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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 JUNE 30, 2001

                                       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 August 06, 2001, there were 482,809,864 ordinary shares, S$0.01 par
value, outstanding.

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                         FLEXTRONICS INTERNATIONAL LTD.

                                      INDEX




                                                                                             PAGE
                                                                                             ----
                          PART I. FINANCIAL INFORMATION

                                                                                          
Item 1. Financial Statements

        Condensed Consolidated Balance Sheets -- June 30, 2001 and March 31, 2001 ....         3
        Condensed Consolidated Statements of Operations - Three Months Ended
          June 30, 2001 and June 30, 2000 ............................................         4
        Condensed Consolidated Statements of Cash Flows - Three Months Ended
          June 30, 2001 and June 30, 2000 ............................................         5
        Notes to Condensed Consolidated Financial Statements .........................         6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of
 Operations ..........................................................................        12

Item 3. Quantitative and Qualitative Disclosures About Market Risk ...................        18

                          PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K .............................................        24

        Signatures ...................................................................        25




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ITEM 1. FINANCIAL STATEMENTS

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




                                                                        JUNE 30,          MARCH 31,
                                                                          2001              2001
                                                                      -----------       -----------
                                                                      (Unaudited)
                                            ASSETS
                                                                                  
CURRENT ASSETS:
  Cash and cash equivalents .......................................   $   543,304       $   631,588
  Accounts receivable, net ........................................     1,703,208         1,651,252
  Inventories, net ................................................     1,525,728         1,787,055
  Other current assets ............................................       587,331           386,152
                                                                      -----------       -----------
  Total current assets ............................................     4,359,571         4,456,047
                                                                      -----------       -----------
Property, plant and equipment, net ................................     1,997,692         1,828,441
Goodwill and other intangibles, net ...............................     1,034,543           983,384
Other assets ......................................................       319,973           303,783
                                                                      -----------       -----------
   Total assets ...................................................   $ 7,711,779       $ 7,571,655
                                                                      ===========       ===========

                           LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Bank borrowings and current portion of long-term debt ...........   $   340,115       $   298,052
  Current portion of capital lease obligations ....................        22,554            27,602
  Accounts payable ................................................     1,477,169         1,480,468
  Other current liabilities .......................................       834,667           735,184
                                                                      -----------       -----------
  Total current liabilities .......................................     2,674,505         2,541,306
                                                                      -----------       -----------
Long-term debt, net of current portion ............................       870,284           879,525
Capital lease obligations, net of current portion .................        34,727            37,788
Other liabilities .................................................        81,706            82,675

SHAREHOLDERS' EQUITY:
  Ordinary shares, S$0.01 par value; authorized -- 1,500,000,000;
     issued and outstanding -- 484,713,214 and 481,531,339 as of
     June 30, 2001 and March 31, 2001, respectively ...............         2,889             2,871
  Additional paid-in capital ......................................     4,217,185         4,266,908
  Retained deficit ................................................       (44,564)         (132,892)
  Accumulated other comprehensive loss ............................      (124,953)         (106,526)
                                                                      -----------       -----------
          Total shareholders' equity ..............................     4,050,557         4,030,361
                                                                      -----------       -----------

          Total liabilities and shareholders' equity ..............   $ 7,711,779       $ 7,571,655
                                                                      ===========       ===========



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



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




                                                                  THREE MONTHS ENDED
                                                              ----------------------------
                                                               JUNE 30,         JUNE 30,
                                                                 2001             2000
                                                              -----------      -----------
                                                                         
        Net sales ......................................      $ 3,110,598      $ 2,676,974
        Cost of sales ..................................        2,878,803        2,470,408
        Unusual charges ................................               --           83,721
                                                              -----------      -----------
            Gross profit ...............................          231,795          122,845
        Selling, general and administrative ............          108,816           94,918
        Goodwill and intangibles amortization ..........            2,256            9,370
        Unusual charges ................................               --          409,383
        Interest and other expense (income), net .......           22,366           (4,199)
                                                              -----------      -----------
            Income (loss) before income taxes ..........           98,357         (386,627)
        Provision for (benefit from) income taxes ......           10,029          (16,065)
                                                              -----------      -----------
            Net income (loss) ..........................      $    88,328      $  (370,562)
                                                              ===========      ===========

        Earnings (loss) per share:
           Basic .......................................      $      0.18      $     (0.88)
                                                              ===========      ===========
           Diluted .....................................      $      0.17      $     (0.88)
                                                              ===========      ===========

        Shares used in computing per share amounts:
           Basic .......................................          484,794          418,857
                                                              ===========      ===========

           Diluted .....................................          511,987          418,857
                                                              ===========      ===========



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



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






                                                                                THREE MONTHS ENDED
                                                                             JUNE 30,         JUNE 30,
                                                                               2001             2000
                                                                            ----------       ----------
                                                                                       
        Net cash provided by (used in) operating activities ..........      $  383,493       $ (219,150)
                                                                            ----------       ----------
        CASH FLOWS FROM INVESTING ACTIVITIES:
          Purchase of property and equipment, net of proceeds from
               sale of equipment .....................................        (111,224)        (148,734)
          Purchases of OEM facilities and related assets .............        (301,738)        (163,517)
          Proceeds from sales of investments .........................           6,288           32,894
          Acquisitions of businesses, net of cash acquired ...........         (11,601)         (28,838)
          Other investments ..........................................          (5,048)            (885)
                                                                            ----------       ----------

        Net cash used in investing activities ........................        (423,323)        (309,080)
                                                                            ----------       ----------

        CASH FLOWS FROM FINANCING ACTIVITIES:
          Bank borrowings and proceeds from long-term debt ...........         224,344          650,749
          Repayments of bank borrowings and long-term debt ...........        (180,746)        (427,428)
          Repayments of capital lease obligations ....................          (9,835)          (5,158)
          Proceeds from exercise of stock options and Employee
             Stock Purchase Plan .....................................          15,712           19,251
          Net proceeds from sale of ordinary shares in public
             offering ................................................              --          375,920
          Repurchase of equity instrument issued .....................        (112,000)              --
          Dividends paid to former shareholders ......................              --             (190)
                                                                            ----------       ----------

        Net cash provided by (used in) financing activities ..........         (62,525)         613,144
                                                                            ----------       ----------

        Effect on cash from:
           Exchange rate changes .....................................          14,071           (2,733)
           Adjustment to conform fiscal year of pooled entities ......              --          (32,706)
                                                                            ----------       ----------

        Net increase (decrease) in cash and cash equivalents .........         (88,284)          49,475
        Cash and cash equivalents at beginning of period .............         631,588          747,049
                                                                            ----------       ----------

        Cash and cash equivalents at end of period ...................      $  543,304       $  796,524
                                                                            ==========       ==========




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


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                         FLEXTRONICS INTERNATIONAL LTD.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2001
                                   (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, 2001 contained in the Company's annual report on Form 10-K.
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 month period ended June 30, 2001 are
not necessarily indicative of the results that may be expected for the year
ending March 31, 2002.


Note B - INVENTORIES

        Inventories, net of applicable reserves, consist of the following (in
thousands):




                                               JUNE 30,        MARCH 31,
                                                 2001            2001
                                              ----------      ----------
                                                        
     Raw materials .........................  $1,111,355      $1,346,427
     Work-in-process .......................     283,001         301,875
     Finished goods ........................     131,372         138,753
                                              ----------      ----------
                                              $1,525,728      $1,787,055
                                              ==========      ==========



Note C - UNUSUAL CHARGES

        The Company recognized unusual pre-tax charges of approximately $973.3
million during fiscal year 2001. Of this amount, $493.1 million was recorded in
the first quarter and was comprised of approximately $286.5 million related to
the issuance of an equity instrument to Motorola, Inc. ("Motorola") combined
with approximately $206.6 million of expenses resulting from The DII Group, Inc.
and Palo Alto Products International Pte. Ltd. mergers and related facility
closures. In the second quarter, unusual pre-tax charges amounted to
approximately $48.4 million associated with the mergers with Chatham
Technologies, Inc. and Lightning Metal Specialties (and related entities) and
related facility closures. In the third quarter, the Company recognized unusual
pre-tax charges of approximately $46.3 million, primarily related to the merger
with JIT Holdings Ltd. and related facility closures. During the fourth quarter,
the Company recognized unusual pre-tax charges, amounting to $385.6 million
related to closures of several manufacturing facilities.

        On May 30, 2000, the Company entered into a strategic alliance for
product manufacturing with Motorola. In connection with this strategic alliance,
Motorola paid $100.0 million for an equity instrument that entitled it to
acquire 22.0 million Flextronics ordinary shares at any time through December
31, 2005, upon meeting targeted purchase levels or making additional payments to
the Company. The issuance of this equity instrument resulted in a one-time
non-cash charge equal to the excess of the fair value of the equity instrument
issued over the $100.0 million proceeds received. As a result, the one-time
non-cash charge amounted to approximately $286.5 million offset by a
corresponding credit to additional paid-in capital in the first


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quarter of fiscal 2001. In June 2001, the Company entered into an agreement with
Motorola under which it repurchased this equity instrument for $112.0 million.

        In connection with the aforementioned mergers and facility closures, in
fiscal 2001, the Company recorded aggregate unusual charges of $686.8 million,
which included approximately $584.4 million of facility closure costs and
approximately $102.4 million of direct transaction costs. As discussed below,
$510.5 million of the charges relating to facility closures have been classified
as a component of Cost of Sales during the fiscal year ended March 31, 2001. The
components of the unusual charges recorded in fiscal 2001 are as follows (in
thousands):





                                                                                                         TOTAL
                                              FIRST         SECOND          THIRD         FOURTH         FISCAL
                                             QUARTER        QUARTER        QUARTER        QUARTER         2001          NATURE OF
                                             CHARGES        CHARGES        CHARGES        CHARGES        CHARGES         CHARGES
                                            ----------     ----------     ----------     ----------     ----------     -------------
                                                                                                     
Facility closure costs:
  Severance ............................    $   62,487     $    5,677     $    3,606     $   60,703     $  132,473     cash
  Long-lived asset impairment ..........        46,646         14,373         16,469        155,046        232,534     non-cash
  Exit costs ...........................        24,201          5,650         19,703        169,818        219,372     cash/non-cash
                                            ----------     ----------     ----------     ----------     ----------
      Total facility closure costs .....       133,334         25,700         39,778        385,567        584,379
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 Unusual Charges ..................       206,567         48,395         46,276        385,567        686,805
                                            ----------     ----------     ----------     ----------     ----------
Income tax benefit .....................       (30,000)        (6,000)        (6,500)      (110,000)      (152,500)
                                            ----------     ----------     ----------     ----------     ----------
Net Unusual Charges ....................    $  176,567     $   42,395     $   39,776     $  275,567     $  534,305
                                            ==========     ==========     ==========     ==========     ==========



        In connection with the fiscal 2001 facility closures, the Company
developed formal plans to exit certain activities and involuntarily terminate
employees. Management's plan to exit an activity included the identification of
duplicate manufacturing and administrative facilities for closure and the
identification of manufacturing and administrative facilities for consolidation
into other facilities. Management currently anticipates that the facility
closures and activities to which all of these charges relate will be
substantially completed within one year of the commitment dates of the
respective exit plans, except for certain long-term contractual obligations. The
following table summarizes the balance of the facility closure costs as of March
31, 2001 and the type and amount of closure costs utilized during the first
quarter of fiscal 2002.




                                                              EXIT
                                             SEVERANCE       COSTS          TOTAL
                                            ----------     ----------     ----------
                                                                 
Balance at March 31, 2001 .........         $   71,734     $   95,343     $  167,077
Activities during the quarter:
  Cash charges ....................            (28,264)       (17,219)       (45,483)
  Non-cash charges ................                 --         (3,947)        (3,947)
                                            ----------     ----------     ----------
Balance at June 30, 2001 .........          $   43,470     $   74,177     $  117,647
                                            ==========     ==========     ==========



        Of the total pre-tax facility closure costs recorded in fiscal 2001,
$132.5 million relates to employee termination costs, of which $67.8 million has
been classified as a component of Cost of Sales. As a result of the various exit
plans, the Company identified 11,269 employees to be involuntarily terminated
related to the various mergers and facility closures. As of June 30, 2001,
8,027 employees have been terminated, and another 3,242 employees have been
notified that they are to be terminated upon completion of the various facility
closures and consolidations. During the first quarter of fiscal 2002, the
Company paid employee termination costs of approximately $28.3 million. The
remaining $43.5 million of employee termination costs is classified as accrued
liabilities as of June 30, 2001 and is expected to be paid out within one year
of the commitment dates of the respective exit plans.


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        The unusual pre-tax charges recorded in fiscal 2001, included $232.5
million for the write-down of long-lived assets to fair value. This amount has
been classified as a component of Cost of Sales during fiscal 2001. Included in
the long-lived asset impairment are charges of $229.1 million, which related 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 are being depreciated
over this expected period. The impaired long-lived assets consisted primarily of
machinery and equipment of $153.0 million and building and improvements of $76.1
million. The long-lived asset impairment also included the write-off of the
remaining goodwill and other intangibles related to certain closed facilities of
$3.4 million.

        The unusual pre-tax charges recorded in fiscal 2001, also included
approximately $219.4 million for other exit costs. Approximately $210.2 million
of this amount has been classified as a component of Cost of Sales. The other
exit costs recorded, primarily related to items such as building and equipment
lease termination costs, warranty costs, current asset impairments and payments
to suppliers and vendors to terminate agreements and were incurred directly as a
result of the various exit plans. The Company paid approximately $17.2 million
of other exit costs during the first quarter of fiscal 2002. Additionally,
approximately $3.9 million of other exit costs were non-cash charges utilized
during the first quarter of fiscal 2002. The remaining $74.2 million is
classified in accrued liabilities as of June 30, 2001 and is expected to be
substantially paid out within one year from the commitment dates of the
respective exit plans, except for certain long-term contractual obligations.

        The direct transaction costs recorded in fiscal 2001, included
approximately $64.3 million of costs primarily related to investment banking and
financial advisory fees as well as legal and accounting costs associated with
the merger transactions. Other direct transaction costs which totaled
approximately $38.1 million were mainly comprised of accelerated debt prepayment
expense, accelerated executive stock compensation and benefit-related expenses.
The Company paid approximately $1.3 million of the direct transaction costs
during the first quarter of fiscal 2002. Approximately, $70.9 million of direct
transaction costs were paid by the Company during fiscal 2001. Additionally,
approximately $28.2 million of the direct transaction costs were non-cash
charges utilized during fiscal 2001. The remaining $2.0 million is classified in
accrued liabilities as of June 30, 2001 and is expected to be substantially paid
out in the ensuing quarter.


Note D - EARNINGS PER SHARE

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

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

        Earnings per share data were computed as follows (in thousands, except
per share amounts):



                                                                       THREE MONTHS ENDED
                                                                    JUNE 30,        JUNE 30,
                                                                      2001            2000
                                                                   ----------      ----------
                                                                             
Basic earnings (loss) per share:
Net income (loss) ...........................................      $   88,328      $ (370,562)
                                                                   ----------      ----------
Shares used in computation:
Weighted-average ordinary shares outstanding ................         484,794         418,857
                                                                   ==========      ==========
Basic earnings (loss) per share .............................      $     0.18      $    (0.88)
                                                                   ==========      ==========



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                                                                        THREE MONTHS ENDED
                                                                    JUNE 30,        JUNE 30,
                                                                      2001            2000
                                                                   ----------      ----------
                                                                             
Diluted earnings (loss) per share:
Net income (loss) ...........................................      $   88,328      $ (370,562)

Shares used in computation:
Weighted-average ordinary shares outstanding ................         484,794         418,857
Shares applicable to exercise of dilutive options(1),(2) ....          27,193              --
                                                                   ----------      ----------
  Shares applicable to diluted earnings .....................         511,987         418,857
                                                                   ==========      ==========
Diluted earnings (loss) per share ...........................      $     0.17      $    (0.88)
                                                                   ==========      ==========


        (1) Stock options of the Company calculated based on the treasury stock
            method using average market price for the period, if dilutive.
            Options to purchase 7,397,542 shares outstanding during the three
            months ended June 30, 2001 were excluded from the computation of
            diluted earnings per share because the exercise price of these
            options were greater than the average market price of the Company's
            ordinary shares during the period.

        (2) The ordinary share equivalents from stock options and other equity
            instruments were anti-dilutive for the three months ended June 30,
            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
                                                                   JUNE 30,         JUNE 30,
                                                                     2001             2000
                                                                  ----------       ----------
                                                                             
Net income (loss) ..........................................      $   88,328       $ (370,562)
 Other comprehensive income (loss):
  Foreign currency translation adjustments, net of tax .....         (24,274)          (6,222)
  Unrealized holding gain (loss) on investments and
     derivatives, net of tax ...............................           8,544          (35,363)
                                                                  ----------       ----------
Comprehensive income (loss) ................................      $   72,598       $ (412,147)
                                                                  ==========       ==========



Note F - SEGMENT REPORTING

   Information about segments was as follows (in thousands):




                                                                 THREE MONTHS ENDED
                                                              JUNE 30,         JUNE 30,
                                                                2001             2000
                                                            -----------       -----------
                                                                        
Net Sales:
 Asia .................................................      $   628,119       $   545,245
 Americas .............................................        1,128,596         1,199,064
 Western Europe .......................................          618,319           515,975
 Central Europe .......................................          756,389           461,052
 Intercompany eliminations and corporate allocations ..          (20,825)          (44,362)
                                                             -----------       -----------
                                                             $ 3,110,598       $ 2,676,974
                                                             ===========       ===========
Income (Loss) before Income Tax:
 Asia .................................................      $    43,968       $    12,121
 Americas .............................................           26,091          (172,454)
 Western Europe .......................................            8,527            11,046
 Central Europe .......................................           15,613             9,738
 Intercompany eliminations,corporate allocations and
   Motorola one-time non-cash charge (see Note G) .....            4,158          (247,078)
                                                             -----------       -----------
                                                             $    98,357       $  (386,627)
                                                             ===========       ===========



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                                                         AS OF         AS OF
                                                        JUNE 30,     MARCH 31,
                                                          2001         2001
                                                      ------------  ----------
                                                              
Long-lived Assets:
  Asia.............................................    $  599,694  $   503,094
  Americas.........................................       659,814      636,399
  Western Europe...................................       400,243      371,064
  Central Europe...................................       337,941      317,884
                                                       ----------   ----------
                                                       $1,997,692   $1,828,441
                                                       ==========   ==========



   For purposes of the preceding tables, "Asia" includes China, India, Malaysia,
Singapore, Thailand and Taiwan, "Americas" includes Brazil, Mexico and the
United States, "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 -- SHAREHOLDERS' EQUITY

        In connection with the Company's strategic alliance with Motorola in May
2000, Motorola paid $100.0 million for an equity instrument that entitled it to
acquire 22.0 million Flextronics ordinary shares at any time through December
31, 2005 upon meeting targeted purchase levels or making additional payments to
the Company. The issuance of this equity instrument resulted in a one-time
non-cash charge equal to the excess of the fair value of the equity instrument
issued over the $100.0 million proceeds received. As a result, the one-time
non-cash charge amounted to approximately $286.5 million offset by a
corresponding credit to additional paid-in capital in the first quarter of
fiscal 2001.

        In June 2001, the Company entered into an agreement with Motorola under
which it repurchased this equity instrument for $112.0 million. The fair value
of the equity instrument on the date it was repurchased exceeded the amount paid
to repurchase the equity instrument. Accordingly, the Company accounted for the
repurchase of the equity instrument as a reduction to shareholders' equity in
the accompanying condensed consolidated financial statements.

Note H -- PURCHASE OF ASSETS

        In April 2001, the Company entered into a definitive agreement with
Ericsson Telecom AB ("Ericsson") with respect to its management of the
operations of Ericsson's mobile telephone operations. Operations under this
arrangement commenced in the first quarter of fiscal 2002. Under this agreement,
the Company is to provide a substantial portion of Ericsson's mobile phone
requirements. The Company assumed responsibility for product assembly, new
product prototyping, supply chain management and logistics management in which
we process customer orders from Ericsson and configure and ship products to
Ericsson's customers. In connection with this relationship, the Company employed
the existing workforce for certain operations, and purchased from Ericsson
certain inventory, equipment and other assets, and assumed certain accounts
payable and accrued expenses at their net book value. The Company has not
completed the purchase of certain assets, but estimates that the net asset
purchase price will be approximately $416.0 million of which $301.7 million was
purchased in the first quarter of fiscal 2002. The Company anticipates
completing the purchase by the end of the second quarter of fiscal 2002.

Note I - NEW ACCOUNTING STANDARDS

        In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141 and No. 142,
"Business Combinations" and "Goodwill and Other Intangible Assets". SFAS No. 141
requires all business combinations initiated after June 30, 2001 to be accounted
for using the purchase method. Under SFAS No. 142, goodwill is no longer subject
to amortization over its estimated useful life. Rather, goodwill is subject to
at least an annual assessment for impairment, applying a fair-value based test.
Additionally, an


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acquired intangible asset should be separately recognized if the benefit of the
intangible asset is obtained through contractual or other legal rights, or if
the intangible asset can be sold, transferred, licensed, rented or exchanged,
regardless of the acquirer's intent to do so. Other intangible assets will
continue to be valued and amortized over their estimated useful lives;
in-process research and development will continue to be written off immediately.

        The Company only adopted SFAS 142 in the first quarter of fiscal 2002
as allowed under the statement and will no longer amortize goodwill, thereby
eliminating annual goodwill amortization of approximately $124.2 million, based
on anticipated amortization for fiscal 2002. At June 30, 2001, unamortized
goodwill approximated $1.0 billion.

        The pro forma effect of the adoption on net income and earnings per
share of the Company during the three months ended June 30, 2000 is as indicated
below:



                                                            THREE
                                                         MONTHS ENDED
                                                           JUNE 30,
                                                             2000
                                                         -------------
                                                          
Net loss as reported ................................    $ (370,562)
Add back: Goodwill amortization expense ...............      (8,670)
                                                         ----------
Proforma net loss ...................................    $ (361,892)
                                                         ==========

Basic earnings (loss) per share:
   As reported ........................................  $    (0.88)
                                                         ----------
   Proforma ...........................................  $    (0.86)
                                                         ----------

Diluted earnings (loss) per share:
   As reported ........................................  $    (0.88)
                                                         ----------
   Proforma ...........................................  $    (0.86)
                                                         ----------


        On April 1, 2001, the Company adopted, SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended by SFAS No. 137 and
No. 138.

        The Company transacts business in various foreign currencies. The
Company has established revenue, expense and balance sheet risk management
programs to protect against reductions in value and volatility of future cash
flows caused by changes in foreign exchange rates. The Company enters into
short-term foreign currency forward contracts and borrowings to hedge only those
currency exposures associated with certain assets and liabilities denominated in
non-functional currencies. These contracts' fair value is recorded on the
balance sheet with corresponding charges or credits to income. The fair value of
these short-term foreign currency forward contracts was not material from
adoption of the standard through June 30, 2001.

        In addition, as part of the Company's investment program, the Company
from time to time will enter into derivative financial instruments to manage
certain equity market risks. These instruments are designed to hedge the equity
price risk of marketable equity securities in its investment portfolio. These
instruments were designated as fair value hedges upon adoption of the standard
and the ineffective portion of the hedge was not material. Accordingly, changes
in the fair value of these instruments are included in Other Comprehensive
Income ("OCI").

        Adoption of SFAS No. 133 on April 1, 2001, resulted in recording the
fair value of the equity derivative instruments of approximately $8.9 million
as an asset on the balance sheet with the corresponding credit to OCI.


Note J - SUBSEQUENT EVENTS


                                       11
   12


        In July 2001, the Company acquired Alcatel's manufacturing facility and
related assets located in Laval, France. All of Alcatel's GSM handset production
will be consolidated from Illkirch, France, to the Company's facility in Laval.
The acquisition will be accounted for as a purchase of assets. In connection
with this acquisition, the Company entered into a long-term supply agreement
with Alcatel to provide printed circuit board assembly, final systems assembly
and various engineering support services.


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

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





DATE                ACQUIRED COMPANY             NATURE OF BUSINESS                CONSIDERATION
----                ----------------             ------------------                ------------------------
                                                                          
November 2000       JIT Holdings Ltd.            Provides electronics              17,323,531 ordinary shares
                                                 manufacturing and design
                                                 services

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

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

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

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



        Each of these acquisitions was accounted for as a pooling of interests
and our condensed consolidated financial statements have been restated to
reflect the combined operations of the merged companies for all periods
presented. Additionally, we completed other immaterial pooling of interests
transactions in fiscal 2001. Prior period statements had 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.


12
   13



OTHER STRATEGIC TRANSACTIONS

        In April 2001, we entered into a definitive agreement with Ericsson
Telecom AB ("Ericsson") with respect to our management of the operations of
Ericsson's mobile telephone operations. Operations under this arrangement
commenced in the first quarter of fiscal 2002. Under this agreement we are to
provide a substantial portion of Ericsson's mobile phone requirements. We
assumed responsibility for product assembly, new product prototyping, supply
chain management and logistics management in which we process customer orders
from Ericsson and configure and ship products to Ericsson's customers. In
connection with this relationship, we employed the existing workforce for
certain operations, and purchased from Ericsson certain inventory, equipment and
other assets, and assumed certain accounts payable and accrued expenses at their
net book value. We have not completed the purchase of certain assets, but
estimate that the net asset purchase price will be approximately $416.0 million
of which $301.7 million was purchased in the first quarter of fiscal 2002. We
anticipate completing the purchase by the end of the second quarter of fiscal
2002.

RESULTS OF OPERATIONS

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



                                                      THREE MONTHS ENDED
                                                    JUNE 30,       JUNE 30,
                                                      2001           2000
                                                   ---------       ---------
                                                             
Net sales ...................................          100.0%          100.0%
Cost of sales ...............................           92.5            92.3
Unusual charges .............................             --             3.1
                                                   ---------       ---------
     Gross margin ...........................            7.5             4.6
Selling, general and administrative .........            3.5             3.5
Goodwill and intangibles amortization .......            0.1             0.4
Unusual charges .............................             --            15.3
Interest and other expense (income), net ....            0.7            (0.2)
                                                   ---------       ---------
     Income (loss) before income taxes ......            3.2           (14.4)
Provision for (benefit from) income taxes ...            0.3            (0.6)
                                                   ---------       ---------
      Net income (loss) .....................            2.9%          (13.8)%
                                                   =========       =========


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 first quarter of fiscal 2002 increased 16% to $3.1
billion from $2.7 billion for the first quarter of fiscal 2001. 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. However, net sales for the
first quarter of fiscal 2002, declined slightly as compared to net sales for the
fourth quarter of fiscal 2001. This decrease in net sales was the result of the
continued decline in demand due to the economic downturn experienced by the
electronics industry, which was driven by a combination of weakening end-market
demand (particularly in the telecommunications and networking sectors) and our
customers' inventory imbalances.

        Our ten largest customers in the first three months of fiscal 2002 and
2001 accounted for approximately 62% and 58% of net sales, respectively. Our
only customer that exceeded 10% of sales during the first three months of
fiscal 2002 & fiscal 2001 was Ericsson.


                                       13
   14


"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, Electronics and Computer
Industries which Continually Produce Technologically Advanced Products with
Short Life Cycles; Our Inability to Continually Manufacture such Products on a
Cost-Effective Basis would Harm our Business".

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, capacity utilization, pricing, competition and new product
introductions.

        Gross margin for the first quarter of fiscal 2002 increased to 7.5% from
4.6% for the first quarter of fiscal 2001. The increase in gross margin in the
first quarter of fiscal 2002 is primarily attributable to unusual pre-tax
charges amounting to $83.7 million in the first quarter of fiscal 2001, 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 margin for the first quarter of fiscal
2001 was 7.7%. Gross margin after considering these charges, decreased due to
several factors, including (i) under absorbed fixed costs caused by the
underutilization of capacity, resulting from the economic downturn experienced
by the electronics industry; (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;
(iii) higher costs associated with expanding our facilities; and (iv) changes in
product mix to higher volume printed circuit board assembly 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
Changes in Our Operations, Our Business May be Harmed," and "- We may be
Adversely Affected by Shortages of Required Electronic Components".

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

Unusual Charges

        We recognized unusual pre-tax charges of approximately $973.3 million
during fiscal year 2001. Of this amount, $493.1 million was recorded in the
first quarter and was comprised of approximately $286.5 million related to the
issuance of an equity instrument to Motorola combined with approximately $206.6
million of expenses resulting from the DII Group, Inc. and Palo Alto Products
International Pte. Ltd. mergers and related facility closures. In the second
quarter, unusual pre-tax charges amounted to approximately $48.4 million
associated with the mergers with Chatham Technologies, Inc. and Lightning Metal
Specialties (and related entities) and related facility closures. In the third
quarter, we recognized unusual pre-tax charges of approximately $46.3 million,
primarily related to the merger with JIT Holdings Ltd. and related facility
closures. During the fourth quarter, we recognized unusual pre-tax charges,
amounting to $385.6 million related to closures of several manufacturing
facilities.

        On May 30, 2000, we entered into a strategic alliance for product
manufacturing with Motorola. In connection with this strategic alliance,
Motorola paid $100.0 million for an equity instrument that entitled it to
acquire 22.0 million Flextronics ordinary shares at any time through December
31, 2005, upon meeting targeted purchase levels or making additional payments to
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 June 2001,
we entered into an agreement with Motorola under which we repurchased this
equity instrument for $112.0 million.

        In connection with the aforementioned mergers and facility closures, in
fiscal 2001, we recorded aggregate unusual charges of $686.8 million, which
included approximately $584.4 million of facility closure costs and
approximately $102.4


14
   15


million of direct transaction costs. As discussed below, $510.5 million of the
charges relating to facility closures have been classified as a component of
Cost of Sales during the fiscal year ended March 31, 2001. The components of the
unusual charges recorded in fiscal 2001 are as follows (in thousands):





                                                                                                     TOTAL
                                              FIRST         SECOND        THIRD        FOURTH        FISCAL
                                             QUARTER       QUARTER       QUARTER       QUARTER        2001        NATURE OF
                                             CHARGES       CHARGES       CHARGES       CHARGES       CHARGES       CHARGES
                                            ---------     ---------     ---------     ---------     ---------     ---------
                                                                                                
Facility closure costs:
  Severance ............................    $  62,487     $   5,677     $   3,606     $  60,703     $ 132,473     cash
  Long-lived asset impairment ..........       46,646        14,373        16,469       155,046       232,534     non-cash
  Exit costs ...........................       24,201         5,650        19,703       169,818       219,372     cash/non-cash
                                            ---------     ---------     ---------     ---------     ---------
      Total facility closure costs .....      133,334        25,700        39,778       385,567       584,379
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 Unusual Charges ..................      206,567        48,395        46,276       385,567       686,805
                                            ---------     ---------     ---------     ---------     ---------
Income tax benefit .....................      (30,000)       (6,000)       (6,500)     (110,000)     (152,500)
                                            ---------     ---------     ---------     ---------     ---------
Net Unusual Charges ....................    $ 176,567     $  42,395     $  39,776     $ 275,567     $ 534,305
                                            =========     =========     =========     =========     =========



        In connection with the fiscal 2001 facility closures, we developed
formal plans to exit certain activities and involuntarily terminate employees.
Management's plan to exit an activity included the identification of duplicate
manufacturing and administrative facilities for closure and the identification
of manufacturing and administrative facilities for consolidation into other
facilities. Management currently anticipates that the facility closures and
activities to which all of these charges relate will be substantially completed
within one year of the commitment dates of the respective exit plans, except for
certain long-term contractual obligations. The following table summarizes the
balance of the facility closure costs as of March 31, 2001 and the type and
amount of closure costs utilized during the first quarter of fiscal 2002.





                                                       EXIT
                                            SEVERANCE       COSTS         TOTAL
                                            ---------     ---------     ---------
                                                               
Balance at March 31, 2001 .........         $  71,734     $  95,343     $ 167,077
Activities during the quarter:
  Cash charges ....................           (28,264)      (17,219)      (45,483)
  Non-cash charges ................                --        (3,947)       (3,947)
                                            ---------     ---------     ---------
Balance at June 30, 2001 ..........         $  43,470     $  74,177     $ 117,647
                                            =========     =========     =========


        Of the total pre-tax facility closure costs recorded in fiscal 2001,
$132.5 million relates to employee termination costs, of which $67.8 million has
been classified as a component of Cost of Sales. As a result of the various exit
plans, we identified 11,269 employees to be involuntarily terminated related to
the various mergers and facility closures. As of June 30, 2001, 8,027 employees
have been terminated, and another 3,242 employees have been notified that they
are to be terminated upon completion of the various facility closures and
consolidations. During the first quarter of fiscal 2002, we paid employee
termination costs of approximately $28.3 million. The remaining $43.5 million of
employee termination costs is classified as accrued liabilities as of June 30,
2001 and is expected to be paid out within one year of the commitment dates of
the respective exit plans.

        The unusual pre-tax charges recorded in fiscal 2001, included $232.5
million for the write-down of long-lived assets to fair value. This amount has
been classified as a component of Cost of Sales during fiscal 2001. Included in
the long-lived asset impairment are charges of $229.1 million, which related 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


15
   16


anticipated disposal dates pursuant to the exit plans. Since the assets will
remain in service from the date of the decision to dispose of these assets to
the anticipated disposal date, the assets are being depreciated over this
expected period. The impaired long-lived assets consisted primarily of machinery
and equipment of $153.0 million and building and improvements of $76.1 million.
The long-lived asset impairment also included the write-off of the remaining
goodwill and other intangibles related to certain closed facilities of $3.4
million.

        The unusual pre-tax charges recorded in fiscal 2001, also included
approximately $219.4 million for other exit costs. Approximately $210.2 million
of this amount has been classified as a component of Cost of Sales. The other
exit costs recorded, primarily related to items such as building and equipment
lease termination costs, warranty costs, current asset impairments and payments
to suppliers and vendors to terminate agreements and were incurred directly as a
result of the various exit plans. We paid approximately $17.2 million of other
exit costs during the first quarter of fiscal 2002. Additionally, approximately
$3.9 million of other exit costs were non-cash charges utilized during the first
quarter of fiscal 2002. The remaining $74.2 million is classified in accrued
liabilities as of June 30, 2001 and is expected to be substantially paid out
within one year from the commitment dates of the respective exit plans, except
for certain long-term contractual obligations.

        The direct transaction costs recorded in fiscal 2001, included
approximately $64.3 million of costs primarily related to investment banking and
financial advisory fees as well as legal and accounting costs associated with
the merger transactions. Other direct transaction costs which totaled
approximately $38.1 million were mainly comprised of accelerated debt prepayment
expense, accelerated executive stock compensation and benefit-related expenses.
We paid approximately $1.3 million of the direct transaction costs during the
first quarter of fiscal 2002. Approximately, $70.9 million of direct transaction
costs were paid during fiscal 2001. Additionally, approximately $28.2 million of
the direct transaction costs were non-cash charges utilized during fiscal 2001.
The remaining $2.0 million is classified in accrued liabilities as of June 30,
2001 and is expected to be substantially paid out in the ensuing quarter.

Selling, General and Administrative Expenses

        Selling, general and administrative expenses ("SG&A") for the first
quarter of fiscal 2002 increased to $108.8 million from $94.9 million in the
same quarter of fiscal 2001, but remained constant as a percentage of net sales
of 3.5% for the first quarter of fiscal 2002 and fiscal 2001. The dollar
increase in SG&A was 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 constant SG&A as percentage
of net sales reflects our continued focus on controlling our operating expenses,
while expanding our net sales.

Goodwill and Intangibles Amortization

        Goodwill and intangibles asset amortization for the first quarter of
fiscal 2002 decreased to $2.3 million from $9.4 million for the same period of
fiscal 2001. The decrease in goodwill and intangibles assets amortization in the
first quarter of fiscal 2002 was a direct result of the adoption of Statement of
Financial Accounting Standards (SFAS) 142, effectively discontinuing the
amortization of goodwill. As of June 30,2001, unamortized goodwill approximated
$1.0 billion. Such goodwill is now subject to at least annual impairment
testing, as discussed in Note I, "New Accounting Standards," of the Notes to
Condensed Consolidated Financial Statements.

Interest and Other Expense, Net

        Interest and other expense, net was $22.4 million for the first quarter
of fiscal 2002 compared to net income of $4.2 million for the corresponding
quarter of fiscal 2001. The increase in interest and other expense, net in the
first quarter of fiscal 2002 was attributable to increased interest expense
associated with the approximately $645.0 million of senior subordinated notes we
issued in June 2000, offset by lower gains recorded on the sale of marketable
securities as compared to the $22.4 million gain on sale of marketable
securities we recorded in the first quarter of fiscal 2001.


16
   17
Provision for Income Taxes

        Our consolidated effective tax rate was a 10.2% provision for the first
quarter of fiscal 2002 compared to a 4.2% benefit for the first quarter of
fiscal 2001. Excluding the unusual charges, the effective income tax rate for
the first quarter of fiscal 2001 was 13.1%. 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 June 30, 2001, we had cash and cash equivalents totaling $543.3
million, total bank and other debts totaling $1.3 billion and $422.0 million
available for future borrowing under our credit facility subject to compliance
with certain financial covenants.

        Cash provided by operating activities was $383.5 million and cash used
in operating activities was $219.2 million for the first three months of fiscal
2002 and fiscal 2001, respectively. Cash provided by operating activities in the
first three months of fiscal 2002 was primarily due to significant reductions of
inventory and cash used in operations for the first three months of fiscal 2001
was the 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 was $1.7
billion at June 30, 2001 and March 31, 2001. Accounts receivable remained
relatively unchanged primarily because net sales was relatively unchanged as a
result of the recent economic slowdown.

        Inventories decreased 15% to $1.5 billion at June 30, 2001 from $1.8
billion at March 31, 2001. The decrease in inventories was primarily the result
of the focused effort by the Company to reduce inventories that were built up
for customers in March, in their anticipation of stronger demand which did not
materialize.

        Cash used in investing activities was $423.3 million and $309.1 million
for the first three months of fiscal 2002 and fiscal 2001, respectively. Cash
used in investing activities for the first three months of fiscal 2002 was
primarily related to (i) net capital expenditures of $111.2 million to purchase
equipment and for continued expansion of manufacturing facilities, (ii) payment
of $301.7 million for purchases of manufacturing facilities and related assets
and (iii) payment of $11.6 million for acquisitions of businesses. Cash used in
investing activities for the first three months of fiscal 2001 consisted
primarily of (i) net capital expenditures of $148.7 million to purchase
equipment and for continued expansion of manufacturing facilities, (ii) payment
of $163.5 million for purchases of manufacturing facilities and related assets
and (iii) payment of $28.8 million for acquisitions of businesses and offset by
proceeds of $32.9 million for sale of minority investments in the stocks of
various technology companies.

        Net cash used in financing activities was $62.5 million for the first
three months of fiscal 2002 and net cash provided by financing activities was
$613.1 million for the first three months of fiscal 2001. Cash used in financing
activities for the first three months of fiscal 2002 primarily resulted from the
payment of $112.0 million related to the repurchase of the equity instrument
from Motorola, $180.7 million of short-term credit facility and long-term debt
repayments, offset by $224.3 million of proceeds from long-term debt and bank
borrowings. Cash provided by financing activities for the first three months of
fiscal 2001 primarily resulted from $650.7 million of proceeds from long-term
debt and bank borrowings, $375.9 million of net proceeds from equity offerings,
offset by $427.4 million of short-term credit facility and long-term debt
repayments.

        We anticipate that our working capital requirements and capital
expenditures



17
   18


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 months ended June 30,
2001 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 CHANGES IN OUR OPERATIONS, OUR BUSINESS MAY BE
HARMED.

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

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

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

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

         -    we may incur cost overruns;

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

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


18
   19



         In addition, we expect to incur new fixed operating expenses associated
with our expansion efforts that will increase our cost of sales, including
substantial increases in depreciation expense and rental expense. If our
revenues do not increase sufficiently to offset these expenses, our operating
results would be seriously harmed. Our expansion, both through internal growth
and acquisitions, has contributed to our incurring significant unusual charges.
For example, in connection with our acquisitions of DII, Palo Alto Products
International, Chatham, Lightning and JIT, we recorded merger related charges
and related facility closure costs of approximately $258.7 million, net of tax.

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

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

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

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

         -    recessionary periods in our customers' markets.

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

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

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

         In addition, we make significant decisions, including determining the
levels of business that we will seek and accept, production schedules, component
procurement commitments, personnel needs and other resource requirements, based
on our estimates of customer requirements. The short-term nature of our
customers' commitments and the possibility of rapid changes in demand for their
products reduce our ability to estimate accurately future customer requirements.
This makes it difficult to schedule production and maximize utilization of our



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manufacturing capacity. We often increase staffing, purchase materials and incur
other expenses to meet the anticipated demand of our customers. Anticipated
orders may not materialize, and delivery schedules may be deferred as a result
of changes in demand for our customers' products. On occasion, customers may
require rapid increases in production, which can stress our resources and reduce
margins. Although we have increased our manufacturing capacity, and plan further
increases, we may not have sufficient capacity at any given time to meet our
customers' demands. In addition, because many of our costs and operating
expenses are relatively fixed, a reduction in customer demand could harm our
gross profit and operating income.

OUR OPERATING RESULTS VARY SIGNIFICANTLY.

         We experience significant fluctuations in our results of operations.
The factors that 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 stronger revenues in our third fiscal quarter as compared to our
other fiscal quarters.

         We are reconfiguring certain of our operations to further increase our
concentration in low-cost locations. This shift of operations resulted in a
restructuring charge of $275.6 million, net of tax, in the fourth quarter of
fiscal 2001, and may result in additional restructuring charges in fiscal 2002.
In addition, many of our customers are currently experiencing increased
volatility in demand, and in 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 MAY ENCOUNTER DIFFICULTIES WITH ACQUISITIONS, WHICH COULD HARM OUR BUSINESS.

    In the past fiscal year, we completed a significant number of acquisitions
of businesses and facilities, including our acquisitions of DII, Palo Alto
Products International, Chatham, Lightning and JIT. We expect to continue to
acquire additional businesses and facilities in the future and are currently in


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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;

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

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

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

WE DEPEND ON THE CONTINUING TREND OF OUTSOURCING BY OEMS.

     A substantial factor in our revenue growth is the transfer to us of
manufacturing and supply chain 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


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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 three months of fiscal 2002 and 2001 accounted for approximately 62%
and 58% of net sales in the first three months of fiscal 2002 and fiscal 2001,
respectively. Our largest customer during the first three months of fiscal
2002 and fiscal 2001 was Ericsson, who accounted for approximately 23% and 11%
of net sales in the first three months of fiscal 2002 and fiscal 2001,
respectively. No other customer accounted for more than 10% of net sales in the
first three months of fiscal 2002 and fiscal 2001. We anticipate that our
strategic relationship with Ericsson will substantially increase the percentage
of our sales attributable to Ericsson.

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

OUR INDUSTRY IS EXTREMELY COMPETITIVE.

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

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

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

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

OUR CUSTOMERS MAY BE ADVERSELY AFFECTED BY RAPID TECHNOLOGICAL CHANGE.

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

WE ARE SUBJECT TO THE RISK OF INCREASED INCOME TAXES.

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

         -    tax incentives have been extended to encourage foreign investment;


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              or

         -    income tax rates are low.

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

         Several countries in which we are located allow for tax holidays or
provide other tax incentives to attract and retain business. We have obtained
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.

         The geographical distances between the Americas, Asia 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 China and Mexico, governmental authorities
exercise significant influence over many aspects of the economy, and their
actions could have a significant effect on us. Finally, we could be seriously
harmed by inadequate infrastructure, including lack of adequate power and water
supplies, transportation, raw materials and parts in countries in which we
operate.

WE DEPEND ON OUR KEY PERSONNEL.


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         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 could be
harmed.

WE ARE SUBJECT TO ENVIRONMENTAL COMPLIANCE RISKS.

         We are subject to various federal, state, local and foreign
environmental laws and regulations, including those governing the use, storage,
discharge and disposal of hazardous substances in the ordinary course of our
manufacturing process. In addition, we are responsible for cleanup of
contamination at some of our current and former manufacturing facilities and at
some third party sites. If more stringent compliance or cleanup standards under
environmental laws or regulations are imposed, or the results of future testing
and analyses at our current or former operating facilities indicate that we are
responsible for the release of hazardous substances, we may be subject to
additional remediation liability. Further, additional environmental matters may
arise in the future at sites where no problem is currently known or at sites
that we may acquire in the future. Currently unexpected costs that we may incur
with respect to environmental matters may result in additional loss
contingencies, the quantification of which cannot be determined at this time.

THE MARKET PRICE OF OUR ORDINARY SHARES IS VOLATILE.

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


PART II - OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits

None.

(b)     Reports on Form 8-K

None.



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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:  August 14, 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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