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

                                ----------------

                                    FORM 10-Q

(MARK ONE)

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

                For the quarterly period ended DECEMBER 31, 2000

                                       OR

[ ]   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: 0-23354

                         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.)

                                ----------------

                                MICHAEL E. MARKS
                             CHIEF EXECUTIVE OFFICER
                         FLEXTRONICS INTERNATIONAL LTD.
                             11 UBI ROAD 1 #07-01/02
                           MEIBAN INDUSTRIAL BUILDING
                                SINGAPORE 408723
                                  (65) 844-3366
            (NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
                   INCLUDING AREA CODE, OF AGENT FOR SERVICE)

                                ----------------

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 [ ]

        At February 2, 2001, there were 444,494,302 Ordinary Shares, S$0.01 par
value, outstanding.

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   2

                         FLEXTRONICS INTERNATIONAL LTD.

                                      INDEX




                                                                                               PAGE
                                                                                               ----
                                                                                            

                                  PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

           Condensed Consolidated Balance Sheets - December 31, 2000 and March 31, 2000......    3

           Condensed Consolidated Statements of Operations - Three and Nine Months
             Ended December 31, 2000 and December 31, 1999...................................    4

           Condensed Consolidated Statements of Cash Flows - Nine Months Ended
             December 31, 2000 and December 31, 1999.........................................    5

           Notes to Condensed Consolidated Financial Statements..............................    6

Item 2. Management's Discussion and Analysis of Financial Condition and
        Results of Operations................................................................   13
 .
Item 3. Quantitative and Qualitative Disclosures About Market Risk...........................   19

                                    PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K.....................................................   25

           Signatures........................................................................   27





                                       2
   3

ITEM 1. FINANCIAL STATEMENTS

                         FLEXTRONICS INTERNATIONAL LTD.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
                                  (Unaudited)




                                                                      DECEMBER 31,        MARCH 31,
                                                                          2000              2000
                                                                      -----------       -----------
                                                                                  
                                            ASSETS
CURRENT ASSETS:
  Cash and cash equivalents .......................................   $   398,374       $   747,049
  Accounts receivable, net ........................................     1,634,053         1,057,949
  Inventories, net ................................................     1,727,826         1,142,594
  Other current assets ............................................       339,079           275,152
                                                                      -----------       -----------
          Total current assets ....................................     4,099,332         3,222,744
                                                                      -----------       -----------

Property and equipment, net .......................................     1,856,168         1,323,732
Goodwill and other intangibles, net ...............................       604,211           390,351
Other assets ......................................................       139,300           198,116
                                                                      -----------       -----------
          Total assets ............................................   $ 6,699,011       $ 5,134,943
                                                                      ===========       ===========


                           LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Bank borrowings and current portion of long-term debt ...........   $   691,414       $   487,773
  Current portion of capital lease obligations ....................        26,551            24,037
  Accounts payable ................................................     1,507,582         1,227,142
  Accrued expenses ................................................       556,550           322,257
                                                                      -----------       -----------
          Total current liabilities ...............................     2,782,097         2,061,209
                                                                      -----------       -----------

Long-term debt, net of current portion ............................       884,839           593,830
Capital lease obligations, net of current portion .................        45,496            51,437
Other liabilities .................................................        84,339            58,133

SHAREHOLDERS' EQUITY:
  Ordinary shares, S$0.01 par value; authorized - 1,500,000,000;
     issued and outstanding - 439,386,316 and 410,538,799 as of
     December 31, 2000 and March 31, 2000, respectively ...........         2,695             2,516
  Additional paid-in capital ......................................     2,928,032         1,990,673
  Retained earnings ...............................................        60,464           373,735
  Accumulated other comprehensive income (loss) ...................       (88,951)            8,494
  Deferred compensation ...........................................            --            (5,084)
                                                                      -----------       -----------
          Total shareholders' equity ..............................     2,902,240         2,370,334
                                                                      -----------       -----------

          Total liabilities and shareholders' equity ..............   $ 6,699,011       $ 5,134,943
                                                                      ===========       ===========



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




                                       3
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                         FLEXTRONICS INTERNATIONAL LTD.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                   (Unaudited)




                                                  THREE MONTHS ENDED            NINE MONTHS ENDED
                                              --------------------------  ----------------------------
                                              DECEMBER 31,  DECEMBER 31,  DECEMBER 31,    DECEMBER 31,
                                                  2000          1999          2000            1999
                                              ------------  ------------  ------------    ------------
                                                                              
Net sales .................................... $3,239,293    $1,967,740    $ 8,995,265     $4,730,426
Cost of sales ................................  2,964,034     1,797,643      8,263,848      4,293,919
Unusual charges ..............................     38,550            --        146,539             --
                                               ----------    ----------    -----------     ----------
     Gross profit ............................    236,709       170,097        584,878        436,507
Selling, general and administrative ..........    113,736        86,534        316,585        228,263
Goodwill and intangibles amortization ........     15,141        10,735         37,016         29,276
Unusual charges ..............................      7,726            --        441,236          3,523
Interest and other expense, net ..............     22,092        23,367         40,252         57,023
                                               ----------    ----------    -----------     ----------
     Income (loss) before income taxes .......     78,014        49,461       (250,211)       118,422
Provision for income taxes ...................     10,232         1,662          2,642         12,881
                                               ----------    ----------    -----------     ----------
     Net income (loss) ....................... $   67,782    $   47,799    $  (252,853)    $  105,541
                                               ==========    ==========    ===========     ==========

Earnings (loss) per share:
  Basic ...................................... $     0.15    $     0.13    $     (0.58)    $     0.31
                                               ==========    ==========    ===========     ==========
  Diluted .................................... $     0.14    $     0.12    $     (0.58)    $     0.29
                                               ==========    ==========    ===========     ==========

Shares used in computing per share amounts:
  Basic ......................................    441,016       357,116        433,448        342,676
                                               ==========    ==========    ===========     ==========
  Diluted ....................................    478,657       384,017        433,448        368,605
                                               ==========    ==========    ===========     ==========



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




                                       4
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                         FLEXTRONICS INTERNATIONAL LTD.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)




                                                                         NINE MONTHS ENDED
                                                                   DECEMBER 31,      DECEMBER 31,
                                                                       2000              1999
                                                                   -----------       ---------
                                                                               
Net cash used in operating activities ..........................   $  (461,817)      $ (14,136)
                                                                   -----------       ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property, plant and equipment ...................      (711,252)       (374,679)
  Proceeds from sale of property, plant and equipment ..........        51,444          17,003
  Proceeds from sale of investments and certain subsidiaries ...        42,766          35,871
  Payments for business acquisitions, net of cash acquired .....      (112,852)        (32,049)
  Other investments ............................................       (39,508)        (25,450)
                                                                   -----------       ---------

Net cash used in investing activities ..........................      (769,402)       (379,304)
                                                                   -----------       ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayments of bank borrowings and long-term debt .............    (1,002,157)       (131,508)
  Repayments of capital lease obligations ......................       (23,282)        (25,480)
  Bank borrowings and proceeds from long-term debt .............     1,386,948         311,387
  Proceeds from stock issued under stock plans .................        59,041          17,238
  Net proceeds from sale of ordinary shares ....................       431,588         448,924
  Proceeds from issuance of equity instrument ..................       100,000              --
  Dividends paid to former shareholders of companies acquired ..          (190)         (1,641)
                                                                   -----------       ---------

Net cash provided by financing activities ......................       951,948         618,920
                                                                   -----------       ---------

Effect on cash from:
   Exchange rate changes .......................................       (36,698)         (2,995)
   Adjustment to conform fiscal year of pooled entities ........       (32,706)           (818)
                                                                   -----------       ---------

Net increase (decrease) in cash and cash equivalents ...........      (348,675)        221,667
Cash and cash equivalents at beginning of period ...............       747,049         318,165
                                                                   -----------       ---------

Cash and cash equivalents at end of period .....................   $   398,374       $ 539,832
                                                                   ===========       =========



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




                                       5
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                         FLEXTRONICS INTERNATIONAL LTD.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2000
                                   (Unaudited)


Note A - BASIS OF PRESENTATION

   The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and in accordance with the instructions to Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements, and should be read in conjunction with the Company's
audited consolidated financial statements as of and for the fiscal year ended
March 31, 2000 contained in the Company's annual report on Form 10-K and the
Company's current report on Form 8-K filed on January 29, 2001. In the opinion
of management, all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended December 31, 2000 are not
necessarily indicative of the results that may be expected for the year ending
March 31, 2001.

   On July 26, 2000, the Company announced a two-for-one stock split of its
ordinary shares, to be effected in the form of a bonus issue (equivalent to a
stock dividend), payable to the Company's shareholders of record as of September
22, 2000. The Company's shareholders of record at the close of business on
September 22, 2000 received certificates representing one additional share for
every one share held at that time. Distribution of the additional shares
occurred on October 16, 2000. The stock dividend has been reflected in the
Company's financial statements for all periods presented. All share and per
share amounts have been retroactively restated to reflect the stock split.

   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"), Palo Alto Products International Pte. Ltd. ("Palo Alto
Products International"), JIT Holdings Ltd. ("JIT") and Chatham Technologies,
Inc. ("Chatham"). These acquisitions were accounted for as pooling of interests
and the condensed consolidated financial statements have been prepared to give
retroactive effect to the mergers.

   DII is a leading provider of electronics manufacturing and design services,
operating through a global operations network in the Americas, Asia/Pacific and
Europe. 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 with
operations in Ireland and the United States. 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.

   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, 1998 and 1999
and for each of the three years ended December 31, 1999 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. Starting in fiscal
2001, DII and Lightning changed their year ends from December 31 to March 31 to
conform to the Company's fiscal year end. Accordingly, their operations for the
three 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 in the first quarter of fiscal 2001.

   Palo Alto Products International is an enclosure design and plastic molding
company with operations in Taiwan, Thailand and the United States. 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
with operations in China, Malaysia, Hungary, Indonesia and Singapore. 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.




                                       6
   7

   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.

   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, warrants and options. 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 30, 1998 and
September 24, 1999 and for each of the three fiscal years ended September 24,
1999 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. Starting in fiscal 2001, Chatham changed its year end from the
Saturday closest to September 30 to March 31 to conform to the Company's fiscal
year end. Accordingly, 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 in the first quarter of
fiscal 2001.

   A reconciliation of results of operations previously reported by the separate
companies for the three and nine month periods ended December 31, 1999 to the
condensed consolidated results of the Company is as follows (in thousands):



                                             THREE MONTHS      NINE MONTHS
                                                ENDED             ENDED
                                             DECEMBER 31,      DECEMBER 31,
                                                 1999              1999
                                             -----------       -----------
                                                         
     Net sales:
       As previously reported ............   $ 1,251,681       $ 2,879,082
       DII ...............................       365,089           892,650
       Lightning .........................        77,467           203,544
       Palo Alto Products International ..        23,003            73,322
       JIT ...............................       152,672           420,460
       Chatham ...........................        98,743           263,432
       Intercompany elimination ..........          (915)           (2,064)
                                             -----------       -----------
       As restated .......................   $ 1,967,740       $ 4,730,426
                                             ===========       ===========

     Net income:
       As previously reported ............   $    38,066       $    85,008
       DII ...............................        16,251            37,474
       Lightning .........................        (4,402)           (2,210)
       Palo Alto Products International ..         1,060             1,642
       JIT ...............................         4,944            11,124
       Chatham ...........................        (8,120)          (27,497)
                                             -----------       -----------
       As restated .......................   $    47,799       $   105,541
                                             ===========       ===========



Note B - INVENTORIES

   Inventories consist of the following (in thousands):



                                              DECEMBER 31,     MARCH 31,
                                                  2000           2000
                                              ----------      ----------
                                                        
     Raw materials .........................  $1,225,758      $  820,070
     Work-in-process .......................     356,703         207,474
     Finished goods ........................     145,365         115,050
                                              ----------      ----------
                                              $1,727,826      $1,142,594
                                              ==========      ==========



Note C - UNUSUAL CHARGES

   The Company recognized unusual pre-tax charges of $587.8 million during the
nine months ended fiscal 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




                                       7
   8

International mergers. In the second quarter, unusual pre-tax charges amounted
to approximately $48.4 million associated with the Chatham and Lightning
mergers. Unusual pre-tax charges of $46.3 million were recorded in the third
quarter, primarily related to the JIT merger.

   On May 30, 2000, the Company entered into a strategic alliance for product
manufacturing with Motorola. See Note I 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 22,000,000
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.

   In connection with the aforementioned mergers, the Company recorded aggregate
merger-related charges of $301.3 million, which included approximately $198.8
million of integration expenses and approximately $102.5 million of direct
transaction costs. As discussed below, $146.5 million of the unusual charges
relating to integration expenses have been classified as a component of Cost of
Sales during the nine months ended fiscal 2001. The components of the
merger-related unusual charges recorded are as follows (in thousands):



                                                 FIRST     SECOND      THIRD
                                                QUARTER    QUARTER    QUARTER    TOTAL    NATURE OF
                                                CHARGES    CHARGES    CHARGES   CHARGES    CHARGES
                                                --------   --------   -------  ---------  ---------
                                                                           
Integration Costs:
  Severance.................................    $ 62,487   $  5,677   $ 3,606  $  71,770  cash
  Long-lived asset impairment...............      46,646     14,373    16,469     77,488  non-cash
  Inventory write-downs.....................      11,863         --    10,608     22,471  non-cash
  Other exit costs..........................      12,338      5,650     9,095     27,083  cash/non-cash
                                                --------   --------   -------  ---------
      Total Integration Costs...............     133,334     25,700    39,778    198,812
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
                                                --------  ---------  --------  ---------
  Total Merger-Related Unusual Charges......     206,567     48,395    46,276    301,238
                                                --------  ---------  --------  ---------
Benefit from income taxes...................     (30,000)    (6,000)   (6,500)   (42,500)
                                                --------- ---------- --------- ----------

  Total Merger-Related Unusual Charges,
     Net of Tax.............................    $176,567  $  42,395  $ 39,776  $ 258,738
                                                ========  =========  ========  =========


   As a result of the consummation of the various mergers, 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 integration costs 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 integration costs and related activities in fiscal 2001:



                                                  LONG-LIVED                   OTHER         TOTAL
                                                     ASSET       INVENTORY     EXIT       INTEGRATION
                                      SEVERANCE   IMPAIRMENT    WRITE-DOWNS    COSTS         COSTS
                                      ---------   ----------    -----------  --------     ------------
                                                                           
     Balance at March 31, 2000 ...... $     --     $     --     $     --     $     --     $       --
     Activities during the year:
       First quarter provision ......   62,487       46,646       11,863       12,338        133,334
       Cash charges .................  (35,800)          --           --       (1,627)       (37,427)
       Non-cash charges .............       --      (46,646)      (4,315)      (3,126)       (54,087)
                                      --------     --------     --------     --------      ---------
     Balance at June 30, 2000 .......   26,687           --        7,548        7,585         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)      (7,548)        (526)       (22,447)
                                      --------     --------     --------     --------      ---------
     Balance at September 30, 2000 .. $ 28,362     $     --     $     --     $  8,478      $  36,840
                                      --------     --------     --------     --------      ---------
     Activities during the year:






                                       8
   9


                                                                           
       Third quarter provision ......    3,606       16,469       10,608        9,095        39,778
       Cash charges .................   (7,332)          --           --       (2,572)       (9,904)
       Non-cash charges .............       --      (16,469)     (10,608)      (3,462)      (30,539)
                                      --------     --------     --------     --------     ---------
     Balance at December 31, 2000 ... $ 24,636     $     --     $     --     $ 11,539     $  36,175
                                      ========     ========     ========     ========     =========


   Of the total pre-tax integration charges, $71.8 million relates to employee
termination costs, of which $19.4 million has been classified as a component of
Cost of Sales. As a result of the various exit plans, the Company identified
5,807 employees to be involuntarily terminated related to the various mergers.
As of December 31, 2000, approximately 2,092 employees have been terminated, and
approximately another 3,715 employees have been notified that they are to be
terminated upon completion of the various facility closures and consolidations
related to the mergers. During the nine months ended fiscal 2001, the Company
paid employee termination costs of approximately $47.1 million. The remaining
$24.7 million of employee termination costs is classified as accrued liabilities
as of December 31, 2000 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 $77.5 million for the write-down of
long-lived assets to fair value. Of these charges, approximately $46.6 million,
$14.4 million, and $16.5 million were written down in the first, second, and
third quarters of fiscal 2001, respectively. These amounts have been classified
as a component of Cost of Sales. Included in the long-lived asset impairment are
charges of $74.6 million, which relate to property, plant and equipment
associated with the various manufacturing and administrative facility closures
which were written down to their net realizable value based on their estimated
sales price. Certain facilities 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 will be depreciated over this expected
period. The impaired long-lived assets consisted primarily of machinery and
equipment of $53.5 million and building and improvements of $21.1 million. The
long-lived asset impairment also includes the write-off of the remaining
goodwill and other intangibles related to certain closed facilities of $2.9
million.

   The unusual pre-tax charges also include approximately $49.6 million for
losses on inventory write-downs and other exit costs, which resulted from the
integration plans. This amount has been classified as a component of Cost of
Sales. The Company has written off and disposed of approximately $11.9 million
of inventory related to the first quarter integration activities and
approximately $10.6 million was written off and disposed of related to the third
quarter integration activities. The $27.1 million of other exit costs relate
primarily to items such as lease termination costs, incremental amounts of
uncollectible accounts receivable, warranty-related accruals, legal and other
exit costs, incurred directly as a result of the various exit plans. The Company
paid approximately $1.6 million, $4.2 million, and $2.6 million of other exit
costs during the first, second and third quarters of fiscal 2001. Additionally,
approximately $3.1 million, $0.5 million and $3.5 million of other exit costs
were written off during the first, second and third quarters, respectively. The
remaining $11.6 million is classified in accrued liabilities as of December 31,
2000 and is expected to be substantially paid out by the end of fiscal 2001,
except for certain long-term contractual obligations.

   The direct transaction costs include approximately $64.4 million of costs
primarily related to investment banking and financial advisory fees as well as
legal and accounting costs associated with the transactions. Of these charges,
approximately $50.9 million was associated with the first quarter mergers, $7.2
million related to the second quarter mergers, and $6.3 million related to the
third quarter merger. Other direct transaction costs which totaled
approximately $38.1 million was mainly comprised of accelerated debt prepayment
expense, accelerated executive stock compensation, benefit-related expenses and
other merger-related costs. The Company paid approximately $55.5 million, $5.6
million and $5.3 million of the direct transaction costs during the first,
second and third quarters of fiscal 2001, respectively. Additionally,
approximately $14.7 million, $13.4 million and $0.1 million of the direct
transaction costs were written off during the first, second and third quarters,
respectively. The remaining $7.9 million is classified in accrued liabilities as
of December 31, 2000 and is expected to be substantially paid out by the end of
fiscal 2001.




                                       9
   10

Note D - EARNINGS PER SHARE

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

   Diluted net income 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 (in thousands, except per share amounts):



                                                                    THREE MONTHS ENDED           NINE MONTHS ENDED
                                                               DECEMBER 31,  DECEMBER 31,  DECEMBER 31,    DECEMBER 31,
                                                                   2000          1999          2000            1999
                                                               ------------  ------------  ------------    ------------
                                                                                               
Basic earnings (loss) per share:
Net income (loss) .........................................      $ 67,782      $ 47,799      $(252,853)      $105,541
                                                                 --------      --------      ---------       --------
Shares used in computation:
Weighted-average ordinary shares outstanding(1) ...........       441,016       357,116        433,448        342,676
                                                                 ========      ========      =========       ========
Basic earnings (loss) per share ...........................      $   0.15      $   0.13      $   (0.58)      $   0.31
                                                                 ========      ========      =========       ========
Diluted earnings (loss) per share:
Net income (loss) .........................................      $ 67,782      $ 47,799      $(252,853)      $105,541
Plus income impact of assumed conversions:
  Interest expense (net of tax) on convertible
   subordinated notes .....................................            --            --             --            400
  Amortization (net of tax) of debt issuance costs on
   convertible subordinated notes .........................            --            --             --             33
                                                                 --------      --------      ---------       --------
  Net income (loss) available to shareholders .............      $ 67,782      $ 47,799      $(252,853)      $105,974
Shares used in computation:
Weighted-average ordinary shares outstanding ..............       441,016       357,116        433,448        342,676
Shares applicable to exercise of dilutive options(2),(3) ..        28,071        26,009             --         23,124
Shares applicable to deferred stock compensation ..........            --           892             --            860
Shares applicable to other equity instruments(3) ..........         9,570            --             --             --
Shares applicable to convertible subordinated notes .......            --            --             --          1,945
                                                                 --------      --------      ---------       --------
  Shares applicable to diluted earnings ...................       478,657       384,017        433,448        368,605
                                                                 ========      ========      =========       ========
Diluted earnings (loss) per share .........................      $   0.14      $   0.12      $   (0.58)      $   0.29
                                                                 ========      ========      =========       ========


(1) Ordinary shares issued and outstanding based on the weighted average method.

(2) Stock options of the Company calculated based on the treasury stock method
    using average market price for the period, if dilutive. Options to purchase
    3,543,796 shares and 78,828 shares outstanding during the three months ended
    December 31, 2000 and December 31, 1999, respectively, and options to
    purchase 113,786 shares outstanding during the nine months ended December
    31, 1999 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 periods.
(3) The ordinary share equivalents from stock options and other equity
    instruments were antidilutive for the nine months ended December 31, 2000,
    and therefore not assumed to be converted for diluted earnings per share
    computation.

Note E - COMPREHENSIVE INCOME

     The following table summarizes the components of comprehensive income (in
thousands):



                                                               THREE MONTHS ENDED            NINE MONTHS ENDED
                                                          DECEMBER 31,    DECEMBER 31,   DECEMBER 31,     DECEMBER 31,
                                                              2000            1999           2000             1999
                                                          ------------    ------------   ------------     ------------
                                                                                              
Net income (loss) .......................................   $ 67,782       $  47,799       $(252,853)      $ 105,541
 Other comprehensive income (loss), net of tax:
  Foreign currency translation adjustments ..............      7,532         (12,061)        (38,961)        (16,479)
  Unrealized holding gain (loss) on available-for-sale
    securities ..........................................    (31,069)         75,037         (53,170)         84,645
                                                            --------       ---------       ---------       ---------
Comprehensive income (loss) .............................   $ 44,245       $ 110,775       $(344,984)      $ 173,707
                                                            ========       =========       =========       =========





                                       10
   11

Note F - SEGMENT REPORTING

   Information about segments was as follows (in thousands):



                                           THREE MONTHS ENDED                  NINE MONTHS ENDED
                                      DECEMBER 31,      DECEMBER 31,      DECEMBER 31,      DECEMBER 31,
                                          2000              1999              2000              1999
                                      ------------      ------------      ------------      ------------
                                                                                
Net Sales:
 Asia .............................   $   710,635       $   468,023       $ 1,875,362       $ 1,118,898
 Americas .........................     1,526,112           794,448         4,212,587         1,998,286
 Western Europe ...................       611,071           408,177         1,683,597           969,881
 Central Europe ...................       495,852           322,880         1,562,862           698,111
 Intercompany eliminations ........      (104,377)          (25,788)         (339,143)          (54,750)
                                      -----------       -----------       -----------       -----------
                                      $ 3,239,293       $ 1,967,740       $ 8,995,265       $ 4,730,426
                                      ===========       ===========       ===========       ===========
Income (Loss) before Income Tax:
 Asia .............................   $    39,584       $    31,766       $    91,099       $    72,504
 Americas .........................        69,505            (7,256)          140,531            (3,326)
 Western Europe ...................         6,038            13,753            26,599            27,048
 Central Europe ...................         8,865            13,644            28,396            24,253
 Intercompany eliminations,
   corporate allocations and
   unusual charges ................       (45,978)           (2,446)         (536,836)           (2,057)
                                      -----------       -----------       -----------       -----------
                                      $    78,014       $    49,461       $  (250,211)      $   118,422
                                      ===========       ===========       ===========       ===========





                                                                 AS OF        AS OF
                                                              DECEMBER 31,   MARCH 31,
                                                                  2000         2000
                                                              ------------  ----------
                                                                      
Long-lived Assets:
  Asia.....................................................    $  499,395  $  449,824
  Americas.................................................       730,205     712,215
  Western Europe...........................................       311,788     275,935
  Central Europe...........................................       314,780     171,165
                                                               ----------   ----------
                                                               $1,856,168   $1,609,139
                                                               ==========   ==========


   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.


Note G - EQUITY OFFERING

   In June 2000, the Company completed an equity offering of 11,000,000 ordinary
shares at $35.625 per share with net proceeds of $375.9 million. In July 2000,
the Company issued an additional 1,650,000 ordinary shares at $35.625 per share
with net proceeds of $56.3 million, which represents the overallotment option on
the equity offering completed in June 2000. The Company used the net proceeds
from the offering to fund the further expansion of its business including
additional working capital and capital expenditures, and for other general
corporate purposes.


Note H - SENIOR SUBORDINATED NOTES

   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 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




                                       11
   12

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.


Note I - 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 up to $32.0 billion of products and services from the Company 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.


Note J - NEW ACCOUNTING STANDARDS

   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 imbedded 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 is required to adopt SFAS No. 133 in the first quarter of fiscal 2002
and anticipates that SFAS No. 133 will not have a material impact on its
consolidated financial statements.

   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
will adopt SAB 101 as required in the fourth quarter of fiscal 2001 and
anticipates that SAB 101 will not have a material impact on its consolidated
financial statements.


Note K - SUBSEQUENT EVENTS

   In January 2001, the Company completed its acquisition of Li Xin Industries
Ltd. (Li Xin), a plastics company in Asia with operations in Singapore, Malaysia
and Northern China. Li Xin's primary activities include the manufacturing and
sales of high precision plastic injection molds and plastic injection molded
parts, design support and sub-assembly services of electrical components. The
Company issued ordinary shares having a total value of approximately $89.6
million for the acquired net assets of Li Xin. The acquisition was accounted for
as a purchase.

     On February 6, 2001, the Company completed an equity offering of 27,000,000
of its ordinary shares at $37.9375 with net proceeds of approximately $990.8
million. In addition, the Company has granted the underwriters of the equity
offering an overallotment option, which is exercisable for thirty days after the
offering, to purchase up to an additional 4,050,000 ordinary shares. The Company
intends to use the net proceeds from the offering to fund anticipated expenses
related to its strategic relationship with Ericsson (as further discussed
below), to fund the further expansion of its business, and for other general
corporate purposes.

     In January 2001, the Company entered into a non-binding memorandum of
understanding with Ericsson in which the Company is to provide a substantial
portion of Ericsson's mobile phone requirements and will be assuming
responsibility for product assembly, new product prototyping, supply chain
management and logistics management. In this new relationship, the Company will
use facilities currently owned by Ericsson for its mobile phone operations in
Brazil, Great Britain, Malaysia and Sweden, and will also manufacture at the
Company's southern China and Malaysia facilities. The Company will also provide
PCBs and plastics, primarily from its Asian operations. In connection with this
relationship, the Company 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 net asset purchase price has not been
fixed, but is expected to be between $200.0 million and $800.0 million. The
Company anticipates that operations under this arrangement will begin on April
1, 2001.




                                       12
   13

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

   This report on Form 10-Q 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-Q with the
Securities and Exchange Commission. These forward-looking statements are subject
to risks and uncertainties, including, without limitation, those discussed in
"Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations - Certain Factors Affecting Operating Results." Accordingly, our
future results may differ materially from historical results or from those
discussed or implied by these forward-looking statements.

Acquisitions, Purchases of Facilities and Other Strategic Transactions

   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. We have completed several significant
business combinations since the end of fiscal 2000. In the current fiscal year,
we acquired all of 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
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. The significant business combinations that
we have completed to date in fiscal 2001, include the following:




    DATE             ACQUIRED COMPANY          NATURE OF BUSINESS       CONSIDERATION    LOCATION(s)
------------     ------------------------   ------------------------ ------------------ ------------
                                                                            
November 2000    JIT Holdings Ltd.          Provides electronics        17,323,531        China
                                            manufacturing and design    ordinary shares   Hungary
                                            services                                      Indonesia
                                                                                          Malaysia
                                                                                          Singapore

August 2000      Chatham Technologies, Inc. Provides industrial and    15,234,244         Brazil
                                            electronics manufacturing  ordinary shares    China
                                            design services                               France
                                                                                          Mexico
                                                                                          Spain
                                                                                          Sweden
                                                                                          United States

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

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

April 2000       The DII Group, Inc.       Provides electronics         125,536,310       Austria
                                           manufacturing services       ordinary shares   Brazil
                                                                                          China
                                                                                          Czech
                                                                                          Republic
                                                                                          Germany
                                                                                          Ireland
                                                                                          Malaysia
                                                                                          Mexico
                                                                                          United States


   Additionally, we have completed other immaterial pooling of interests
transactions in the first nine months of 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.


                                       13
   14


   In the nine months December 31, 2001, we 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. The transactions were accounted for as purchases of
assets. We completed the following facilities purchases in fiscal 2001:



    DATE              CUSTOMER         CASH CONSIDERATION   FACILITY LOCATION(S)
-------------      ------------------  ------------------   --------------------
                                                   
November 2000      Siemens Mobile         $29.9 million     Italy

May 2000           Ascom                  $37.4 million     Switzerland

May 2000           Bosch Telecom GmbH     $126.1 million    Denmark


   We will continue to review opportunities to acquire OEM manufacturing
operations and enter into business combinations and selectively pursue strategic
transactions that we believe will further our business objectives. We have
recently begun to structure our business combinations as purchases rather than
pooling of interests. We are currently in preliminary discussions to acquire
additional businesses and facilities. We cannot assure the terms of, or that we
will complete, such acquisitions, and our ability to obtain the benefits of such
combinations and transactions is subject to a number of risks and uncertainties,
including our ability to successfully integrate the acquired operations and our
ability to maintain and increase sales to customers of the acquired companies.
See "Risk Factors - We May Encounter Difficulties with Acquisitions, Which Could
Harm our Business".

Other Strategic Transactions

   On May 30, 2000, we entered into a strategic alliance for product
manufacturing with Motorola. This alliance provides incentives for Motorola to
purchase up to $32.0 billion of products and services from us through December
31, 2005. We anticipate that this relationship will encompass a wide range of
products, including cellular phones, pagers, set-top boxes and infrastructure
equipment, and will involve a broad range of services, including design, PCB
fabrication and assembly, plastics, enclosures and supply chain services. The
relationship is not exclusive and does not require that Motorola purchase any
specific volumes of products or services from the Company. Our ability to
achieve any of the anticipated benefits of this relationship is subject to a
number of risks, including our 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 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. 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 of our ordinary shares. However, there may be
additional non-cash charges of up to $300.0 million over the term of the
strategic alliance.

   In January 2001, we 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. We anticipate that operations under this arrangement will
begin on April 1, 2001. Under this memorandum of understanding, 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
will also provide PCBs and plastics, primarily from our Asian operations. In
this new relationship, we will use facilities currently owned by Ericsson for
its mobile phone operations in Brazil, Great Britain, Malaysia and Sweden, and
will also manufacture at our southern China and Malaysia facilities. In
connection with this relationship, we will employ the existing workforce for
these 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 net asset purchase price has not been fixed, but is
expected to be between $200.0 million and $800.0 million. We expect to receive
substantial revenue from this relationship beginning in the first quarter of
fiscal 2002. See "Certain Factors Affecting Operating Results - Our Strategic
Relationship with Ericsson Creates Risks".

RESULTS OF OPERATIONS

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




                                       14
   15



                                               THREE MONTHS ENDED            NINE MONTHS ENDED
                                           DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                               2000           1999           2000           1999
                                           ------------   ------------   ------------   ------------
                                                                            
Net sales............................         100.0%         100.0%         100.0%         100.0%
Cost of sales........................          91.5           91.4           91.9           90.8
Unusual charges......................           1.2             --            1.6             --
                                              -----          -----          -----          -----
     Gross margin....................           7.3            8.6            6.5            9.2
Selling, general and administrative..           3.5            4.4            3.5            4.8
Goodwill and intangibles amortization           0.5            0.5            0.4            0.6
Unusual charges......................           0.2             --            5.0            0.1
Interest and other expense, net......           0.7            1.2            0.4            1.2
                                              -----          -----          -----          -----
     Income (loss) before income taxes          2.4            2.5           (2.8)           2.5
Provision for income taxes...........           0.3            0.1             --            0.3
                                              -----          -----          -----          -----
     Net income (loss)...............           2.1%           2.4%          (2.8)%          2.2%
                                              =====          =====          =====          =====


Net Sales

   We derive our net sales from our wide range of service offerings, including
product design, semiconductor design, printed circuit board assembly and
fabrication, enclosures, material procurement, inventory and supply chain
management, plastic injection molding, final system assembly and test,
packaging, logistics and distribution.

   Net sales for the third quarter of fiscal 2001 increased 65% to $3.2 billion
from $2.0 billion for the third quarter of fiscal 2000. Net sales for the first
nine months of fiscal 2001 increased 90% to $9.0 billion from $4.7 billion for
the same period in fiscal 2000. The increase in net sales was primarily the
result of expanding sales to our existing customer base and, to a lesser extent,
sales to new customers. Our ten largest customers in the first nine months of
fiscal 2001 and 2000 accounted for approximately 56% and 59% of net sales,
respectively. Our largest customers during the first nine months of fiscal 2001
were Cisco and Ericsson, accounting for approximately 11% and 10% of net sales,
respectively. No other customers accounted for more than 10% of net sales in the
nine months ended December 31, 2000. See "Certain Factors Affecting Operating
Results - The Majority of our Sales Comes from a Small Number of Customers; If
We Lose any of these Customers, our Sales Could Decline Significantly" and
"Certain Factors Affecting Operating Results - We Depend on the
Telecommunications, Networking and Electronics 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".

Gross Profit

   Gross profit varies from period to period and is affected by a number of
factors, including product mix, component costs and availability, product life
cycles, unit volumes, startup, expansion and consolidation of manufacturing
facilities, pricing, competition and new product introductions.

   Gross margin for the third quarter of fiscal 2001 decreased to 7.3% from 8.6%
for the third quarter of fiscal 2000. Gross margin decreased to 6.5% for the
first nine months of fiscal 2001 from 9.2% for the same period in fiscal 2000.
The decrease in gross margin in the current fiscal year is primarily
attributable to unusual pre-tax charges amounting to $38.5 million in the third
quarter and $146.5 million for the fiscal year to date, which were associated
with the integration costs primarily related to the various business
combinations, as more fully described below in "Unusual Charges". Excluding
these unusual charges, gross margins for the third quarter and first nine months
of fiscal 2001 were 8.5% and 8.1%, respectively. Gross margin decreased due to
several factors, including (i) costs associated with expanding our facilities;
(ii) costs associated with the startup of new customers and new projects, which
typically carry higher levels of underabsorbed manufacturing overhead costs
until the projects reach higher volume production; and (iii) changes in product
mix to higher volume projects and final systems assembly projects, which
typically have a lower gross margin. See "Certain Factors Affecting Operating
Results - If We Do Not Manage Effectively the Expansion of Our Operations, Our
Business May be Harmed," and "- We may be Adversely Affected by Shortages of
Required Electronic Components".




                                       15
   16

Unusual Charges

   We recognized unusual pre-tax charges of $587.8 million during the nine
months ended fiscal 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. In the second quarter, unusual pre-tax charges amounted to
approximately $48.4 million associated with the Chatham and Lightning mergers.
Unusual pre-tax charges of $46.3 million were recorded in the third quarter,
primarily related to the JIT merger.

   On May 30, 2000, we entered into a strategic alliance for product
manufacturing with Motorola. See Note I 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 22,000,000
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.

   In connection with the aforementioned mergers, we recorded aggregate
merger-related charges of $301.3 million, which included approximately $198.8
million of integration expenses and approximately $102.5 million of direct
transaction costs. As discussed below, $146.5 million of the unusual charges
relating to integration expenses have been classified as a component of Cost of
Sales during the nine months ended fiscal 2001. The components of the
merger-related unusual charges recorded are as follows (in thousands):



                                                 FIRST     SECOND      THIRD
                                                QUARTER    QUARTER    QUARTER    TOTAL    NATURE OF
                                                CHARGES    CHARGES    CHARGES   CHARGES    CHARGES
                                                --------   --------   -------  ---------  ---------
                                                                           
Integration Costs:
  Severance.................................    $ 62,487   $  5,677   $ 3,606  $  71,770  cash
  Long-lived asset impairment...............      46,646     14,373    16,469     77,488  non-cash
  Inventory write-downs.....................      11,863         --    10,608     22,471  non-cash
  Other exit costs..........................      12,338      5,650     9,095     27,083  cash/non-cash
                                                --------   --------   -------  ---------
      Total Integration Costs...............     133,334     25,700    39,778    198,812
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
                                                --------   --------   -------  ---------
  Total Merger-Related Unusual Charges......     206,567     48,395    46,276    301,238
                                                --------   --------   -------  ---------
Benefit from income taxes...................     (30,000)    (6,000)   (6,500)   (42,500)
                                                --------   --------   -------  ---------

  Total Merger-Related Unusual Charges,
      Net of Tax............................    $176,567  $  42,395  $ 39,776  $ 258,738
                                                ========   ========   =======  =========


   As a result of the consummation of the various mergers, 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 integration costs 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 integration costs and related activities in fiscal 2001:



                                                 LONG-LIVED                      OTHER            TOTAL
                                                    ASSET         INVENTORY      EXIT          INTEGRATION
                                   SEVERANCE     IMPAIRMENT      WRITE-DOWNS     COSTS            COSTS
                                   ---------     ----------      -----------    --------       ------------
                                                                                
Balance at March 31, 2000 ......   $     --       $     --       $     --       $     --        $      --
Activities during the year:
  First quarter provision ......     62,487         46,646         11,863         12,338          133,334
  Cash charges .................    (35,800)            --             --         (1,627)         (37,427)
  Non-cash charges .............         --        (46,646)        (4,315)        (3,126)         (54,087)
                                   --------       --------       --------       --------        ---------
Balance at June 30, 2000 .......     26,687             --          7,548          7,585           41,820
Activities during the year:





                                       16
   17


                                                                                
  Second quarter provision .....      5,677         14,373             --          5,650          25,700
  Cash charges .................     (4,002)            --             --         (4,231)         (8,233)
  Non-cash charges .............         --        (14,373)        (7,548)          (526)        (22,447)
                                   --------       --------       --------       --------       ---------
Balance at September 30, 2000 ..   $ 28,362       $     --       $     --       $  8,478       $  36,840
                                   --------       --------       --------       --------       ---------
Activities during the year:
  Third quarter provision ......      3,606         16,469         10,608          9,095          39,778
  Cash charges .................     (7,332)            --             --         (2,572)         (9,904)
  Non-cash charges .............         --        (16,469)       (10,608)        (3,462)        (30,539)
                                   --------       --------       --------       --------       ---------
Balance at December 31, 2000 ...   $ 24,636       $     --       $     --       $ 11,539       $  36,175
                                   ========       ========       ========       ========       =========


   Of the total pre-tax integration charges, $71.8 million relates to employee
termination costs, of which $19.4 million has been classified as a component of
Cost of Sales. As a result of the various exit plans, we identified 5,807
employees to be involuntarily terminated related to the various mergers. As of
December 31, 2000, approximately 2,092 employees have been terminated, and
approximately another 3,715 employees have been notified that they are to be
terminated upon completion of the various facility closures and consolidations
related to the mergers. During the nine months ended fiscal 2001, we paid
employee termination costs of approximately $47.1 million, respectively. The
remaining $24.7 million of employee termination costs is classified as accrued
liabilities as of December 31, 2000 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 $77.5 million for the write-down of
long-lived assets to fair value. Of these charges, approximately $46.6 million,
$14.4 million, and $16.5 million were written down in the first, second, and
third quarters of fiscal 2001, respectively. These amounts have been classified
as a component of Cost of Sales. Included in the long-lived asset impairment are
charges of $74.6 million, which relate to property, plant and equipment
associated with the various manufacturing and administrative facility closures
which were written down to their net realizable value based on their estimated
sales price. Certain facilities 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 will be depreciated over this expected
period. The impaired long-lived assets consisted primarily of machinery and
equipment of $53.5 million and building and improvements of $21.1 million. The
long-lived asset impairment also includes the write-off of the remaining
goodwill and other intangibles related to certain closed facilities of $2.9
million.

   The unusual pre-tax charges also include approximately $49.6 million for
losses on inventory write-downs and other exit costs, which resulted from the
integration plans. This amount has been classified as a component of Cost of
Sales. We have written off and disposed of approximately $11.9 million of
inventory related to the first quarter integration activities and approximately
$10.6 million was written off and disposed of related to the third quarter
integration activities. The $27.1 million of other exit costs relate primarily
to items such as lease termination costs, incremental amounts of uncollectible
accounts receivable, warranty-related accruals, legal and other exit costs,
incurred directly as a result of the various exit plans. We paid approximately
$1.6 million, $4.2 million, and $2.6 million of other exit costs during the
first, second and third quarters of fiscal 2001. Additionally, approximately
$3.1 million, $0.5 million and $3.5 million of other exit costs were written off
during the first, second and third quarters, respectively. The remaining $11.6
million is classified in accrued liabilities as of December 31, 2000 and is
expected to be substantially paid out by the end of fiscal 2001, except for
certain long-term contractual obligations.

   The direct transaction costs include approximately $64.4 million of costs
primarily related to investment banking and financial advisory fees as well as
legal and accounting costs associated with the transactions. Of these charges,
approximately $50.9 million was associated with the first quarter mergers, $7.2
million related to the second quarter mergers, and $6.3 million related to the
third quarter merger. Other direct transaction costs which totaled
approximately $38.1 million was mainly comprised of accelerated debt prepayment
expense, accelerated executive stock compensation, benefit-related expenses and
other merger-related costs. We paid approximately $55.5 million, $5.6 million
and $5.3 million of the direct transaction costs during the first second, and
third quarters of fiscal 2001, respectively. Additionally, approximately $14.7
million, $13.4 million and $0.1 million of the direct transaction costs were
written off during the first, second and third quarters, respectively. The
remaining $7.9 million is classified in accrued liabilities as of December 31,
2000 and is expected to be substantially paid out by the end of fiscal 2001.

   We incurred unusual pre-tax charges of $3.5 million in the second quarter of
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.

Selling, General and Administrative Expenses




                                       17
   18

   Selling, general and administrative expenses ("SG&A") for the third quarter
of fiscal 2001 increased to $113.7 million from $86.5 million in the same
quarter of fiscal 2000, but decreased as a percentage of net sales to 3.5% for
the third quarter of fiscal 2001 compared to 4.4% for the same quarter of fiscal
2000. SG&A increased to $316.6 million in the first nine months of fiscal 2001
from $228.3 million in the same period of fiscal 2000, but decreased as a
percentage of net sales to 3.5% from 4.8%. The dollar increases in SG&A were
primarily due to the continued investment in infrastructure such as sales,
marketing, supply-chain management, information systems and other related
corporate and administrative expenses. The declines in SG&A as a percentage of
net sales reflect the increases in our net sales, as well as our continued focus
on controlling our operating expenses.

Goodwill and Intangibles Amortization

   Goodwill and intangibles asset amortization for the third quarter of fiscal
2001 increased to $15.1 million from $10.7 million for the same period of fiscal
2000. Goodwill and intangibles asset amortization was $37.0 million and $29.3
million for the first nine months of fiscal 2001 and fiscal 2000, respectively.
The increase in goodwill and intangible assets amortization in the third quarter
and first nine months of fiscal 2001 was primarily a result of goodwill acquired
in connection with the various purchase acquisitions during fiscal 2001 and
increased amortization of debt issuance costs associated with the senior notes
offering in June 2000.

Interest and Other Expense, Net

   Interest and other expense, net was $22.1 million for the third quarter of
fiscal 2001 compared to $23.4 million for the corresponding quarter of fiscal
2000. Interest and other expense, net was $40.3 million for the first nine
months of fiscal 2001 compared to $57.0 million for the same period in fiscal
2000. The decreases in interest and other expense, net in the third quarter and
the first nine months of fiscal 2001 were attributable to gains recorded on the
sale of marketable equity securities, offset by increased interest expense
associated with increased borrowings.

Provision for Income Taxes

   Our consolidated effective tax rate was 13.1% and (1.1%) for the third
quarter and first nine months of fiscal 2001, compared to 3.4% and 10.9% for the
comparable periods of fiscal 2000. Excluding the unusual charges, the effective
income tax rate in the third quarter and first nine months of fiscal 2001 was
13.5% and 13.4%, respectively. The consolidated effective tax rate for a
particular period varies depending on the amount of earnings from different
jurisdictions 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.
See "Certain Factors Affecting Operating Results - We are Subject to the Risk of
Increased Taxes".

Liquidity and Capital Resources

   As of December 31, 2000, we had cash and cash equivalents totaling $398.4
million, total bank and other debts totaling $1.6 billion and $60 million
available for future borrowing under our credit facility subject to compliance
with certain financial covenants. Subsequent to December 31, 2000, we have
generated additional cash from a public offering of our ordinary shares.

   Cash used in operating activities was $461.8 million and $14.1 million for
the first nine months of fiscal 2001 and fiscal 2000, respectively. Cash used in
operating activities increased in the first nine months of fiscal 2001 from the
first nine months of fiscal 2000 as a result of significant increases in
accounts receivable and inventory, partially offset by an increase in accounts
payable.

   Accounts receivable, net of allowance for doubtful accounts increased 54% to
$1.6 billion at December 31, 2000 from $1.1 billion at March 31, 2000. The
increase in accounts receivable was primarily due to an increase of 90% in net
sales for the first nine months of fiscal 2001 over the comparable period in the
prior year.

   Inventories increased 51% to $1.7 billion at December 31, 2000 from $1.1
billion at March 31, 2000. The increase in inventories was primarily the result
of increased purchases of material to support the growing sales combined with
the inventory acquired in connection with the manufacturing facility purchases
from original equipment manufacturers (OEMs) in the first nine months of fiscal
2001.

   Cash used in investing activities was $769.4 million and $379.3 million for
the first nine months of fiscal 2001 and fiscal 2000, respectively. Cash used in
investing activities for the first nine months of fiscal 2001 was primarily
related to (i) capital expenditures of $711.3 million to purchase equipment and
for continued expansion of manufacturing facilities, including our manufacturing
facility purchases from OEMs, (ii) payment of $112.9 million for acquisitions of
businesses and (iii) payment of $39.5 million for minority investments in the
stock of various technology companies, offset by (iv) $51.4 million in proceeds
from the sale of equipment and (v)




                                       18
   19

$42.8 million in proceeds from the sale of marketable equity securities. Cash
used in investing activities for the first nine months of fiscal 2000 consisted
primarily of (i) capital expenditures of $374.7 million to purchase equipment
and for continued expansion of manufacturing facilities, including our
manufacturing facility purchases from OEMs (ii) payment of $32.0 million for
acquisitions of businesses and (iii) payment of $25.4 million for minority
investments in the stocks of various technology companies, offset by (iv)
proceeds of $17.0 million and (v) $35.9 million related to the sale of equipment
and the sale of certain subsidiaries, respectively.

   Net cash provided by financing activities was $951.9 million and $618.9
million for the first nine months of fiscal 2001 and fiscal 2000, respectively.
Cash provided by financing activities for the first nine months of fiscal 2001
primarily resulted from $1.4 billion of proceeds from long-term debt and bank
borrowings, $59.0 million in proceeds from stock issued under stock plans,
$431.6 million of net proceeds from equity offerings and $100.0 million of
proceeds from an equity instrument issued to Motorola, offset by $1.0 billion of
short-term credit facility and long-term debt repayments.

   Subsequent to December 31, 2000, we substantially increased our cash balances
through an equity offering of 27,000,000 of our ordinary shares at $37.9375 with
net proceeds of approximately $990.8 million. In addition, we have granted the
underwriters of the equity offering an overallotment option, which is
exercisable for thirty days after the offering, to purchase up to an additional
4,050,000 ordinary shares.

   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. We also anticipate incurring significant capital expenditures
and operating lease commitments in order to support our anticipated expansions
of our industrial parks in China, Hungary, Mexico, Brazil and Poland. 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, borrowings available under our
credit facility and the net proceeds from our recent equity offerings 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 "Certain Factors Affecting Operating
Results - If We Do Not Manage Effectively the Expansion of Our Operations, Our
Business May be Harmed".

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   There were no material changes during the three and nine months ended
December 31, 2000 to our exposure to market risk for changes in interest rates
and foreign currency exchange rates.

CERTAIN FACTORS EFFECTING OPERATING RESULTS

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 tripled
in size over the last year as a result of internal growth and acquisitions. This
growth is likely to strain considerably our management control system 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 by expanding our facilities
and adding new equipment. Such 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;




                                       19
   20

   -  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 accounting
charges. For example, in connection with our acquisitions of DII, Palo Alto
Products International, Chatham and Lightning, we recorded one-time charges of
approximately $255.0 million, and in connection with the issuance of an equity
instrument to Motorola relating to our alliance with Motorola, we recorded a
one-time non-cash charge of approximately $286.5 million.

OUR STRATEGIC RELATIONSHIP WITH ERICSSON CREATES RISKS.

   While we have entered into a non-binding memorandum of understanding with
Ericsson with respect to our management of its mobile telephone operations, we
have not negotiated or entered into any definitive agreements. The memorandum of
understanding is only an expression of the parties' current intentions, and the
relationship as described in the memorandum of understanding is subject to
change in the definitive agreements. In addition, the memorandum of
understanding does not address a number of terms that will be set forth in the
definitive agreements, and these terms may affect our ability to obtain the
anticipated benefits of this relationship. We anticipate commencing this
relationship on April 1, 2001, but we cannot be sure when, or whether, we will
enter into definitive agreements for this relationship or commence operations.
Further, we cannot provide any assurances as to the final terms of any
definitive agreement or as to the duration of our anticipated relationship with
Ericsson. Finally, we cannot be sure when or whether we will obtain the
regulatory approvals that are required for the relationship.

   Once we commence 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, and the memorandum of
understanding does not require that Ericsson purchase any specified volume of
products from us. 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. Finally, other OEMs may not wish to obtain logistics or operations
management services from us.

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

   In the past six months, we completed a significant number of acquisitions of
businesses and facilities, including our acquisitions of Chatham, Lightning and
JIT. We expect to continue to acquire additional businesses and facilities in
the future. We are currently in preliminary discussions to acquire additional
businesses and facilities. Any future acquisitions may require additional debt
or equity financing, which could increase our leverage or be dilutive to our
existing shareholders. We cannot assure the terms of, or that we will complete,
any acquisitions in the future.

   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, but not limited to:

   -  diversion of management's attention;

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




                                       20
   21

   -  lack of experience operating in the geographic market of the acquired
      business; and

   -  an increase in our expenses and working capital requirements.

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 OPERATING RESULTS VARY SIGNIFICANTLY.

   We experience significant fluctuations in our results of operations. The
factors which contribute to fluctuations include:

   -  the timing of customer orders;

   -  the volume of these orders relative to our capacity;

   -  market acceptance of customers' new products;

   -  changes in demand for customers' products and product obsolescence;

   -  our ability to manage the timing and amount of our procurement of
      components to avoid delays in production and excess inventory levels;

   -  the timing of our expenditures in anticipation of future orders;

   -  our effectiveness in managing manufacturing processes and costs;

   -  changes in the cost and availability of labor and components;

   -  changes in our product mix;

   -  changes in economic conditions;

   -  local factors and events that may affect our production volume, such as
      local holidays; and

   -  seasonality in customers' product requirements.

   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 relative strength in revenues in our third fiscal quarter.

   We are reconfiguring certain of our operations to further increase our
concentration in low-cost locations. We expect that this shift of operations
will result in the recognition of unusual charges in the fourth quarter of
fiscal 2001 related to the integration activities. In addition, some of our
customers are currently experiencing increased volatility in demand, and in some
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, which could lead to a
reduction or delay in such revenues. 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 HAVE NEW STRATEGIC RELATIONSHIPS FROM WHICH WE ARE NOT YET RECEIVING
SIGNIFICANT REVENUES, AND MAY NOT REACH ANTICIPATED LEVELS.

     We have recently announced major new strategic relationships, including our
alliances with Ericsson and Motorola, from which we anticipate significant
future revenues. However, similar to our other customer relationships, there are
no volume purchase commitments under these new programs, and the revenues we
actually achieve may not meet our expectations. In anticipation of future
activities under these programs, 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.

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




                                       21
   22

   Electronics manufacturing service 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.
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 margins and operating income.

WE DEPEND ON THE CONTINUING TREND OF OUTSOURCING BY OEMS.

   A substantial factor in our revenue growth is the transfer of manufacturing
and supply base management activities from our OEM customers. Future growth
partially depends on new outsourcing opportunities. To the extent that these
opportunities are not available, our future growth would be unfavorably
impacted. These outsourcing opportunities may include the transfer of assets
such as facilities, equipment and inventory.

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 the first nine
months of fiscal 2001 and 2000 accounted for approximately 56% and 59% of net
sales. Our two largest customers during the first nine months of fiscal 2001
were Cisco and Ericsson, accounting for approximately 11% and 10% of net sales.
We expect that our strategic relationship with Ericsson will substantially
increase the percentage of our sales attributable to Ericsson. No other
customers accounted for more than 10% of net sales in the first nine months of
fiscal 2001. The identity of our principal customers has 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 would be harmed.

WE DEPEND ON THE TELECOMMUNICATIONS, NETWORKING AND ELECTRONICS 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 and
electronics industries. Factors affecting the electronics industry 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.




                                       22
   23

   If any of these factors materialize, our business would suffer. Recently,
many sectors of the telecommunications, networking and electronics industries
have experienced pricing and margin pressures and reduced demand for many
products, and the impact of these pressures has caused, and is expected to
continue to cause, some customers to defer delivery schedules for certain
products that we manufacture for them.

OUR INDUSTRY IS EXTREMELY COMPETITIVE.

   The electronics manufacturing services 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.

   A substantial majority of our net sales are derived from turnkey
manufacturing in which we are responsible for purchasing components used in
manufacturing our customers' products. We generally do not have long-term
agreements with suppliers of components. This typically results in our bearing
the risk of component price increases because we may be unable to procure the
required materials at a price level necessary to generate anticipated margins
from our agreements with our customers. Accordingly, component price changes
could seriously harm our operating results.

   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. Component shortages have
recently become more prevalent in our industry. 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. We expect that shortages
and delays in deliveries of some components will continue. 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 TAXES.

   We have structured our operations in a manner designed to maximize income in
countries where (1) tax incentives have been extended to encourage foreign
investment or (2) 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 holidays
or other incentives where available. 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.




                                       23
   24

   The geographical distances between Asia, the Americas and Europe create a
number of logistical and communications challenges. Our manufacturing operations
are located in a number of countries throughout East Asia, the Americas and
Europe. As a result, we are affected by economic and political conditions in
those countries, including:

   -  fluctuations in the value of currencies;

   -  changes in labor conditions;

   -  longer payment cycles;

   -  greater difficulty in collecting accounts receivable;

   -  the burdens and costs of compliance with a variety of foreign laws;

   -  political and economic instability;

   -  increases in duties and taxation;

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

   -  limitations on imports or exports;

   -  expropriation of private enterprises; and

   -  a potential reversal of current tax or other 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 Mexico and China, 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 ARE SUBJECT TO RISKS OF CURRENCY FLUCTUATIONS AND HEDGING OPERATIONS.

   A significant portion of our business is conducted in the European euro, the
Swedish krona and the Brazilian real. In addition, some of our costs, such as
payroll and rent, are denominated in local currencies in the countries in which
we operate. In recent years, some of these currencies, including the Hungarian
forint, Brazilian real and Mexican peso, have experienced significant
devaluations. Changes in exchange rates between these and other currencies and
the U.S. dollar will affect our cost of sales, operating margins and revenues.
We cannot predict the impact of future exchange rate fluctuations. We use
financial instruments, primarily forward purchase contracts, to hedge Japanese
yen, European euro, U.S. dollar and other foreign currency commitments arising
from trade accounts payable and fixed purchase obligations. Because we hedge
only fixed obligations, we do not expect that these hedging activities will harm
our results of operations or cash flows. However, our hedging activities may be
unsuccessful, and we may change or reduce our hedging activities in the future.
As a result, we may experience significant unexpected expenses from fluctuations
in exchange rates.

WE DEPEND ON OUR KEY PERSONNEL.

   Our success depends to a large extent upon the continued services of our key
executives, managers and skilled personnel. Generally our employees are not
bound by employment or non-competition agreements, and we cannot assure that we
will retain our key officers and employees. We could be seriously harmed by the
loss of key personnel. 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 would be harmed.

WE ARE SUBJECT TO ENVIRONMENTAL COMPLIANCE RISKS.




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   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 if the results of future testing and analysis 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.

PART II - OTHER INFORMATION

ITEMS 1-5. Not Applicable

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits


                
        3.01       Memorandum and New Articles of Association of the Registrant.


(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
the 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 have 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.



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                                  EXHIBIT INDEX





EXHIBIT
  NO.                                 DESCRIPTION
-------                               -----------
           
 3.01         Memorandum and New Articles of Association of the Registrant.






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                                   SIGNATURES

   Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                     FLEXTRONICS INTERNATIONAL LTD.
                                     (Registrant)


Date:  February 9, 2001                      /s/ ROBERT R.B. DYKES
                                     ----------------------------------------
                                     Robert R.B. Dykes
                                     President, Systems Group and Chief
                                     Financial Officer (principal financial
                                     and accounting officer)




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