency translation ........................................... (14,538) -- (14,538)
----------- ----------- -----------
BALANCE AT MARCH 31, 1999 ............................................... (32,138) (9,494) 915,305
Adjustment to conform fiscal year of pooled entity .................... -- -- (818)
Impact of immaterial pooling of interests acquisitions ................ -- -- (449)
Issuance of common stock .............................................. -- -- 9,989
Exercise of stock options ............................................. -- -- 18,097
Ordinary shares issued under Employee Stock Purchase Plan ............. -- -- 8,835
Tax benefit on employee stock plans ................................... -- -- 4,785
Sale of ordinary shares in public offering, net of offering costs ..... -- -- 1,158,773
Conversion of convertible notes ....................................... -- -- 85,074
Dividends paid to former shareholders ................................. -- -- (26,572)
Deferred stock compensation ........................................... -- 361 360
Amortization of deferred stock compensation ........................... -- 4,049 4,049
Net income ............................................................ -- -- 158,568
Change in unrealized gain (loss) on available for sale securities ..... 59,704 -- 59,704
Foreign currency translation .......................................... (19,072) -- (19,072)
----------- ----------- -----------
BALANCE AT MARCH 31, 2000 ............................................... 8,494 (5,084) 2,376,628
Adjustment to conform fiscal year of pooled entities .................. (3,787) -- (57,997)
Impact of immaterial pooling of interests acquisitions ................ -- -- 374
Issuance of ordinary shares for acquisitions .......................... -- -- 365,485
Exercise of stock options ............................................. -- -- 69,570
Ordinary shares issued under Employee Stock Purchase Plan ............. -- -- 8,914
Tax benefit on employee stock plans ................................... -- -- 11,537
Sale of ordinary shares in public offering, net of offering costs ..... -- -- 1,421,671
Dividends paid to former shareholders ................................. -- -- (190)
Amortization of deferred stock compensation ........................... -- 5,084 5,084
Issuance of equity instrument (Note 9) ................................ -- -- 386,537
Net loss .............................................................. -- -- (446,019)
Change in unrealized gain (loss) on available for sale securities ..... (55,851) -- (55,851)
Foreign currency translation .......................................... (55,382) -- (55,382)
----------- ----------- -----------
BALANCE AT MARCH 31, 2001 ............................................... $ (106,526) $ -- $ 4,030,361
=========== =========== ===========

The accompanying notes are an integral part of these consolidated financial
statements.

FLEXTRONICS INTERNATIONAL LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

YEARS ENDED MARCH 31,
-----------------------------------------------
1999 2000 2001
----------- ----------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ....................................................... $ 51,003 $ 158,568 $ (446,019)
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Depreciation, amortization and impairment charges ..................... 180,153 187,597 518,985
Loss (gain) on sales of equipment ..................................... (427) 2,818 (1,382)
Provision for doubtful accounts ....................................... 1,149 12,534 9,429
Provision for inventories ............................................. 7,624 32,345 33,634
Equity in earnings of associated companies ............................ (2,529) (1,591) (79)
In-process research and development ................................... 2,000 -- --
Gain on sales of subsidiaries and long-term investments ............... (67) (365) --
Amortization of deferred stock compensation ........................... 2,247 4,049 5,084
Non-cash charge from issuance of equity instrument .................... -- -- 286,537
Minority interest expense and other non-cash unusual charges .......... 11,553 (2,414) 139,067
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable ................................................. (180,873) (444,306) (581,225)
Inventories ......................................................... (112,381) (597,698) (559,842)
Other current assets ................................................ (30,848) (89,464) (159,902)
Other current liabilities, including accounts payable ............... 253,645 721,965 464,009
Deferred revenue .................................................... 314 (2,292) 1,723
Deferred income taxes ............................................... (21,681) (16,107) (179,744)
----------- ----------- -----------
Net cash provided by (used in) operating activities ............ 160,882 (34,361) (469,725)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net of proceeds
from sale of equipment ............................................. (322,185) (462,398) (711,227)
Purchases of OEM facilities and related assets .......................... (104,900) (249,755) (239,042)
Proceeds from sales of subsidiaries and investments ..................... -- 35,871 46,910
Other investments and notes receivable .................................. (15,250) (117,391) (54,398)
Acquisitions of businesses, net of cash acquired ........................ (130,441) (85,743) (158,882)
Other ................................................................... 572 -- --
----------- ----------- -----------
Net cash used in investing activities .......................... (572,204) (879,416) (1,116,639)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank borrowings and proceeds from long-term debt ........................ 497,188 342,691 1,420,594
Repayments of bank borrowings and long-term debt ........................ (178,872) (120,231) (1,451,114)
Repayments of capital lease obligations ................................. (19,337) (40,930) (31,788)
Dividends paid to former shareholders ................................... (9,227) (26,572) (190)
Proceeds from exercise of stock options and Employee Stock
Purchase Plan ......................................................... 18,723 26,932 78,484
Net proceeds from issuance of common stock .............................. 23,621 9,804 --
Net proceeds from sale of ordinary shares in public offering ............ 194,000 1,158,773 1,421,671
Proceeds from issuance of equity instrument ............................. -- -- 100,000
Payments to acquire treasury stock ...................................... (24,335) -- --
Other ................................................................... -- 1,162 --
----------- ----------- -----------
Net cash provided by financing activities ...................... 501,761 1,351,629 1,537,657
----------- ----------- -----------
Effect on cash from:
Exchange rate changes ................................................ (5,872) (8,150) (34,048)
Adjustment to conform fiscal year of pooled entities ................. -- (818) (32,706)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents .................... 84,567 428,884 (115,461)
Cash and cash equivalents, beginning of year ............................ 233,598 318,165 747,049
----------- ----------- -----------
Cash and cash equivalents, end of year .................................. $ 318,165 $ 747,049 $ 631,588
=========== =========== ===========

The accompanying notes are an integral part of these consolidated financial
statements.

FLEXTRONICS INTERNATIONAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2001

1. ORGANIZATION OF THE COMPANY

Flextronics International Ltd. ("Flextronics" or the "Company") was
incorporated in the Republic of Singapore in May 1990. Flextronics provides
electronics manufacturing services to original equipment manufacturers, or OEMs,
primarily in the telecommunications, networking, consumer electronics and
computer industries. The Company provides a network of design, engineering and
manufacturing operations in 27 countries across four continents. Flextronics
provides customers with the opportunity to outsource on a global basis, a
complete product where the Company takes responsibility for engineering, new
product introduction and implementation, manufacturing, supply chain management
and logistics management. The Company provides complete product design and
technology services; logistics services, such as materials procurement,
inventory management, vendor management, packaging and distribution; and
automation of key components of the supply chain through advanced information
technologies.

2. SUMMARY OF ACCOUNTING POLICIES

Principles of consolidation and basis of presentation

All dollar amounts included in the financial statements are expressed in
U.S. dollars unless otherwise designated as Singapore dollars (S$) or Euro.

The accompanying consolidated financial statements include the accounts
of Flextronics and its wholly and majority-owned subsidiaries, after elimination
of all significant intercompany accounts and transactions.

In the current fiscal year, Flextronics acquired 100% of the outstanding
shares of The DII Group, Inc. ("DII"), Lightning Metal Specialties and related
entities ("Lightning"), Chatham Technologies, Inc. ("Chatham"), Palo Alto
Products International Pte. Ltd. ("Palo Alto Products International") and JIT
Holdings Ltd. ("JIT"). These acquisitions were accounted for as pooling of
interests and the consolidated financial statements have been prepared to give
retroactive effect to the mergers.

DII, Lightning and Chatham operated under a different fiscal year end
than Flextronics prior to the respective mergers. However, starting in fiscal
2001, DII, Lightning and Chatham changed their respective year ends to conform
to the Company's March 31 year end. Accordingly, DII's and Lightning's
operations for the three months ended March 31, 2000, and Chatham's operations
for the six months ended March 31, 2000, have been excluded from the
consolidated results of operations for fiscal 2001 and reported as an adjustment
to retained earnings. Palo Alto Products International and JIT operated under
the same fiscal year end as Flextronics, and as such, no alignment of fiscal
year ends was required. See Note 11, "Business Combinations," for further
details on the respective pooling of interests transactions.

A reconciliation of results of operations previously reported by the
separate companies and the combined amounts presented in the financial
statements are summarized below (in thousands).

YEARS ENDED MARCH 31,
-----------------------------
1999 2000
----------- -----------

Net sales:
Flextronics .......................... $ 2,233,208 $ 4,307,193
DII .................................. 925,543 1,339,943
Lightning ............................ 124,795 269,258
Chatham .............................. 206,736 376,997
Palo Alto Products International ..... 95,519 95,458
JIT .................................. 368,229 573,132
Intercompany elimination ............. (1,244) (2,859)
----------- -----------
As restated .......................... $ 3,952,786 $ 6,959,122
=========== ===========

Net income (loss):
Flextronics .......................... $ 60,883 $ 120,915
DII .................................. (17,032) 58,382
Lightning ............................ 5,051 3,461
Chatham .............................. (15,321) (41,711)
Palo Alto Products International ..... 4,949 2,148
JIT .................................. 12,473 15,373
----------- -----------
As restated .......................... $ 51,003 $ 158,568
=========== ===========

Reclassifications

Certain prior years' balances have been reclassified to conform to the
current year's presentation.

Translation of Foreign Currencies

The functional currency of the majority of Flextronics' Asian
subsidiaries and certain other subsidiaries is the U.S. dollar. Accordingly, all
of the monetary assets and liabilities of these subsidiaries are translated into
U.S. dollars at the current exchange rate as of the applicable balance sheet
date, and all non-monetary assets and liabilities are remeasured at historical
rates. Revenues and expenses are translated at the average exchange rate
prevailing during the period. Gains and losses resulting from the translation of
these subsidiaries' financial statements are included in the accompanying
consolidated statements of operations.

The financial position and results of operations of the Company's Danish,
certain Italian, Norwegian, Polish, Swiss and UK subsidiaries are measured using
their respective local currencies as the functional currency. Accordingly, for
these subsidiaries all assets and liabilities are translated into U.S. dollars
at current exchange rates as of the respective balance sheet date. Revenue and
expense items are translated at the average exchange rates prevailing during the
period. Cumulative translation gains and losses from the translation of these
subsidiaries' financial statements are reported as a separate component of
shareholders' equity. The Company's Finnish, French, German and certain Italian
subsidiaries have adopted the Euro as their functional currency.

Cash, Cash Equivalents and Investments

All highly liquid investments with a maturity of three months or less at
date of purchase are carried at fair market value and considered to be cash
equivalents. Cash and cash equivalents consist of cash deposited in checking and
money market accounts, corporate debt securities and certificates of deposit.

The Company's short-term investments comprise of public corporate equity
securities and are included within Other Current Assets in the Company's
consolidated balance sheets and carried at fair market value. All investments
are generally held in the Company's name and custodied with major financial
institutions. The specific identification method is used to determine the cost
of securities disposed of, with realized gains and losses reflected in other
income and expense. At March 31, 2001, all of the Company's short-term
investments were classified as available-for-sale. Unrealized holding gains and
losses on these investments are included as a separate component of
shareholders' equity, net of any related tax effect.

Cash equivalents and short-term investments consist of the following (in
thousands):

MARCH 31, 2001
--------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------- ---------- ---------- ---------

Money market funds .......................... $344,499 $ -- $ -- $344,499
Certificates of deposits .................... 272 -- -- 272
Corporate debt securities ................... 5,264 -- -- 5,264
Corporate equity securities ................. 1,622 3,853 -- 5,475
-------- -------- -------- --------
$351,657 $ 3,853 $ -- $355,510
======== ======== ======== ========
Included in cash and cash equivalents ....... $350,035 $ -- $ -- $350,035
Included in other current assets ............ 1,622 3,853 -- 5,475
-------- -------- -------- --------
$351,657 $ 3,853 $ -- $355,510
======== ======== ======== ========

MARCH 31, 2000
--------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------

Money market funds .......................... $236,342 $ -- $ -- $236,342
Certificates of deposits .................... 36,775 -- -- 36,775
Corporate debt securities ................... 282,781 -- -- 282,781
Corporate equity securities ................. 19,660 59,704 -- 79,364
-------- -------- -------- --------
$575,558 $ 59,704 $ -- $635,262
======== ======== ======== ========
Included in cash and cash equivalents ....... 555,898 -- -- 555,898
Included in other current assets ............ 19,660 59,704 -- 79,364
-------- -------- -------- --------
$575,558 $ 59,704 $ -- $635,262
======== ======== ======== ========

During fiscal year 2001, net gains realized on the sale of marketable
equity securities amounted to approximately $33.4 million. There were no sales
activities for the fiscal year ended March 31, 2000. The Company also has
certain investments in non-publicly traded companies. These investments are
included within Other Assets in the Company's consolidated balance sheet and are
carried at cost. The Company monitors these investments for impairment and makes
appropriate reductions in carrying values when necessary. During fiscal 2001,
the Company recorded an unusual charge of $9.5 million for impairment of its
investments in certain technology companies. See Note 9, "Unusual Charges" for
further discussion.

Property, plant and equipment

Property, plant and equipment is stated at cost. Depreciation and
amortization are provided on a straight-line basis over the estimated useful
lives of the related assets (one to thirty years), with the exception of
building leasehold improvements, which are amortized over the life of the lease,
if shorter. Repairs and maintenance costs are expensed as incurred. Property,
plant and equipment was comprised of the following as of March 31 (in
thousands):

2000 2001
----------- -----------

Machinery and equipment ....................... $ 927,294 $ 1,209,422
Buildings ..................................... 418,332 596,070
Leasehold improvements ........................ 55,834 168,764
Computer equipment and software ............... 74,412 167,115
Furniture, fixtures and vehicles .............. 79,397 216,818
Other, including land ......................... 119,677 88,901
----------- -----------
1,674,946 2,447,090
Accumulated depreciation and amortization ..... (351,214) (618,649)
----------- -----------
Property, plant and equipment, net ............ $ 1,323,732 $ 1,828,441
=========== ===========

Concentration of credit risk

Financial instruments, which potentially subject the Company to
concentrations of credit risk, are primarily accounts receivable, cash
equivalents and investments. The Company performs ongoing credit evaluations of
its customers' financial condition and maintains an allowance for doubtful
accounts based on the outcome of its credit evaluations. The Company maintains
cash and cash equivalents with various financial institutions that management
believes to be of high credit quality. These financial institutions are located
in many different locations throughout the world.

No customer accounted for more than 10% of net sales in fiscal 1999 and
fiscal 2001. In fiscal 2000, Ericsson accounted for approximately 12% of net
sales. We have increasingly focused on sales to larger companies and to
customers in the telecommunications, networking, consumer electronics and
computer industries. In fiscal 2001, our ten largest customers accounted for
approximately 59% of our net sales.

Goodwill and other intangibles

Any excess of cost over net assets acquired (goodwill) is amortized by
the straight-line method over estimated lives generally ranging from two to
fifteen years.

Intangible assets are comprised of technical agreements, patents,
trademarks, developed technologies and other acquired intangible assets
including assembled work forces, favorable leases and customer lists. Technical
agreements are being amortized on a straight-line basis over periods of up to
five years. Patents and trademarks are being amortized on a straight-line basis
over periods of up to 5 years. Purchased developed technologies are being
amortized on a straight-line basis over periods of up to seven years. Intangible
assets related to assembled work forces, favorable leases and customer lists are
amortized on a straight-line basis over three to ten years.

Goodwill and other intangibles were as follows as of March 31 (in
thousands):

2000 2001
----------- -----------

Goodwill ................................. $ 420,494 $ 1,060,712
Other intangibles ........................ 55,397 79,730
----------- -----------
475,891 1,140,442
Accumulated amortization ................. (85,540) (157,058)
----------- -----------
Goodwill and other intangibles, net ...... $ 390,351 $ 983,384
=========== ===========

Long-lived assets

The Company reviews long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of property and equipment is measured by
comparison of its carrying amount, including the unamortized portion of goodwill
allocated to the property and equipment, to future net cash flows the property
and equipment are expected to generate. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the property and equipment, including the allocated goodwill,
if any, exceeds its fair market value. The Company assesses the recoverability
of enterprise level goodwill and intangible assets as well as long-lived assets
by determining whether the unamortized balances can be recovered through
undiscounted future results of the operation or asset. The amount of enterprise
level long lived asset impairment, if any, is measured based on projected
discounted future results using a discount rate reflecting the Company's average
cost of funds. The Company's adjustments to the carrying value of its long-lived
assets are discussed in Note 9, "Unusual Charges."

Use of estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Inventories

Inventories are stated at the lower of cost (first-in, first-out basis)
or market value. Cost is comprised of direct materials, labor and overhead. As
of March 31, the components of inventories, net of applicable reserves, were as
follows (in thousands):

2000 2001
---------- ----------

Raw materials ............. $ 820,070 $1,346,427
Work-in-process ........... 207,474 301,875
Finished goods ............ 115,050 138,753
---------- ----------
$1,142,594 $1,787,055
========== ==========

Other current liabilities

Other current liabilities were comprised of the following as of March 31
(in thousands):

2000 2001
-------- --------

Income taxes payable ................................... $ 26,108 $ 33,777
Accrued payroll ........................................ 112,035 182,217
Sales taxes and other taxes payable .................... 19,600 20,797
Accrued expenses for unusual charges (see Note 9) ...... 931 170,384
Other accrued liabilities .............................. 159,205 323,071
-------- --------
$317,879 $730,246
======== ========

Revenue recognition

In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 provides guidance on applying generally accepted accounting
principles to revenue recognition issues in financial statements. The Company
adopted SAB 101 as required in the fourth quarter of fiscal 2001 and the
adoption of SAB 101 did not have a material impact on the Company's consolidated
financial statements.

The Company's net sales are primarily comprised of manufacturing
services. Our manufacturing services include the fabrication and assembly of
plastic and metal enclosures, printed circuit boards or PCBs, backplanes and the
assembly of complete systems and products. In addition, through our photonics
division, we manufacture and assemble photonics components and integrate them
into PCB assemblies and other systems. Throughout the production process, we
offer other services including design and technology services; logistics
services, such as materials procurement, inventory management, vendor
management, packaging and distribution; and automation of key components of the
supply chain through advanced information technologies. In addition, we have
added other after-market services such as network installation.

Revenue from manufacturing services is generally recognized upon shipment
of the manufactured product. Other services revenues, which include design,
logistics and network installation, are recognized as the services are
performed.

Interest and other expense, net

Interest and other expense, net was comprised of the following for the
years ended March 31 (in thousands):

1999 2000 2001
--------- --------- ---------

Earnings Per Share

Basic earnings per share is computed using the weighted average number of
ordinary shares outstanding during the applicable periods.

Diluted earnings per share is computed using the weighted average number
of ordinary shares and dilutive ordinary share equivalents outstanding during
the applicable periods. Ordinary share equivalents include ordinary shares
issuable upon the exercise of stock options and other equity instruments, and
are computed using the treasury stock method.

Earnings per share data were computed as follows for the years ended
March 31 (in thousands, except per share amounts):

1999 2000 2001
--------- --------- ---------

BASIC EARNINGS (LOSS) PER SHARE:
Net income (loss) ......................................................... $ 51,003 $ 158,568 $(446,019)
--------- --------- ---------
Shares used in computation:
Weighted-average ordinary shares outstanding ........................... 299,984 356,338 441,991
========= ========= =========

1999 2000 2001
--------- --------- ---------

Basic earnings (loss) per share ........................................... $ 0.17 $ 0.44 $ (1.01)
========= ========= =========
DILUTED EARNINGS (LOSS) PER SHARE:
Net income (loss) ......................................................... $ 51,003 $ 158,568 $(446,019)
Plus income impact of assumed conversions:
Interest expense (net of tax) on convertible subordinated notes ........ 3,105 400 --
Amortization (net of tax) of debt issuance costs on convertible
subordinated notes .................................................... 260 33 --
--------- --------- ---------
Net income (loss) available to shareholders ............................ $ 54,368 $ 159,001 $(446,019)
Shares used in computation:
Weighted-average ordinary shares outstanding ........................... 299,984 356,338 441,991
Shares applicable to exercise of dilutive options(1)(2) ................ 14,174 25,021 --
Shares applicable to deferred stock compensation ....................... 432 302 --
Shares applicable to convertible subordinated notes .................... 14,762 1,458 --
--------- --------- ---------
Shares applicable to diluted earnings ................................ 329,352 383,119 441,991
========= ========= =========
Diluted earnings (loss) per share ......................................... $ 0.17 $ 0.42 $ (1.01)
========= ========= =========

(1) Stock options of the Company calculated based on the treasury stock
method using average market price for the period, if dilutive. Options to
purchase 1,591,596 and 961,436 shares outstanding during the fiscal years
ended March 31, 1999 and March 31, 2000, respectively, were excluded from
the computation of diluted earnings per share because the options'
exercise price was greater than the average market price of the Company's
ordinary shares during those fiscal years.

(2) The ordinary share equivalents from stock options and other equity
instruments were antidilutive for the fiscal year ended March 31, 2001,
and therefore not assumed to be converted for diluted earnings per share
computation.

New Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," ("SFAS No. 133") which establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts and for hedging activities.
It requires that companies recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. The Company adopted SFAS No. 133 effective April 2001 and the
adoption will not have a material impact on its consolidated financial
statements.

3. SUPPLEMENTAL CASH FLOW DISCLOSURES

The following information relates to fiscal years ended March 31 (in
thousands):

1999 2000 2001
-------- -------- --------

Cash paid for:
Interest ......................................................... $ 42,513 $ 78,293 $ 68,363
Income taxes ..................................................... 16,846 12,927 15,312
Non-cash investing and financing activities:

Equipment acquired under capital lease obligations ............... 50,843 50,897 10,318
Conversion of convertible notes to common stock .................. -- 85,074 --
Issuances of ordinary shares for purchases of OEM assets ......... -- -- 26,902
Issuances of ordinary shares for acquisitions of businesses ...... 4,801 -- 338,583

4. BANK BORROWINGS AND LONG-TERM DEBT

In June 2000, the Company issued approximately $645.0 million of senior
subordinated notes, consisting of $500.0 million of 9.875% notes and euros 150.0
million of 9.75% notes. Interest is payable on July 1 and January 1 of each
year, commencing January 1, 2001. The notes mature on July 1, 2010. The Company
may redeem the notes on or after July 1, 2005. The fair value of the 9.875%
senior subordinated notes and the 9.75% euro senior subordinated notes based on
broker trading prices was 96.5% and 99.0% of the face value on March 31, 2001,
respectively.

Additionally, the Company has $150.0 million in unsecured senior
subordinated notes due in 2007 outstanding with an annual interest rate of
8.75%. Interest is payable on April 15 and October 15 of each year. The notes
mature on October 15, 2007. The fair value of the unsecured senior subordinated
notes based on broker trading prices was 93.5% of the face value on March 31,
2001.

The indentures relating to the notes contain certain covenants that,
among other things, limit the ability of the Company and certain of its
subsidiaries to (i) incur additional debt, (ii) issue or sell stock of certain
subsidiaries, (iii) engage in asset sales, and (iv) make distributions or pay
dividends. The covenants are subject to a number of significant exceptions and
limitations.

In April 2000, the Company replaced its existing credit facilities, with
a $500.0 million Revolving Credit Facility ("Credit Facility") with a syndicate
of domestic and foreign banks. The Credit Facility consisted of two separate
credit agreements, one providing for up to $150.0 million principal amount of
revolving credit loans to the Company and designated subsidiaries ("Tranche A")
and one providing for up to $350.0 million principal amount of revolving credit
loans to the Company's principal United States subsidiaries ("Tranche B"). Both
Tranche A and Tranche B are split equally between a 364 day and a three year
facility. Borrowings under the Credit Facility bear interest, at the Company's
option, at either: (i) the base rate (as defined in the Credit Facility); or
(ii) the LIBOR rate (as defined in the Credit Facility) plus the applicable
margin for LIBOR loans ranging between 0.625% and 1.75%, based on certain
financial ratios of the Company. The Company is required to pay a quarterly
commitment fee ranging from 0.15% to 0.375% per annum, based on certain
financial ratios of the Company, of the unutilized portion of the Credit
Facility. The Credit Facility was amended on April 3, 2001 to provide for an
additional 364 day facility with similar terms and conditions.

The Credit Facility is unsecured, and contains certain restrictions on
the Company's ability to (i) incur certain debt, (ii) make certain investments
and (iii) make certain acquisitions of other entities. The Credit Facility also
requires that the Company maintain certain financial covenants, including, among
other things, a maximum ratio of total indebtedness to EBITDA (earnings before
interest, taxes, depreciation, and amortization) and a minimum ratio of fixed
charge coverage, as defined, during the term of the Credit Facility. Borrowings
under the Credit Facility are guaranteed by the Company and certain of its
subsidiaries. As of March 31, 2001, there were no borrowings outstanding under
the Credit Facility and the Company was in compliance with its covenants

Certain subsidiaries of the Company have various lines of credit
available with annual interest rates generally ranging from 3.1% to 7.8%. These
lines of credit expire on various dates through 2002. The Company also has term
loans with annual interest rates generally below 8.0% with terms of up to 15
years. These lines of credit and term loans are primarily secured by assignment
of account receivables and assets.

The Company has financed the purchase of certain facilities with
mortgages. The mortgages generally have terms of up to 10 years and annual
interest rates ranging from 5.0% to 9.0% and are secured by the underlying
properties with a net book value of approximately $63.4 million at March 31,
2001.

Bank borrowings and long-term debt was comprised of the following at
March 31 (in thousands):

2000 2001
----------- -----------

Senior subordinated notes ............. $ 300,000 $ 779,596
Credit facilities ..................... 433,849 --
Outstanding under lines of credit ..... 116,624 219,579
Mortgages ............................. 23,550 43,340
Term loans and other debt ............. 207,580 135,062
----------- -----------
1,081,603 1,177,577
Current portion ............. (487,773) (298,052)
----------- -----------
Non-current portion ......... $ 593,830 $ 879,525
=========== ===========

Maturities for the bank borrowings and other long-term debt are as
follows for the years ended March 31 (in thousands):

2002 ......................... $ 298,052
2003 ......................... 39,976
2004 ......................... 14,141
2005 ......................... 9,738
2006 ......................... 11,872
Thereafter ................... 803,798
----------
$1,177,577
==========

5. FINANCIAL INSTRUMENTS

The value of the Company's cash and cash equivalents, investments, accounts
receivable and accounts payable carrying amount approximates fair value. The
fair value of the Company's long-term debt (see Note 4, "Bank Borrowings and
Long-Term Debt") is determined based on current broker trading prices. The
Company's cash equivalents are comprised of cash deposited in money market
accounts, corporate debt securities and certificates of deposit (see Note 2,
"Summary of Accounting Policies"). The Company's investment policy limits the
amount of credit exposure to 20% of the total investment portfolio in any single
issuer.

The Company enters into forward exchange contracts to hedge underlying
transactional currency exposures and does not engage in foreign currency
speculation. The credit risk of these forward contracts is minimal since the
contracts are with large financial institutions. The Company hedges committed
exposures and these forward contracts generally do not subject the Company to
risk of accounting losses. The gains and losses on forward contracts generally
offset the gains and losses on the asset, liabilities and transactions hedged.
The Company's off-balance sheet financial instruments consist of $61.1 million
and $200.4 million of aggregate foreign currency forward contracts outstanding
at the end of fiscal year 2000 and 2001, respectively. These foreign exchange
contracts expire in less than three months and will settle in Euro, Swiss Franc,
Swedish Kronor, British Pound and United States dollar.

6. COMMITMENTS AND CONTINGENCIES

As of March 31, 2000 and 2001, the Company has financed a total of $77.6
million and $142.8 million, respectively in machinery and equipment purchases
with capital leases. Accumulated amortization for property and equipment under
capital leases totaled $26.8 million and $61.2 million at March 31, 2000 and
2001, respectively. These capital leases have interest rates ranging from 1.8%
to 14.6%. The Company also leases certain of its facilities under non-cancelable
operating leases. The capital and operating leases expire in various years
through 2007 and require the following minimum lease payments for the years
ended March 31 (in thousands):

CAPITAL OPERATING
-------- ---------

2002 ............................................ $ 31,354 $117,171
2003 ............................................ 20,859 101,714
2004 ............................................ 14,069 70,801
2005 ............................................ 3,177 35,463
2006 ............................................ 1,359 16,456
Thereafter ...................................... 400 16,848
-------- --------
Minimum lease payments .......................... 71,218 $358,453
========
Amount representing interest .................... (5,828)
--------
Present value of minimum lease payments ......... 65,390
Current portion ................................. (27,602)
--------
Capital lease obligations, net of current portion $ 37,788
========

Total rent expense was $28.7 million, $50.7 million and $78.7 million for
the years ended March 31, 1999, 2000 and 2001, respectively.

We are party to various legal proceedings that arise in the normal course
of business. In the opinion of management, the ultimate disposition of these
proceedings will not have a material adverse effect on our consolidated
financial position, liquidity or results of operations.

7. INCOME TAXES

The domestic and foreign components of income (loss) before income taxes
were comprised of the following for the years ended March 31 (in thousands):

1999 2000 2001
--------- --------- ---------

Singapore .................... $ 4,912 $ 32,377 $(269,771)
Foreign ...................... 34,457 149,271 (282,533)
--------- --------- ---------
Total ........................ $ 39,369 $ 181,648 $(552,304)
========= ========= =========

The provision for (benefit from) income taxes consisted of the following
for the years ended March 31 (in thousands):

1999 2000 2001
--------- --------- ---------

Current:
Singapore .................. $ 2,828 $ 839 $ 6,607
Foreign .................... 7,755 35,406 27,170
--------- --------- ---------
10,583 36,245 33,777
--------- --------- ---------
Deferred:
Singapore .................. 363 2,870 (2,206)
Foreign .................... (22,580) (16,035) (137,856)
--------- --------- ---------
(22,217) (13,165) (140,062)
--------- --------- ---------
$ (11,634) $ 23,080 $(106,285)
========= ========= =========

The Singapore statutory income tax rate was approximately 26.0% for each of
the years in the two year period ended March 31, 2000, and 24.5% for the one
year period ended March 31, 2001. The reconciliation of the income tax expense
(benefit) expected based on Singapore statutory income tax rates to the
provision for (benefit from) income taxes included in the consolidated
statements of operations for the years ended March 31 is as follows (in
thousands):

1999 2000 2001
--------- --------- ---------

Income taxes based on Singapore statutory rates ... $ 10,236 $ 47,133 $(135,315)
Effect of tax rate differential ................... (19,220) (41,984) (138,105)
Tax exempt income ................................. (549) (866) (8,790)
Amortization of goodwill and other intangibles .... 3,350 4,334 15,568
Motorola unusual charge ........................... -- -- 70,201
Merger expenses ................................... -- -- 16,059
Facility closure costs ............................ -- -- 46,094
Change in valuation allowance ..................... (2,827) 15,993 26,848
Tax credits and carryforwards ..................... (1,166) (4,800) --
Other ............................................. (1,458) 3,270 1,155
--------- --------- ---------
Provision for (benefit from) income taxes $ (11,634) $ 23,080 $(106,285)
========= ========= =========

The components of deferred income taxes are as follows as of March 31 (in
thousands):

2000 2001
--------- ---------

Deferred tax liabilities:
Unremitted earnings of foreign subsidiaries ............ $ (2,766) $ --
Intangible assets ...................................... (10,604) (6,665)
Fixed assets ........................................... (34,922) --
Others ................................................. (5,398) (803)
--------- ---------
Total deferred tax liabilities ................. $ (53,690) $ (7,468)
--------- ---------
Deferred tax assets:
Fixed assets ........................................... $ -- $ 15,855
Deferred compensation .................................. 6,057 43,147
Compensated absences ................................... 1,164 3,210
Provision for inventory obsolescence ................... 10,867 35,760
Provision for doubtful accounts ........................ 5,625 8,782
Net operating loss carryforwards ....................... 67,689 133,860
Federal and state credits .............................. 11,857 11,414
Uniform capitalization of inventory .................... 4,493 2,523
Unusual charges ........................................ -- --
Others ................................................. 13,069 37,982
--------- ---------
Total deferred tax assets ...................... 120,821 292,533
Valuation allowances ................................... (50,342) (102,792)
--------- ---------
Total deferred tax assets ...................... $ 70,479 $ 189,741
--------- ---------
Net deferred tax asset ................................ $ 16,789 $ 182,273
========= =========
The net deferred tax asset is classified as follows:

Current asset (classified as Other Current Assets) ..... $ 18,338 $ 42,595
Long-term asset (classified as Other Assets/Liabilities) (1,549) 139,678
--------- ---------
$ 16,789 $ 182,273
========= =========

A deferred tax asset arises from available tax loss carryforwards and
non-deductible accruals. The Company has total tax loss carryforwards of
approximately $400.0 million, a portion of which begin expiring in tax year
2010. The utilization of these tax loss deductions is limited to the future
operations of the Company in the tax jurisdictions in which such loss deductions
arose. As a result, management is uncertain as to when or whether these
operations will generate sufficient profit to realize the deferred tax asset
benefit. The valuation allowance provides a reserve against deferred tax assets
that may expire or go unutilized by the Company. However, management has
determined that it is more likely than not that the Company will realize certain
of these benefits and, accordingly, has recognized a deferred tax asset from
these benefits. The amount of deferred tax assets considered realizable,
however, could be reduced or increased in the near-term if facts, including the
amount of taxable income or the mix of taxable income between subsidiaries,
differ from management's estimates.

The Company does not provide for federal income taxes on the undistributed
earnings of its foreign subsidiaries as such earnings are not intended by
management to be repatriated in the foreseeable future. Determination of the
amount of the unrecognized deferred tax liability on these undistributed
earnings is not practicable.

The effective income tax rate is largely a function of the balance between
income from domestic and international operations, as well as certain tax
holidays and incentives granted to the Company and its subsidiaries in China,
Malaysia , Hungary and Czech Republic. These tax incentives and holidays expire
over various periods from 2002 to 2010 and are subject to certain conditions
with which the Company expects to comply. During the years ended March 31, 2001,
2000 and 1999, the aggregate amount of savings from tax holidays and similar
incentives and the associated earnings per share benefits were immaterial.

8. SHAREHOLDERS' EQUITY

Secondary offerings

During fiscal 1999, the Company completed an offering of its ordinary
shares. A total of 21,600,000 ordinary shares were sold, resulting in net
proceeds to the Company of $194.0 million.

During fiscal 2000, the Company completed three secondary offerings of its
ordinary shares. A total of 67,018,000 ordinary shares were sold, resulting in
net proceeds to the Company of approximately $1.2 billion.

During fiscal 2001, the Company completed two equity offerings of its
ordinary shares. A total of 39,650,000 ordinary shares were sold, resulting in
net proceeds to the Company of approximately $1.4 billion.

Stock splits

In fiscal 1999, the Company effected a 2:1 stock split. A distribution of
47,068,458 ordinary shares occurred on January 11, 1999. In fiscal 2000, the
Company effected a second 2:1 stock split. A distribution of 57,497,204 ordinary
shares occurred on December 22, 1999. In fiscal 2001, the Company effected
another 2:1 stock split. A distribution of 209,001,331 ordinary shares occurred
on October 16, 2000. Each of the stock splits was effected as a bonus issue (the
Singapore equivalent of a stock dividend). The Company has accounted for these
transactions as a stock split and all share and per share amounts have been
retroactively restated to reflect all stock splits.

Strategic Alliance

On May 30, 2000, the Company entered into a strategic alliance for product
manufacturing with Motorola. This alliance provides incentives for Motorola to
purchase over $32.0 billion of products and services from us through December
31, 2005. The relationship is not exclusive and does not require that Motorola
purchase any specific volumes of products or services from the Company. The
Company's ability to achieve any of the anticipated benefits of this
relationship is subject to a number of risks, including its ability to provide
services on a competitive basis and to expand manufacturing resources, as well
as demand for Motorola's products. In connection with this strategic alliance,
Motorola paid $100.0 million for an equity instrument that entitles it to
acquire 22,000,000 Flextronics ordinary shares at any time through December 31,
2005 upon meeting targeted purchase levels or making additional payments to the
Company. The issuance of this equity instrument resulted in a one-time non-cash
charge equal to the excess of the fair value of the equity instrument issued
over the $100.0 million proceeds received. As a result, the one-time non-cash
charge amounted to approximately $286.5 million offset by a corresponding credit
to additional paid-in capital in the first quarter of fiscal 2001. During the
term of the strategic alliance, if Motorola meets targeted purchase levels, no
additional payments may be required by Motorola to

acquire 22,000,000 Flextronics ordinary shares. However, there may be additional
non-cash charges of up to $300.0 million over the term of the strategic
alliance. (See Note 14, "Subsequent Events" for additional information on this
equity instrument.)

Stock-based compensation

The Company's 1993 Share Option Plan (the "Plan") provides for the grant of
up to 50,800,000 incentive stock options and non-statutory stock options to
employees and other qualified individuals to purchase ordinary shares of the
Company. As of March 31, 2001, the Company had 5,741,227 ordinary shares
available for future option grants under the Plan at an exercise price of not
less than 85% of the fair value of the underlying stock on the date of grant.
Options issued under the Plan generally vest over 4 years. Pursuant to an
amendment to the provisions relating to the term of options provided under the
Plan, options granted subsequent to October 1, 2000 expire 10 years from the
date of grant, rather than the five-year term previously provided.

The Company's 1997, 1998 and 1999 Interim Option Plans provide for grants
of up to 2,000,000, 3,144,000, and 5,200,000 stock options, respectively. These
plans provide grants of non-statutory stock options to employees and other
qualified individuals to purchase ordinary shares of the Company. Options under
these plans cannot be granted to executive officers and directors. As of March
31, 2001, the 1997, 1998 and 1999 Interim Option Plans had 490,594, 173,803 and
1,928,352 ordinary shares available for future option grants, respectively. All
Interim Option Plans have an exercise price of not less than 85% of fair market
value of the underlying stock on the date of grant. Options issued under these
plans generally vest over 4 years and expire 5 years from the date of grant.

The Company has assumed certain option plans and the underlying options of
companies which the Company has merged with or acquired (the "Assumed Plans").
Options under the Assumed Plans have been converted into the Company's options
and adjusted to effect the appropriate conversion ratio as specified by the
applicable acquisition or merger agreement, but are otherwise administered in
accordance with the terms of the Assumed Plans. Options under the Assumed Plans
generally vest over 4 years and expire 10 years from the date of grant.

The following table presents the activity for options outstanding under all
of the stock option plans as of March 31 ("Price" reflects the weighted average
exercise price):

1999 2000 2001
--------------------- ----------------------- ----------------------
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
----------- ----- ----------- ------ ----------- ------

Outstanding, beginning of year.................. 28,281,584 $3.07 39,283,808 $ 4.25 44,853,772 $ 7.46
Granted......................................... 19,223,312 5.28 11,668,916 13.49 14,655,646 23.23
Exercised....................................... (5,481,928) 2.15 (4,990,596) 3.57 (11,404,613) 5.54
Forfeited....................................... (2,739,160) 4.11 (1,108,356) 6.30 (869,374) 23.98
----------- ----------- -----------
Outstanding, end of year........................ 39,283,808 $4.25 44,853,772 $ 7.46 47,235,431 $13.35
=========== =========== ===========
Exercisable, end of year........................ 11,314,768 13,583,702 21,065,008
=========== =========== ===========
Weighted average fair value per option granted.. $ 3.30 $ 7.44 $ 12.60
=========== =========== ===========

The following table presents the composition of options outstanding and
exercisable as of March 31, 2001 ("Price" and "Life" reflect the weighted
average exercise price and weighted average contractual life unless otherwise
noted):

RANGE OF OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------- ---------------------- ---------------------------------
EXERCISE PRICES AMOUNT PRICE LIFE AMOUNT PRICE
------------------- ------------ ------ ---- ------------ ------

$ 0.39 -- $ 4.05 9,686,954 $ 3.16 3.66 8,643,873 $ 3.08
4.12 -- 6.00 10,670,262 5.42 2.58 6,651,767 5.38
6.23 -- 16.00 10,379,352 11.92 4.86 4,837,944 10.73
16.13 -- 25.00 12,824,248 23.22 7.53 644,517 21.49
25.03 -- 44.12 3,674,615 32.82 4.42 286,907 29.25
------------ ------------
Total, March 31, 2001 47,235,431 $13.35 4.79 21,065,008 $ 6.48
============ ============

The Company's Employee Stock Purchase Plan (the "Purchase Plan") provides
for issuance of up to 2,400,000 ordinary shares. The Purchase Plan was approved
by the shareholders in October 1997. Under the Purchase Plan, employees may
purchase, on a periodic basis, a limited number of shares of common stock
through payroll deductions over a six-month period up to 10% of each
participant's compensation. The per share purchase price is 85% of the fair
market value of the stock at the beginning or end of the offering period,
whichever is lower. As of March 31, 2001, there are 1,444,133 ordinary shares
available for sale under this plan. The ordinary shares sold under this plan in
fiscal 1999, 2000 and 2001, amounted to 282,088, 278,808 and 445,476,
respectively. The weighted-average fair value of ordinary shares sold under this
plan in fiscal 1999, 2000 and 2001 was $4.03, $8.69 and $20.00 per share,
respectively.

In connection with the acquisition of DII, the Company assumed DII's
Employee Stock Purchase Plan ("DII's Purchase Plan"). The ordinary shares sold
under this plan in fiscal 1999 and 2000 amounted to 1,790,111 and 1,838,932,
respectively. The weighted average fair value of ordinary shares sold under the
DII Purchase Plan in fiscal 1999 and 2000 was $5.32 and $7.60 per share,
respectively. In addition, the Company also assumed DII's Non-Employee
Directors' Stock Compensation Plan. The ordinary shares sold under this plan in
fiscal 1999 and 2000 amounted to 28,526 and 17,871, respectively. The weighted
average fair value of ordinary shares sold under this plan in fiscal 1999 and
2000 was $6.07 and $10.41 per share, respectively. The Company discontinued
issuing ordinary shares under both plans in fiscal 2001.

The Company has elected to follow APB Opinion No. 25 "Accounting for Stock
Issued to Employees" and related interpretations in accounting for its employee
stock option plans and employee stock purchase plans and has adopted the
disclosure provisions of SFAS No. 123 "Accounting for Stock Based Compensation."
Because the exercise price of the Company's stock options has equaled the fair
value of the underlying stock on the date of grant, no compensation expense has
been recognized under APB Opinion No. 25. Had the compensation cost for the
Company's stock-based compensation plans been determined based on the fair
values of these options, the Company's fiscal 1999, 2000 and 2001 net income
(loss) and earnings (loss) per share would have been adjusted to the proforma
amounts indicated below:

YEARS ENDED MARCH 31,
-------------------------------------------
1999 2000 2001
----------- ----------- ------------

Net income (loss):
As reported .................... $ 51,003 $ 158,568 $ (446,019)
Proforma ....................... 35,943 133,319 (596,494)

Basic earnings (loss) per share:
As reported .................... $ 0.17 $ 0.44 $ (1.01)
Proforma ....................... 0.12 0.37 (1.35)

Diluted earnings (loss) per share:
As reported .................... $ 0.17 $ 0.42 $ (1.01)
Proforma ....................... 0.12 0.35 (1.35)

In accordance with the disclosure provisions of SFAS No. 123, the fair
value of employee stock options granted during fiscal 1999, 2000 and 2001 was
estimated at the date of grant using the Black-Scholes model and the following
weighted average assumptions:

YEARS ENDED MARCH 31,
-----------------------------
1999 2000 2001
------- ------- -------

Volatility ........................ 58% 58% 62%
Risk-free interest rate range ..... 5.2% 6.2% 6.3%
Dividend yield .................... 0% 0% 0%
Expected lives .................... 3.5 yrs 3.5 yrs 3.6 yrs

Because SFAS No. 123 is applicable only to awards granted subsequent to
December 30, 1994, and due to the subjective nature of the assumptions used in
the Black-Scholes model, the pro-forma net income (loss) and earnings (loss) per
share disclosures may not reflect the associated fair value of the outstanding
options.

Deferred Stock Compensation

Under the DII 1994 Stock Incentive Plan, certain key executives of DII were
awarded 1,468,320 shares in fiscal 1999. Shares vest over a period of time,
which in no event exceeds eight years. The shares vested at an accelerated rate
upon the achievement of certain annual earnings per share targets established by
DII's Compensation Committee. Non-vested shares for individual participants who
are no longer employed by the Company on the plan termination date are
forfeited. Participants receive all unissued shares upon death or disability, or
in the event of a change of control of the Company. The shares are not reported
as outstanding until vested. The Company issued 884,972 vested shares in fiscal
1999.

Deferred stock compensation equivalent to the market value at the date the
shares were awarded is charged to shareholders' equity and is amortized to
expense based upon the estimated number of shares expected to be issued in any
particular year. Deferred compensation expense amounting to $2.2 million, $4.0
million and $5.1 million, was amortized to expense during fiscal 1999, 2000 and
2001, respectively. The weighted-average fair value of performance shares
awarded in fiscal 1999 and 2000, was $6.20 and $6.23 per share, respectively.

9. UNUSUAL CHARGES

FISCAL 2001

The Company recognized unusual pre-tax charges of approximately $973.3
million during fiscal year 2001. Of this amount, $493.1 million was recorded in
the first quarter and was comprised of approximately $286.5 million related to
the issuance of an equity instrument to Motorola combined with approximately
$206.6 million of expenses resulting from the DII and Palo Alto Products
International mergers and related facility closures. In the second quarter,
unusual pre-tax charges amounted to approximately $48.4 million associated with
the Chatham and Lightning mergers and related facility closures. In the third
quarter, the Company recognized unusual pre-tax charges of approximately $46.3
million, primarily related to the JIT merger and related facility closures.
During the fourth quarter, the Company recognized unusual pre-tax charges,
amounting to $376.1 million related to closures of several manufacturing
facilities and $9.5 million for the impairment of investments in certain
technology companies. On May 30, 2000, the Company entered into a strategic
alliance for product manufacturing with Motorola. See Note 8, "Shareholders'
Equity," for further information concerning the strategic alliance. In
connection with this strategic alliance, Motorola paid $100.0 million for an
equity instrument that entitles it to acquire 22.0 million Flextronics ordinary
shares at any time through December 31, 2005, upon meeting targeted purchase
levels or making additional payments to the Company. The issuance of this equity
instrument resulted in a one-time non-cash charge equal to the excess of the
fair value of the equity instrument issued over the $100.0 million proceeds
received. As a result, the one-time non-cash charge amounted to approximately
$286.5 million offset by a corresponding credit to additional paid-in capital in
the first quarter of fiscal 2001. The Company recorded aggregate unusual charges
of $973.3 million, which included approximately $574.9 million of facility
closure costs and $102.4 million of direct transaction costs in connection with
the mergers and facility closures, $286.5 million related to the issuance of an
equity instrument to Motorola and $9.5 million for impairment of certain
investments. As discussed below, $510.5 million of the charges relating to
facility closures have been classified as a component of Cost of Sales during
the fiscal year ended March 31, 2001.

The components of the unusual charges recorded are as follows (in thousands):

FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL NATURE OF
CHARGES CHARGES CHARGES CHARGES CHARGES CHARGES
--------- --------- --------- --------- --------- -------------

Facility closure costs:
Severance ........................... $ 62,487 $ 5,677 $ 3,606 $ 60,703 $ 132,473 cash
Long-lived asset impairment ......... 46,646 14,373 16,469 155,046 232,534 non-cash
Exit costs .......................... 24,201 5,650 19,703 160,368 209,922 cash/non-cash
--------- --------- --------- --------- ---------
Total facility closure costs .... 133,334 25,700 39,778 376,117 574,929
Direct transaction costs:
Professional fees ................... 50,851 7,247 6,250 -- 64,348 cash
Other costs ......................... 22,382 15,448 248 -- 38,078 cash/non-cash
--------- --------- --------- --------- ---------
Total direct transaction costs .. 73,233 22,695 6,498 -- 102,426
--------- --------- --------- --------- ---------
Motorola equity instrument ............ 286,537 -- -- -- 286,537 non-cash
Other unusual charges ................. -- -- -- 9,450 9,450 non-cash
Total unusual charges ........... 493,104 48,395 46,276 385,567 973,342
--------- --------- --------- --------- ---------
Income tax benefit .................... (30,000) (6,000) (6,500) (110,000) (152,500)
--------- --------- --------- --------- ---------
Net unusual charges ............. $ 463,104 $ 42,395 $ 39,776 $ 275,567 $ 820,842
========= ========= ========= ========= =========

In connection with the facility closures, the Company developed formal
plans to exit certain activities and involuntarily terminate employees.
Management's plan to exit an activity included the identification of duplicate
manufacturing and administrative facilities for closure and the identification
of manufacturing and administrative facilities for consolidation into other
facilities. Management currently anticipates that the facility closures and
activities to which all of these charges relate will be substantially completed
within one year of the commitment dates of the respective exit plans, except for
certain long-term contractual obligations. The following table summarizes the
components of the facility closure costs and related activities in fiscal 2001:

LONG-LIVED
ASSET EXIT
SEVERANCE IMPAIRMENT COSTS TOTAL
--------- ---------- --------- ---------

Balance at March 31, 2000 ... $ -- $ -- $ -- $ --
Activities during the year:
First quarter provision ........ 62,487 46,646 24,201 133,334
Cash charges ................... (35,800) -- (1,627) (37,427)
Non-cash charges ............... -- (46,646) (7,441) (54,087)
--------- --------- --------- ---------
Balance at June 30, 2000 ......... 26,687 -- 15,133 41,820
Activities during the year:
Second quarter provision ....... 5,677 14,373 5,650 25,700
Cash charges ................... (4,002) -- (4,231) (8,233)
Non-cash charges ............... -- (14,373) (8,074) (22,447)
--------- --------- --------- ---------
Balance at September 30, 2000..... 28,362 -- 8,478 36,840
Activities during the year:
Third quarter provision ........ 3,606 16,469 19,703 39,778
Cash charges ................... (7,332) -- (2,572) (9,904)
Non-cash charges ............... -- (16,469) (14,070) (30,539)
--------- --------- --------- ---------
Balance at December 31, 2000...... 24,636 -- 11,539 36,175
Activities during the year:
Fourth quarter provision ....... 60,703 155,046 160,368 376,117
Cash charges ................... (13,605) -- (14,686) (28,291)
Non-cash charges ............... -- (155,046) (61,878) (216,924)
--------- --------- --------- ---------
Balance at March 31, 2001 ........ $ 71,734 $ -- $ 95,343 $ 167,077
========= ========= ========= =========

Of the total pre-tax facility closure costs, $132.5 million relates to
employee termination costs, of which $68.1 million has been classified as a
component of Cost of Sales. As a result of the various exit plans, the Company
identified 11,269 employees to be involuntarily terminated related to the
various mergers and facility closures. As of March 31, 2001, 4,457 employees
have been terminated, and another 6,812 employees have been notified that they
are to be terminated upon completion of the various facility closures and
consolidations. During fiscal 2001, the Company paid employee termination costs
of approximately $60.7 million. The remaining $71.7 million of employee
termination costs is classified as accrued liabilities as of March 31, 2001 and
is expected to be paid out within one year of the commitment dates of the
respective exit plans.

The unusual pre-tax charges include $232.5 million for the write-down of
long-lived assets to fair value. This amount has been classified as a component
of Cost of Sales. Included in the long-lived asset impairment are charges of
$229.1 million, which relate to property, plant and equipment associated with
the various manufacturing and administrative facility closures which were
written down to their fair value of $192.0 million as of March 31, 2001. Certain
assets will be held for use and will remain in service until their anticipated
disposal dates pursuant to the exit plans. Since the assets will remain in
service from the date of the decision to dispose of these assets to the
anticipated disposal date, the assets are being depreciated over this expected
period. For the assets that are being held for use, an impairment loss is
recognized if the carrying amounts of these assets exceed the fair value of the
assets. Certain other assets will be held for disposal as these assets are no
longer required in operations. Assets held for disposal are no longer being
depreciated. For the assets that are being held for disposal, an impairment loss
is recognized if the carrying amounts of these assets exceed the fair value less
cost to sell. The impaired long-lived assets consisted primarily of machinery
and equipment of $153.0 million and building and improvements of $76.1 million.
The long-lived asset impairment also includes the write-off of the remaining
goodwill and other intangibles related to certain closed facilities of $3.4
million.

plans. Other exit costs also include $11.6 million of facility refurbishment and
abandonment costs related to certain building repair work necessary to prepare
the exited facilities for sale or return the facilities to the landlord. The
remaining $19.8 million of other exit costs recorded were primarily associated
with incremental amounts of legal and environmental costs, incurred directly as
a result of the various exit plans and facility closures. The Company paid
approximately $23.1 million of other exit costs during fiscal 2001.
Additionally, approximately $91.5 million of other exit costs were non-cash
charges utilized during fiscal 2001. The remaining $95.3 million is classified
in accrued liabilities as of March 31, 2001 and are expected to be substantially
paid out within one year from the commitment dates of the respective exit plans,
except for certain long-term contractual obligations.

The direct transaction costs include approximately $64.3 million of costs
primarily related to investment banking and financial advisory fees as well as
legal and accounting costs associated with the merger transactions. Other direct
transaction costs which totaled approximately $38.1 million were mainly
comprised of accelerated debt prepayment expense, accelerated executive stock
compensation and benefit-related expenses. The Company paid approximately $70.9
million of the direct transaction costs during fiscal 2001. Additionally,
approximately $28.2 million of the direct transaction costs were non-cash
charges utilized during fiscal 2001. The remaining $3.3 million is classified in
accrued liabilities as of March 31, 2001 and is expected to be substantially
paid out in the first quarter of fiscal 2002.

FISCAL 2000

In fiscal 2000, the Company recognized unusual pre-tax charges in the
Americas business segment of $7.5 million related to the operations of Chatham,
which included severance and related charges of approximately $4.4 million and
other facility exit costs of approximately $3.1 million.

FISCAL 1999

During fiscal 1999, the Company recognized unusual pre-tax charges in the
Americas business segment of $79.3 million, substantially all of which related
to the operations of the Company's wholly owned subsidiary, Orbit Semiconductor,
Inc. ("Orbit"). The Company decided to sell Orbit's 6-inch, 0.6 micron wafer
fabrication facility ("Fab") and adopt a fabless manufacturing strategy to
complement Orbit's design and engineering services. The charges were primarily
due to the impaired recoverability of inventories, intangible assets and fixed
assets, and other costs associated with the exit of semiconductor manufacturing.
The Fab was ultimately sold in the fourth quarter of fiscal 1999.

The components of the unusual charges recorded in fiscal 1999 are as
follows:

FIRST FOURTH
QUARTER QUARTER TOTAL NATURE OF
CHARGES CHARGES CHARGES CHARGES
------- ------- ------- --------------

Severance ........................................ $ 498 $ 2,371 $ 2,869 cash
Long-lived asset impairment ...................... 38,257 16,538 54,795 non-cash
Losses on sales contracts ........................ 2,658 3,100 5,758 non-cash
Incremental uncollectible accounts receivable .... 900 -- 900 non-cash
Incremental sales return and allowances .......... 1,500 500 2,000 non-cash
Inventory write-downs ............................ 5,500 250 5,750 non-cash
Acquired in-process research and development ..... -- 2,000 2,000 non-cash
Other exit costs ................................. 1,845 3,369 5,214 cash/non-cash
------- ------- -------
Total Unusual Pre-Tax Charges .................... $51,158 $28,128 $79,286
======= ======= =======

Of the total unusual pre-tax charges, approximately $2.9 million relates to
employee termination costs. As a result of the closure of the fabrication
facility, 460 employees were terminated. The terminations were completed and
related severance costs were fully paid out by the first quarter of fiscal 2000.

The unusual pre-tax charges include $54.8 million for the write-down of
long-lived assets to fair value. This amount has been classified as a component
of cost of sales. Included in the long-lived asset impairment are charges of
$50.7 million related to the Fab which was written down to its net realizable
value based on its estimated selling price less cost to sell. The Company kept
the Fab in

service until the sale date in the fourth quarter of fiscal 1999. In accordance
with SFAS No. 121, the Company discontinued depreciation expense on the Fab when
it determined that it would be disposed of and its net realizable value was
known. The impaired long-lived assets consisted primarily of machinery and
equipment of $52.4 million, which were written down by $43.4 million to a
carrying amount of $9 million and building and improvement of $7.3 million which
were written down to a carrying value of zero. The long-lived asset impairment
also includes the write-off of the remaining goodwill of $0.6 million. The
remaining $3.5 million of asset impairment relates to the write-down to net
realizable value of a facility the Company exited during fiscal 1999.

The Company entered into certain non-cancelable sales contracts to provide
semiconductors to customers at fixed prices. Because the Company was obligated
to fulfill the terms of the agreements at selling prices which were not
sufficient to cover the cost to produce or acquire such products, a liability
for losses on sales contracts was recorded for the estimated future amount of
such losses. The unusual pre-tax charges include approximately $8.7 million for
losses on sales contracts, incremental amounts of uncollectible accounts
receivable, and estimated incremental costs for sales returns and allowances,
all of which were fully utilized by the end of fiscal 2000.

The unusual pre-tax charges also include approximately $10.9 million for
losses on inventory write-downs and other exit costs. The Company has written
off and disposed of approximately $5.8 million of inventory. The remaining $5.1
million relates primarily to incremental costs and contractual obligations for
items such as lease termination costs, litigation, environmental clean-up costs,
and other exit costs incurred directly as a result of the exit plan, all of
which were paid out or non-cash charges utilized by the end of fiscal 2000.

The purchase price of Advanced Component Labs included in-process research
and development costs totaling $2.0 million which had not reached technological
feasibility and had no probable alternative future use. Accordingly, the Company
wrote-off $2.0 million of in-process research and development in fiscal 1999.

10. RELATED PARTY TRANSACTIONS

The Company has loaned approximately $22.9 million to various executive
officers of the Company. Each loan is evidenced by a promissory note in favor of
the Company. Certain notes are non-interest bearing and others have interest
rates ranging from 4.19% to 7.25%. The remaining outstanding balance of the
loans, including accrued interest, as of March 31, 2001 was approximately $10.4
million.

11. BUSINESS COMBINATIONS

FISCAL 2001

Pooling of Interests Mergers

In fiscal 2001, Flextronics acquired 100% of the outstanding shares of DII,
Lightning, Chatham, Palo Alto Products International and JIT. These acquisitions
were accounted for as pooling of interests and the consolidated financial
statements have been prepared to give retroactive effect to the mergers.

DII is a leading provider of electronics manufacturing and design services.
As a result of the merger, in April 2000, the Company issued approximately 125.5
million ordinary shares for all of the outstanding shares of DII common stock,
based upon the exchange ratio of 3.22 Flextronics ordinary shares for each share
of DII common stock.

Lightning is a provider of fully integrated electronic packaging systems.
As a result of the merger, in August 2000, the Company issued approximately 2.6
million ordinary shares for all of the outstanding shares of Lightning common
stock and interests.

Chatham is a leading provider of integrated electronic packaging systems to
the communications industry. As a result of the merger, in August 2000, the
Company issued approximately 15.2 million ordinary shares for all of the
outstanding Chatham capital stock and interests.

DII and Lightning operated under a calendar year end prior to merging with
Flextronics and, accordingly, their respective balance sheets, statements of
operations, shareholders' equity and cash flows as of December 31, 1999 and for
each of the two years ended December 31, 1999 have been combined with the
Company's consolidated financial statements as of March 31, 2000 and for each of
the two fiscal years ended March 31, 2000. Chatham operated under a fiscal year
which ended on the Saturday closest to September

30 prior to merging with Flextronics and, accordingly, Chatham's balance sheets,
statements of operations, shareholders' equity and cash flows as of September
24, 1999 and for each of the two years ended September 24, 1999 have been
combined with the Company's consolidated financial statements as of March 31,
2000 and for each of the two fiscal years ended March 31, 2000.

Starting in fiscal 2001, DII, Lightning and Chatham changed their
respective year ends to conform to the Company's March 31 year end. Accordingly,
DII's and Lightning's operations for the three months ended March 31, 2000, and
Chatham's operations for the six months ended March 31, 2000, have been excluded
from the consolidated results of operations for fiscal 2001 and reported as an
adjustment to retained earnings. Total net sales, gross profit, selling, general
and administrative expenses, operating loss and total net loss related to the
omitted periods amounted to approximately $898.3 million, $50.0 million, $66.6
million, $33.0 million and $58.3 million, respectively. During the omitted
periods, total cash flows used in operating and investing activities amounted to
approximately $24.9 million and $28 million, respectively, and financing
activities provided approximately $20.2 million.

The net loss of $58.3 million for the omitted period consisted primarily of
the net losses of DII and Chatham, with each company representing about half of
the net loss for the omitted period. With respect to Chatham, the net loss for
that acquired company was relatively consistent both before and during the
omitted period. In the case of DII, the results for that acquired company during
the omitted period was adversely effected by the uncertainties created by the
merger with the Company, which closed April 3, 2000. DII experienced several
customer cancellations during the omitted period due to customer concerns over
the merger and resulting supplier concentration issues. DII also experienced
lower employee productivity during the omitted period due to the uncertainty
over anticipated employee terminations as a result of the merger. The net loss
for Chatham and DII in the omitted period prompted the Company to develop formal
plans to exit certain activities, close certain facilities and involuntarily
terminate employees in the periods following the acquisitions of each company,
which resulted in the unusual charges recorded in fiscal 2001. See Note 9,
"Unusual Charges" for further discussion.

Palo Alto Products International is an enclosure design and plastic molding
company. The Company merged with Palo Alto Products International in April 2000
by exchanging approximately 7.2 million ordinary shares of Flextronics for all
of the outstanding shares of Palo Alto Products International common stock.

JIT is a global provider of electronics manufacturing and design services.
The Company merged with JIT in November 2000, by exchanging approximately 17.3
million ordinary shares of Flextronics for all of the outstanding shares of JIT
common stock.

Palo Alto Products International and JIT operated under the same fiscal
year end as Flextronics, and accordingly, their respective balance sheets,
statements of operations, shareholders' equity and cash flows have been combined
with the Company's consolidated financial statements as of March 31, 1999 and
2000 and for each of the three fiscal years ended March 31, 2000.

The Company also completed several other immaterial pooling of interests
transactions. In connection with these mergers, the Company issued approximately
0.7 million ordinary shares. The historical operations of these entities were
not material to the Company's consolidated operations on either an individual or
an aggregate basis; therefore, prior period statements have not been restated
for these acquisitions.

Business Acquisitions

In fiscal 2001, the Company completed several immaterial business acquisitions.
These transactions have been accounted for under the purchase method of
accounting and accordingly, the results of the acquired businesses were included
in the Company's consolidated statements of operations from the acquisition
dates forward. Comparative proforma information has not been presented, as the
results of the acquired operations were not material to the Company's
consolidated financial statements. In connection with these business
acquisitions, the Company paid total cash consideration of approximately $146.4
million, net of cash acquired, and issued approximately 9.8 million ordinary
shares, which equated to approximately $338.6 million of purchase price. The
fair value of the ordinary shares issued were determined based on the quoted
market prices of the Company's ordinary shares for a reasonable period,
generally three days, before and after the date the terms of the acquisitions
were agreed to and announced.

The aggregate purchase price paid for these business acquisitions was
allocated to the net assets acquired based on their estimated fair values at the
dates of the acquisitions. The purchase price for certain acquisitions is
subject to adjustments for contingent consideration, based upon the businesses
achieving specified levels of earnings through December 2003. The contingent
consideration has not been recorded as purchase price, pending the outcome of
the contingency. The fair value of the net liabilities acquired, amounted to
approximately $117.3 million, including estimated acquisition costs. The costs
of acquisitions have been allocated on the basis of the estimated fair value of
assets acquired and liabilities assumed. Goodwill and intangibles resulting from
these acquisitions amounted to approximately $602.3 million. The respective
goodwill associated with these acquisitions is amortized over various years,
none of which exceed ten years. Also, the Company increased goodwill in the
amount of approximately $12.5 million for contingent purchase price adjustments
for historical acquisitions during the current fiscal year.

FISCAL 2000

Pooling of Interests Merger

In fiscal 2000, the Company acquired 100% of the outstanding shares of
Kyrel Ems Oyj ("Kyrel") and PCB Assembly, Inc. ("PCB"). These acquisitions were
accounted for as pooling of interests and the consolidated financial statements
have been prepared to give retroactive effect to the mergers.

Kyrel is an electronics manufacturing services provider with operations in
Finland and France. As a result of the merger, the Company issued approximately
7.3 million ordinary shares in exchange for all the outstanding Kyrel shares.
Kyrel operated under a calendar year end, prior to merging with Flextronics, and
accordingly, Kyrel's balance sheets, statements of operations, shareholders'
equity and cash flows as of December 31, 1997 and 1998 and for each of the three
years ended December 31, 1998 have been combined with the Company's consolidated
financial statements as of March 31, 1998 and 1999 and for each of the three
fiscal years ended March 31, 1999. In fiscal 2000, Kyrel's fiscal year end was
changed to conform to the Company's fiscal year end. Accordingly, Kyrel's
operations for the three months ended March 31, 1999, have been excluded from
the consolidated results of operations for fiscal 2000 and have been reported as
an adjustment to retained earnings in the first quarter of fiscal 2000.

PCB is an electronics manufacturing service provider based in the United
States. As a result of the merger, the Company issued approximately 2.2 million
ordinary shares in exchange for all the outstanding PCB shares, of which
approximately 0.2 million ordinary shares are to be issued upon resolution of
certain general and specific contingencies. PCB operated under the same fiscal
year end as the Company and, accordingly, their respective balance sheets,
statements of operations, shareholders' equity and cash flows have been combined
with Flextronics' consolidated financial statements as of March 31, 1999 and
2000 and for each of the three fiscal years ended March 31, 2000.

The Company also completed several other immaterial pooling of interests
transactions in fiscal 2000. In connection with these mergers, the Company
issued 1.8 million ordinary shares. The historical operations of these entities
were not material to the Company's consolidated operations on either an
individual or an aggregate basis; therefore, prior period statements have not
been restated for these acquisitions.

Business Acquisitions

In fiscal 2000, the Company acquired several immaterial businesses and made
a payment of an earn-out arrangement to the former owners of Great Sino
Electronics Technology (a company acquired by DII in August 1998, as further
discussed below). These transactions have been accounted for under the purchase
method of accounting and accordingly, the results of the acquired businesses
were included in the Company's consolidated statements of operations from the
acquisition dates forward. Comparative proforma information has not been
presented, as the results of the acquired operations were not material to the
Company's consolidated financial statements. In connection with these business
acquisitions, the Company paid total cash consideration of approximately $51.6
million, net of cash acquired.

The aggregate purchase price paid for these business acquisitions was
allocated to the net assets acquired based on their estimated fair values at the
dates of the acquisitions. The fair value of the net assets acquired amounted to
approximately $17.9 million, including estimated acquisition costs. The costs of
acquisitions have been allocated on the basis of estimated fair values of assets
acquired and liabilities assumed. Goodwill and intangibles resulting from these
acquisitions amounted to approximately $33.7 million. The respective goodwill
associated with these acquisitions is amortized over ten years. Also, the
Company increased goodwill in the amount of approximately $34.1 million for
contingent purchase price adjustments for historical acquisitions during fiscal
2000.

FISCAL 1999

Business Acquisitions

In fiscal 1999, the Company completed several immaterial business
acquisitions. These transactions have been accounted for under the purchase
method of accounting and accordingly, the results of the acquired businesses
were included in the Company's consolidated statements of operations from the
acquisition dates forward. Comparative pro forma information has not been
presented, as the results of the acquired operations were not material to the
Company's consolidated financial statements. In connection with these business
acquisitions, the Company paid total cash consideration of approximately $130.4
million and issued approximately 0.5 million ordinary shares, which equated to
approximately $4.8 million of purchase price.

The aggregate purchase price paid for these business acquisitions was
allocated to the net assets acquired based on their estimated fair values at the
dates of acquisitions. The fair value of the net assets acquired, amounted to
approximately $50.4 million, including estimated acquisition costs. The costs of
acquisitions have been allocated on the basis of estimated fair values of assets
acquired and

liabilities assumed. Goodwill and intangibles resulting from these acquisitions
amounted to approximately $84.8 million. The respective goodwill associated with
these acquisitions is amortized over fifteen years.

12. SEGMENT REPORTING

Information about segments for the years ended March 31 is as follows (in
thousands):

1999 2000 2001
------------ ------------ ------------

Net Sales:
Asia ............................................... $ 898,304 $ 1,588,665 $ 2,467,629
Americas ........................................... 1,875,677 2,936,441 5,466,547
Western Europe ..................................... 666,763 1,391,965 2,356,281
Central Europe ..................................... 572,289 1,132,242 2,147,788
Intercompany eliminations .......................... (60,247) (90,191) (328,546)
------------ ------------ ------------
$ 3,952,786 $ 6,959,122 $ 12,109,699
============ ============ ============
Income (Loss) before Income Taxes:
Asia ............................................... $ 61,845 $ 102,541 $ 13,611
Americas ........................................... (52,774) (4,149) (319,420)
Western Europe ..................................... 12,803 23,833 7,740
Central Europe ..................................... 31,839 44,107 33,333
Intercompany eliminations, corporate allocations and
Motorola one-time non-cash charge (see Note 9) .. (14,344) 15,316 (287,568)
------------ ------------ ------------
$ 39,369 $ 181,648 $ (552,304)
============ ============ ============
Long-Lived Assets:
Asia ............................................... $ 286,797 $ 449,824 $ 503,094
Americas ........................................... 511,036 712,215 636,399
Western Europe ..................................... 240,759 275,935 371,064
Central Europe ..................................... 114,734 171,165 317,884
------------ ------------ ------------
$ 1,153,326 $ 1,609,139 $ 1,828,441
============ ============ ============
Depreciation and Amortization:*
Asia ............................................... $ 25,492 $ 39,889 $ 54,038
Americas ........................................... 69,079 86,967 126,012
Western Europe ..................................... 18,933 42,534 56,667
Central Europe ..................................... 11,854 18,207 49,734
------------ ------------ ------------
$ 125,358 $ 187,597 $ 286,451
============ ============ ============
Capital Expenditures:
Asia ............................................... $ 83,382 $ 155,243 $ 178,557
Americas ........................................... 141,082 214,224 284,340
Western Europe ..................................... 127,471 52,396 125,072
Central Europe ..................................... 57,720 83,570 193,252
------------ ------------ ------------
$ 409,655 $ 505,433 $ 781,221
============ ============ ============

* Excludes unusual charges related to property, plant and equipment and
goodwill impairment charges of $54,795 and $232,534 in fiscal 1999 and
fiscal 2001, respectively. See Note 9, "Unusual Charges," for additional
information regarding unusual charges.

For purposes of the preceding tables, "Asia" includes China, Malaysia,
Singapore, Thailand and Taiwan, "Americas" includes the U.S., Mexico, and
Brazil, "Western Europe" includes Denmark, Finland, France, Germany, Norway,
Poland, Sweden, Switzerland and the United Kingdom and "Central Europe" includes
Austria, the Czech Republic, Hungary, Ireland, Israel, Italy and Scotland.

Geographic revenue transfers are based on selling prices to unaffiliated
companies, less discounts.

During fiscal 1999, Hungary accounted for approximately 11% of net sales.
No other foreign country accounted for more than 10% of net sales in fiscal
1999. China and Hungary accounted for approximately 20% and 11% of long-lived
assets at March 31, 1999, respectively. No other foreign country accounted for
more than 10% of long-lived assets at March 31, 1999.

During fiscal 2000, China, Sweden and Hungary accounted for approximately
11%, 12% and 12% of net sales, respectively. No other foreign country accounted
for more than 10% of net sales in fiscal 2000. China accounted for approximately
24% of long-lived assets at March 31, 2000. No other foreign country accounted
for more than 10% of long-lived assets at March 31, 2000.

During fiscal 2001, China accounted for over 10% of net sales. No other
foreign country accounted for more than 10% of net sales in fiscal 2001. China
and Hungary accounted for approximately 17% and 11% of long-lived assets at
March 31, 2001, respectively. No other foreign country accounted for more than
10% of long-lived assets at March 31, 2001.

13. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following table contains selected unaudited quarterly financial data
for fiscal years 2000 and 2001:

FISCAL YEAR ENDED
MARCH 31, 2000
--------------------------------------------------------------
FIRST SECOND THIRD FOURTH
----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Net sales ......................... $ 1,237,320 $ 1,525,366 $ 1,967,740 $ 2,228,696
Cost of sales ..................... 1,112,493 1,383,783 1,797,643 2,041,323
Unusual charges ................... -- -- -- 7,519
----------- ----------- ----------- -----------
Gross profit (loss) ............ 124,827 141,583 170,097 179,854
Selling, general and
administrative .................. 67,996 73,733 86,534 91,689
Goodwill and intangibles
amortization .................... 9,754 8,787 10,735 12,050
Unusual charges ................... -- 3,523 -- --
Interest and other expense
(income), net ................... 14,420 19,236 23,367 12,889
----------- ----------- ----------- -----------
Income (loss) before
income taxes ................. 32,657 36,304 49,461 63,226
Provision for (benefit from)
income taxes .................... 5,870 5,349 1,662 10,199
----------- ----------- ----------- -----------
Net income (loss) .............. $ 26,787 $ 30,955 $ 47,799 $ 53,027
=========== =========== =========== ===========
Diluted earnings (loss)
per share ....................... $ 0.08 $ 0.09 $ 0.12 $ 0.12
=========== =========== =========== ===========
Shares used in computing
diluted per share amounts ....... 359,213 360,465 384,017 427,521
=========== =========== =========== ===========

FISCAL YEAR ENDED
MARCH 31, 2001
---------------------------------------------------------------
FIRST SECOND THIRD FOURTH
----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Net sales ......................... $ 2,676,974 $ 3,078,998 $ 3,239,293 $ 3,114,434
Cost of sales ..................... 2,470,408 2,829,406 2,964,034 2,864,048
Unusual charges ................... 83,721 24,268 38,550 363,956
----------- ----------- ----------- -----------
Gross profit (loss) ............ 122,845 225,324 236,709 (113,570)
Selling, general and
administrative .................. 94,918 107,931 113,736 113,524
Goodwill and intangibles
amortization .................... 9,370 12,505 15,141 26,525
Unusual charges ................... 409,383 24,127 7,726 21,611
Interest and other expense
(income), net ................... (4,199) 22,359 22,092 26,863
----------- ----------- ----------- -----------
Income (loss) before
income taxes ................. (386,627) 58,402 78,014 (302,093)
Provision for (benefit from)
income taxes .................... (16,065) 8,475 10,232 (108,927)
----------- ----------- ----------- -----------
Net income (loss) .............. $ (370,562) $ 49,927 $ 67,782 $ (193,166)
=========== =========== =========== ===========
Diluted earnings (loss)
per share ....................... $ (0.88) $ 0.10 $ 0.14 $ (0.41)
=========== =========== =========== ===========
Shares used in computing
diluted per share amounts ....... 418,857 480,801 478,657 468,069
=========== =========== =========== ===========

14. SUBSEQUENT EVENTS (UNAUDITED)

In April 2001, the Company entered into a definitive agreement with
Ericsson with respect to its management of the operations of Ericsson's mobile
telephone operations. Operations under this arrangement commenced in the first
quarter of fiscal 2002. Under this agreement the Company is to provide a
substantial portion of Ericsson's mobile phone requirements. The Company will
assume responsibility for product assembly, new product prototyping, supply
chain management and logistics management in which we will process customer
orders from Ericsson and configure and ship products to Ericsson's customers. In
connection with this relationship, the Company will employ the existing
workforce for certain operations, and will purchase from Ericsson certain
inventory, equipment and other assets, and may assume certain accounts payable
and accrued expenses at their net book value. The Company has not completed the
purchasing of the various assets, but estimate that the net asset purchase price
is expected to be approximately $450.0 million. We anticipate completing the
remaining purchases by the end of the first quarter of fiscal 2002.

In April 2001, the Company announced that it had signed a memorandum of
understanding with Alcatel to purchase its manufacturing facility and related
assets located in Laval, France. Upon completion of this transaction, the
Company will enter into a long-term supply agreement with Alcatel to provide
printed circuit board assembly, final systems assembly and various engineering
support services. The transaction is subject to applicable governmental
approvals and customary conditions of closing. This transaction will be
accounted for as a purchase of assets. The estimated purchase price is subject
to final negotiations, due diligence and working capital levels at the time of
closing, but is not expected to be a material cash requirement.

In connection with the Company's strategic alliance with Motorola in May
2000, Motorola purchased an equity instrument. In June 2001, the Company entered
into an agreement with Motorola under which it repurchased this equity
instrument for $112.0 million. No current or planned manufacturing programs are
affected by this repurchase, and the Company anticipates that Motorola will
continue to be a customer following this repurchase, although the Company's
future revenue from Motorola may be less than it would have been had this
instrument remained in effect.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The names, ages and positions of our directors and officers as of June 1,
2001 are as follows:

NAME AGE POSITION
---- --- --------

Michael E. Marks................................................. 50 Chairman of the Board and Chief Executive Officer
Robert R. B. Dykes............................................... 51 President, Systems Group and Chief Financial Officer
Ronny Nilsson.................................................... 52 President, Western European Operations
Michael McNamara................................................. 44 President, Americas Operations
Ash Bhardwaj..................................................... 37 President, Asia Pacific Operations
Humphrey Porter.................................................. 53 President, Central/Eastern European Operations
Steven C. Schlepp................................................ 44 President, Multek
Ross Manire...................................................... 49 President, Flextronics Enclosure Systems
Ronald R. Snyder................................................. 44 President, Flextronics Semiconductor
Thomas J. Smach.................................................. 41 Vice President of Finance
Tsui Sung Lam.................................................... 51 Director
Michael J. Moritz................................................ 46 Director
Richard L. Sharp................................................. 54 Director
Patrick Foley.................................................... 69 Director
Chuen Fah Alain Ahkong........................................... 52 Director
Goh Thiam Poh Tommie............................................. 50 Director

MICHAEL E. MARKS - Mr. Marks has been our Chief Executive Officer since
January 1994. He has been the Chairman of our Board of Directors since July 1993
and a member since December 1991. From November 1990 to December 1993, Mr. Marks
was President and Chief Executive Officer of Metcal, Inc., a precision heating
instrument company. He received a B.A. and an M.A. from Oberlin College and an
M.B.A. from the Harvard Business School.

ROBERT R. B. DYKES - Mr. Dykes has served as our Chief Financial Officer
since February 1997 and as our President of the Systems Group since April 1999.
From February 1997 to April 1999, he served as our Senior Vice President of
Finance and Administration, and from January 1994 to August 1997 as a member of
our Board of Directors. From 1988 to February 1997, Mr. Dykes served as
Executive Vice President, Worldwide Operations and Chief Financial Officer of
Symantec Corporation, an application and system software products company. He
received a Bachelor of Commerce and Administration from Victoria University in
Wellington, New Zealand.

MICHAEL McNAMARA - Mr. McNamara has served as our President of Americas
Operations since April 1997. Prior to his promotion, he served as Vice President
of North American Operations since April 1994. From May 1993 to March 1994, Mr.
McNamara served as President and Chief Executive Officer of Relevant Industries,
Inc., which we acquired in March 1994. From May 1992 to May 1993, he served as
Vice President, Manufacturing Operations at Anthem Electronics, an electronics
distributor. From April 1987 to May 1992, he was a Principal of Pittiglo, Rabin,
Todd & McGrath, an operations consulting firm. Mr. McNamara received a B.S. from
the University of Cincinnati and an M.B.A. from Santa Clara University.

RONNY NILSSON - Mr. Nilsson has served as our President of Western European
Operations since April 1997. From May 1995 to April 1997, he served as Vice
President and General Manager of Supply and Distribution, and Vice President of
Procurement of Ericsson Business Networks. From January 1991 to May 1995, Mr.
Nilsson served as Director of Production of the EVOX+RIFA Group, a manufacturer
of components, and Vice President of RIFA AB. He received a certificate in
Mechanical Engineering from the Lars Kagg School in Kalmar, Sweden and
certificates from the Swedish Management Institute and the Ericsson Management
Program.

ASH BHARDWAJ - Mr. Bhardwaj joined Flextronics in 1988 and was promoted to
President of Asia-Pacific Operations. Prior to his promotion, he served as our
Vice President of the China region. In addition, Mr. Bhardwaj was General
Manager for our Flextronics plant in Shekou, China. He received a degree in
Electrical Engineering from Thapar Institute of Engineering and Technology and
an M.B.A. from Southeastern Louisiana University.

HUMPHREY PORTER - Mr. Porter has served as our President of Central and
Eastern European Operations since October 1997. From July 1994 to October 1997,
he served as President and Chief Executive Officer of Neutronics Electronics
Industries Holding

AG, which we acquired in October 1997. Prior to joining Neutronics, Mr. Porter
served in various positions at Philips, including Industrial Director for
Philips Audio Austria from 1989 to 1994 and Managing Director of the Philips
Audio factory in Penang, Malaysia from 1984 to 1989. He received his B.Sc. in
Production Engineering from Trent University.

STEVEN C. SCHLEPP - Mr. Schlepp has served as our President of Multek since
April 2000 following our acquisition of DII. From June 1996 to April 2000, he
served as Senior Vice President of DII and President of Multilayer Technology,
Inc. From January 1991 until June 1996, Mr. Schlepp served as President of
Toppan West Incorporated, a wholly owned subsidiary of Toppan Printing Ltd.

ROSS MANIRE - Mr. Manire has served as our President of Flextronics
Enclosure Systems, a division of Flextronics, since our acquisition of Chatham
Technologies, Inc. in August 2000. At Chatham, Mr. Manire served as the
President and Chief Executive Officer. Prior to joining Chatham, he was the
Senior Vice President and General Manager of the Carrier Systems Business Unit
of 3Com Corporation, a position he held since 1995. He has also served in
various executive positions with U.S. Robotics, which was acquired by 3Com in
June 1997, including Senior Vice President of Operations and Chief Financial
Officer. Mr. Manire received a B.A. in Economics from Davidson College and an
M.B.N.A. in Business from the University of Chicago.

RONALD R. SNYDER - Mr. Snyder has served as our President of Flextronics
Semiconductor since April 2000 following our acquisition of DII. From May 1998
to April 2000, he served as Senior Vice President of DII and President of DII
Semiconductor. From March 1994 to May 1998, Mr. Snyder served as Senior Vice
President of Sales and Marketing of DII. Prior to DII, he served as President of
Dovatron Manufacturing Colorado, a division of Dovatron International, Inc. from
March 1993 to March 1994.

THOMAS J. SMACH - Mr. Smach has served as our Vice President of Finance
since April 2000 following our acquisition of DII. From August 1997 to April
2000, he held several positions that included Senior Vice President, Chief
Financial Officer and Treasurer of DII. From March 1994 to August 1997, Mr.
Smach served as Corporate Controller and Vice President. From 1982 to March
1994, he served as a certified public accountant with KPMG LLP. Mr. Smach
received his B.Sc. in Accounting from State University of New York at
Binghamton.

TSUI SUNG LAM - Mr. Tsui has served as a member of our Board of Directors
since 1991. From January 1994 to April 1997, he served as our President and
Chief Operating Officer, and from June 1990 to December 1993 he served as our
Managing Director and Chief Executive Officer. Between 1982 and June 1990, Mr.
Tsui served in various positions for Flextronics, Inc., our predecessor,
including Vice President of Asian Operations. He received diplomas in Production
Engineering and Management Studies from Hong Kong Polytechnic, and a certificate
in Industrial Engineering from Hong Kong University.

MICHAEL J. MORITZ - Mr. Moritz has served as a member of our Board of
Directors since July 1993. Since 1988, he has been a General Partner of Sequoia
Capital, a venture capital firm. Mr. Moritz also serves as a director of Yahoo,
Inc., Saba Software and several privately-held companies.

RICHARD L. SHARP - Mr. Sharp has served as a member of our Board of
Directors since July 1993. He is Chairman of the Board and Chief Executive
Officer of Circuit City Stores, Inc., a consumer electronics and appliance
retailer. Mr. Sharp joined Circuit City as an Executive Vice President in 1982.
He was President from June 1984 to March 1997 and became Chief Executive Officer
in 1986, and Chairman of the Board in 1994. Mr. Sharp also serves as a director
of Fort James Corporation.

PATRICK FOLEY - Mr. Foley has served as a member of our Board of Directors
since October 1997. He is Chairman, President and Chief Executive Officer of DHL
Corporation, Inc. and its major subsidiary, DHL Airways, Inc., a global
document, package and airfreight delivery company. Mr. Foley joined DHL in
September 1988 with more than thirty years experience in hotel and airline
industries. He also serves as a director of Continental Airlines, Inc., Del
Monte Corporation, DHL International, Foundation Health Systems, Inc. and
Glenborough Realty Trust, Inc.

CHUEN FAH ALAIN AHKONG - Mr. Ahkong has served as a member of our Board of
Directors since October 1997. He is a founder of Pioneer Management Services
Pte. Ltd., a Singapore-based consultancy firm, and has been the Managing
Director of Pioneer since 1990. Pioneer provides advice to us and other
multinational corporations on matters related to international taxation.

GOH THIAM POH TOMMIE -- Mr. Goh has been a member of our Board of Directors
since December 2000. He founded JIT Electronics Pte Ltd in 1988 and grew the
company to one of the top 20 largest electronics manufacturing services
providers in the world before the merger with Flextronics in November 2000. Mr
Goh was named "Entrepreneur of the Year" in 1997 and

"Businessman of the Year" in 1999 in Singapore. He was conferred the Doctor
of Philosophy in Business Administration by Wisconsin International University
in 2000.

ITEM 11. EXECUTIVE COMPENSATION

The following table presents information concerning the compensation paid
or accrued by us for services rendered during fiscal 2001, 2000 and 1998 by the
Chief Executive Officer and each of our four most highly compensated executive
officers whose total salary and bonus for fiscal 2001 exceeded $100,000.

SUMMARY COMPENSATION TABLE

LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION OTHER SECURITIES
FISCAL ----------------------- ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
--------------------------- ---------- ---------- ---------- ------------- ------------ ---------------

Michael E. Marks ................... 2001 $ 600,000 $1,285,000 $ 5,082(1) 1,036,456 $ 8,627(9)
Chairman and 2000 450,000 363,750 230,385(2) 600,000 8,350(10)
Chief Executive Officer 1999 400,000 339,315 9,617(3) 3,200,000 7,701(11)
Michael McNamara ................... 2001 450,000 831,250 3,925(1) 600,000 4,702(12)
President, Americas Operations 2000 375,000 201,250 3,867(1) 600,000 4,750(12)
1999 325,000 177,416 22,611(3) 1,784,000 5,000(12)
Robert R.B. Dykes .................. 2001 425,000 798,125 4,668(1) 400,000 5,329(12)
President, Systems Group and 2000 337,500 156,000 4,599(1) 240,000 3,500(12)
Chief Financial Officer 1999 300,000 166,008 25,337(3) 440,000 5,000(12)
Humphrey Porter .................... 2001 400,000 375,000 27,500(4) 200,000 36,000(13)
President, Central/ Eastern 2000 300,000 195,000 20,000(5) 160,000 36,000(13)
European Operations 1999 250,000 149,000 21,000(6) 880,000 30,000(14)
Ronny Nilsson ...................... 2001 362,545 405,350 10,154(1) 200,000 33,614(14)
President, Western European 2000 317,684 129,563 17,436(7) 160,000 34,884(14)
Operations 1999 315,000 148,859 18,096(8) 320,000 43,497(14)

(1) Represents a vehicle allowance.

(2) Represents a vehicle allowance of $3,868 and forgiveness of a promissory
note due to one of our subsidiaries of $200,000 and forgiveness of
interest payment of $26,517 on the promissory note.

(3) Represents payment for a company vehicle.

(4) Represents a vehicle allowance of $13,500 and a housing allowance of
$14,000.

(5) Represents a vehicle allowance of $12,000 and a housing allowance of
$8,000.

(6) Represents a vehicle allowance of $7,000 and an apartment allowance of
$14,000.

(7) Represents a vehicle allowance of $10,166 and a housing allowance of
$7,270.

(8) Includes a vehicle allowance of $10,404 and an apartment allowance of
$7,692.

(9) Represents our contributions to the 401(k) plan of $4,750 and life and
disability insurance premium payments of $3,877.

(10) Represents our contributions to the 401(k) plan of $4,750 and life and
disability insurance premium payments of $3,600.

(11) Represents our contributions to the 401(k) plan of $5,000, and life and
disability insurance premium payments of $2,701.

(12) Represents our contributions to the 401(k) plan.

(13) Represents our contributions to a pension retirement fund of $24,000 and
life insurance premium payments of $12,000.

(14) Represents our contributions to a pension retirement fund.

OPTION GRANTS IN FISCAL 2001

The following table presents information regarding option grants during
fiscal 2001 to our Chief Executive Officer and each of our four other most
highly compensated executive officers. All options were granted pursuant to our
1993 Share Option Plan.

The options shown in the table were granted at fair market value and are
incentive stock options (to the extent permitted under the Internal Revenue
Code). Options granted on or before October 1, 2001 expire five years from the
date of grant, subject to earlier termination upon termination of the optionee's
employment. Options granted after October 1, 2001 expire ten years from the date
of grant, subject to earlier termination as described above. The options become
exercisable over a four-year period, with 25% of the shares vesting on the first
anniversary of the date of grant and 1/36th of the shares vesting for each full
calendar month that an optionee renders services to us thereafter. Each option
fully accelerates in the event that, in the 18-month period following certain
mergers or acquisitions of us, the optionee's employment with us is terminated
or his duties are substantially reduced or changed. Each option includes a
limited stock appreciation right pursuant to which the option will automatically
be canceled upon the occurrence of certain hostile tender offers, in return for
a cash distribution from us based on the tender offer price per share. The
exercise price of each option may be paid in cash or through a cashless exercise
procedure involving a same-day sale of the purchase shares. We granted options
to purchase an aggregate of 14,655,646 Ordinary Shares to our employees during
fiscal 2001.

In accordance with the rules of the Securities and Exchange Commission, the
table presents the potential realizable values that would exist for the options
at the end of their respective five-year terms. These values are based on
assumed rates of annual compound stock price appreciation of 5% and 10% from the
date the option was granted to the end of the option term. Potential realizable
values are computed by:

- multiplying the number of ordinary shares subject to a given option by
the trading price per share of our ordinary shares on the date of grant;

- assuming that the aggregate option exercise price derived from the
calculation compounds at the annual 5% or 10% rates should in the table
for the entire five or ten year term of the option, as the case may be;
and

- subtracting from that result the aggregate option exercise price.

The assumed 5% and 10% rates of share price appreciation are mandated by
rules of the Securities and Exchange Commission and do not represent our
estimate or projection of future ordinary share prices. The closing sale price
per share as reported on the Nasdaq National Market on March 30, 2001, the last
trading day of fiscal 2001, was $15.00.

INDIVIDUAL GRANTS
----------------------------------------------------------------
POTENTIAL REALIZE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATED
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------------
NAME GRANTED FISCAL 2001 SHARE DATE 5% 10%
------------------------ ------------ ------------ ------------ ------------ ------------ ------------

Michael E. Marks ....... 36,456 0.25% $ 32.4375 04/07/2005 $ 326,714 $ 721,953
1,000,000 6.82 23.1875 12/20/2010 14,582,494 36,954,903
Michael McNamara ....... 600,000 4.09 23.1875 12/20/2010 8,749,496 22,172,942
Robert R.B. Dykes ...... 400,000 2.73 23.1875 12/20/2010 5,832,998 14,781,961
Humphrey Porter ........ 200,000 1.36 23.1875 12/20/2010 2,916,499 7,390,981
Ronny Nilsson .......... 200,000 1.36 23.1875 12/20/2010 2,916,499 7,390,981

AGGREGATED OPTION EXERCISES IN FISCAL 2001 AND OPTION VALUES AT MARCH 31, 2001

The following table presents information concerning the exercise of options
during fiscal 2001 by our Chief Executive Officer and each of our four other
most highly compensated executive officers, including the aggregate amount of
gains on the date of exercise. The amounts set forth in the column entitled
"Value Realized" represent the fair market value of the ordinary shares
underlying the option on the date of exercise less the aggregate exercise price
of the option.

In addition, the table includes the number of shares covered by both
exercisable and unexercisable stock options as of March 31, 2001. Also reported
are values of "in-the-money" options that represent the positive spread between
the respective exercise prices of outstanding stock options and $15.00 per
share, which was the closing price per ordinary share as reported on the Nasdaq
National

Market on March 30, 2001, the last day of trading for fiscal 2001. These values,
unlike the amounts set forth in the column entitled "Value Realized," have not
been, and may never be, realized.

NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
NUMBER OF OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES MARCH 31, 2001 MARCH 31, 2001
ACQUIRED VALUE ----------------------------------- -------------------------------
NAME ON EXERCISE REALIZED VESTED UNVESTED VESTED UNVESTED
---- ------------ ------------ ----------------- ----------------- ----------------- -------------

Michael E. Marks........... 935,274 $ 25,047,854 2,866,039 2,804,167 $42,990,585 $27,062,505
Michael McNamara........... 109,298 2,925,023 1,767,448 1,666,982 26,511,720 16,004,730
Robert R.B. Dykes.......... 377,166 10,721,962 1,131,002 775,832 16,965,030 5,637,480
Humphrey Porter............ 231,997 8,934,592 183,670 678,333 2,755,050 7,174,995
Ronny Nilsson.............. -- -- 900,000 -- 10,500,000 --

EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS

Mr. Nilsson. In connection with the acquisition of two manufacturing
facilities from Ericsson Business Networks AB located in Karlskrona, Sweden, we
entered into an Employment and Noncompetition Agreement and a Services Agreement
with Mr. Ronny Nilsson, each dated as of April 30, 1997.

Pursuant to the Employment Agreement, Mr. Nilsson:

- was appointed as our Senior Vice President, Europe for a four-year
period;

- is entitled to receive an annual salary of $250,000; and

- is entitled to a bonus of up to 45% of his annual salary upon the
successful completion of certain performance criteria.

Pursuant to the Services Agreement, Mr. Nilsson is to perform management
consultation and guidance services to us in consideration for:

- an aggregate of $775,000 which was paid between March 31, 1997 and April
15, 1998; and

- the issuance by us to Mr. Nilsson of an interest-free loan in the amount
of 51,875 kronor ($415,000 as of April 15, 1997, the date of the
issuance of the loan) which was repaid by Mr. Nilsson in two
installments of $210,000 on September 15, 1997 and $205,000 on April 15,
1998.

In connection with Mr. Nilsson's repayment of the interest-free loan, on
April 15,1998 we paid to Mr. Nilsson as compensation an amount equal to the two
installments paid by Mr. Nilsson.

Mr. Goh. In connection with our acquisition of JIT Holdings Limited, JIT
entered into a noncompetition agreement with Goh Thiam Poh Tommie, Chairman of
the Board of JIT and a principal shareholder of JIT. Pursuant to this agreement,
Mr. Goh agreed that within specific geographic areas he will not own or manage a
business that competes with JIT or solicit any employees or customers of JIT.
This agreement will terminate upon the earlier of one year after the termination
of Mr. Goh's employment with JIT or November 30, 2003.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the compensation committee of our Board of Directors during
fiscal 2001 were Messrs. Sharp and Moritz. None of our officers serve on our
compensation committee. No interlocking relationships exist between our Board of
Directors or compensation committee and the board of directors or compensation
committee of any other company.

DIRECTOR COMPENSATION

Each individual who first becomes a non-employee Board member is granted a
stock option to subscribe for 15,000 ordinary shares at an exercise price equal
to the fair market value of our ordinary shares on the date of grant. After this
initial grant, on the date of each Annual General Meeting, each individual who
is at that time serving as a non-employee director receives a stock option to
subscribe for 3,000 ordinary shares at an exercise price equal to the fair
market value of our ordinary shares on the date of grant, all

pursuant to the automatic option grant provisions of our 1993 Share Option Plan.
Pursuant to this program, Messrs. Ahkong, Moritz, Sharp, Foley and Tsui each
received option grants for 3,000 ordinary shares in fiscal 2001 at an exercise
price of $42.0313 per share.

In addition, all directors receive reimbursement of reasonable out-of-pocket
expenses incurred in connection with meetings of the Board of Directors. No
non-employee Director receives any cash compensation for services rendered as a
director. No director who is our employee receives compensation for services
rendered as a director.

COMPLIANCE UNDER SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16 of the Securities Exchange Act of 1934, as amended, requires our
directors and officers, and persons who own more than 10% of our common stock to
file initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission and the Nasdaq National Market. Such persons
are required by Securities and Exchange Commission regulations to furnish us
with copies of all Section 16(a) forms that they file. Based solely on our
review of the copies of such forms furnished to us and written representations
from our executive officers and directors, we believe that all Section 16(a)
filing requirements for the year ended March 31, 2001 were met with the
exception of the following: Messrs. Manire, Schlepp, Snyder and Smach failed to
file timely Forms 3; Messrs. Bhardwaj, McNamara, Marks and Schlepp failed to
timely file Forms 4 for October 2000; and Messrs. Bhardwaj, McNamara, Marks,
Porter, Schlepp and Smach failed to file timely Forms 4 for February 2001.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of May 1, 2001 regarding the
beneficial ownership of the our ordinary shares, by

- each shareholder known to us to be the beneficial owner of more than 5%
of our ordinary shares;

- each director;

- each executive officer named in the Summary Compensation Table; and

- all directors and executive officers as a group.

Information in this table as to our directors and executive officers is
based upon information supplied by these individuals. Information in this table
as to our 5% shareholders is based solely upon the Schedules 13G filed by these
shareholders with the Securities and Exchange Commission. Where information
regarding shareholders is based on Schedules 13G, the number of shares owned is
as of the date for which information was provided in such schedules.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission that deem shares to be beneficially owned by
any person who has voting or investment power with respect to such shares.
Ordinary shares subject to options that are currently exercisable or exercisable
within 60 days of May 1, 2001 are deemed to be outstanding and to be
beneficially owned by the person holding such options for the purpose of
computing the percentage ownership of such person but are not treated as
outstanding for the purpose of computing the percentage ownership of any other
person. Unless otherwise indicated below, the persons and entities named in the
table have sole voting and sole investment power with respect to all the shares
beneficially owned, subject to community property laws where applicable.

In the table below, percentage ownership is based upon 480,058,647 ordinary
shares outstanding as of May 1, 2001.

SHARES BENEFICIALLY OWNED
-------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT
---------------- ------------

5% SHAREHOLDERS:
Entities associated with AXA Financial, Inc.(1) .......... 45,279,073 9.4%
1290 Avenue of the Americas
New York, NY 10104
T. Rowe Price Associates, Inc.(2) ........................ 26,521,115 5.5
100 E. Pratt Street
Baltimore, MD 21202
Entitles associated with FMR Corporation(3) .............. 24,634,204 5.1
82 Devonshire Street
Boston, MA 02109

EXECUTIVE OFFICERS AND DIRECTORS:
Richard L. Sharp(4) ...................................... 6,062,202 1.3
Goh Thiam Poh Tommie ..................................... 5,573,114 1.2
Michael E. Marks(5) ...................................... 5,285,777 1.1
Michael McNamara(6) ...................................... 2,641,700 *
Robert R.B. Dykes(7) ..................................... 1,606,407 *
Michael J. Moritz(8) ..................................... 455,682 *
Ronny Nilsson(9) ......................................... 390,000 *
Tsui Sung Lam(10) ........................................ 313,946 *
Humphrey Porter(11) ...................................... 272,003 *
Patrick Foley(12) ........................................ 208,250 *
Chuen Fah Alain Ahkong(13) ............................... 28,250 *
------------ ------------
All 16 directors and executive officers as a group(14) ... 25,986,948 5.3%
============ ============

----------

* Less than 1%.

(1) Based on information supplied by AXA Financial, Inc. in an amended
Schedule 13G filed with the Securities and Exchange Commission on February
12, 2001.

(2) Based on information supplied by T. Rowe Price Associates, Inc. in a
Schedule 13G filed with the Securities and Exchange Commission on February
14, 2001.

(3) Based on information supplied by FMR Corporation in an amended Schedule
13G filed with the Securities and Exchange Commission on February 13,
2001.

(4) Includes 1,480,000 shares beneficially owned by Bethany Limited
Partnership. Mr. Sharp, the general partner of Bethany Limited
Partnership, has voting and investment power over such shares and may be
deemed to beneficially own such shares. Mr. Sharp disclaims beneficial
ownership of all such shares except to the extent of his proportionate
interest therein. Also includes 612,000 shares held by RLS Charitable
Remainder Unitrust of which Mr. Sharp is a co-trustee and 96,250 shares
subject to options exercisable within 60 days after May 1, 2001 held by
Mr. Sharp.

(5) Includes 24,000 shares held by the Justin Caine Marks Trust and 24,000
shares held by the Amy G. Marks Trust. Also includes 3,166,039 shares
subject to options exercisable within 60 days after May 1, 2001 held by
Mr. Marks.

(6) Includes 1,950,930 shares subject to options exercisable within 60 days
after May 1, 2001 held by Mr. McNamara.

(7) Includes 232,166 shares held by the Dykes Family LP Trust. Also includes
1,228,501 shares subject to options exercisable within 60 days after May
1, 2001 held by Mr. Dykes.

(8) Includes 359,432 shares held by the Maximus Trust. Also includes 96,250
shares subject to options exercisable within 60 days after May 1, 2001
held by Mr. Moritz.

(9) Represents 390,000 shares subject to options exercisable within 60 days
after May 1, 2001 held by Mr. Nilsson.

(10) Includes 271,594 shares subject to options exercisable within 60 days
after May 1, 2001 held by Mr. Tsui.

(11) Represents 272,003 shares subject to options exercisable within 60 days
after May 1, 2001 held by Mr. Porter.

(12) Includes 168,250 shares subject to options exercisable within 60 days
after May 1, 2001 held by Mr. Foley.

(13) Represents 28,250 shares subject to options exercisable within 60 days
after May 1, 2001 held by Mr. Ahkong.

(14) Includes 9,065,280 shares subject to options exercisable within 60 days
after May 1, 2001.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Other than compensation agreements and other arrangements, which are
described in "Executive" Compensation, and the transactions described below,
during fiscal 2001, there was not, nor is there currently proposed, any
transaction or series of similar transactions to which we were or will be a
party:

- in which the amount involved exceeded or will exceed $60,000; and

- in which any director, executive officer, holder of more than 5% of our
ordinary shares or any member of their immediate family had or will have
a direct or indirect material interest.

LOANS TO EXECUTIVE OFFICERS

Mr. Marks. On October 11, 2000, our principal U.S. subsidiary, Flextronics
International (USA), Inc., which we refer to in this section as Flextronics USA,
loaned $10,569,658 to Mr. Michael Marks, our Chairman of the Board and Chief
Executive Officer. Mr. Marks executed a promissory note in favor of Flextronics
USA that bore interest at a rate of 5.96% and was to mature on November 11,
2003. In fiscal 2001, Mr. Marks paid the principal in full, together with
accrued interest.

Mr. McNamara. On October 22, 1996, Flextronics USA loaned $135,900 to Mr.
Michael McNamara. Mr. McNamara executed a promissory note in favor of
Flextronics USA that bears interest at a rate of 7.00% and matures on October
22, 2001. The remaining outstanding balance of the loan as of March 31, 2001 was
$179,464 (representing $135,900 in principal and $43,564 in accrued interest).

On November 25, 1998, Flextronics USA loaned $130,000 to Mr. McNamara. Mr.
McNamara executed a promissory note in favor of Flextronics USA that bears
interest at a rate of 7.25% and matures on November 25, 2003. The remaining
outstanding balance of the loan as of March 31, 2001 was $152,797 (representing
$130,000 in principal and $22,797 in accrued interest).

On April 14, 1999, Flextronics USA loaned $950,000 to Mr. McNamara. Mr.
McNamara executed a promissory note in favor of Flextronics USA that bears
interest at a rate of 4.19% and matures on May 3, 2003. The remaining
outstanding balance of the loan as of March 31, 2001 was $1,089,663
(representing $950,000 in principal and $139,663 in accrued interest).

On October 11, 2000, Flextronics USA loaned $152,236 to Mr. McNamara. Mr.
McNamara executed a promissory note in favor of Flextronics USA that bears
interest at a rate of 5.96% and matures on November 11, 2003. The remaining
outstanding balance of the loan as of March 31, 2001 was $156,546 (representing
$152,236 in principal and $4,310 in accrued interest).

Mr. Dykes. On January 15, 1999, Flextronics USA loaned $200,100 to Mr.
Robert Dykes. Mr. Dykes executed a promissory note in favor of Flextronics USA
that bears interest at a rate of 7.25% and matures on January 15, 2004. In
fiscal 2001, Mr. Dykes paid the principal in full, together with accrued
interest.

On October 11, 2000, Flextronics USA loaned $1,046,886 to Mr. Dykes. Mr.
Dykes executed a promissory note in favor of Flextronics USA that bore interest
at a rate of 5.96% and was to mature on November 11, 2003. In fiscal 2001, Mr.
Dykes paid the principal in full, together with accrued interest.

Mr. Smach. On April 3, 2000, Flextronics USA loaned $1,000,000 to Mr.
Thomas J. Smach. Mr. Smach executed a Loan and Security Agreement and a
promissory note in favor of Flextronics USA that does not bear interest and
matures on April 3, 2005. The remaining outstanding balance of the loan as of
March 31, 2001 was $1,000,000 in principal.

Mr. Snyder. On April 20, 2000, Flextronics USA loaned $1,000,000 to Mr.
Ronald R. Snyder. Mr. Snyder executed a Loan and Security Agreement and a
promissory note in favor of Flextronics USA that did not bear interest and was
to mature on April 20, 2005. In fiscal 2001, Mr. Snyder paid the principal in
full.

OTHER LOANS TO EXECUTIVE OFFICERS

In connection with an investment partnership, Glouple Ventures LLC, one of
our subsidiaries, Flextronics International, NV, which we refer to in this
section as Flextronics NV, has entered into the following transactions with our
executive officers.

- in July 2000, Flextronics NV loaned $76,922 to each of Messrs. Marks,
McNamara, Dykes, Porter, Nilsson, Bhardwaj, Schlepp, Snyder and Smach,
and each executed a promissory note in favor of Flextronics NV that
bears interest at a rate of 6.40% and matures on August 15, 2010;

- in August 2000, Flextronics NV loaned an aggregate of $51,157 to each of
Messrs. Marks, McNamara, Dykes, Porter, Nilsson, Bhardwaj, Schlepp,
Snyder and Smach, and each executed promissory notes in favor of
Flextronics NV that bear interest at a rate of 6.22% and mature on
August 15, 2010; and

- in November 2000, Flextronics NV loaned an aggregate of $428,286 to each
of Messrs. Marks, McNamara, Dykes, Porter, Nilsson, Bhardwaj, Manire,
Schlepp, Snyder and Smach, and each executed promissory notes in favor
of Flextronics NV that bear interest at a rate of 6.09% and mature on
August 15, 2010.

As of March 31, 2001, the entire principal amount of these loans, together
with $102,698 of accrued interest, was outstanding.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) DOCUMENTS TO BE FILED AS PART OF THIS ANNUAL REPORT ON FORM 10-K

1. Financial Statements. See Item 8, "Financial Statements and
Supplementary Data."

2. Financial Statement Schedules. The following financial statement
schedule is filed as part of this report and should be read together
with our financial statements:

Schedule II -- Valuation and qualifying accounts

3. Exhibits. The following exhibits are filed with this annual report on
Form 10-K:

INCORPORATED BY REFERENCE
---------------------------------------------------
EXHIBIT FILING EXHIBIT FILED
NO. EXHIBIT FORM FILE NO. DATE NO. HEREWITH
--------- --------------------------------------- ---------- ----------- ----------- ----------- ----------

2.01 Exchange Agreement dated as of June 11, 10-K 000-23354 06-29-99 2.3
1999 among the Registrant, Flextronics
Holding Finland Oyj, Kyrel EMS Oyj, and
Seppo Parhankangas

2.02 Agreement and Plan of Merger dated November 8-K 000-23354 12-06-99 2.1
22, 1999 among the Registrant, Slalom
Acquisition Corp. and The DII Group, Inc.*

2.03 Agreement and Plan of Reorganization dated 8-K 000-23354 09-15-00 2.01
July 31, 2000 among the Registrant, Chatham
Acquisition Corporation, and Chatham
Technologies, Inc.*

2.04 Merger Agreement dated August 10, 2000 S-3 333-46770 09-27-00 2.4
among the Registrant, JIT Holdings Limited,
Goh Thiam Poh Tommie and Goh Mui Teck
William, as amended.*

2.05 Agreement and Plan of Reorganization dated S-3 333-46200 09-20-00 2.4
August 31, 2000 among the Registrant,
Lightning Metal Acquisition Corp., Coating
Acquisition Corp., Lightning Tool
Acquisition Corp., Lightning Metal
Specialties, Incorporated, Coating
Technologies, Inc., Lightning Tool and
Design, Inc., Lightning Metal Specialties
E.M.F., Ltd., Lightning Manufacturing
Solutions-Europe, Ltd., Lightning
Manufacturing Solutions Texas, L.L.C.,
Lightning Logistics, L.L.C., Papason,
L.L.C., 200 Scott Street, L.L.C., 80 Scott
Street, L.L.C., 230 Scott Street, L.L.C.,
1350 Lively Blvd, L.L.C., D.A.D.
Partnership, S.O.N. Partnership, S.O.N. II
Partnership, and shareholders and members
of such companies.*

2.06** Exchange Agreement dated January 14, 2000, X
among the Registrant, Palo Alto Products
International Pte. Ltd., and the
shareholders of Palo Alto Products
International Pte. Ltd., Palo Alto
Manufacturing (Thailand) Ltd., and Palo
Alto Plastic (Thailand) Ltd.

3.01 Memorandum and New Articles of Association 10-Q 000-23354 02-09-01 3.1
of the Registrant.

4.01 Indenture dated as of October 15, 1997 8-K 000-23354 10-22-97 10.1
between Registrant and State Street Bank
and Trust Company of California, N.A., as
trustee.

4.02 U.S. Dollar Indenture dated June 29, 2000 10-Q 000-23354 08-14-00 4.1
between the Registrant and Chase Manhattan
Bank and Trust Company, N.A., as trustee.

4.03 Euro Indenture dated as of June 29, 2000 10-Q 000-23354 08-14-00 4.2
between Registrant and Chase Manhattan Bank
and Trust Company, N.A., as trustee.

4.04 Credit Agreement dated April 3, 2000 among 10-K 000-23354 06-13-00 10.26
the Registrant and its subsidiaries
designated under the Credit Agreement as
borrowers from time to time, the lenders
named in Schedule I to the Credit
Agreement, ABN AMRO Bank N.V. as agent for
the lenders, Fleet National Bank as
documentation agent, Bank of America,
National Association and Citicorp USA, Inc.
as managing agents, and The Bank of Nova
Scotia as co-agent (the "Flextronics
International Credit Agreement.*

4.05 Credit Agreement dated as of April 3, 2000 10-K 000-23354 06-13-00 10.27
among Flextronics International USA, Inc.,
The DII Group, Inc., the lenders named in
Schedule I to the Credit Agreement, ABN
AMRO Bank N.V. as agent for the lenders,
Fleet National Bank, as documentation
agent, Bank of America, National
Association and Citicorp USA, Inc. as
managing agents, and The Bank of Nova
Scotia as co-agent (the "Flextronics USA
Credit Agreement").*

4.06 Amendment, dated as of June 15, 2000, to 10-Q 000-23354 11-14-00 10.01
the Flextronics USA Credit Agreement.*

4.07** First Amendment, dated as of April 3, 2001, X
to the Flextronics International Credit
Agreement.*

4.08** Second Amendment, dated as of April 3, X
2001, to the Flextronics USA Credit
Agreement.*

10.01 Form of Indemnification Agreement between S-1 33-74622 10.01
the Registrant and its Directors and
certain officers.

10.02 Registrant's 1993 Share Option Plan.+ S-8 333-55850 02-16-01 4.2

10.03 Registrant's 1997 Employee Share Purchase S-8 333-95189 01-21-00 4.3
Plan.+

10.04 Flextronics U.S.A. 401(k) plan.+ S-1 33-74622 10.52

10.05 Employment and Noncompetition Agreement 10-K 000-23354 quarter ended
dated as of April 30, 1997 between 03-31-97 10.29
Flextronics International Sweden AB and
Ronny Nilsson.+

10.06 Services Agreement dated as of April 30, 10-K 000-23354 quarter ended 10.30
1997 between Flextronics International USA, 03-31-97
Inc. and Ronny Nilsson.+

10.07 Promissory Note dated April 15, 1997 10-K 000-23354 quarter ended 10.31
executed by Ronny Nilsson in favor of 03-31-97
Flextronics International USA, Inc.

10.08** Form of Secured Full Recourse Promissory X
Note executed by certain executive officers
of the Registrant in favor of Flextronics
International, NV, in connection with
Glouple Ventures 2000 - I.

10.09** Form of Secured Full Recourse Promissory X
Note executed by certain executive officers
of the Registrant in favor of Flextronics
International, NV, in connection with
Glouple Ventures 2000 - II.

10.10** Deed of Noncompetition dated November 30,
2000 among JIT Holdings Limited and Goh
Thiam Poh Tommie.+

21.01** Subsidiaries of Registrant X

23.01 Consent of Arthur Andersen LLP X

23.02 Consent of Deloitte & Touche LLP X

* Certain schedules have been omitted. The Registrant agrees to furnish
supplementally a copy of any omitted schedule to the Commission upon
request.

** Previously filed.

+ Management contract, compensatory plan or arrangement.

(b) Reports on Form 8-K:

On January 29, 2001 we filed a current report on Form 8-K including our
consolidated financial statements as of March 31, 1999 and 2000 and for each of
the three years in the period ended March 31, 2000, giving retroactive effect to
our mergers with Chatham Technologies, Inc. and Lightning Metal Specialties and
related entities.

On February 1, 2001 we filed a current report on Form 8-K relating to (i) our
underwritten public offering of 27,000,000 of our ordinary shares, all of which
were sold by us, at a public offering price of $37.9375 per share and (ii) our
announcement that we had entered into a non-binding memorandum of understanding
with Ericsson in which we

were selected to manage the operations of Ericsson's mobile phone business. This
Form 8-K was amended on February 8, 2001 to file the underwriting agreement
relating to our underwritten public offering.

SIGNATURES

Pursuant to the requirement of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to its
Report to be signed on its behalf by the undersigned, thereto duly authorized.

Date: December 14, 2001

FLEXTRONICS INTERNATIONAL LTD.

By: /s/ Michael E. Marks
--------------------------------
Michael E. Marks
Chairman of the Board and
Chief Executive Officer

Valuation and Qualifying Accounts

Schedule II

Years Ended March 31, 1999, 2000 and 2001
(in thousands)

ADDITIONS
-----------------------------
BALANCE AT EFFECT CHARGED TO BALANCE AT
BEGINNING OF OF COSTS AND DEDUCTIONS/ END OF
YEAR ACQUISITIONS EXPENSES WRITE-OFFS YEAR
------------ ------------ ------------ ------------ ------------

Allowance for doubtful accounts:
Year ended March 31, 1999 $ 15,446 $ 223 $ 1,149 $ 121 $ 16,939
Year ended March 31, 2000 16,939 1,123 12,534 (5,639) 24,957
Year ended March 31, 2001 24,957 10,293 9,429 (260) 44,419
Accrual for unusual charges:
Year ended March 31, 1999 5,445 -- 79,286 (78,177) 6,554
Year ended March 31, 2000 6,554 -- -- (5,623) 931
Year ended March 31, 2001 931 -- 686,805 (517,352) 170,384
Reserve for inventory obsolescence:
Year ended March 31, 1999 19,834 3,095 7,624 (741) 29,812
Year ended March 31, 2000 29,812 3,046 32,345 (3,411) 61,792
Year ended March 31, 2001 61,792 34,341 33,634 (24,668) 105,099

EXHIBIT INDEX

2.01 Exchange Agreement dated as of June 11, 10-K 000-23354 06-29-99 2.3
1999 among the Registrant, Flextronics
Holding Finland Oyj, Kyrel EMS Oyj, and
Seppo Parhankangas

2.02 Agreement and Plan of Merger dated 8-K 000-23354 12-06-99 2.1
November 22, 1999 among the Registrant,
Slalom Acquisition Corp. and The DII
Group, Inc.*

2.03 Agreement and Plan of Reorganization 8-K 000-23354 09-15-00 2.01
dated July 31, 2000 among the
Registrant, Chatham Acquisition
Corporation, and Chatham Technologies,
Inc.*

2.04 Merger Agreement dated August 10, 2000 S-3 333-46770 09-27-00 2.4
among the Registrant, JIT Holdings
Limited, Goh Thiam Poh Tommie and Goh
Mui Teck William, as amended.*

2.05 Agreement and Plan of Reorganization S-3 333-46200 09-20-00 2.4
dated August 31, 2000 among the
Registrant, Lightning Metal Acquisition
Corp., Coating Acquisition Corp.,
Lightning Tool Acquisition Corp.,
Lightning Metal Specialties,
Incorporated, Coating Technologies,
Inc., Lightning Tool and Design, Inc.,
Lightning Metal Specialties E.M.F.,
Ltd., Lightning Manufacturing
Solutions-Europe, Ltd., Lightning
Manufacturing Solutions Texas, L.L.C.,
Lightning Logistics, L.L.C., Papason,
L.L.C., 200 Scott Street, L.L.C., 80
Scott Street, L.L.C., 230 Scott Street,
L.L.C., 1350 Lively Blvd, L.L.C., D.A.D.
Partnership, S.O.N. Partnership, S.O.N.
II Partnership, and shareholders and
members of such companies.*

2.06** Exchange Agreement dated January 14, X
2000, among the Registrant, Palo Alto
Products International Pte. Ltd., and
the shareholders of Palo Alto Products
International Pte. Ltd., Palo Alto
Manufacturing (Thailand) Ltd., and Palo
Alto Plastic (Thailand) Ltd.

3.01 Memorandum and New Articles of 10-Q 000-23354 02-09-01 3.1
Association of the Registrant.

4.01 Indenture dated as of October 15, 1997 8-K 000-23354 10-22-97 10.1
between Registrant and State Street Bank
and Trust Company of California, N.A.,
as trustee.

4.02 U.S. Dollar Indenture dated June 29, 10-Q 000-23354 08-14-00 4.1
2000 between the Registrant and Chase
Manhattan Bank and Trust Company, N.A.,
as trustee.

4.03 Euro Indenture dated as of June 29, 2000 10-Q 000-23354 08-14-00 4.2
between Registrant and Chase Manhattan
Bank and Trust Company, N.A., as
trustee.

4.04 Credit Agreement dated April 3, 2000 10-K 000-23354 06-13-00 10.26
among the Registrant and its
subsidiaries designated under the Credit
Agreement as borrowers from time to time,
the lenders named in Schedule I to the
Credit Agreement, ABN AMRO Bank N.V. as
agent for the lenders, Fleet National Bank
as documentation agent, Bank of America,
National Association and Citicorp USA, Inc.
as managing agents, and The Bank of Nova
Scotia as co-agent (the "Flextronics
International Credit Agreement.*

4.05 Credit Agreement dated as of April 3, 10-K 000-23354 06-13-00 10.27
2000 among Flextronics International
USA, Inc., The DII Group, Inc., the
lenders named in Schedule I to the
Credit Agreement, ABN AMRO Bank N.V. as
agent for the lenders, Fleet National
Bank, as documentation agent, Bank of
America, National Association and
Citicorp USA, Inc. as managing agents,
and The Bank of Nova Scotia as co-agent
(the "Flextronics USA Credit
Agreement").*

4.06 Amendment, dated as of June 15, 2000, to 10-Q 000-23354 11-14-00 10.01
the Flextronics USA Credit Agreement.*

4.07** First Amendment, dated as of April 3, X
2001, to the Flextronics International
Credit Agreement.*

4.08** Second Amendment, dated as of April 3, X
2001, to the Flextronics USA Credit
Agreement.*

10.01 Form of Indemnification Agreement S-1 33-74622 10.01
between the Registrant and its Directors
and certain officers.

10.02 Registrant's 1993 Share Option Plan.+ S-8 333-55850 02-16-01 4.2

10.03 Registrant's 1997 Employee Share S-8 333-95189 01-21-00 4.3
Purchase Plan. +

10.04 Flextronics U.S.A. 401(k) plan.+ S-1 33-74622 10.52

10.05 Employment and Noncompetition Agreement 10-K 000-23354 quarter ended 10.29
dated as of April 30, 1997 between 03-31-97
Flextronics International Sweden AB and
Ronny Nilsson.+

10.06 Services Agreement dated as of April 30, 10-K 000-23354 quarter ended 10.30
1997 between Flextronics International 03-31-97
USA, Inc. and Ronny Nilsson.+

10.07 Promissory Note dated April 15, 1997 10-K 000-23354 quarter ended 10.31
executed by Ronny Nilsson in favor of 03-31-97
Flextronics International USA, Inc.

10.10** Deed of Noncompetition dated November
30, 2000 among JIT Holdings Limited and
Goh Thiam Poh Tommie.+

21.01** Subsidiaries of Registrant X

23.01 Consent of Arthur Andersen LLP X

23.02 Consent of Deloitte & Touche LLP X

* Certain schedules have been omitted. The Registrant agrees to furnish
supplementally a copy of any omitted schedule to the Commission upon
request.

** Previously filed.

+ Management contract, compensatory plan or arrangement.